Silicon Laboratories Inc (SLAB) 2021 Q2 法說會逐字稿

Hello. My name is Jason, and I'll be your conference operator today. Welcome to Silicon Labs' Second Quarter Fiscal 2021 Earnings Call. (Operator Instructions) Please note, this event is being recorded.

I'd now like to turn the conference over to Austin Dean, Silicon Labs Investor Relations Manager. Austin, please go ahead.

Thank you, Jason. We are now recording this meeting, and a replay will be available for 4 weeks on the Investor Relations section of website at silab.com/investors.

Joining me today are Silicon Labs' Chief Executive Officer, Tyson Tuttle; Matt Johnson, President; and John Hollister, Chief Financial Officer. They will discuss our second quarter's financial performance and review recent business activities. This information, along with accompanying financial tables and the earnings press release, is available on our website.

We will take questions after our prepared comments, and our comments today will include forward-looking statements, subject to risks and uncertainties. We base these forward-looking statements on information available to us as of the date of this conference call and assume no obligation to update these statements in the future. We encourage you to review our SEC filings, which identify important risk factors that could cause actual results to differ materially from those contained in any forward-looking statements.

Additionally, during our call today, we will refer to certain non-GAAP financial information. A reconciliation of our GAAP to non-GAAP results is included in the company's earnings press release and in the Investor Relations section of the Silicon Labs' website.

I would now like to turn the call over to Silicon Labs' Chief Financial Officer, John Hollister.

Thank you, Austin. Earlier this week, Silicon Labs accomplished a major milestone, closing the divestiture of our Infrastructure and Automotive business to Skyworks Solutions for $2.75 billion in an all-cash transaction, the proceeds of which have been fully funded. We expect the net proceeds, after taxes and fees, to be approximately $2.3 billion. We are evaluating the best ways to return the majority of this capital to our shareholders while preserving an appropriate level of liquidity and financial flexibility for the business.

The completion of this strategic transaction solidifies Silicon Labs as a pure-play leader in secure, intelligent wireless connectivity for the IoT. Our team is now hyper-focused on helping customers use our integrated hardware and software development platform and award-winning security technology to create connected devices for a wide range of industrial, commercial, home, health and safety applications.

We are also working diligently to enhance production. Like the entire semiconductor industry, our supply chain conditions are tight. Yet even in this unprecedented operational environment, I'm pleased to share that Silicon Labs ended the second quarter on a strong note.

Revenue on a total company basis exceeded the top end of our guidance range at $278 million. IoT revenue ended at a new record high of $169 million, up 7% sequentially and 48% year-over-year. We also experienced another strong quarter of bookings, exceeding $400 million for the total company, and bringing our total for the last 9 months to more than $1 billion. These successes in large part are due to strong demand for our wireless connectivity solutions.

Our wireless product portfolio, which is unparalleled in breadth and depth, continues to see surging momentum, posting greater than 60% year-on-year growth in the second quarter revenue. We are also seeing strong top line organic growth across all supported wireless protocols, including Bluetooth, Thread, Zigbee, proprietary and Z-Wave. Additionally, we are rapidly growing our Wi-Fi business as we have fully integrated the technology and teams from last year's Redpine Signals acquisition.

The diversity of our business continues to factor into our success beyond just the number of wireless protocols we support. This quarter, for our continuing operations, we sold solutions to more than 20,000 customers across thousands of different applications. Our top 10 customers represented only 20% of our business. Design win lifetime revenue achievement grew 25% year-on-year, reaching an all-time high.

I will now break out the business results in greater detail. Moving forward, Silicon Labs will report revenue from the divested business as discontinued operations and from IoT as continuing operations. Non-GAAP gross margin for the IoT business was approximately 57%, in line with our model. During the June quarter, we implemented price increases in response to higher costs and expedite charges because of the current supply chain situation.

We are working collaboratively with our customer base on pricing to ensure that while we recover the impact of cost increases, we are at the same time preserving our relationships and superior track record of customer service. Our non-GAAP gross margin continues to represent a premium relative to competitors as our customers recognize our differentiation, innovation and value in multiple connectivity technologies, security and system design.

Operating expenses for continuing operations were $85 million in Q2 with R&D expenses at $51 million and SG&A expenses at $34 million. Total operating expenses increased about $1 million in the quarter due to higher variable compensation based on upside business performance.

Non-GAAP operating income on our continuing operations was $11 million or 6.6% of revenue for the quarter. On the now-divested I&A business, Q2 was also strong, resulting in $41 million in non-GAAP after-tax income from discontinued operations.

Overall, for Silicon Labs, encompassing both business units, we have the following quarterly results. Non-GAAP effective tax rate was 10.2% and non-GAAP earnings were $1.05 per share, which was above our guidance range.

On a GAAP basis, operating expenses were $133 million, stock compensation expense was $14 million and amortization of intangible assets was $12 million. We had a GAAP operating loss of $11 million from continuing operations and $38 million in GAAP after-tax income from discontinued operations. GAAP net income was $20 million or $0.44 per share, which was also above our guidance range.

Let's now turn to the balance sheet. We ended the quarter with $622 million in cash and investments. Driven by solid performance and strong collections, the operating cash flow from continuing and discontinued operations year-to-date was $78 million. Accounts receivable was $100 million with DSO of 32 days, which is standard. And we maintain a $400 million credit facility with no outstanding balance. And our convertible notes, which have a par value of $535 million and mature in 2025, remain with our continuing operations. Finally, we have no known bad debt issues.

Diving deeper into just IoT. We ended the quarter at $52 million in inventory, which represents inventory turns of 5.6x, a number above our target. As we enable more supply, we expect turns to revert to a level of approximately 3 to 4x. For our continuing operations, the mix of distribution business was 81%. And distribution inventory increased 4 days quarter-over-quarter to 50 days, which is typical. We expect channel partners to continue to play a strong role in our growth as a wireless leader.

Now I'll cover guidance for Q3 2021. For continuing operations, we expect the following: IoT revenue up from Q2 to a range of $170 million to $180 million; non-GAAP gross margins to be in the range of 57% to 58%; non-GAAP operating expenses to increase to about $93 million, aligned to our goals of expanding our IoT platform, portfolio and team. We also expect a non-GAAP effective tax rate of about 14% and total non-GAAP earnings in the range of $0.10 to $0.20 per share.

On a GAAP basis from continuing operations, we expect gross margin to be in the range of 57% to 57.5%, operating expenses to be approximately $116 million, our GAAP effective tax rate to be about negative 11% and GAAP earnings per share to be in the range of a $0.56 to $0.46 loss. Finally, we expect to record a onetime gain from the divestiture of approximately $2.1 billion, which will be reported in discontinued operations.

I now hand back to CEO, Tyson Tuttle, to provide greater detail on the IoT business.

Thanks, John. To echo John's comments, I'm thrilled to report record revenue in Q2, a continued track record of sustainable growth, a large opportunity of pipeline and strong demand for our wireless technology.

I also want to recognize and thank the dedicated team at both Silicon Labs and Skyworks Solutions for executing the major transaction. The Infrastructure and Automotive business will remain a key part of Silicon Labs' history and success story. Additionally, since I spent 24 years working with that group, it will always be a personal source of pride. We wish our former colleagues continued success at Skyworks.

Moving forward, Silicon Labs will continue to capitalize on the large, growing and diverse IoT market. By centralizing efforts, we aim to accelerate market leadership, optimize execution and maximize future growth opportunities, and we are positioned to win globally. To highlight, I want to share some of our recent successes beyond our financials.

First, we are operating successfully in the current era of unprecedented demand for semiconductors. We understand the importance of a resilient global supply chain and are working around the clock with our customers and partners. This collaborative approach ensures we are maximizing production and fairly allocating products. Additionally, we are carefully evaluating long-term options to expand capacity into 2022 and beyond.

The serious shortage of supply across the industry and increased foundry prices are not impacting our strategic road map or pace of innovation. We keep driving the IoT market forward with our leadership position in many well-known ecosystems and wireless protocol alliances. We are at the foundational level of many standards, including Amazon Sidewalk, which extends the power of the IoT beyond the home without the need for cellular technology; and Wi-SUN, which improves developers' ability to create scalable, robust and safer industrial and smart city applications.

We are also proud of our involvement in Matter, formerly known as Project Connected Home over IP, or CHIP. Silicon Labs engineers contributed more than 20% of the source code for Matter. And our new solutions leverage Matter to help IoT product developers create secure, interoperable devices and networks. This industry-unifying standard can be used for a wide range of applications, and our new technology also makes it easier for consumers to use their devices with all major smart home ecosystems, including Amazon Alexa, Apple HomeKit and Google Home.

In Q2, we also announced a collaboration with fellow IoT leader Wirepas on Wirepas Massive, a powerful mesh networking technology solution which helps companies with asset tracking and building automation. Wirepas chose Silicon Labs for our integrated hardware and software platform, ultra-low-power chips and affordable solutions.

This quarter, we remain steadfast in our dedication to environmental sustainability and our passion for supporting communities globally. We became the first corporation to join the International Institute of Information Technology Hyderabad's new Smart City Living Lab, which focuses R&D on devices that improve safety, sustainability and more.

We also supported our employees, families and neighbors in India who continue to battle COVID-19. We funded the creation of a new ICU hospital, donated to United Way India and made facilities changes to our new wireless lab in Hyderabad to make it easier for employees to adhere to social distancing guidelines.

Examples like these serve as strong proof points that we are living our mission to build a more connected world. Customers are using our technology to build secure wireless devices that improve lives, transform industries and grow economies. Working together, we are measurably solving tough global challenges in energy, health, Infrastructure, production and more.

These results have personally inspired me. I'm an engineer at heart. I find nothing more satisfying than working with others to find innovative solutions to tough problems, and that's exactly what we've been doing at Silicon Labs for nearly 25 years. As pioneers of wireless innovation, we've simplified the complexity of implementing wireless technology, from silicon to cloud, so developers can bring the power of secure intelligent connectivity to the world.

With the major divestiture of our I&A business complete, the vision, strategy and road map for the IoT set and our current outstanding financial results reported, I decided and got Board approval to officially announce my retirement from Silicon Labs effective January 1, 2022. Silicon Labs' President, Matt Johnson, who has been managing the IoT business since 2018, will become our next Chief Executive Officer at that time.

Matt and I have worked closely together to set our company's purpose and promise; create the strategy for a leading wireless platform and product portfolio; and most importantly, reinforce our belief that people belong at the center of everything we do. I'm confident Matt will continue to demonstrate our values, the foremost of which is do the right thing for all stakeholders. Under Matt's leadership, Silicon Labs will continue its proven track record of sustainable growth, meet its commitments and conduct the business with integrity.

For the remainder of the year, I will work to facilitate a smooth transition, both internally and externally. After my service is complete, I will continue to support Silicon Labs as a member of the Technical Advisory Board.

Matt will be joining us on the Q&A and also for the Q3 earnings call. Before we take questions, I'd like to give Matt a chance to say a few words. Matt?

Thank you, Tyson. I'm incredibly excited to lead Silicon Labs as we embark on taking the company to the next level. We have great talent and technology, all now focused on the IoT wireless space that is rapidly growing. Our position to accelerate our impact has never been greater. I'm looking forward to sharing more with you on our Q3 update.

I will now turn the call back over to Austin.

Thank you, Matt. Thank you for joining Silicon Labs' Q2 2021 financial and business update. I recognize we've covered a lot of information, so I will now open the call for questions. (Operator Instructions) Operator?

(Operator Instructions) Our first question comes from Gary Mobley from Wells Fargo Securities.

Matt, Tyson, let me extend my congratulations on both of your milestones. I want to start out by asking about your plans for the net proceeds. Specifically, I think the $2 billion you had originally outlined for either a onetime dividend, share buyback or other uses. I'm hoping to get your current view on the options.

And as well, you mentioned -- and this is linked to the use of cash. You mentioned that you're looking at different options to expand capacity. Might you use some of that cash for things like prepurchase of wafers to secure that?

Gary, this is John. Yes, really, no change in terms of the capital deployment. We are expecting to deploy roughly $2 billion of the cash that's in the company now, which around is $3.3 billion currently, ahead of final payments for taxes and fees, et cetera, associated with the deal.

No change in our view of how that might come about, either through a share repurchase program, various techniques to accomplish that, either through open market repurchases, advanced share repurchases, a tender offer. These are all possibilities. A special dividend of some amount is also a possibility. And the Board and the management team are continuing to evaluate that in light of market conditions and other factors to determine how to proceed there. So no change in the message this morning. And also nothing specific to announce this morning on that.

Regarding the production capacity. We are looking at various options to enhance our production capacity into next year. This could involve entering into some longer-term agreements with suppliers, but nothing to announce specifically this morning. But we are looking at various options there.

My follow-up, I wanted to ask a question about your IoT mix and your long-term gross margin guidance, which I believe was 56% to 58%. Your guidance for the third quarter implies that you're at the high end of that long-term guidance range, and that seems a bit counterintuitive, given that your -- the radio portion of your IoT seems to be the growth engine right now. And I know there's mix within that mix, but maybe if you could just walk us through. Basically, what I'm asking is, is it sustainable? Is that third quarter gross margin sustainable given sort of the mix dynamics?

Yes. Gary, so we've taken steps this year to address the cost increase situation that we've been facing over the last 6 to 9 months and have implemented a number of price increase programs with our customers. As we indicated in our prepared comments, we are working collaboratively with customers to ease that in, so to speak, and ensure that it's not a shock to them. And that's working well. We're collaboratively working with the customers on that point. That's definitely helping gross margin here, short term.

On the sustainability. We continue to view the longer-term model here as likely indicating some pressure out in time. It's hard to predict exactly how that's going to play out. But we haven't changed our long-term model from what we talked to you guys about when we announced the deal.

Next question comes from Blayne Curtis from Barclays.

Tyson, congrats. I just wanted to revisit the -- your internal inventory levels, you said, needs to come up a great deal. I'm also kind of just looking at your revenue, and I think you said wireless was up 60% year-over-year, so I guess the nonwireless, probably down. So I'm just kind of trying to figure out how you're managing that. Are you prioritizing certain products?

And then maybe just a peak into the downstream supply chain, what are your lead times? And clearly, you can't buy a lot of these wireless products. So I'm just trying to understand, when do you think you can get caught back up?

Yes. Blayne, it is a tight supply chain situation out there. And we're working very hard every day to secure more capacity. And we're pleased actually with how we're able to do that and show some growth in the business here with strong year-on-year growth, both for the second quarter results as well as the third quarter guide.

The inventory level, ideally, we would elevate that now that we're in the pure-play mode. And a couple of things to keep in mind about the IoT business. One is it's very broad-based. So we're not talking about application-specific products. These products are widely applicable for numerous types of applications. And that in and of itself reduces the level of inventory risk and also calls for a higher level of inventory across a broad range of 10s of thousands of customers. It's a bit more challenging to predict exactly what is going to be ordered versus having a very isolated vertical-type business with just a handful of customers.

So we look forward to increasing the inventory levels as we can out in time. It's going to take some time. It's likely several quarters for us to get our inventories back to where we want them to be.

And then I just want to ask you, at the time of the divestiture, you gave an annual guide. Didn't know if you want to revisit that, or any thoughts, on December.

We're moving back into the mode of 1 quarter at a time on our guidance. So no real update on the annual view at this point.

The next question comes from Matt Ramsay from Cowen.

As folks have said, congrats, Matt. Congrats, Tyson. I guess first question, and you guys laid out this new model when you announced the divestiture, and with the third quarter guidance, it's sort of out there officially, of where the scale of the business and the margin structure is.

I guess my question, and I guess this is for Tyson and for Matt, as we go forward is, the confidence in continuing along this 20% growth plan that you have outlined in IoT while keeping operating expenses relatively flat to generate the leverage that you've laid out as we continue to grow the business.

I guess that would be my question is, is do we need to invest more to generate that type of growth? Or are you really confident in where the investment levels are as we see them?

Sure, Matt. This is Matt. I'll answer the first part of that. So our commitment to the long-term 20% CAGR is strong, and we see a pretty good path to achieving that. If you look at our current momentum, we are clearly supply constrained and not demand constrained in this environment and this year and next year. If you look at design win pipeline, it clearly supports continuing this model going forward, so we're encouraged by that. So current priority is to continue to secure more supply to support that.

In terms of short term, we mentioned that one of the benefits of the divestiture is allowing us to accelerate investment in some key areas to capture as much of this opportunity as we can. Without exaggeration, we basically have unlimited demand right now and a limited opportunity, and we're working to capture that.

But long term, our commitment to the model is absolute. So the long term 20% revenue CAGR and the profitability progression each year, we believe that that's fundamental to this go-forward model, and that's what we're committed to. So we see a path to achieving it, and that's why we're doing this.

Great. And just, John, you mentioned a few times about how tight things are across the supply chain. As you guys invest for more supply, how much of unlocking, I don't know, the growth potential are you seeing in the next 3, 4 quarters that's directly in your control? Versus all of your peer companies that sell components into the same solutions are supply constrained as well. So I don't know how are you guys sort of balancing and thinking about that over the next few quarters.

Matt, we're really just driving to it. And we see greater constraints in foundry capacity. Our OSAT situation is not as constrained at this point, and we'll continue to monitor that as the foundry capacity increases. But that is exactly our task, to keep working that and ensuring that we have adequate wafer supply to drive our growth. And that's what we're laser-focused on doing here.

The next question comes from Raji Gill from Needham & Company.

Yes. And congrats, Tyson and Matt as well. Just to go back on the full year guidance for IoT, I know, John, you had mentioned that you're not giving an update on the 2021 guidance for IoT. But it looks like it's, given the guidance for third quarter, that it could exceed the midpoint of the guidance unless there's a pretty big sequential decline in Q4, to hit the midpoint, which would be, I think, different from seasonality patterns, if there were to be a decline of that magnitude. So I just want to get an update of kind of what's the thought process of the full year for IoT? And how should we think about that?

Yes. Raji, I think you're thinking about it correctly. And we're not providing guidance of a decline in the fourth quarter. Demand is very strong. We continue to work the supply. We certainly have the opportunity to have a consistent Q4 performance. So we're not communicating this morning that we anticipated a decline in the fourth quarter.

Okay. Good to know. And in terms of the wafer capacity constraints, I think, Tyson, in the last earnings call or the earnings call before, had talked about that they were -- you guys were 40% to 50% overbooked at TSMC for calendar '21. And production capacity is limited on the wafer side, although the back-end capacity seems to be efficient. Your recent updated conversations with TSMC, give us a sense of how those conversations are trending. How do we look at capacity in calendar 2022?

Yes. Raji, this is Tyson. And the comment on TSMC was that they are 40% to 50% overbooked. They are completely jammed. We're working allocations for 2022 and have received increased allocations from TSMC and are looking also at other options that are under our control to be able to ramp up additional capacity that would ramp in 2022 to support our growth.

So there is certainly constraints. There's growth from here, certainly with our existing suppliers, bringing on new supply and then being able to scale the back end efficiently. There's a lot of work to do here, but certainly have line of sight to that long-term model and certainly being able to get out of the woods here in 2022.

I think everyone is hoping that the global situation lightens up from -- we don't see any cracks in the armor yet in terms of the tightness that we're seeing. And certainly, as new fab capacity ramps towards the end of next year, I think that, that should get us to the point where we can get back to serving the demand.

And if I could just squeeze one more in terms of the IoT. You had mentioned broad-based growth across wireless, but kind of specific focus on some traction on Wi-Fi. Any update there in terms of your Wi-Fi efforts?

Yes. This is Matt. So on the Wi-Fi piece, it's been over a year since we completed the acquisition of Redpine. We're very happy with the way that's gone. We've integrated the team. We've seen good market response to the technology. And now we're integrating that capability into our ongoing road map.

It came off of a small base, but we're actually seeing the growth of those Wi-Fi products above the average of our other wireless technologies. So we're seeing good uptake and momentum there. And the fundamental thesis or strategic backdrop for why we did this hasn't changed. If anything, we've seen in the last year or 2, it's accelerated. So we're happy with where it's at, and we see continuing momentum there.

The next question comes from Srini Pajjuri from SMBC Nikko Securities.

Let me echo my congrats as well for Tyson and Matt. A couple of questions. First, John, can we talk about the channel inventory? I think you said it went up 4 days. Could you put that into perspective? And also, are you comfortable where the inventory is? Or do you plan to kind of try to build additional level of inventory as we head into the second half of the year?

Yes. Srini, I mean, I -- the main thing to say about this is our operations team has done a great job executing more supply, getting the shipments out and ensuring that we have adequate channel inventory. Inventory is falling, but we are pleased that we're able to elevate our unit shipments on a sequential basis in the second quarter and anticipate doing that again in the third quarter. So that is a relatively normal level of inventory. Ideally, yes, we would like to increase it some. But overall, that is a relatively normal level.

Got it. And then just a follow-up on gross margins, John. So your longer-term model is for mid-50%. I'm just trying to understand how we get to mid-50% from the current levels. Obviously, you said there was some benefit in the quarter. But as we go through the next few quarters or the next couple of years, should we assume that this is going to be a gradual decline? Or I mean, do you even -- I mean, should we even expect a decline? Or do you think the mix itself will take care of itself? Or are there any other factors that we should be aware of as we model gross margins?

Yes. Srini, it's -- of course, it's a hard thing to predict. But over time, as this market grows and evolves, competition is present in the market, and we're allowing for the possibility of some slight declines over time as we scale the business and building of our model to comprehend the possibility of that happening. It may not happen, but we're acknowledging that it's possible that it might happen.

The next question comes from Tore Svanberg from Stifel.

Yes. Congratulations to Matt and Tyson. Tyson, we'll miss you a lot. And before we let you off the hook, I was hoping you could just talk a little bit more again about the long-term vision in IoT. obviously, you've become a semiconductor leader. I know you've invested a lot in software and security. So as we look over the next few years, how is the IoT business going to evolve for the company?

Yes. Tore, thanks a lot for the kind words. I'm going to miss traveling with you and your thoughtful reports and questions. So -- but we're not done yet here. We got a little bit of time to go. We started out over a decade ago. I think you remember when we said, "Hey, we're going to pivot the company to IoT."

And we had been a high-performance, mixed-signal and RF provider of various components across a diverse set of markets. But we viewed the IoT as kind of the next frontier, where we're integrating wireless connectivity into everything outside of the PC and handset.

And we predicted there would be 10s of thousands of customers and thousands of applications for that technology over time, and that, that would be a long-term growth trend, where we could be able to control the integration path to not just do the SoCs and the chips to integrate wireless and battery management, processing and memory and sensor interfaces and now security and AI and a lot of things, but also build on top of that.

Build our differentiation to where you have communication protocol stacks and become experts in networking and communication standards. To develop tools and the channel to sell across all of those markets effectively. And to drive simplicity so that we're able to effectively support those customers.

And we've seen that business grow from sub-$100 million to now over $650 million this year. And divesting our Infrastructure and Automotive business, which was essentially the legacy business, to be able to focus on this is, I think, a real testament to how that strategy has played out here over the last decade.

And as we look forward, we see our position is strong and growing in strength. We've now -- we're now supporting a multitude of wireless standards to a very -- to address various segments of the market. We've got -- we're supplying solutions to industry leaders.

We've got a huge pipeline of design wins and decades of growth ahead in terms of -- the wireless market is growing at a 15% CAGR, so 5x or more GDP. And so that puts the company on a really good footing. And there's a lot of work to do to get out our new products and to continue to innovate, to continue to build out those teams, to continue to support customers in a more efficient way so that we can continue to gain leverage off of the bottom line as the revenue grows.

And I couldn't be more excited about what we -- more proud of what we've created and more excited about the path ahead.

And I'm delighted. I've been working with Matt here for the last 3, 4 years. Actually, the last year seems like even longer than that. But he's a fantastic leader of the team. And the team really rallies around him. And he's got energy and passion and is going to do a great job carrying our values and our strategy and then evolving that into the future and leading the team.

So thank you all for your patience over the last decade. It's been a really, really exciting time. And I think the future is very, very bright for Silicon Labs as I move on to the Technical Advisory Board and get to cheer from the sidelines.

Great. And as a follow-up, John, you mentioned total bookings of $400 million, which translates to about a book-to-bill of 1.43. Could you calibrate that number a little bit more? I mean, is the bulk of those bookings in IoT? Any other color you could share?

Yes, Tore. The majority of the bookings are in IoT. And the calibration, you're correctly viewing that. It's very high, and it has been high now for 3 quarters. And what that means is we have an extraordinarily high level of backlog coverage in the business right now. It really is supply constrained. And as we've been indicating, we're working constantly to activate as much supply as we can to drive the growth. But it is a very high level of bookings.

This concludes our question-and-answer session. I would like to turn the conference back over to Austin Dean for any closing remarks.

All right, thank you. And thank you for joining us for the Silicon Labs Q2 Earnings Call. Remember, you can find our financial information at silab.com/investors. We look forward to discussing our business further during our participation in the KeyBanc conference coming up on August 9.

Operator, you can now conclude this call. Thank you.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.