Gentherm Inc (THRM) 2011 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Amerigon, Inc. 2011 second-quarter and 6-month result conference call. During today's presentation, all participants will be in a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions). Today's conference is being recorded August 9, 2011, I would now like to turn the conference over to Jill Bertotti with Allen & Caron. Please go ahead.

Good morning, and thank you for joining us today for the Amerigon Incorporated 2011 second-quarter and 6-month results conference call. Before we start today's call, there are a few items I would like to cover with you. First, in addition to disseminating through PR NewsWire this morning's news release announcing Amerigon's results, an email copy of the release was also sent to a number of conference call participants. If any of you need a copy of the news release you may download a copy from either the Amerigon website at www.Amerigon.com, or the Allen & Caron website at www.AllenCaron.com. Additionally, a replay of the conference call will be available via our link provided on the events page of the investor section of Amerigon's website.

Finally, I've been asked to make the following statement. Certain matters discussed on this conference call are forward-looking statements that involve risks and uncertainties and actual results may be different. Important factors that could cause the Company's actual results to differ materially from its expectations on this call are risks that sales may not significantly increase, additional financing, if necessary, may not be available, new competitors may arise, and adverse conditions in the automotive industry may negatively affect its results. The liquidity and trading price of its common stock may be negatively affected by these and other factors.

Please also refer to Amerigon's Securities and Exchange Commission filings and reports, including but not limited to Form 10-Q for the period ended June 30th, 2011 and Form 10-K, for the year ended December 31, 2010. On the call today from Amerigon, we have Dan Coker, President and CEO, Barry Steele, Chief Financial Officer, and Bud Marx, Chairman. Management will provide a review of the results, after which there will be a question-and-answer period. I would now like to turn the call over to Dan. Good morning, Dan.

Good morning, Jill, and thanks everyone for joining us today. Amerigon has posted our second quarter results, which include a bit of a seismic event and including the acquisition of WET, majority control has been established, effective May 16, 2011, therefore the numbers you see before you in the press releases indicate what I think is called the sub-period numbers that include WET's results from May 16 through the end of the quarter.

As we said in past calls, a lot of people around the world have worked very hard to bring about the transaction where Amerigon acquired in excess of 76% of the outstanding public shares of WET. That transaction, that part of the transaction closed on May 16th, and we are continuing through the process with working with our partners now at WET and the Board of Directors of WET, and the accommodation of the minority shareholders. The process that we go through will not be completed until sometime in the first quarter of 2012. What you see today will be the first attempt at the consolidation of the 2 businesses' operating results but unfortunately it started in a mid-quarter period, next quarter, in the third quarter you will see a full quarter's results of the operating, and our operating statement.

What we are going to do today is try to give a very brief overview of how the businesses have performed. And we are quite pleased to say both businesses performed well, particularly given the circumstances worldwide. Barry and the financial teams of Amerigon and WET have worked very hard to try to do the consolidation work, and to put together some charts that we have included in the package to help everybody understand some of the moving parts that have involved in this consolidation report. We are going to give a very brief overview, Barry will speak briefly to some key points and then we are basically going to open for questions. With that, I would like to invite Amerigon's CFO, Barry Steele to lead us through a few of the key points in the discussion today. Barry?

Thank you, Dan. As Dan pointed out, our results for the quarter included all of Amerigon's results for the 3 months and the 6 month periods, and the WET results from May 16th, the acquisition date, through the end of the quarter, roughly half of the quarters of their result. The revenue included in our financial statements for WET was $45.2 million. WET had gross margin during this period of (technical difficulties) of 22.9%. I would like to point out the fact we had certain impacts from purchase accounting, that were included in the gross margin for WET, so when you add those back, we would actually be reporting a gross margin for WET of 26.1%. We will talk a little bit more about what those variances.

The net loss before tax for WET for the period for the $724,000, again including some of these charges for purchase accounting. But overall, the quarter had a number of one-time impacts and non-cash adjustments that -- items in the prior quarters including the following. First of all, we had transaction acquisition expenses and debt retirement expenses totaling $1.4 million for the 3 months, in combination, or $2.4 million for the 3 months, and $6.1 million for the 6 month period. We expect that these expenses would be small in the third quarter, we estimate about $300,000 for the third quarter, and then would disappear because they're related to the actual combining of the company.

In addition, we had non-cash purchase accounting impacts, basically, in purchase accounting we valued a number of assets, including intangible assets, we wrote up the inventory of WET and we reported an asset for the order backlog. All of these assets were amortized in the period and their affects on the period were $4.3 million, for the 3 and 6 months, we would expect that amount to decrease in the third quarter because the inventory (technical difficulties) total utilized by the order backlog amortization, then the amount decreased over time, given the various lives of the various assets that were measured.

We calculate or estimate that the total impact of all of these adjustments per quarter (technical difficulties) in terms of earnings per share were $0.18 for the 3 months, and $0.35 for 6 months. (technical difficulties) basis, $0.18 and $0.34 for 3 and 6 months on a fully diluted basis. Additionally, we have for the first time shown a dividend for our Series C preferred stock. This totaled $2.9 million for the quarter, and had an effect of reducing earnings per share by $0.13 for the 3 months and the 6 months period.

The Series C preferred stock does amortize over time, so we will be paying that back over time, so the impact in future quarters will decrease, because we are using the effective interest method for recording the dividend. We shown the tables to help illustrate some of the impacts for the current period as well as future period as we estimate them. Other things I want to mention we now have cash reserves of $27.6 million, and total debt of $91 million. I will turn it back over to Dan.

Operator, we are getting a little bit of our interference on our end of the line. I'm hoping that's not carrying through to the full call.

We lowered the volume on that line.

Thank you very much, ma'am. We were getting a little bit of static on our side. Barry, thank you very much for that report. Barry and the team as I mentioned earlier, has worked very hard to put together some charts to help everybody understand all of the moving parts here. Our third quarter, the next quarterly report will offer a full combination of the 2 businesses and we will be perhaps a little bit easier to read and understand. And for that purpose we thought it best to put out the information as clearly as we could and follow the format we suggested, and we will open the floor for questions at this time. Thank you, operator.

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions). Our first question comes from the line of Rick Hoss with ROTH Capital Partners. Please go ahead.

Hi, good morning. Barry, can you tell me what the estimated depreciation for 2012 is going to be?

It's difficult because it's going be impacted quite a bit by currency rate.

Or a range. You did a good job in breaking out the amortization for 2012, at 14.6. If I want to factor in depreciation, because it's difficult to try and figure out an annual D&A run rate at this point and so if you have a depreciation number that you have -- even a range that you think is reasonable for 2012, that would be helpful for people.

What I can -- I can't answer the question specifically because it requires a little bit of analysis. But what I can do is suggest that, in our 10-Q, which we will publish by the end of the day, there is segment level information, we are viewing WET as a separate segment, which will you give you depreciation by segment if you will. See if you can draw conclusions as to the future amounts for each of the Companies based on that.

Okay. I will come back with a more detailed answer for what that looks like in the future for you.

Just to be clear on guidance, you talk about third quarter being slightly below that of the second quarter but I wanted to make sure that we were clear that that's on a apples-to-apples comparison, which means including only the 6 week contribution from WET. If you were to look at the gross dollar amount in the third quarter versus the second, then the third quarter is going to, obviously, be well above that of the second quarter because of a full quarter of contribution from WET.

To say it a different way, we would expect an increase in revenues from third quarter -- from second quarter to third quarter, to the order of [manager] of $45 million because of WET being for the full quarter. And a basis for each of the businesses we would expect slightly down.

Sure, okay, that makes sense. Barry, you did say something about explaining gross margin at 26.1, how do you get back -- what do you ad back to get that 26.1?

If you look at the table that we provided that shows you, it's titled acquisition transaction expense reference accounting impacts and other effects, we like to be longwinded, the items under non-cash purchase accounting impacts, there are 5 different impacts, the first one, customer relationships, is recorded in the revenue line as a reduction in revenue. Technology amortization is included in cost of sales. Product development cost amortization is again in cost of sales. The order backlog amortization is included in SG&A. Inventory per value adjustment is in cost of sales. So the items that affect revenue and cost of sales, if you added those back, or adjusted the gross margin for WET, you would get the 26.1%.

Okay. On the go forward basis, the amortization is still going to occur right? We are still going to see a gross margin level similar to you breakout WET for this quarter. That's going to be ongoing?

There are a couple of items that go away fairly quickly. The one that effects the gross margin that goes away is inventory fair value adjustment. That's a small impact that we estimate for the third quarter, and then, yes, all the other items that are affecting the gross margin are pretty much here to stay for awhile. They will be flat, they won't increase, of course, with the exception of changes in foreign currency fluctuations which affect the revenue line, as well as the cost of sales line. If we were to grow, it would have a lesser impact in the future.

Okay. That's helpful. Dan, just last question from me. Can you give us an update on the 25% or so shares that are outstanding at WET?

Well, we own 76.3%, that leaves somewhere under 24% shares that are still held by the remaining public, mostly it looks like by German shareholders. And these are the folks that we will be working to come to an accommodation with, most likely during the third and fourth quarter of this year. Those folks will, the normal process in Germany includes the opportunity for these people to basically request and get a fair and independent valuation which we have begun the process of establishing that, and establishing a methodology for these people to either sell their shares to us, or retain their shares and receive a ongoing dividend. Again, that process will take some months, and will not be completed until early in the first quarter of 2012.

Thank you very much.

Thank you. Our next question comes from the line of Steve Dyer with Craig-Hallum. Please go ahead.

Thank you, good morning. I'm wondering if going forward, you guys plan on releasing an addition to the GAAP earnings number, which you obviously have to release, some sort of an adjusted number which you feel sort of better reflects the cash generation or the earnings power of the Company, and if so, what that may include or exclude that GAAP takes in to account?

Steve, we are obviously very limited in what we can show as non-GAAP measures that is something an area that's scrutinized very closely by our accountants and our attorneys as well. With that said, giving details on these types of adjustments, the non-cash purchase accounting impacts I would draw your attention to operating cash flow, for example, as being a good idea of earnings measures and cash, we probably also will include in our disclosure some measures, adjusted EBITDA and things of that nature that should be helpful where we haven't in the past. We are still working through what is the best presentation and more information will come.

Okay. That adjusted EBITDA, for example, will be the more the focus on next quarter.

Hopefully.

We have worked very hard in this quarter to help people understand what amounts are here for WET and what some of the unusual things going through the financials are. In terms of future periods, we will present additional information that will be helpful.

Understood. I'm just wondering priorities, or how you think about, it looks like you are going to be throwing off a pretty substantial amount of cash going forward. How should we think about how that's going to get prioritized whether it be paying back debt, convert, putting on the balance sheet, those sorts of things.

We have a number of things we can do with cash, we do have a significant amount of debt. We have amortization that's required under our debt facilities. We are likely to have some cash needs to, with respect to the minority interest that's less for WET, sometime next year. So I think our focus will be to satisfy our needs, with respect to buying back shares, as they're tendered and then to reduce debt. We also will be looking at, periodically each quarter, whether we will pay the amortization on the preferred in cash or stock periodically based on our current existing working capital capabilities.

Okay. Just taking a bigger look at the P&L, what should we think about as a good gross margin number to use going forward. Amerigon's historically been kind of closer to 30, WET a little bit lower, what is kind of a good blended rate to use on our models going forward?

I don't have that in front of me. It's going to be mid to high 20s, I think.

I think it will be more obvious in the third quarter when we get to see a full impact of both Companies' efforts on that line.

Secondarily, I guess how would you think about looking out in to next year and the year beyond, assuming a pretty lukewarm recovery in the SAR. How should we think about the long-term top line growth of this Company. Amerigon was often 20%, 25%, bigger company now, law of large numbers, how do you think about what can this grow each year?

We are actually working on the planning efforts to -- when we get the permission to do the combination of our 2 Companies. Actually, I'm quite excited about the opportunity. There's a lot of new possibilities and new potential products that we are all looking at being able to work together to introduce and bring to the market. We haven't set a hard number yet, but obviously we won't be able to maintain the 25% to 30% growth that Amerigon was able to pull as a small, fast growing company. We do believe that companies should be nimble enough to take opportunities in to market and we would like to set some target and that target will be set but somewhere between 5% and 10% a year top line growth as one of our key measures.

Okay. Lastly, anything new in the BSSD front this quarter?

Well. I can take that comment. Yes we've made very good product on our waste steeper power program. We have a prototype that is generating 700 watts of power, which is, I would say, unique in the world. I think we are making good progress in our development of new product and technical efforts and that's as much as we should say.

Fair enough. Thanks, guys.

Thank you. Our next question comes from the line of Adam Brooks with Sidoti & Company. Please go ahead.

Yes, good afternoon at this point. Quick question, you have an office in Germany and given less exposure to Europe, can you maybe give us an update on your thoughts of penetration with the European OEM with regards to Amerigon's product?

We are very excited about the opportunities, actually. Amerigon ourselves have been slow to be able to penetrate the European market with the heated and cooled and heated and ventilated products that were traditionally ours. We have very limited access to the European markets. We have a few people working very hard to work with the customers there. We do have business revenue today with Jaguar on several platforms and Land Rover and we believe that the addition of the facilities and team at WET will allow us to expand our potential customer base, and, potentially, I think more importantly, we are now going to be able to work together as a team and be able to design a product line as they may be in the next generation product, that will bring forth the strengths of both Companies.

So that's pretty much for us, job one, is to try to sit down and find the best product to introduce to the European market using the local knowledge and the working skills of our new WET teammates and all of the strengths and capabilities that Amerigon has had in thermoelectrics and air movement technology. I think that's going to be key for us in the future is introducing our products into the European market.

Great, and one more quick question. Maybe an update on how things are progressing as far as the mattress program. I guess you had $400,000 revenue in the quarter -- maybe how things have progressed compared to your expectation?

Well, as you probably know this is a tough time to bring out very high end items, it is not a success to the extent that we would have liked but, frankly speaking, we didn't anticipate a few years ago when we were working on this project, we didn't anticipate the current economic climate. The high-end mattress business is impacted like a lot of things are in the current business climate. We are working diligently with our partners to try to find a way to expand the availability of the product in the market, but right now we are a little bit behind our goals and would like to work to be able to catch up.

Thank you.

Our next question comes from the line of Jeff Osher with Harvest Capital. Please go ahead.

Hello, guys. Congratulations on closing WET. A couple of questions. The jump in inventory sequentially, I assume almost all of that, going from 7.3 to 45 is WET. Can you help us understands from a production side how we think about inventory management, whether that's finished goods, WIP, and was there inventory step up there?

There is an inventory step up for the first time, as we mentioned before. In total, it's about $1.5 million, roughly. You are right, the significant amount coming in from WET, we had historical revenue -- excuse me, inventory levels of about $5 million to $7 million, the rest is coming from them. They are obviously a manufacturing company so they have a lot of inventory where we were just buying and selling, sometimes even drop shipping, so certain customers we didn't hold any inventory for, so it's a completely different environment. I think that WET acts lean as much as they possibly can, to keep inventories low and so it's, obviously, an area of focus for us to working capital management.

Okay. At a 26% margin, is that about 1.5 quarters worth of inventory, almost 2 quarters on the books. Is that the right way to think about it on a go-forward basis.

Slightly higher gross margin probably for that. Calculation's a pretty rough way to look at it. There is probably a little bit more turns then you would expect.

Good. Just final question, in the first caller, thank you for clarifying what you meant by down sequentially for revenue, clearly it will be up in gross dollars. Is it fair to effectively to just double what you reported for WET, so about $90 million, I think they did about $94 million in Q1, so is that the right way to think about it and help us, I'm trying to get a sense of where, what kind of visibility you have and to the absolute dollars. I think it was down 6% sequentially in Q2.

We typically don't give specific guidance particularly in these uncertain times. You've got a good handle. We got about a half of a quarter's worth of revenue in for them now. Although, I would say that I think we have the good half of the quarter. Typically in the auto business, things run a little heavier toward the end of the period.

We are not going to give you guidance and tell you that we think WET's revenues are going to be X and ours are going to be Y, and the combination is going to be a number. We believe that both companies are doing well and that the market is uncertain. We can't really specifically give you a number. You see we have a half a quarter for them and a full quarter for us.

That's fair, Dan. I thought I would try. Thanks a lot guys. I appreciate you taking my questions as always.

Thank you. Our next question comes from the line of Brett Hoselton with KeyBanc, please go ahead.

Good morning. It's Matt Mishan in for Brett. I apologize I'm in the car if it's a little staticky. First question as far as press releases go, normally, I would expect to see more press releases come out of you with some new platform launches. Can you talk about some of your launches in 2011?

We are sorry, we have been a little busy with other things lately. But we have had some good launches in the first half. We have a few more platforms coming out for the Amerigon side in the second half of this year. But we will put more effort in trying to communicate the awards and wins for both Amerigon and WET in the future.

I would add to that, point out that a couple of our launches this year are existing vehicles we are expanding in to either North American production or Asian production at a different plan. We wouldn't necessarily advertise those, because they're not new nameplates for us, but they do have a significant impact on our growth line. That's maybe why you see a little bit less things coming out for us. Clearly there is new programs in the till that we are working on.

Great. That's very helpful. As far as tellurium goes, can you give us an update on tellurium prices?

Sure. Tellurium is expensive. If you recall our first quarter discussions, the prices for tellurium were well in excess of $400 per kilo. Today, those numbers range wildly, actually, most of the numbers we are seeing are anywhere from the $350 to $375 range, there are some opportunities on the spot market that we have seen as low as $325, and these numbers are trending down.

I would add to that to point out that tellurium is a much smaller percent of cost of sales. You may recall that in 2010, we disclosed that tellurium was about 3% of cost of sales. Between 1% and 1.5% on a go forward basis with WET. That said, we would also point out that there were some increases in tellurium cost for us in the quarter, but they were very minimal because the impact, it takes so long to get to us.

As far as contract manufacturing in China, one of the reasons you cited for the acquisition, the manufacturing capabilities of WET. Given the additional thoughts on essentially moving into contract manufacturing, to existing manufacturing for WET?

Actually, I'm glad to see you were paying attention, Matt. One of the key things for Amerigon in partnering and acquiring the WET facilities -- sorry, WET company was their facilities and footprint worldwide. If you recall precisely what we said was that we were very excited about the opportunity to build some of our new advanced products in some of these new wholly-owned facilities around the world. We haven't quite gotten into the full impact analysis of the consolidation of the 2 businesses and how we want to move forward on the existing product lines.

But we also would point out that Amerigon has some very strong partners that we have been working with for the past 10 and, in some cases, 15 years, and these guys also bring a lot to the party. Our original intent, and one of the basic thesis of our acquisition of WET, was to acquire manufacturing capability and all that it in entails including the preproduction work, the design work, the design for manufacturing and their lean manufacturing capability, particularly as it looks towards our future more advanced programs.

Great, thanks, Dan. Thanks, Barry.

Thank you.

Thank you. Our next question comes from the line of Jeff Bernstein with AH Lisanti. Please go ahead.

Hi, good morning and congratulations on the deal. Wanted to delve a little bit further into the guidance for next quarter, and the mechanics of what is going on in the supply chain for you with Japan coming off and coming back on, some people are talking about a very promotional environment in the US that may actually spur some car sales in the second half of the year. How should we be thinking about that?

Well the environment in Japan is in what I call a steady state of recovery. The first half of this year, particularly the second quarter, we estimated that Amerigon suffered about a $2 million revenue impact and, of course, obviously that goes to the gross profit line as well, due to several of our Japanese customers in particular suffering from the structural damages that impacted their country in such a horrible way.

I was just in Asia the last couple of weeks and the Japanese market is beginning to come back, the Japanese people are very strong and resilient folks and they're putting everything they have in to recovery. We see that market recovering in the second half. In addition to that, we also see the components of assembly companies that were also impacted and hobbled by the same tsunami and earthquake and now of course the lack of full utility services throughout the area.

If you look at it in the Asian, particularly the Japanese microscope, you'll see that we think things will recover in the third quarter, significantly better than the second quarter was. Globally, however, things are a little bit slow in Europe at the moment, there is a lot of economic uncertainty there. And I agree with you, in North America, we probably should see some steady improvement in the auto industry. All of that is pure speculation, there is a lot of economic uncertainty in the world today. We are all being very cautious and by nature, the Amerigon team, we are conservative people. When we look forward, we see that there are some signs that things could get slightly worse than they are, and so our projections are going to be conservative, we are going to say we see things could be slightly less than the 2 combined companies in the second quarter.

Sounds a little bit more of a macro call than a mechanics call of can't make these cars because certain Japanese guys are down, or that kind of thing. We got back to more of a normal state and we're now really talking about what you see the pulls on the demand side.

That's an accurate assessment.

Thank you.

Thank you. (Operator Instructions). Our next question comes from Russell Lynde with Park West Asset Management. Please go ahead.

Good morning. Got a bunch of questions here. Barry, I appreciate you not wanting to give a G&A number for 2012, but is $11 million a decent number to use for next quarter?

I don't have that analysis in from of me. I don't want to comment and then be wrong, so I would like to get back to you on that.

Okay. It was 5.7 for the second quarter. That included half a quarter of WET, so I'm assuming you can use $11 million, does that sounds like in the ballpark?

I think it is, yes. The way you are doing it, it makes some sense.

Okay. When you were going through the non-cash purchase accounting impact, I think you said customer relationships amortization was in the revenue line. Was that a reduction of revenue?

Yes, it is.

Okay. That doesn't go through the D&A line? It's a reduction.

Yes, it is. For depreciation and amortization, yes it is.

It is, okay, but it was a reduction in revenue.

Yes, sir.

Okay. WET revenue was $1 million less as reflected on your income statement than it should have been?

Correct.

What was the revenue impact of Japan to WET for the stub period?

They don't have much exposure to theirs, to the Japanese market, so it's very minimal.

Okay. Was there any margin impact from components, manufactured in Japan, to WET's business?

I believe they did have some cost associated with some supplier disruption, but I don't think they are very -- they are very minimal. They are not significant.

Okay. So 26% gross margin for WET, is that a -- is that the right number to think about going forward, or could it get better from there?

First of all, it's not the right number because on a GAAP basis we will be including the amortization amounts.

On a non-GAAP basis.

I think it's a pretty good number going forward for them.

How do I think about OpEx expense for Q3? Will there be any synergy reduction or, how should we model OpEx for Q3?

I don't think you should look at -- look for any synergy impact until sometime late in 2012.

Okay. So if we looked at the past WET OpEx that would probably be the range that, to use for Q3? You guys are breaking up. I don't know if others can hear you.

Russ, this is Coker. We do not have permission to do any combination analysis of the Companies until after the final judgments are ruled in Germany and we don't expect any of that to happen until early in the first quarter of 2012. So we are not in a position to answer any of those questions for you other than to assure you that we did not buy WET thinking that we were going to be able to go in and hack away at their structure and make a big savings.

We value all of their assets and want to try to capitalize and multiply on their assets, so we are not looking at any huge OpEx reductions, although there are potential synergies, as Barry has mentioned, in the long run, we may be able to have some sort of combination that will be more efficient. But right now, I wouldn't be looking for any big savings.

Okay. Last question, just on the cup holder business, I think it was about $3 million of revenue in the first half, I think you said that it could be as much as $10 million for the full year, is that still a decent number? Are you on any additional platforms for 2012?

This is Barry. I think the $10 million, we said $8 million to $10 million. That's a full run rate that we expect, at some point. Won't be this year because we are still adding programs. We had one program, in particular, that will have more of a second half impact.

Okay, and any additional platforms for 2012?

We do have additional customers evaluating the product and -- but no one has made any announcements yet.

No booked revenue at this point.

Okay, great. Thanks for taking my question.

Thank you. I show no further questions in the queue at this time. I would like to turn the call back to you, Mr. Coker, for closing remarks.

Thank you very much, ma'am. This has been a very complex quarter to explain. As we said, there is a lot of moving parts. I compliment Barry and Thomas Liedl, our CFO for the WET group, for the hard work they put in over the past few weeks, trying to pull this information together and put it into a format that can be distributed and explained.

I would also like to welcome all of our WET associates worldwide, to the Amerigon team, we are all looking very much forward to working together. We've had some very preliminary discussions on the planning phases of how we can get together and bring a better line of products for thermal management to the automotive and industrial markets as we move forward, and I would say that our customers, globally, have seen this merger of technologies in combination of strength in a very positive form.

We are very excited about the future. We are looking forward to the third and fourth quarters of this year, and we are very much looking forward to the years beyond, when we get to really work together as a solid team. Thank you very much for attending our call. We look forward to hearing from you again next quarter. Thank you.

Ladies and gentlemen, this concludes the Amerigon Inc 2011 second-quarter and 6 months results conference call. Thank you for your participation, you may now disconnect.