Sanmina Corp (SANM) 2016 Q4 法說會逐字稿

Good afternoon, my name is Mary Emma and I will be your conference operator today. At this time I would like to welcome everyone to the fourth-quarter and FY16 earnings call.

(Operator Instructions)

Thank you. I would now like to turn the call over to Vice President Investor Relations, Paige Bombino, you may begin your conference.

Thank you, Mary Emma. Good afternoon, ladies and gentlemen, and welcome to Sanmina's fourth-quarter of FY16 earnings call. A copy of today's release is available on our website in the investor relations section. You can follow along with our prepared remarks in the slides posted on our website.

Please turn to page 2 the Safe Harbor statement. During this conference call, we may make projections or other forward looking statements regarding the future events or future financial performance of the Company. We caution you that such statements are just projections. The Company's actual results of operation may differ significantly as a result of various factors, including adverse changes to the key markets we target, credit problems experienced by our customers, competition that could cause us to lose sales, consolidation among our customers and suppliers that could adversely affect our business and the other factors set forth in the Company's annual and quarterly reports filed with the Securities and Exchange Commission.

You will note in our press release, and the slides issued today, that we have provided you with statements of operations for the three months and 12 months ended October 1, 2016, on a GAAP basis, as well as certain non-GAAP financial information. A reconciliation between the GAAP and non-GAAP financial information is also provided in the press release and slides posted on the website. In general, our non-GAAP information excludes restructuring costs, acquisition and integration costs, non-cash stock-based compensation expense, amortization expense and certain other infrequent or unusual items to the extent material.

Any comments we make on this call, as they relate to the income statement measures, will be directed at or non-GAAP financial results. Accordingly, unless otherwise stated in this conference call, when we refer to the gross profit, gross margin, operating income, operating margin, taxes, net income and earnings per share, we are referring to our non-GAAP information.

I would now like to turn the call over to Jure Sola, Chairman and Chief Executive Officer.

Thanks, Paige. Good afternoon, ladies and gentlemen, and welcome. Thank you all for being here with us. With me on today's conference call is Bob Eulau, our CFO.

Hi, everyone.

What agenda we have for you that, first Bob will review our financial results for the fourth quarter and FY16. I will follow-up with additional comments about Sanmina's results and future goals. Then Bob and I will open it for Q&A. And now, I would like to turn this call over to Bob. Bob?

Thanks, Jure. Please turn to slide 3. Overall, the fourth quarter was a solid finish to the fiscal year. Revenue of $1.67 billion was almost flat with Q3 but up 1.8% from the fourth quarter last year.

Our gross margin came in at 7.9%, which was up 10 basis points from both the third quarter and the fourth quarter last year. Operating margin at 4.2% was up 50 basis points sequentially and up 40 basis points from Q4 last year. Non-GAAP EPS was $0.72, which was above the high end of our guidance for the quarter. This is based on 77.4 million shares outstanding on a fully diluted basis.

During the quarter we used $28 million to repurchase a total of 1.1 million common shares. Cash flow from operations was $103 million and free cash flow was $68 million. I'll discuss cash in more detail in a few minutes.

Please turn to slide 4. From a GAAP perspective, we reported net income of approximately $101 million, which resulted in earnings per share of $1.30 for the fourth quarter. This was up relative to last quarter by $0.92. The GAAP results included an incremental release our valuation allowance against deferred tax assets.

The tax benefit recorded in this quarter totaled $96.2 million or $1.24 per share versus the benefit of $287 million or $3.45 per share which was recognized in the same quarter last year. With this adjustment, we are now expecting to use all of our US federal net operating losses prior to their expiration.

For the year, revenue finished at $6.481 billion, this was up by $106 million while GAAP net income decreased by $189 million to $188 million, primarily due to a lower tax benefit being recognized this year.

Accordingly, GAAP earnings per share for the year were $2.38 versus $4.41 last year. The restructuring costs for Q4 were $1.2 million and were $2.7 million for FY16. We expect these costs to be low again next quarter. As of the end of the year, we have about $20 million in real estate on the market at list price after having sold around $120 million of property in the last seven years.

My remaining comments will focus on the non-GAAP financials for the fourth quarter and FY16. At $131.6 million, gross profit was up $2.2 million from the prior quarter. Gross margin came in at 7.9%, which was 10 basis points higher than we reported in Q3.

Operating expenses were down $5.2 million for the quarter at $62.3 million. This was mainly driven by lower professional services fees. This represents a 30 basis point improvement in operating expenses as a percent of revenue compared to Q3. At $69.3 million, operating income increased by 12% from the prior quarter, and increased 12.3% from Q4 last year.

Operating margin was 4.2%, which was up 50 basis points from last quarter. Other income and expense at $4.4 million was down $700,000 when compared with last quarter and down $1.5 million or 25% from the fourth quarter last year.

The tax rate for the quarter was 14.1% of free tax income, which in the range we had expected. On a non-GAAP basis we earned $55.7 million in net income or $0.72 per share. Earnings per share were up 14.8% from Q3, and up 25.8% from Q4 last year.

Please turn to slide 5 where we are providing more information on the segments that we report. The integrated manufacturing solutions segment represents printed circuit board assembly and test, final system assembly and test, as well as direct order fulfillment. As you can see from the graph on the left, the IMS segment revenue was essentially flat with last quarter at $1.371 billion.

Our gross margin increased by 50 basis points from Q3 to 7.7%. This is driven by solid execution and a better mix of business.

The second segment for us is components, products, and services. Components include printed circuit board fabrication, backplane assemblies, cable assemblies, enclosures, precision machining and plastic injection molding. Products include computing and storage products, Defense and aerospace products, memory and solid-state drive modules as well as optical and RF modules. Services include design and engineering, as well as logistics and repair services.

In aggregate the revenue for this segment was also basically flat with gross margin down 1.1 percentage points from Q3 to 7.7%. This gross margin decline was driven by lower profitability for products and services partially offset by modest improvement in the component businesses.

On slide 6 we are showing you key non-GAAP P&L metrics. Our gross profit increased 1.7% from last quarter to $132 million. Gross margin at 7.9% was up 10 basis points from last quarter. We've been very consistent with our quarterly gross margin ranging from 7.7% to 8.2% for over three years. Our operating profit increased 12% from last quarter to $69.3 million, this led operating margin of 4.2%.

Please turn to slide 7. Here we are showing these same P&L measures on an annual basis. For FY16, our gross profit was up $17 million to $519 million. Our gross margin was 8% for the full year. Are full year gross margin has been in the range of 7.9% to 8% over the last three years. Our operating profit was $257 million for the year which was up $11 million or 4.5% from FY15.

Operating income was up 37% since FY13. Our operating margin for the year was up 10 basis points for the second straight year and up 80 basis points since FY13, definitely trending in the right direction. We are proud of these results but we believe we can do better as we continue executing on our strategy of driving a better mix of business.

Now I'd like to turn your attention to the balance sheet on slide 8. Our cash and cash equivalents were $398 million at the end of the year. Cash was down $12 million from the previous quarter. Accounts Receivable were down $26 million, reflecting strong cash collections for the quarter. And inventory was up $33 million. We will talk more about inventory in a moment.

The additional release of the valuation allowance resulted in an increase of $49 million in the deferred tax assets over the prior quarter. From a liability standpoint, we had a $10 million increase in accounts payable during the quarter. Our short-term debt was down $55 million from last quarter in spite of using $28 million to repurchase common shares. Specifically we repurchased 1.1 million shares at an average price of $25.76 per share.

From a long-term debt perspective, as of the end of the year, we have $434 million, which has been fairly consistent throughout the year. At the end of the quarter, our growth leverage was approximately 1.3. Overall, our balance sheet and capital structure continue to be in great shape.

Please turn to slide 9 where we will review our balance sheet metrics for the fourth quarter. Cash was down $12 million from Q3 but very consistent with prior quarters. Cash flow from operations for the quarter was very good at $103 million and net capital expenditures for the quarter were $35 million. This led to $68 million in free cash flow.

Inventory dollars were up $33 million from last quarter at $946 million, while inventory turns were at 6.6. Compared to Q4 last year, inventory turns were up 0.4. We made progress this year on inventory management, but we think there is still plenty of opportunity for further improvement in FY17.

In the lower left quadrant we are showing cash cycle days, which combines our cycle time for inventory, accounts receivable and accounts payable. Overall, cash cycle time decreased from 42.6 days last quarter to 42.2 days. This reflects improvement in accounts receivable days sales outstanding and accounts payable days outstanding, partially offset by the increase in inventory days.

On a full-year basis, our cash cycle days improved by 2.4 days from 44.6 days in Q4 last year to 42.2 days in Q4 this year. This reflects improvement in our cash collections and inventory turns.

Finally, pretax return on invested capital improved to 23.7% from the prior quarter. Compared to the fourth quarter last year, pretax ROIC improved 280 basis points. This reflects better operating margin with solid working capital management.

Please turn to slide 10. I want to take a couple minutes to reflect on our longer-term cash generation and what it has allowed us to do over the last five years. FY16 cash flow from operations was excellent at $390 million and our cash generation has been strong for the last five years. In fact, in the last five years our cash flow from operations was outstanding as we generated over $1.4 billion.

During the same five-year period, our free cash flow was around $1 billion. This cash generation is the driving force behind our ability to reduce our long-term debt, invest in capital equipment, repurchase equity and fund small strategic acquisitions.

In the pie chart on the right we are showing how we invested the cash flow from operations over the last five years. As we forecast the next few years, we expect capital expenditures to grow as the business grows. We do not anticipate any material debt reduction but we do anticipate increasing share repurchases and funding small strategic acquisitions.

Please turn to slide 11. With all of the progress that we've made in the last few years reducing our debt, the balance sheet is in excellent condition. This, coupled with a strong cash generation, has given us the opportunity to repurchase common stock over the last three years. In fact, over the last three years we repurchased approximately 16.8 million shares at a total cost of $337 million.

In September, the Board of Directors authorized an incremental $150 million program. This brings the total authorization to $213 million. We expect to continue to generate cash in the coming years and we will remain focused on creating benefit for shareholders with the cash regenerate.

Please turn to slide 12, we will give you a little history on how our book value per share has evolved. As of the end of the fiscal year are book value per share was $22.04. This was up $2.56 since the end of last year. Over the last four years our book value has grown from $11.81 to $22.04 per share.

This was primarily the result of strong cash generation over the last few years. Our stock continues to trade at a low multiple of book value and provides double-digit free cash flow yield.

Please turn to slide 13. I would now like to share with you are guidance for the first quarter of FY17. Our view is that revenue will be in the range of $1.675 billion to $1.725 billion. We expect that gross margin will be in the range of 7.6% to 8%. Operating expense should be $65 million to $67 million. This leads to an operating margin in the range of 3.7% to 4.1%.

We expect that other income and expense will be in the range of $4.5 million to $5.5 million. Our tax rate should be around 15% and we expect our fully diluted share count to be around 77.5 million shares plus or minus 0.5 million shares. When you consider all this guidance, we believe that you will end up with earnings per share in the range of $0.65 to $0.70.

Finally, for your cash flow modeling we expect that capital expenditures will be around $35 million, while depreciation and amortization will be around $30 million. Overall, we are very pleased with FY16. We executed consistently in FY16 and our diversification positions us well for the future.

We grew revenue by 2% but we were able to grow earnings-per-share by 15% and generate excellent cash flow. Growth continues to be our number one objective but it is imperative that we grow with the right kind of business. At this point I will turn the discussion back over to Jure for more comments on our target markets in our business strategy.

Thanks, Bob. Ladies and gentlemen, I would like to add a few more comments about our business environment for the fourth quarter and FY16. And most importantly we will talk about the first quarter and the rest of the FY17.

So let me again recap for fourth-quarter just add a few more comments about what Bob said, I'll put it my way. I believe we delivered solid financial results for the fourth quarter.

Good improvements in operating margin of 4.2% and EPS of $0.72. It is the best EPS earnings in the last 15 years, so very proud of that. Also, we continue to generate strong cash flow from operations as Bob just talked about.

Operationally, we did solid operational execution in spite of flat revenue. Revenue was softer than forecasted for the quarter driven by new project delays and softer demand in the mobile networks and embedded computing and storage. So overall, good quarter. We also had a fair amount of new projects in this quarter which was good.

For FY16 we delivered solid financial and consistent results. We improved margins, EPS grew 15% year-over-year, we delivered strong operating cash flow of $390 million and free cash flow of $274 million. It's part of our key strategy that we focus on that every day.

Also during the year, we diversified our customer base and once some very important new programs and new customers. This helped us deliver the best financial results in years. And again, very important that we position Sanmina for a better future.

Now, please turn to slide 15. I'd like to give you some highlights now for the breakup of our revenue by end markets. Our top ten customers were 51.8% of our revenue, book-to-bill for the quarter was positive [102 to 1]. We added new projects during the quarter and as we continue to diversify revenue by end markets and our customers.

The most important is that we are improving quality of our customer base as we are putting a lot of focus here. As you can see Industrial, Medical and Defense now is our largest segment, 46% in the quarter. That was nicely up 4.3%, driven by strong demand and Industrial, Defense and Medical. The only segment that was week there was oil and gas and that continues to be pretty week.

For the year also Industrial/Medical was very strong that was up 9.7% for the year. Communication network as you can see is 37% of our revenue, nicely up 1.5%. I will say overall good demand driven by networking and optical products but we did see some push out during the quarter now [mobile] networks basically broadband product. For the year that was down 2.8%.

Embedded Computing and Storage, 17% of our revenue for the quarter. That was down 13%. We had a weak demand in our Embedded Computing, we also had some push outs in our Storage, some are key programs. Automotive, actually in the segment, did pretty well. For the year, this segment is down 5.2%.

Please turn to slide 16. Now let me talk to you about the revenue outlook by market segments for the first quarter of 2017. For the first quarter we still see modest growth for Industrial, Medical and Defense. Today we are forecasting flat. We see Industrial to be still strong, we expect a modest growth to continue.

Medical we see some push outs because of demand during the quarter. For Defense we see slightly up driven mainly by new projects. Good thing is in this segment we still have a very strong customer base and a lot of good opportunities for Sanmina to continue to expand and grow in this segment.

For Communication Network we are forecasting to be up for the first quarter. We are seeing some improvements in demand driven by networking and optical products. We also have some new customers especially in the IT routing products for data centers.

Mobile Network broadband we expect to see some improvements during the quarter. And we also are starting to see a fair amount of new projects in this communication network segment. For embedded computing and storage, we expect computing and storage to see a better demand and a quarter as we are working on some good new projects with some upside potential. For automotive we continue to see stable demand and as we are working also some new opportunities during the quarter.

So now let me give you a few more comments about the business environment for FY17. Global economy, as you know, is very hard to predict at this time. But what we see today is that the Business environment is stable and it's growing slowly. Overall, our customer base is still positive about the future.

Based on our visibility and forecast, we are confident that FY17 will be another solid year for Sanmina. Pipeline and new opportunities is good and these new programs are starting to ramp up.

But let me give you some more information about the pipeline of these new opportunities that we see. I can tell you that the pipeline is stronger for FY17 than what we saw earlier in 2016. Sanmina reports and two business groups. Components, Products and Services and Integrated Manufacturing Solutions. Let me talk to about each of these groups.

Components Products and Services, as you can tell FY16 was a flat year for us. Also margins were down about 1%. This was mainly driven by oil and gas, very weak demand during the year. Mobil Network with a soft demand for our mechanical products, for our circuit board products, and backplane products.

We also sought softer demand in Defense and Aerospace markets for our printed circuit board business. Also, we did a lot of new qualifications for components and products during the year. For Industrial, Medical, Defense, Aerospace, [IP] Optical, network markets.

This is good, except we spend a lot of money investing in these qualifications. We also had some delays of the new storage products for some key projects that we expected to ship during the year, got pushed out into FY17. So on a good side 2017 overall we expect to see nice growth improvements from these new qualified projects that I just talked about in Components, Products and Services.

We also see Defense and Aerospace, what we call SCI group, good forecast and we see a potential for upside from new projects. Also from our internal new product releases for our storage systems, optical modules, flash memory modules, we see upside. We also see new a growth that is planned in our services group, we seeing good potential there. And for oil and gas we expect to see some improvements.

We are well positioned as this market improves. The bottom line is that the forecast looks a lot better for FY17 for Components, Products and Services.

Now, let me give you a few more comments on integrated manufacturing solutions group. We have a good pipeline of the business and we expect to continue to improve in this group. This is all driven by existing customer base, which is very strong, and good new opportunities for this existing customer base.

We also developed, and we should see some upside from our new projects from our new customers. And we continue to work for additional opportunities that should help us drive the growth in 2017. So, overall as Bob said earlier the key focus for us, the quality of the business that we book, it might be sustainable and profitable for many years to come.

Let me give you a few more comments on Sanmina's long-term outlook. I am personally excited and very confident about Sanmina's future. Sanmina is in a great shape, the best shape we've been for a long, long time. I can tell you that we are building a great company.

Sanmina has a strong balance sheet and can adjust quickly to any economic environment. But we still see and we are optimistic that the global economy will continue to improve. We have some solid structure in place, strong Management team, we offer leading technologies to our customers and capabilities.

I can tell you that our strategy is working. We delivered the right technology solutions for mission-critical markets, we are continually targeting high market margin businesses and we continue to invest in talent and the right technology and services for the future.

We have a lot of leverage in Sanmina's business model. We have strong momentum in our key markets and our goal is to deliver profitable growth and maximize shareholder value for our investors in whatever we do.

Now, please turn to slide 17. So in summary for the fourth quarter, we believe we delivered a solid operating margin improvement, 50 basis points up quarter to quarter and 40 basis points year-over-year. EPS exceeded expectations up 15% quarter over quarter and 26% year-over-year. We continue to deliver strong cash flow.

For FY16, as Bob mentioned earlier, we are pleased with our performance. EPS expanded 15% year-over-year, continues to deliver solid cash flow from operations, $390 million this year and most importantly free cash flow of $274 million. In 2016, we diversified the customer base, the best customer base we had forever. And we want some new programs and positioning Sanmina for the future.

For first quarter, we see stable demand driven by new projects and for the year 2017, as I mentioned, we are optimistic that FY17 will be another solid year for Sanmina Corporation.

Ladies and gentlemen, now I would like to thank you for all your time you spent with us today. Operator, we are now ready to open the lines for questions and answers.

(Operator Instructions)

Steven Fox, Cross Research.

Thanks, good afternoon. I was wondering if (multiple speakers), first off, you could just dig into the gross margins a little bit? Specifically, you said on the IMS side that mix helped the margins go up quarter over quarter. And then on the CPS side, you mentioned products and services hurt margins, while components helped it. If you could just be more specific on those three topic areas and what else is going on there?

Steve, this is Bob. So on the IMS side, we're obviously very pleased with the mix of business, and I think it's what we've seen at times earlier in the year. If you remember in Q2, our gross margin was also 7.7%.

So, it's really continuing to do well in the businesses that we've invested in for a number of years. Our strength in optical has really been important, and then the diversification into industrial has also been helpful for us.

So at this point we are very, very diversified, and so it's hard to point to any one area that drove it. But we think we are executing pretty well across the board on the IMS side.

And then -- CPS?

On the CPS side, it's a little bit of a different story this quarter. We were disappointed in terms of product and services. We had generally been pretty consistent in both of those areas throughout the year. As Jure said, we had some softness, we had a few execution issues and so we didn't do as well in those areas, which usually are pretty stable.

And then we actually did a little bit better on the component side, so we think we're beginning to turn the corner there. We've been hurt pretty badly, as we've talked about throughout the year, in terms of oil and gas, and in the wireless base station business. We think that we're hopefully through the worst of that now and we'll start to see progress on the component side.

Is there anything on the product and services that you could call out specifically that hurt those margins?

I don't want to get too specific, but I can tell you on the services side we believe it's a one-time event and we think that we'll be able to recover pretty rapidly there. On the product side, it's really a matter of continuing to drive the adoption of our product offerings.

Okay. And then just as a follow-up on the -- you mentioned the storage pushouts a couple of times. Was that related to customer product or your own internal development of your storage arrays?

Well, it was really related to our Newisys product line.

If I can add to that, Steve, as I mentioned in our prepared statement, we have some delayed, few key projects for our storage product. We believe those will be pushed in 2017, but it was really more driven by our customer requirement and some change in specifications. But we are confident that these projects will be starting to ship soon.

Great, that's very helpful. Thank you.

Thanks, Steve.

Thanks, Steve.

Herve Francois, B. Riley.

Hi, good afternoon, guys.

Hi, Herve.

Going back real quick to the component products and services, and, Bob, you've been talking about this for several quarters. Do you see any improvement in that, in the December quarter, your fiscal first quarter? Or is that still going to be hampered by -- because I know that's vertically integrated for you guys. So that's still hampered by the softness that you're seeing in the wireless base stations, and oil and gas?

Yes, just to recap again, we did better this quarter on the component side, and we think that we will make even more progress next quarter. That's certainly our internal plan. Products is really going to be a question of market adoption and how our products do in the marketplace, and we obviously are optimistic that we'll see some positive movement there. From a services standpoint, as I mentioned, it's really a one-time event that we think will turn around pretty rapidly there.

Got it. And then when you look at the mix of the Business for what you're expecting in your fiscal first quarter, this December quarter, are you expecting your cash flow and your cash conversion cycle to be within the same neighborhood as you just reported for your September quarter?

Yes, it turns out the December quarter, just because we have some annual payments have to be made, we have some interest payments that have to be made, it tends to be a little more challenging from a cash standpoint. But we still expect to generate solid cash in the first quarter and we expect to generate solid cash for the year.

Got it. Thanks very much.

Thank you.

Mitch Steves, RBC Capital Markets.

Hello, Mitch.

Hi, Mitch.

Hey, guys. I just had a quick question. I guess I'm going to focus more on the communication segment. So there's basically two pieces that I heard mention there, a broadband pushout and then you said optical pushout. Can you talk about when you guys expect that to come back, both and then separately?

I don't think I said it about optical pushout. Well, two things: First of all, my prepared statement in regards to the markets, we had a pushout in mobile network, mainly broadband. But our optical actually performed pretty well, and we expect it to perform pretty well in this coming quarter.

Got it. Okay. And then second, in getting back to the gross margins, just making sure I heard this correctly. It's 7.7% to 7.9% next quarter, is that correct? And that should work its way up to 8% potentially for next year?

I think we guided 7.6% to 8% for Q1.

Got it.

But, Mitch, if I can add to that, as we improve in our components, products and services business -- and as Bob mentioned, our IMS business is pretty solid, we have some really good programs -- we expect that will drive our -- to improve our margin. That's the key to us. As long as the economy is cooperating, which we think it will, we expect to make nice improvements in 2017.

We clearly have a lot of operating leverage in components, products and services, and unfortunately it's been a pretty challenging year with the mix of business there, but we believe things will get better in 2017.

Perfect. Thank you.

Thanks.

(Operator Instructions)

Jim Suva, Citi.

Thank you very much. This past year you made an asset transfer or an acquisition, however you want to say it, [wind], that allowed one of your customers, I believe it was Motorola Solutions, to shift production and plants to Sanmina, which I assume took a long time of negotiations and long-term talking. Jure, in your outlook for next year, 2017, you've mentioned a lot of strength and positives and such. Do you foresee any additional actions or transactions like that happening as we look ahead for 2017?

The key to our strategy, Jim, as we've been talking in the last few years, is that quality of the growth. Something that is sustainable, quality of the customer, that we can be -- as long as we are executing, we have a long partnership that we can build on.

And if you really look at the deals that we did with a few key customers in the last few years, and you mentioned MSI, it's a customer that, yes, it takes time to do this transaction, especially when you have to do it right and it's a commitment long term. So those are great customers. We will continue to add customers like that, but they have to be very strategic and they have to be a long-term, good customer that will fit in our strategy.

But we are excited what's in front of us. We had some great wins last year and those should help us deliver more revenue and we're hoping better margins. So we are excited. There is a lot of work left, but we are continuing to invest in different technologies that will drive the growth and expand our relationships with some of the great customers out there.

So we're really excited. I think 2016 was a good year. I think position us for a better 2017.

Okay. Then my follow-up, probably for Bob. This quarter, the OpEx came in lower and I believe you mentioned lower-than-expected professional services. I assume that's internal professional services, not a cost that are unrelated to revenues at all, maybe it's consultants or something like that. Is that the case? And if so, are these just delayed a couple of quarters or are we looking at a new expense rate that is at these levels and you just are not going to post it? Thank you.

A couple questions in there. First of all, from a professional services standpoint, it is outside service providers, so it's not internal resources. We use external folks to help us in a number of areas. So it's probably going to recover back to that range of $65 million to $67 million this quarter that we said for operating expense. And I would see the outside professional services being at a consistent level with what we've typically seen before. It was more of a one-time event.

Okay. Thank you for the details. Much appreciated.

Sure.

Thanks, Jim. Operator, we have time for one more question to anybody who wants to ask.

(Operator Instructions)

Okay. Ladies and gentlemen, first of all, we want to again thank you for your time you spent with us. Hopefully we answered most of your questions. I think it was a good quarter, most importantly is what we do next quarter, and we are excited what's in front of us. So please stay in touch and looking forward to talking to you 90 days from now.

Thanks, everyone, have a good evening.

Bye bye.

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