Pixelworks Inc (PXLW) 2007 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to third quarter 2007 Pixelworks earnings conference call.

My name is Shawn, and I'll be your operator for today.

(OPERATOR INSTRUCTIONS).

I would now like to turn the presentation over to your host for today's call, Mr.

Steven Moore, Chief Financial Officer.

Please proceed.

Good afternoon, and thank you for joining us.

This is Steve Moore, CFO of Pixelworks.

With me today is Hans Olsen, President and Chief Executive Officer.

The main purpose of this conference call is to supplement the information provided in our press release issued earlier today announcing the Company's financial results for the third quarter ended September 30, 2007.

The press release and contents of this conference call contain comments about our business outlook and include forward-looking statements.

Investors are cautioned that all forward-looking statements involve risks and uncertainties that could cause actual results to differ materially.

The forward-looking statements we make today speak as of today, and we do not undertake any obligation to update any such statements to reflect events or circumstances occurring after today.

Please refer to today's press release, our annual report on Form 10-K for the year ended December 31, 2006, and subsequent SEC filings for a description of factors that could cause forward-looking statements to differ materially from actual results.

During this conference call, we will also be making reference to non-GAAP gross margins, operating expenses, EBITDA, net income loss, and net income loss per share.

These measures exclude, among other costs, restructuring charges, amortization of acquired intangible assets, intangible asset impairments, good will impairment, and stock-based compensation expense.

The Company uses these non-GAAP measures internally to assess its operating performance.

The Company believes these non-GAAP measures provide a meaningful perspective on its underlying cash flow dynamics but cautions investors to consider these measures in addition to, not as a substitute for nor superior to, its consolidated financial results as presented in accordance with GAAP.

A complete reconciliation between GAAP and non-GAAP financial measures is included in the press release, which is available in the Investor Relations section of the Company's Website.

Hans will begin today's call with a strategic update on the business, after which I will review our Q3 '07 results and discuss our outlook for Q4.

Good afternoon, and thank you for taking the time to join us today.

I'm very pleased and encouraged with the Company's third quarter performance.

We were at the high end of our revenue range at $28.1 million.

We maintained non-GAAP gross margin above 45% for the second consecutive quarter.

We improved our positive EBITDA performance by $1.7 million and, ahead of schedule, brought non-GAAP expense levels to $13.4 million, well below the $15-million target we had set three quarters ago.

As demonstrated, we continue to make significant progress towards our goal of profitability.

We also remain focused on execution in product development, evidenced by our considerable internal progress, from which we expect to be able to announce product releases at CES in January.

Both profitability and product development are critical areas of focus for us, as we, as Pixelworks 2.0, are committed to building a balanced business model that will ultimately drive future growth.

With respect to our market and product strategies, we are committed to the direction set earlier this year.

As it is widely recognized, the TV SoC business has become commoditized.

And, rather than pursue a strategy of developing commodity TV SoCs, we are taking a different approach.

We look to architectural differentiation for high performance video pixel processing to address the needs of the fast-growing, large-screen, high-resolution, high-quality TV market segment.

We believe we can put ourselves in a leading position in this market by pushing pixel processing performance to new levels.

As outlined in earlier calls, our new strategy represents a shift from our previous approach of implementing our IP exclusively in system-on-chip ICs to an approach in which our IP is designed to improve video performance of any image processor by serving as a coprocessor IC.

With our DNX pixel enhancement technologies aimed at some of the most demanding applications for image and video quality, we have well positioned for the ongoing transition to next-generation displays.

Additionally, we see great opportunities for our video processing technology in helping drive the convergence of TV, media PCs, and internet TV and video.

We are actively developing technology and products for these convergence markets and believe they represent opportunities for Pixelworks to once again take a prominent position.

Customer response to our core processor technology has been overwhelmingly positive.

We are following a strategy of working closely with a few select customers that represent the best fit for our technology in order to focus our efforts on ensuring close integration and high performance.

We are currently in the evaluation stage with these customers and expect to demonstrate our innovative Motion Engine technology embodied in the product we call PA120 at CES in early January.

Further, based on the current engagements with customers, we anticipate being able to announce design wins early in the first quarter of 2008.

We believe that with our unique Motion Engine approach, the PA120 will be able to command an industry-leading position offering MEMC technology at superior price performance points.

The PA120 offers compelling performance and features - 10 ADP, 120 hertz, [dejogger], deboarder, and noise reduction, as well as integration of the video and color enhancement over our next-generation PixelAmp product.

Looking to our core projector business, we remain firmly committed to this very important market and are well along the path of developing new product as we reinforce our leadership position.

As an example, we'll be introducing our newest projector product, Cranberry 2, later this quarter.

Cranberry 2 is a keystone correction chip designed to offer extreme and industry-leading horizontal keystone.

Most significantly, to enhance our projected product offering, we are investing in further development of our innovative image processor architecture with our next-generation platform called Ruby with focus on adding increased performance and functionality to meet the ever-increasing strength of demands of this market.

As stated, the focus of the Company is on maintaining our momentum in delivering compelling video and pixel processing products to our markets and securing and growing our projector business.

Our product strategy focuses our efforts on what we are not only capable of doing but doing well.

With a balanced business model combining innovative new products, execution in product development, and a more sustainable expense level, we believe we'll be able to deliver profitability and increased shareholder value.

Our progress, our new strategies, and the market opportunities ahead of us continue to make us optimistic and encouraged about the future of Pixelworks 2.0.

I will now turn the call over to Steve for our Q3 financial review and Q4 outlook.

Thank you, Hans.

Revenue in the third quarter of 2007 was $28.1 million, an increase of $1.2 million, or 5%, from $26.9 million in the second quarter of 2007 and a decrease of $8.2 million, or 22.5%, from $36.3 million in the third quarter of 2006.

Quarter-over-quarter revenue growth was driven by increased sales in projectors and stronger-than-expected demand in our advanced television products.

We saw sequential declines in our other markets.

The split for our third quarter revenue by market was - 59% projectors; 20% advanced television; 13% advanced media processors, or Amp; 8% LCD panels, monitors, and other applications.

Our Q3 book to bill ratio was approximately 1 to 1 and reflects stable orders in our projector and advanced television markets.

We're expecting revenue in the fourth quarter to be in the range of $25 to $27 million due to the seasonality both in projectors and advanced television.

Now let's look at third quarter revenue by market, beginning with projectors.

Third quarter projector revenue was approximately $16.5 million, up 22% sequentially, slightly better than expected, and down 2% year over year.

ASPs were essentially flat.

We expect fourth quarter revenue from projectors to be down approximately 9% to 12% from the third quarter of 2007.

Advanced television revenue in Q3 was approximately $5.5 million, up 24% sequentially, and down 56% year over year.

Unit volumes increased 55% sequentially, partially offset by a 21% decrease in sequential ASPs in the quarter due to product mix.

We expect advanced television revenue in the fourth quarter to be down approximately 27% to 36% from the third quarter.

Revenue for the Amp market in the third quarter was approximately $3.8 million, down 18% sequentially and up 2% year over year.

We expect fourth quarter Amp revenue to be up 5% to 18% from the third quarter of 2007.

Third quarter revenues from LCD monitor, panel, and other applications was approximately $2.4 million, down 43% sequentially and down 26% year over year.

As this business includes large orders and is therefore variable from quarter to quarter, we expect revenue from monitor, panel, and other applications in Q4 to be up 25% to 46% from the third quarter.

GAAP gross profit margin in the third quarter of 2007 was 43% compared to 43.1% in Q2 of '07 and 37.5% in the third quarter of 2006.

Included in cost of sales during the third quarter of 2007 was approximately $11,000 in restructuring charges and approximately $727,000 of noncash expense from the amortization of acquired intangible assets and stock-based compensation.

Excluding these costs, non-GAAP gross profit margin was 45.7% in the third quarter compared with 46% in Q2 of '07 and 39.6% in the third quarter of 2006.

Gross profit in the third quarter of 2007 was positively affected by lower cost of materials, continued improvement in production yields, and a favorable mix of products sold, offset by $1 million net increase in the provision for excess and obsolete inventory.

We expect GAAP gross profit margins in the fourth quarter to be in the range of 41.5% to 43.5% and non-GAAP gross profit margin to be in the range of 44% to 46%, excluding an estimated $750,000 in restructuring charges and noncash expenses for the amortization of acquired intangible assets and stock-based compensation.

GAAP operating expenses were $16.4 million in the third quarter, including $1.6 million in restructuring charges and $1.3 million in noncash amortization of acquired intangible assets and stock-based compensation.

Excluding restructuring charges and noncash expenses, non-GAAP operating expenses in the third quarter were $13.4 million, down $1.8 million from $15.3 million in the second quarter, primarily due to lower headcount-related expenses and outside professional fees, lower depreciation, and continued trimming of discretionary spending.

With non-GAAP operating expenses of $13.4 million, we substantially exceeded our Q3 '07 target of $15 million, which we set for ourselves at the beginning of the year.

We are very pleased with the significant progress we have made in reducing our expense base over the last three quarters.

Compared with the same quarter a year ago, we have cut our operating costs by a third and increased GAAP and non-GAAP gross profit margins by 6 percentage points.

Additionally, we have recorded positive EBITDA for two consecutive quarters.

We continue to evaluate our operations on an ongoing basis, and we will pursue additional efficiencies while investing in the development of our next-generation products.

We expect fourth quarter GAAP operating expenses of $14.1 to $15.6 million and non-GAAP operating expenses of $11.5 to $12.5 million.

This expected reduction in operating expense is due in large part to lower compensation expenses.

Excluded from non-GAAP operating expenses are an estimated $2.6 to $3.1 million of restructuring charges and noncash expenses for stock-based compensation and amortization of acquired intangible assets.

Non-GAAP EBITDA was approximately $2.7 million in the third quarter of 2007 compared with $1 million in Q2 of '07 and a loss of $1.2 million in the third quarter of 2006.

Interest and other income, net, was approximately $630,000 in the third quarter compared with $590,000 in the second quarter.

We expect interest and other income to be approximately $550,000 in the fourth quarter.

The provision for income taxes in the third quarter of approximately $775,000 reflects our accrual for current and contingent taxes payable in profitable foreign tax jurisdictions and adjustments to previously recorded deferred tax assets.

We expect income tax expense in the fourth quarter of 2007 to be approximately $500,000.

Third quarter GAAP net loss was $4.4 million, or a $0.09 loss per share, compared with $7.6 million, or a $0.16 loss per share, in Q2 of '07 and $10.1 million loss, or a $0.21 loss per share, in Q3 of '06.

Excluding the noncash expenses and restructuring charges, net loss on a non-GAAP basis in the third quarter was $869,000, or a $0.02 loss per share, compared to a non-GAAP net loss of $2.7 million, or a $0.06 loss per share, in the second quarter of 2007 and a non-GAAP net loss of $5.2 million, or an $0.11 loss per share, in Q3 '06.

We expect to record a GAAP net loss per share in the fourth quarter of 2007 of $0.05 to $0.11 per share and to record non-GAAP net income loss per share of $0.02 income to $0.03 loss.

Now, let's move to the balance sheet.

Cash and marketable securities, which consist of cash and cash equivalents and short- and long-term marketable securities, were $120.7 million at September 30, 2007, a decrease of $4.5 million from $125.2 million at June 30, 2007.

The decrease in cash and marketable securities during the quarter resulted primarily from a $5.8 million decrease in accounts payable, that primarily due to a large inventory receipt at the end of the second quarter.

Cash and marketable securities were also affected by $2.1 million accrued asset liability payments, a decrease in the value of long-term marketable securities, and the offsetting impact of a $1.6 million tax refund received.

Accounts receivable, net, at September 30, 2007 was $8.7 million, compared with $9 million at June 30.

Day sales outstanding on September 30 improved to 28 days, compared to 30 days at June 30.

Inventory, net, at September 30 was $15.5 million, down $1.4 million from $16.9 million at June 30.

Inventory turns remained at 3.8 times in the third quarter, unchanged from the second and the first quarters of 2007.

Property and equipment, net, on September 30 of $13.3 million was down $2.4 million from a balance of $15.7 million at June 30, reflecting normal depreciation and amortization, asset write offs, and minimal capital expenditures as part of our goal to reduce operating expenses and to improve free cash flow.

In the fourth quarter, we expect our depreciation and amortization expense to be approximately $3.1 million and fourth quarter capital expenditures to be approximately $1 million.

This concludes my comments.

We can now open the call for your questions.

Shawn?

Thank you.

(OPERATOR INSTRUCTIONS).

Your first question comes from the line of [Stephen Park] with Wedbush.

Please proceed.

I just had a quick question about kind of Q4 outlook for LCD TVs.

It seems like you guys are seeing some major drop-offs.

Can you provide some color regarding that?

Well, there is some drop-off, which is, in part, the seasonality.

But, also, as you are aware, we are-- In our TV business, we are dealing with part of-- A large component of our TV business is legacy business.

So these are our older designs that are tailing off.

And we've seen some good results in Q3 but expect that we may not be able to sustain those levels in Q4 on the legacy TV products.

Just a quick couple of follow-up questions.

Just on normal-- What would be like a normal seasonality, you would think?

How much would it be down in Q4 versus Q3 typically?

Oh, I don't know that there is a number I can give you.

It all depends on kind of the systems that you're in and the geography and the customer.

We may see-- In Q4, there may be certain parts of orders that you may get, depending on sort of the sell through that a particular customer may have.

So it's often-- For us, where the TV business is a relatively small portion of our business, it doesn't take a lot to make a significant difference in the trend line.

We are-- We're taking a conservative approach here on the TV outlook in that we anticipate that this legacy business will not continue.

We could get surprised, but, certainly, our expectation is that our TV business on the old products continues to tail off.

Even on the projector business, is that normal seasonality to be down 9% to 12%, or are you guys seeing something out there, whether it's inventory or just weaker demand overall in Q4?

No.

It's normal seasonality.

It's typically down.

I think, if I look back to last year, it was a similar trend.

So it's completely normal.

One last follow-up question.

What--?

Can you talk about the competitive landscape for LCD TVs right now and just kind of, in general, whether you're seeing some-- what's happening with Mediatech and Trident and Genesys, as well?

I know that (inaudible) lesser part of your business, but--

Yes.

As you know, we're not really a strong participant in the mainstream TV SoC business.

But, generally, it's-- the market is very competitive.

We see new entrants, and we see, also, a stronger presence of some of the Asian competitors.

I can't speak to the specifics of it, but I certainly know that there is a continued strong presence of Trident, of course, and there is a lot of pressure from some of the Asian competitors.

I know we've heard interesting comments about panel shortages.

Is that affecting you guys, or is that affecting any of your competitors that you know?

To my knowledge, it's not affecting us.

I cannot speak to the general situation.

But, for us, it's-- We're very focused on the high end and on the 120 hertz panels now.

And the customers that we work with are in good positions in that.

Okay.

Thank you so much.

Your next question comes from the line of Ian Gilson with Zacks Investment Research.

Please proceed.

I'd like to address the question of the charges we have been taking for restructuring.

How much of these are noncash?

And when can we see them, basically, no longer affecting the income statement?

Essentially, most of them are cash related.

The cash experience may be over a period of a couple of quarters after we take the charge.

We do also have some which are a longer period where the cash would be used; for example, in re-estimation of the value of a lease.

But much of what we're taking at this point relate to compensation expenses that we're reducing.

And those are cash expenses that we'll be seeing either in the quarter or the next two quarters.

As far as the last question, certainly we believe that most of the heavy lifting on restructuring is behind us, but there certainly will be some continuing restructuring.

And we will always look for opportunities for efficiencies through the Company.

Thank you.

Your next question comes from the line of Eric Reubel of [Pixelworks].

Please proceed.

It's Miller Tabak Roberts.

Steve, a couple of quick ones.

If you could say CapEx and depreciation for Q3, I missed that.

Depreciation was-- I don't believe we gave a CapEx number for Q3.

But depreciation and-- was about-- a little over $3 million.

Okay.

Can you tell me what CapEx was?

CapEx for Q3 was between-- was a little under $1 million.

Okay.

Great.

And you also said that there was a charge for obsolete inventory in the quarter.

What was that?

It was a number of different products, where we believe-- We evaluate them monthly but, certainly, every quarter take a very strong look at our forecast usage.

In each case, these were products that were excess to the demand that we were now forecasting.

And, in some cases, they were versions of products that the customer had moved to a different product.

The charge-- Did you say what it was?

It was $1 million.

And you do not include the obsolete inventory charges and add back to your calculation of EBITDA?

No, we do not.

Okay.

And should we sort of see obsolete inventory around this level going forward, or do you feel pretty comfortable with that balance right now?

Well, I have to answer that, yes, we feel comfortable with that balance.

We made our best estimate and booked it.

I can't preclude further decreases, but I also have to say that I couldn't rule out the possibility that some of the what we view as excess today will be used.

As I said, this is our best estimate at this point, given the balances that we have.

Part of what we're dealing with here is end-of-life products.

And it's difficult to predict the exact end-of-life time for some of these systems that we are designed into.

That's fair enough.

Hans, if I can ask you a question about the PA120-- You talked about announcing this at Consumer Electronics.

Give me a sense, heading into kind of the design cycle season here-- do customers have this chip?

Has it been sampled?

Is it out there at customers?

And, if could also-- You mentioned in your prepared remarks that you were working with customers that are the best fit.

If you could give a little more color around that, I'd appreciate it.

Well, we are-- As indicated in my prepared statement, we are working with a number of customers in, call it, the evaluation stage.

At this point, I cannot give you the details on the exact state of these developments.

But we have picked a number of lead customers based on the best fit for our performance and for their markets.

And, obviously, since we have a very high performance device here, we are targeting primarily 120 hertz panel applications.

We are targeting more high end.

And we are targeting the sort of customers where we believe that we-- historically, we've had strong relationships.

So we have a nice slate of customers that we're working with on the PA120.

And we will be in the position to make the announcement at CES on the specifics of it.

Has this chip sampled yet?

And is this kind of the best new product that's coming out of Pixelworks for this design cycle?

Well, it certainly-- It's the latest in terms of our technology developments.

It represents mainly breakthroughs on technology for Pixelworks.

We've been working with customers for some time on-- at various levels, and we've received a lot of positive feedback on the capabilities of this technology.

We're looking forward to be able to announce the exact nature of the developments and who the customers are, certainly at CES.

Okay.

Thanks a lot, gentlemen.

Your next question comes from the line of [Phil Dunes with Geode Capital].

Please proceed.

A couple questions.

Your share repurchase number - what was that in the quarter, please, in dollars?

We have purchased approximately 2.2 million shares.

Okay.

And what was the dollar amount there?

I don't believe we gave that.

But the average is less than $1.20.

Okay, so approximately-- somewhere between $2.2 and $2.4 million?

That's the math, yes.

A little bit higher than that.

Okay.

Yes.

So that leads me to my next question.

Given the fact that-- I mean your balance sheet has negative $20 in net cash on it, and it appears that your about cash flow breakeven at this point.

And you're not growing the business.

Do you think the best use of cash now is to buy shares back or to buy debt back?

How do you look at that?

Well, certainly, the Board of Directors believes that, the stock trading where it was, that it was a good value for the Company to invest the amount that they authorized, which was a fraction of our cash, to repurchase shares.

We have not recently purchased any bonds.

The Company has, in the past, purchased bonds, I think, to the tune of about $10 million worth of face value.

And we will continue to look at opportunities that arise relative to that.

Okay.

What did you purchase the other bonds for?

What were the prices?

Can you tell me that?

I believe that's all in our SEC reports.

I think it was purchased in February of 2006.

Okay.

I just don't have that information in front of me.

I was wondering if you could provide that - on average, the prices, unless you-- in terms of--

I believe the price-- I wasn't here at the time, but I believe the price was about-- between $0.68 and $0.70.

Okay.

So, in the future, given that you are approaching cash flow breakeven-- I'm just trying to get a sense of if you think the capital structure's optimal here, especially given, you know, where the stock price is and the market cap is and sort of all that together.

Well, we certainly are very focused on improving our operating performance and ultimately becoming profitable and generating cash.

Okay.

All right.

Thanks, guys.

(OPERATOR INSTRUCTIONS).

Your next question comes from the line of Jeff Cohen with Southpaw Asset Management.

Please proceed.

I'm not sure if I heard things correctly.

But, when you were talking about the cash burn for the quarter, I didn't hear you mention the stock repurchase.

Did I hear that correctly?

And, if you didn't mention it, does that mean that the purchases occurred after quarter end?

The purchases all occurred after quarter end.

The second question I have is-- The Company's done a good job of, obviously, cutting your operating expenses significantly in the last year.

But we'd all like to see some growth at the Company.

Can you talk a little bit, qualitatively, around how you see the Company positioned to do that, what obstacles there may be, either on the competitive landscape or within the Company's product line, or any other reason that you can identify that stands in the way of the Company actually beginning to show some growth?

Okay.

Let me speak to that.

We have had a number of primary focus components as we've looked at the restructuring of Pixelworks.

One is the-- getting the operating expenses under control to get us towards the goal of profitability.

The other is on product execution and product strategies.

We embarked on a two-pronged approach on the strategy.

One was to secure the projector business, which is the major component of our revenue and will continue to be so in the-- certainly in the short and medium term.

So we've put a lot of effort into securing that revenue base.

So a lot of our new product development effort has actually gone into securing the roadmap, the new products for that market for 2008 and 2009.

Additionally, as it's well established, we are no longer participating in the TV SoC business that we had a lot of hopes for a couple of years back.

What we're doing is we're redirecting our efforts on the TV side into more of the high end piece of that market, and we're developing some of these very high-performance, pixel-processing levels of technology.

It is taking time to, one, get the new products out and then get customers into production.

So there is a fairly long design cycle and production cycle that we've been faced with.

We've been embarked on this effort now for about a year, and we're well into this phase.

And the next-- The next milestone for us now, as we're getting the products to market, is to get customers into production or help customers get into production and then generate revenue.

So we're looking forward to seeing revenue growth from these new initiatives in 2008.

On the backdrop of this, though, is that a portion of our business has obviously been the legacy business that's been tailing off since last year and throughout this year.

So there is a balance here between our legacy business tailing off and the new product and new product revenue.

At this point, I can only tell you that those are the dynamics that's going on.

We're looking at it on a quarter-to-quarter basis, and we're making every effort to make sure we stay in production as long as we can with the existing products and working very hard on getting the new products into customers' hands, get them qualified, and get them into final production and sale for customers.

With respect to the projector business and trying to secure that or stabilize it, do you feel like you've done that, or are there more products that need to be developed?

Or does there need to be more adoption by the customers of your products in order for you to feel like you have stabilized that revenue base?

Well, I certainly believe that we've stabilized it in the current revenue base, and we're looking for new opportunities, since it is an important market for us.

We have excellent customer relationships there, and we're looking to expand that business.

And we are looking at a number of different initiatives to expand from the base that we are in, and, hopefully, we'll have some success with that going into next year as well.

So, certainly, yes.

We are securing the current revenue base and looking for new revenue opportunities in that market.

I guess I'm trying to find some metric by which we can kind of evaluate how everyone's doing here.

There just seems to be a lack of a report card here beyond the ability of the investment community to look at the reduction in OpEx as any indication that there are positive things happening at the Company.

How should we as investors be evaluating the management at Pixelworks beyond just the ability of the management to cut the operating expenses?

And what's the timeframe in which we can do that?

It seems like there's been a lot of patience that's been asked of everyone to allow for a reset on strategy and the development of new products that can be adopted.

But I still really don't have a feeling as to when that's happening or any of the details that really surround those products and the potential that they'll be embraced by end users.

Right.

The tangible results that you can look for are, for one, on the projector side, I think as you can tell by the numbers, we continue to have a stable business there.

And, as I indicated, we are introducing a product, Cranberry 2, in that family.

I announced that we have the-- well underway on the development on our next platform that we call Ruby.

These are two very important initiatives with our projector customers.

You should be able to see the next measurable progress on that is customer design win that we-- As you also know, we have a practice of-- We're not announcing customer design wins unless, one, the customer agrees to it and, typically, a customer is in production.

But, certainly, the product rollout is there, and I think you can start to look for the customer validation early next year.

With respect to our-- call it our TV business or the business that has historically been our TV/video business, that is where we had the reset.

And we are looking forward to being able to make these announcements.

We certainly are giving you sort of a heads-up here that the next milestone with the tangible results is at CES, where we plan a major rollout of new products, as well as customer announcements.

And that, then, should, in turn, translate into more tangible results of revenue next year.

Okay.

Thank you.

(OPERATOR INSTRUCTIONS).

You have a follow-up question from the line of Eric Reubel.

Please proceed.

Just a quick one, if I can, on working capital.

It reversed around this quarter due to the reduction in payables.

How should we be thinking about the working capital going forward?

You've done a lot of good work.

It seems like those are at pretty low levels here.

Does it reverse in Q4?

Do you see any way to generate cash from the working capital?

I certainly-- I think it's possible.

And, at this point, we're sticking with our cash forecasts that I think we've given before I joined.

And I reiterated last time that, by the end of the year, that we-- I think we said that we would have $115 million, and I believe I said the last time that we would do better than that.

We still believe that to be true.

Depending on where we arrive at our range next quarter, we could see cash positive.

From a working capital standpoint, I'm not looking for the kind of swings that we saw in this current quarter.

There were some things that happened within A/P last quarter, and then, through the early part of this quarter, in A/P that I don't expect to happen again.

Inventory is at a level that could produce some short-term gain in cash, but, again, not forecasting anything dramatic in any of those accounts.

Okay.

Thank you.

There are no other questions at this time.

This will conclude our Q&A session.

I'd like to turn the call back over to Mr.

Steven Moore for closing remarks.

I just would like to thank everyone for joining us and wish you all a good evening.

Thank you for your participation in today's conference.

This concludes the presentation.

You may now disconnect.

Good day.