Photronics Inc (PLAB) 2016 Q3 法說會逐字稿

Welcome to the Photronics third-quarter earnings conference call.

(Operator Instructions)

As a reminder, this conference is being recorded Thursday, August 18, 2016.

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

Thank you, Kevin.

Good morning, everyone, and welcome to our review of Photronics 2016 third-quarter financial results, and an overview of our China IC investment we announced this morning. 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 releases we issued this morning, along with 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. 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, and we assume 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, and good morning, everyone.

Earlier this morning, in addition to releasing third-quarter results, we announced details of our planned investment in the China IC market. For this morning's call, I want to briefly review our Q3 results and discuss our outlook, then spend the rest of the time sharing our China plans with you.

For Q3, we achieved results that were generally in line with our expectations. High-end logic is showing strength, as sales to Asian foundries improved during the quarter. Memory demand fell, as DRAM industry conditions are causing foundry memory customers to delay new product introductions. We experienced a decline in the Micron business, coincident with the conclusion of our JV.

Mainstream IC is doing well, as general overall semiconductor industry activity that drives demand for legacy nodes is strengthening. On balance, given all of the external opportunities and challenges, I would say our IC business is performing well.

While IC demand has been mixed, FP demand remained healthy, and our capacity was sold out throughout Q3. The amount of new applications and product innovation in this industry continues to grow. As a market and technology leader, we are in great position to grow in 2017, as we take delivery of the tools that we ordered last quarter.

For the balance of our fiscal year, the high-end IC photomask market should see increased demand for logic, while memory remains subdued. Mainstream IC should continue to slowly build, as overall market conditions continue to improve.

We expect to see one quarter of temporary softness in FPD, as the industry leaders transition capacity from LCD to OLED. We think this will be a quick transition, and expect overall FPD demand to build in early 2017 and beyond, driven by OLED displays from mobile application. As I mentioned earlier, we believe we have timed the delivery of additional capacity such that we can effectively support our leading customers' AMOLED ramp, expected to begin in late spring of 2017.

Looking at the Business through a different lens, while we've been challenged to achieve consolidated growth year to date in our top line, we have been able to deliver solid earnings and cash flow. This should not come as a surprise. Relentless focus on managing costs is part of our culture. Year-to-date operating profit is up more than 5%, despite a 2% drop in sales.

Shifting to the balance sheet, net cash is up $150 million since the beginning of the year, as a result of operating cash flow generation, debt reduction, and a cash payment from Micron. Two of our key strategic objectives are to grow our high-end IC business, and expand geographically into regions where we see opportunity for long-term growth. Today's announcement regarding our China investment should enable us to make significant progress in meeting both of these objectives.

Growth in the semiconductor industry continues to migrate on a global scale. The US, European, and Japanese markets are now mature.

Korea and Taiwan have been active over the last decade, but it is becoming more and more apparent that these markets have plateaued. This is even truer for the merchant photomask market. Within this changing landscape, we have been able to make selective investment to drive growth; but this has largely been share shifts at the expense of the competition, rather than new business.

Looking at China over the past 10 years, we see a dramatically different story. Rather than maturing, China has progressively become a more important region for the manufacturing of advanced electronics. More than 50% of the world's supply of semiconductors is now being purchased by Chinese manufacturers. As a result, the State Council of China is now heavily promoting the semiconductor industry, providing incentives for a greater percentage of chips consumed by Chinese companies to be manufactured within country.

There has been a rapid expansion of this semiconductor manufacturing activity. This growth is from both domestic suppliers, as well as international companies building capacity in China. For example, nearly all of the leading foundries have, or soon will have, a manufacturing presence in China. This is clearly the region where growth will occur in our industry.

Our investment will provide us with a state-of-the-art manufacturing facility in China to serve existing customers and penetrate new business. The location of Xiamen was chosen due to the presence of our largest IC customer. It's also located within a technology park, ensuring needed infrastructure, available work force, and proximity to other firms within the supply chain. We are installing a number of tools, including new, used, and transferred, to enable us to meet anticipated high-end demand, while also providing the ability to manufacture mainstream products.

Current industry investment in China covers the entire spectrum of the IC landscape -- memory and logic, mainstream, and high-end. Our investment in proven process technology will allow us to serve all of the customers at all the technology nodes. As a leading merchant mass producer, we are well positioned to establish a leading position in China, which is presently lacking a strong domestic supplier.

This investment is a logical step in our progression from technology follower to a market and technology leader. We already have a strong presence in Asia, and this will add to further strengthen our position. Many of the leading domestic producers, plus all of the multi-national firms investing in China, are already customers.

I believe that our investment in Xiamen will allow us to build new, and solidify existing, customer relationships. Due to the financial diligence and discipline we have exercised over the last several years, our balance sheet is strong, and more than capable of supporting the $160 million investment we have planned for our new Chinese factory.

The one thing that is constant in our industry is that it is always changing. Long-term success requires good technology in a low-cost format, along with a willingness to adjust your manufacturing footprint to be aligned with where the growth opportunities present themselves. Given our current position on these attributes relative to our competition, I am more optimistic now regarding our growth prospects than at any time during my career at Photronics.

On the IC side of the Business, our largest customers are pulling us into China. For FPD, the transition to OLED and the many innovative technologies this move will spur is setting up a very attractive investment opportunity for us that should extend over the next several years.

Moreover, our balance sheet affords us options that were not available in the past, including M&A to consolidate the photomask industry, as well as explore potential adjacencies to diversify revenues. It is truly an exciting time at Photronics. I look forward to updating you as we progress.

Before turning the call over to Sean, I would like to thank all the Photronics employees for their commitment and hard work during the quarter. Sean will now provide more details on our Q3 performance and outlook. Sean?

Thanks, Peter. Good morning, everyone. I will first provide a brief overview of third-quarter results, including our guidance for Q4, and then provide an overview of the financial details for the China investment.

From a high-level perspective, operating results for Q3 were strikingly similar to Q2, as consolidated revenues, gross and operating margins were essentially flat on a sequential basis. Sales of IC photomasks improved sequentially due to strong demand for mainstream products, as general macro-economic improvement drove increased demand, and we were successful in winning business opportunities. Sales of high-end IC photomasks were down, as an uptick in logic sales was offset by reduced demand for memory products.

FPD photomasks were down modestly sequentially due to a mix shift toward mainstream product. As Peter mentioned, our next phase of capacity installation should begin to come online in 2017, which should allow additional growth as a large customer ramps AMOLED products.

Breaking out sales geographically, 73% were from Asia, and 27% were from North America and Europe. EBITDA for the quarter was $37 million, and $171 million on a trailing 12-month basis. Below the line, other income net was up sequentially, primarily related to favorable foreign currency.

Income tax expense was higher as a result of increased income tax -- income from tax-paying jurisdictions, principally in Asia. Minority interest expense increased due to higher income from our Taiwan JV. Net income was $8.1 million, or $0.12 per diluted share.

Now turning to the balance sheet, we ended the third quarter with cash balance of $292 million, bringing our net cash position to $223 million, an improvement of $166 million since Q3 of last year. Working capital increased $108 million sequentially.

CapEx for the quarter was $10 million, and $45 million year to date. We anticipate spending approximately $60 million to $70 million in CapEx this year. CapEx for the FPD investments mentioned earlier will occur through 2017.

Turning to China, our investment will be approximately $160 million, comprised of cash and existing capital equipment, and transferred from other sites. While we certainly can fund the entire investment with our cash currently on our balance sheet plus cash we expect to generate over the next several years, we may possibly finance a part of the investment through local debt to take advantage of subsidies offered to us by the local government. We have, however, stress-tested our balance sheet, and are confident that even under a self-funded scenario, our credit metrics and balance sheet will remain healthy.

Once the site is complete, tools are installed, and we have met customer qualification requirements, we anticipate ramping up the facility, as we have significant support from a large customer. Over time, we would anticipate hitting profit margins that meet our corporate targets, and generating cash to enable further investment as the market opportunities arise.

Before providing fourth-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, demand for some of our products is inherently lumpy and difficult to predict. Finally, as our high-end business has grown, and the ASP for these masks are higher, a relatively few number of high-end orders can have a significant impact on sales for the quarter.

Given those caveats, we expect fourth-quarter sales to be between $118 million and $128 million. This range assumes that high-end logic and mainstream will see improving trends for the fourth quarter, while high-end memory is flat. FPD will see some softness, as a large customer retools a factory from LCD to OLED. Based upon this revenue expectation and our current operating model, we estimate earnings for the fourth quarter to be in the range of $0.09 to $0.17 per diluted share.

While year-to-date results are off of last year's record-setting pace, we're performing well in a demand environment that has been challenging. We've been able to maintain respectable levels of profitability and generate cash. Coupled with the payment we received upon the termination of our joint venture with Micron, we were able to fund the various growth projects we have, including expansion into China, without the need to incur significant debt. I remain confident that we're on the path to improving growth and profitability.

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

(Operator Instructions)

Edwin Mok, Needham & Company.

Hi, good morning. Thanks for taking my questions. First question on near-term guidance, and I guess a little bit beyond near term, as well. If I focus on the IC side, it seems like memory has been challenging. Now that your Micron JV has ended, how should we think about the high-end memory part of your business? Should we expect that business to come back, or is it more -- I don't want to say maybe structurally -- we should expect a lower level now that the JV has ended?

Yes, I think when we look at the memory business, I think the good news is that ironically, it's pretty clear that DRAMs finally bottomed out. As the DRAM market recovers, what we expect to see is a build-back of -- both a build-back of our existing foundry memory business, as well as some new revenues from new customers that are leveraging the Micron bit cell. That I think -- will it happen next quarter? We're assuming not, but do we expect to see it building into the quarters after that, yes, we do.

The other part of our memory business that has been very soft is the flash business. As we look into next year, and we see our customers move from the first-generation of NAND flash -- which is essentially not cost competitive with planar flash -- to the second generation of 3D NAND, we expect that business to grow, as well.

Right now our memory business isn't strong. We were able to cover it in the quarter, as we projected, with our high-end logic IC business as well as our mainstream. That was no small feat, so I'm very pleased with how the team executed there. Certainly as we move into 2017, we expect a reversal of what has been a couple quarters of negative head winds in that business to be tail winds.

Edwin, this is Chris. I'm going to make one more comment, if you -- maybe you have concerns on the technology road map in absence of the Micron JV. We have solid technology in DRAM the next two nodes already in hand we have yielding processes, so we're in great shape there.

The NAND as you know is, 3D particularly, a little less lithography intensive. We're qualified for the next two nodes. There's no technology road map impediment for quite some nodes on either of those technologies. It's just a matter of getting the processes qualified and getting the customers lined up.

Okay, great, that's helpful. Then on the flat-panel display, you mentioned there's a one-quarter step-back as your customer convert capacity from LCD to OLED. Trying to understand should we expect that to come back in the subsequent quarter? Then you have a new tool that you guys plan to install late spring. When should we expect that to start to be able to contribute revenue for your Company?

Yes, Edwin, I think it's pretty clear now there's going to be -- if you look at mobile displays, the overall market, right now of the three classic technologies, we have the amorphous silicon, we have the low-temperature polysilicon, and then finally AMOLED. Right now for mobile displays, AMOLED represents a little less than maybe 20% of the overall market. But it's become very clear I think to everyone that the A company is going to need to transition their display technology. That's going to require a tremendous amount of capacity.

What occurred during the quarter is one of our largest customers in Korea announced they were literally taking a traditional alpha-silicon large-format display factory off line, and converting it to AMOLED. That's a short-term negative for us; but you can see that we shifted during the quarter the business to keep our tools full. Anyway, it's a short-term negative, but next year, early spring, when that factory is starting to crank out AMOLED displays, it should be a significant positive for us, given our position with that customer.

I think, finger in the air, it's hard to project exactly. But I would guess by the time 2018 rolls around, the fraction of mobile displays that are built with AMOLED technology will likely double, approximately. That's a huge shift, a lot of business. We think we're positioned very well to exploit that shift.

Safe to say that even with that shift, you are largely capacity constrained until your new tool come into production, right?

Yes, we have said we've invested $40 million. That's more than a single tool.

I see. Okay, that's helpful. Lastly, on your China announcement, congratulations on the announcement. Trying to understand the investment profile or the cash impact for this year and next year. Does that $160 million investment include any kind of incentive that you already expect to receive? As you start going to production in 2018, any way we can think about the size of capacity or production capacity once you start to produce, or maybe a better way to ask it, once you finish this $160 million investment?

The $160 million, Edwin, just to be clear, is not all new capital. That's the initial ramp of the facility, which includes the clean room, the building. There are some re-deployed assets that we will put in there. We've historically done that quite a bit, specifically into Taiwan over the last few years. We'll provide further granularity as we move forward but we also have to be very cognizant of, because of the competitive nature of the business and in China, that we don't want to provide too much clarity at this point in time.

Certainly, as we say, we can self-fund it. We expect it to be a significant portion of the business. I think we talked -- Peter talked on the last call that China was already -- China IC revenue and FPD revenue was already getting to be material for Photronics, so we expect that would continue as we move forward.

Yes, and to answer it differently, when China is fully ramped, I think we would expect they would represent 10% to 20% of our overall revenues. There's some range there, but it depends on how successful we are in gaining market share and ramping that business. But there's no doubt that it's a significant opportunity for us. That's IC alone; that doesn't include FPD.

Great, actually that's good color. Thanks very much. That's all I have.

William Stein, SunTrust.

Great, thanks. I have a couple of questions about the China investment, as well. First, on your last comment you mentioned something about FPD. I'm trying to tease out whether this facility will be producing FPD masks, as well, or just ICs? How does that play out?

Well, the factory potentially could produce both, but that's not contemplated in what you heard this morning. We're still working to fully elaborate our FPD plan for China. I would say the opportunity there is at least as large, maybe even greater than IC.

As we've done historically, we work hard to technically execute the business against the market as it stands today. At the same time, the team works to try to cascade growth opportunities. For us, next year clearly it's the AMOLED ramp. 2018 is clearly China. So far you've heard about IC; you haven't heard much about FPD, but we're working hard at it.

Thanks for that color, I think I get it. One more if I can. I think the answer is that there's a lot of difference, but can you highlight what's different about this effort in China relative to an earlier foray that -- where there was some trouble?

Yes, I think what's most profoundly different is we already have developed the customer base in China today, where before, we built the factory and then developed the business. We've actually developed the business already, quietly.

Beyond that, we have large customers -- one in Xiamen, for example -- that are building and ramping mega-factories, where we already have overwhelming market share that are quite anxious to have a domestic source of supply.

Finally, if you look at China overall for the last few years, not just this year, more than 50% of all the semiconductors that are made globally are actually being incorporated into electronic goods in China. The domestic market there now is overwhelming. There's no doubt in the demand side of the equation today versus several years ago. Now it really boils down to our ability to execute against the demand, instead of trying to create demand. Very different scenario, yes.

Understood. Very helpful, thank you.

Tom Diffely, D.A. Davidson.

Yes, good morning. First question for Chris on 3D NAND. When you look at the mask set moving from the first to the second and third generations and so forth, what happens as far as the number of masks in that set or the cost for that set?

Yes, Tom as you know, the lithography for the 3D NAND is generally less aggressive. It's public known, for example, Samsung's using a 40-nanometer grade litho process for their current 3D NAND, et cetera. It's generally a node or two back from what we associate with cutting edge from a lithography perspective.

Generally, 3D has more patterning layers than the equivalent density planar NAND, so there are more masks in the set. Depending on how the architecture stacks the different layers of NAND, could go up more. I think from a set perspective, less lithographically intensive, but more layers. There are a few very critical layers even in 3D NAND, and they're generally the ones that are required to tie together the different levels of stacking.

As you continue to shrink, most of the 3D or V-NAND companies are looking still at the vertical direction for scaling -- that is, more stacking layers, as opposed to shrinking the cell. We don't expect for the next node or two significant changes in the lateral or conventional lithographic resolution needed for those things. Beyond that, then you'll start to see a shrinking of the cells, as well, and higher resolution needed.

As far as the set costs, generally we wouldn't really comment on that. I can just say that the larger number of non-critical layers in 3D and the few very critical layers, maybe it's similar to planar NAND, which had fewer masking layers but more critical layers, from a total perspective. But beyond that, we probably of course shouldn't give specifics on that.

Okay, but if the customer is doubling their number of layers, is that mask being re-used for the second set of layers?

Generally, they are. Yes, it's a deck-stacking idea. The additional masking layers are needed for how those are knit together, those stacks. But generally speaking, most of the masks are used for the subsequent stacks. A few change, but not all of them.

Yes, okay. Great, that's helpful. Then moving over to the flat-panel side of the business, I just wanted to clarify. Your new tool -- or tool and a half, whatever it is -- will be up and running by early 2017, you believe, to hit the OLED ramp?

Yes, to give slight more color, it's really two litho tools. The reason why the cost doesn't quite look like the price of two new tools is there's a trading of old tools against new, so that our capacity is particularly tuned to the demand. They will come on in subsequent steps in 2017, but soon enough to catch the wave.

Okay. Then it looks like the industry is expecting a fairly robust OLED ramp over the next few years. Is this the first of -- or maybe the second of several new tool sets you'll have to be adding?

I think that's correct; but as we -- again, as we always try to do, is we try to invest in lock-step with demand, and even to the extent we can, tune the profile of our capacity to maximize our revenue and cash flow, as well as our profitability. Given what we see for AMOLED, I don't believe that this wave of investment is going to be adequate to address all the market opportunity that is going to be in front of us.

We're quite excited about that business. If you think about the market, right, it was -- AMOLED was essentially only in Samsung's products. Samsung was smart. They actually sold the displays to some Chinese manufacturers, and this basically put Apple in a box, where they had no choice.

Yes.

There is a huge wave coming there, huge wave.

Okay, great. Sean, when you look at the investment for China, the $160 million, big picture how does that split between brick and mortar, and equipment?

Roughly, the brick and mortar is approximately $20 million, plus or minus or so, which includes the clean room. That, just to clarify, that $160 million is not being spent all in one year or one quarter, it's over time. Some of that's re-deployed. As we crystallize our plans and we have our Q4 closing, when we give guidance for CapEx next year, we will give our baseline CapEx, and then we'll talk about what the plan is for China for the next fiscal year, and give you further clarity.

Okay, but just to confirm, the CapEx of $60 million to $70 million this year does not include that initial Chinese investment or the flat panel tool, the $40 million?

Yes and no. The $60 million to $70 million which we been discussing for the last two or three quarters does not -- it does include a portion of that $40 million FPD, because I think in Q2 when we announced it, or Q1, we had put deposits down with long lead times for these tools. But it does not include any amounts related to China.

Okay, great. Then finally, Peter, when you look at moving into China, what do you have to do from an IP protection -- or I guess for you guys, more of a process know-how protection, so someone cannot imitate your capabilities over time?

Well, it really boils down, I think to having the right manufacturing strategy, where as Chris pointed out, the most difficult layers are held tightly to the vest. One question I think I'd ask, but I thought I might, it was touched upon at the very beginning. There's a company in northern China that's an existing customer that utilizes the Micron technology that is getting really aggressive in both 3D XPoint and NAND flash -- should be a great opportunity for us.

They're very -- like our other large customer -- enthusiastic about having a domestic supplier in China. We have to be very cautious about keeping the crown jewels in a specific location. Other than that, we need to do everything we possibly can to build every layer that the customers need locally.

Yes, and Tom, I might also add on this topic. We have a lot of experience now with tech-protective measures. We're not being complacent, but we had JV with Micron. Some of that technology was -- we could use at other locations, some we couldn't. We developed internal protocols and tools to protect technology. We have a JV with D&P in Taiwan. Same thing, we have some things we need to confine there, other things can move. We also have internal systems and controls to be very careful on this matter. We will deploy those to China, as well, and be very careful with it, best as possible.

Okay, great. Thanks for your time.

Thanks, Tom.

Patrick Ho, Stifel.

Thank you very much. Peter, first in terms of the near-term business and your comments about memory, you did highlight that Micron's business was declining, post the JV dissolution. Were there other issues involved with memory customers that caused the continued weakness in that segment, or was it entirely due to the natural decline following the JV ending?

Yes, we're still seeing -- regarding Micron, we still have and expect to have for a very long time, memory business with Micron. They're still a valuable customer, and we do everything we possibly can to ensure they're successful.

Having said that, the other part of our memory business that right now is really suffering is the foundry memory business. It's going through a technology transition, and you can't -- our foundry memory customers basically with the old 3X DRAM technology cannot make money. They're not taping out any designs on that node.

That industry is shifting to the 2X node. There are now qualified sources, but the designs are under way being finished. We expect to see not next quarter, but the quarter after, a build back in of the foundry memory business at the 2X technology node.

Great, that's helpful. Going to the China investment, obviously this is a 2018, quote, revenue generator for the Company. But obviously in 2017, you're probably trying to get other customers signed on, aside from one of your largest logic customers to date. Where will you be doing the qualifications as you try and get other customers signed? Are they going to be done in some of your Korean and Taiwan facilities, or are you going to be able to do some of them in the United States, as well?

Yes, it will be done across the Company. As Sean mentioned, we already have material amounts of business with many of the Chinese customers, but there are certainly customers and nodes that we've yet to qualify. We'll do that work in advance of the JV to maximize the speed of the ramp.

What -- little known, for example, if you look at the Chinese memory landscape, the domestic supplier, it's in the best position right now -- at least in the NAND flash arena is XMC. We happen to be POR. That work's already been done. Depending on how quickly they ramp, that could be a little bit, or a lot of business for us.

Right, and a final follow-up question to that is it sounds like -- and you can correct me if I'm wrong -- you just mentioned XMC as being one of the local customers that you're working with. Would it be fair to assume initially over the first few years of this venture that you will be getting up more of your business from what I would characterize the multi-nationals that are already existing in China, and the local indigenous ones are the ones you're going to be building on a going-forward basis?

Yes.

Great, thank you.

Thanks, Patrick.

Steven Chin, UBS.

Hi, Peter and Sean. Congrats on the China announcement. I just had some follow-up questions. Can you elaborate on the China announcement? When you talk about getting support from an IC customer, does that basically mean you have a signed contract with this Chinese customer? Is there a minimum purchase agreement at all involved here?

We're really not able to disclose the extent of the relationship with that customer, but let's just say it's strong.

Okay. My follow-up question is, can photomasks that you make at this China facility, will you have the ability to sell these photomasks to China customers based in other cities throughout China, or is the arrangement that photomasks made at this facility can only be sold to customers in either Xiamen city or province? Thanks.

They can be sold anywhere in China. This is the primary reason for locating there. Today, for example, if you look at our factories in Taiwan, in an hour you can have a photomask sitting in China. But you usually have a three-to-four-day delay to get that photomask through customs. Likewise, if you look at Dalian for example, where we think there's going to be a boatload of memory masks needed, that's an hour and half flight from our factory in Korea. But the reticle sits in customs for three or four days.

The importance of having a landed factory in China is to avoid the delay associated with clearing customs. Depending on what industrial park or zone that mask goes in to, there could be as much as a 27% tax and duty applied, or not, depending on the specific location, if it's coming from overseas. All of that is eliminated if it's produced within China itself.

Okay, thanks for sharing. Then one last question on the China announcement. The fab that you're building, will it have the capability and permission to make both foundry and logic photomasks, as well as memory photomasks?

Yes, it's being tooled to be able to build memory and logic, foundry mainstream, high end, the full mask of market basket of products we sell, that factory will be capable of producing.

Okay, thanks Peter. Good luck.

Thanks, Steven.

I'm not showing any further questions at this time. I'd like to turn the call back over to our host.

Thank you once again for your interest in Photronics. While we have some short-term challenges, we remain very optimistic regarding our long-term outlook. Additionally, our balance sheet is as strong as ever, enabling us to explore options for profitable growth. Look forward to updating you as we make progress.

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