Ultra Clean Holdings Inc (UCTT) 2006 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Ultra Clean Technologies fourth quarter financial results conference call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session. [OPERATOR INSTRUCTIONS]

As a reminder, this conference is being recorded, Monday, February 12th, 2007. I would now like to turn the conference over to Mr. Jack Sexton, Chief Financial Officer. Please go ahead, sir.

Good afternoon, and welcome to our fourth quarter financial results conference call. My name is Jack Sexton, Chief Financial Officer of Ultra Clean Holdings, and with me today is our Chairman and Chief Executive Officer, Clarence Granger.

A few moments ago we released a press release reporting financial results for the fourth quarter, 2006. The press release can be accessed from the Investor Relations section of Ultra Clean's website at uct.com. In addition, we have arranged for a tape replay of this call which may be accessed by phone. This replay will be available approximately one hour after the call's conclusion and will be accessible for two weeks. The dial-in access number for this replay is 800-633-8284 for domestic callers, and 402-977-9140 for international dialers. The pass code is 21326304 for both domestic and international dialers. This call is also being webcast live with a web replay also available for 14 days from the Investor Relations section of our website at uct.com.

Together with our recently issued press release, this conference call enables the Company to comply with SEC regulations for fair disclosure. Therefore, investors should accept the contents of this call as the Company's official guidance for the first quarter of fiscal 2007. Investors should note, that only the CEO and CFO are authorized to provide Company guidance. If at any time after this call we communicate any material changes in guidance, it is our intent that such updates will be done officially via public forum such as a press release or publicly announced conference call.

The matter that we discuss today include forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995 related to matters including our future financial performance, Sieger integration efforts, new product orders and shipments, and expanded production at our China facility. Investors are cautioned that forward-looking statements are neither promises nor guarantees but involve risks and uncertainties that may cause actual results to differ materially from those projected in the forward-looking statements. Some of those risks and uncertainties are detailed in our filings with the Securities and Exchange Commission including our most recent Form 10-Q filed for the quarter ended September 30, 2006. The Company disclaims any obligation to publicly update or revise any such forward-looking statements or to reflect events or circumstances that occur after this call.

Now here are the fourth quarter results. Revenue for the fourth quarter of 2006 was $107.5 million, a sequential increase of 3% compared to revenue of $104.1 million for the quarter ended September 30, 2006, and an increase of 177% compared to revenue of $38.8 million in the same period a year ago. The increase over prior year is due in part to the acquisition of Sieger. Our fourth quarter revenue was in line with our guided range of $100 to $108 million.

Gross margin for the fourth quarter was 15.2%, an increase from 14.8% in the third quarter and an increase from 13.6% in the same period a year ago. The sequential increase is due to a higher percentage of revenue generated from our Shanghai operation and improved margins in the U.S. based on steady levels of demand.

Operating expenses in the fourth quarter were $8.1 million compared to $7.3 million for the prior quarter, an increase of 10%. The sequential increase of $800,000 is due to increased legal and consulting charges of approximately $400,000, primarily related to our Sarbanes-Oxley compliance work, increased sales commissions, bonus and profit sharing accruals of approximately $300,000, and increased FAS 123(R) related charges of approximately $100,000.

Interest and other net expense was flat with prior quarter at $619,000. These charges relate primarily to interest charges on debt put in place in support of the Sieger acquisition.

Our effective tax rate for the full year 2006 increased to approximately 31% from approximately 27% charged in the first three quarters of the year. This change was due to a cumulative fiscal year 2006 transfer pricing adjustment which increased the tax charge in the fourth quarter by $0.04 per share, increasing the fourth quarter 2006 effective tax rate to 39.5%. This adjustment was required to align the transfer prices between our U.S. and China entities to reflect changes in the business relationship between these entities. Our recent growth in China had a significant impact on this change. Please note that our tax holiday in China remains in place as does our expectations to continue to grow our revenue and profitability in China.

Net income for the fourth quarter was $4.7 million, decreasing from a net income of $5.6 million in the third quarter of 2006 due to the increased tax charges just discussed, and increasing from a net income of $686,000 for the same period a year ago. Diluted earnings per share for the fourth quarter of 2006 was $0.22, just below our guided range of $0.23 to $0.28, again due to higher tax charges. The $0.22 earnings per share includes a $0.02 per share charge for amortization of intangible assets related to the Sieger acquisition and a $0.02 per share charge related to SFAS 123(R).

Turning to the balance sheet. During the fourth quarter, cash of $23.3 million increased $4.4 million and third party debt of $31.6 million decreased $1.8 million. Taken together, net liquidity improved $6.2 million during the period. Accounts receivable of $44.7 million decreased $2.4 million or 5% due to improved collections. Day sales outstanding decreased three days to 38 days at the end of the fourth quarter. Net inventory of $45.8 million decreased $3.6 million or 7% as continued strong demand allowed us to utilize and ship existing inventory. Days inventory on hand calculated on a forward-looking basis decreased two days to 49 days at the end of the fourth quarter. Accounts payable of $37.6 million decreased $2.2 million or 6% during the period. Days payable outstanding decreased five days to 43 days.

Now Clarence will discuss our operating highlights for the fourth quarter and provide guidance for the first quarter of 2007. Clarence?

Thanks, Jack. I'm pleased to report that the fourth quarter of 2006 was another quarter of strong operating performance for UCT and that once again, we made significant progress on all of our key strategic initiatives. Specifically, through strong operational execution, UCT grew non-GAAP delivery revenue by 28% sequentially, excluding the Sieger acquisition, with sales increasing for virtually all of our non-GAAP delivery product lines. We also successfully shipped prototypes of the new process module that we had announced at our last quarter earnings call and began laying the foundation for new process module opportunities.

Additionally, we increased production shipments to our new U.S.-based gas delivery system customer, [Variant] Semiconductor.

Finally, our Shanghai facility achieved a new revenue record, increasing sales by 32% sequentially.

Financially, UCT significantly improved liquidity and achieved new records for revenue and operating profit. Revenue has now increased for the fifth consecutive quarter and was at the high end of our guided range. If not for the unfavorable tax adjustment, which Jack just described, EPS also would have been within our guided range and would have set another record at $0.26 per share.

Finally, I'm also very pleased with the $6.2 million improvement in liquidity. During the just completed quarter, UCT continued the smooth shipment of customer orders for both of the major subsystem contracts that were announced in early 2006. This enabled a 28% sequential increase of UCT's core non-gas delivery system revenue during the quarter.

In addition, we shipped prototype units and began ramping to full volume production the new award discussed in our last earnings call. We anticipate that this process module will ramp to full volume production by the end of Q1.

We remain focused on expanding in the process modules and other subsystems and estimate that this increases our total addressable market by 3 to 4 times. We believe that together with Sieger Engineering, we are well positioned to serve this market given our combined engineering expertise, industry knowledge and capabilities in the area of low-cost system integration and environment of rapid change.

Also this quarter, we achieved the highest level of revenue from our Shanghai facility since its opening in March of 2005, increasing revenue by 32% from third quarter 2006 levels. We are very pleased with the success of our China organization in its first full year of operation, and I congratulate our staff in Shanghai on their stellar performance.

Further, I'm pleased to announce that we have leased a second facility in Shanghai and that we will be transitioning some of Sieger's machining capability to the new facility starting in late Q3 of this year.

We will also continue to transition other products to our existing UCT Shanghai facility. Growing our base in China is key to enhancing our competitive position and improving our profitability. Additionally, we feel that having a manufacturing presence in Asia will, over the longer term, aid us in penetrating new OEM customers in Asia.

Another UCT strategic initiative is focused on expanding our U.S. customer base. During our last earnings call, we announced that we had received initial production orders for gas delivery systems from a new U.S.-based customer. That customer is Variant Semiconductor Equipment Associates based out of Gloucester, Massachusetts. In the fourth quarter, we began volume shipments to their end. We believe that Variant has the potential to become a significant customer to UCT for both gas delivery systems and other subsystems.

The integration of Sieger into UCT is now largely complete, allowing a greater focus on leveraging UCT's engineering capability into Sieger's large module manufacturing and machining capabilities. In the fourth quarter, we experienced the first significant success of the integrated organization. We were engaged to meet a key customer's engineering needs on a critical new product. As a result of UCT's early engineering involvement, we have been awarded the prototype build of a large process module, which is scheduled for delivery by the end of Q2 this year. This is the first example of how our combined capabilities have opened up new opportunities.

Looking ahead into next quarter, demand levels remain relatively flat and we expect that our continued growth in non-gas delivery subsystems revenue will offset any pockets of market-based declines. We expect revenue for the first quarter of 2007 to range between $102 and $110 million and net income per share to range between $0.22 and $0.27.

To summarize the highlights for the fourth quarter, UCT achieved record levels of revenue, operating income, and cash generation. This is the fifth consecutive quarter of growth for our business. We continued to grow our non-gas delivery subsystems revenue and our Shanghai revenue consistent with our objectives. We maintain a strong pipeline of customer qualifications for product transfer to China and we are moving forward with a new Shanghai facility. UCT continued to grow revenue and further develop our relationship with an important new customer, Varian Semiconductor Equipment. Additionally, we demonstrated success in utilizing the UCT engineering model as a business development tool with Sieger, and we remain optimistic about our continued ability to grow our business in the first quarter of 2007 and beyond.

Finally, turning for a moment to a corporate governance, we're announcing today that effective immediately, Dipanjan Deb has resigned from the Board of Directors of Ultra Clean Holdings. Dipanjan has been part of UCT's Board since 2002 and has contributed greatly to the success of UCT. His input and involvement will be missed.

We are also announcing that Leonard Mezhvinsky, our current President and former CEO of Sieger Engineering, has been appointed to the Board of Directors of Ultra Clean Holdings. We are confident that Leonard will be a key contributor to UCT's future success and are very pleased to have him join our Board.

With that, operator, we would now like to open the call for questions.

Thank you, sir. [OPERATOR INSTRUCTIONS] And our first question comes from the line of Tim Summers from Stanford Financial Group. Please proceed with your question.

Yes, hi, guys, thanks for taking my question. Just a couple of things here. Jack, what is the tax rate that we should be using for 2007 now?

Tim, we're guiding 31% ETR for 2007, basically flat with full-year 2006.

Okay, and as you look at the first quarter and then perhaps beyond, if you look at apples-to-apples basis on the gas panel business, how much of a decline do you see that going into in the first half of the year?

Yes. That's kind of hard to -- Tim, this is Clarence Granger. That's hard to quantify. I would say probably low single digits is what we think we're looking at.

Low single as in 3% or 8%?

0 to 6%, probably.

Okay, great. Thanks, Clarence.

Okay. Thanks, Tim.

And our next question comes from the line of Jay Deahna with JP Morgan. Please proceed with your question.

Good afternoon, guys. You continue to do a great job running this business. Clarence, on that last question, Tim's question, you said gas delivery down 0% to 6%. Is that first half '07 versus second half '06? What was the time frame on that?

Well, that's relative to the guidance that we're giving for the first quarter of '07. So, and we're not, of course, we only give guidance one quarter forward so we don't really give guidance into Q2. But in general, Q2 seems to be similar to Q1 at this point.

So in other words, you're looking at GDS being flat to down 6% sequentially in 1Q versus 4Q, then down again sequentially by that much in 2Q versus 1Q?

No. In 2Q versus 1Q, so far it seems relatively flat. But again, we're not giving official guidance. It seems flat with Q1.

Okay, and in terms of just the kind of I guess this is sort of a barometer on your general cyclical outlook because it sort of looks at your core business ex-the share gain opportunities. Would you, looking at GDS, would you expect some sort of new cycle to start in the second half of the year or something like that?

Well, we -- Jay, we really have limited visibility on the second half so a lot of that information we get from general analyst input. We certainly, our customers do seem optimistic about the second half. I guess that's what I could say.

Okay. And then, Jack, on the earnings, when you were doing your prepared remarks, you mentioned $0.02 of charges related to Sieger and $0.02 related to an accounting issue. Are those the $0.04 that you were talking about in general that would take the earnings from $0.22 to $0.26 or was that something else?

No, no. So, good question, Jay. I'm glad to clarify this. The $0.04 that I spoke about was basically a tax adjustment which hit us in the fourth quarter and was a cumulative adjustment for the full year of 2006 and is completely separate. Going forward, I mentioned at [TMAS,] we're using 31% effective tax rate so the tax issue is behind us from a forecasting standpoint. Then we've got two items which are sort of non-cash charges. We've got $0.02 per share on the SFAS 123(R) and we've got $0.02 a share on the amortization or $0.01 a share on the amortization of intangible assets brought in with the acquisition of Sieger. But these are completely separate issues.

Okay. So if the one-time tax related charge had not occurred, what would your GAAP earnings have been, $0.22?

$0.26 per share.

$0.26, right. Okay, and of the other four that you're talking about, are those ongoing or not?

The SFAS 123(R) is ongoing. It's really a function of our stock option plan. The amortization of intangible assets, if you remember from the last call, we had higher amounts in Q3 and Q4, basically $0.02 based on an accelerated amortization of the trade name Sieger. That is behind us effective January 1 of 2007 and so that amortization expense decreases and it drops off to $0.01, basically $0.01 in the quarter going forward and that will run for the next nine, ten years.

Nine or ten years, okay. All right, so that would definitely be ongoing. Okay. And then the last question I have for right now is, what is your gross margin potential as you trend into the back half of this year and into next year, assuming Shanghai One gets fully utilized, Shanghai Two starts to come up. You get a richer mix of chamber business. What are we looking at as sort of a model gross margin objective for this business, one, two years out?

So we have not moved off our model of 18% gross margin and 12% operating margin. And we've said and we continue to say that we expect that we'll reach that in approximately two years, and what we've said is that UCT, core UCT prior to Sieger, is on a path to achieve that a little bit sooner than Sieger, maybe a year earlier. But Sieger, we expect by adding engineering content to their model, as Clarence described, it will take two years but we think we'll elevate them as well to 18% gross profit in two years' time

From now, so in other words, two years from now or two years from the fourth quarter?

By the fourth quarter of '08, we expect to be around 18%.

Okay. And then one last one. Do you have any opportunities to do subsystems in areas other than implant or plasma-related systems, like maybe like [lifto] or process control or something like that?

One area that we consider a significant opportunity through the acquisition of Sieger, Sieger was doing about 10% of their revenue with KLA 10 core, so roughly $10 million a year, and so we view that as a significant growth area of opportunity for us. UCT obviously has not traditionally participated in the inspection area because it doesn't use gas delivery systems, and so one of the targeted areas for us going forward is to try and grow our market share with and the inspection and test area and specifically with KLA 10 core.

What do you make for them, Clarence?

It's a small stage, and I've forgotten whan the product family is.

Okay. Thank you.

You're welcome.

[OPERATOR INSTRUCTIONS] Next is a follow-up question coming from the line of Jay Deahna from JP Morgan. Please proceed.

I guess this is turning into a one on one. So, okay, so let's go down the line here. In terms of OpEx, what are you guys thinking as you roll through the year? Are you guys going to keep it relatively tight or are there things that you need to do that might cause it to come up or do you have opportunities to tighten it?

We have opportunities to tighten it. As I mentioned, our fourth quarter OpEx was high as a result of working towards the certification, 404 certification with Sarbanes-Oxley. So we expect some relief, not necessarily immediately in Q1 but thereafter we expect some relief on our Sarbanes-Oxley area. And secondly, of course, we have this $400,000 gain or reduction in amortization charge immediately in Q1 over Q4. So those are two areas and that your general question, we will look to keep it tight for sure.

Clarence, how many customers are you actually producing volume process chambers for right now and how many are you working on prototypes?

Let's see. We're producing for three customers right now, two of whom are among our largest three customers. And in the prototype area, we are looking at expanding by one additional customer at this point in time and we have a couple of additional opportunities with existing customers.

Okay, and of those three existing customers that you're servicing right now, are you actually doing process chambers for multiple different products or just one product each?

For one of the largest customers, we're doing process modules for two different process steps. For the others, it's one each.

So, okay, so from that perspective, I mean if you're looking at people like [Novallis,] [Applied LAM] or what have you, these are companies that have many different products.

Yes. We believe we're very much in the early stages of this large outsourcing opportunity. This is still a new step forward for most of our customers and we think again we're in the infancy of a new outsourcing step for our major customers that we think represents a huge potential for us going forward.

Okay, and would you expect as your momentum picks up, as you show success and try to broaden out within these customers and others, do you think that you will begin some sort of prototype or volume production on at least one new process chamber opportunity per quarter as this year progresses? Are you at that rate yet?

Probably not quite at that rate. Probably more like one every other quarter.

Okay.

We did announce one last quarter. We just announced that we received a prototype build for another one that will ship at the end of Q2 so it seems like we're on about a six-month cycle here.

So '08 could be the year that maybe you start seeing slamming down one a quarter or something like that?

Well again, that's pretty far out to project, but we're certainly optimistic about the trend.

Okay, and then one other one here. On that joint, you said that you got a prototype because of the integration of Sieger, and UCT sort of evidence of the synergies?

Correct.

And you said a big one. When you say big, does that mean it's flat panel?

No. It's not flat panel.

Okay. So when you say big, did you mean a big opportunity?

It's physically big and it's a big opportunity.

Okay. But it is in silicon systems?

Yes.

Okay. I'll step off for now. Thanks.

You're welcome.

Our next question comes from the line of Jesse Pichel from Piper Jaffray. Please proceed with your question.

Hi, good afternoon. Congratulations on Variant.

Hi, Jesse. Thanks.

If I have some static there, I'm calling in from overseas, but let me just ask you, what is the annualized ramp to volume opportunity there for your process module? I just want to revise my number.

Which one are you talking about?

The one that you announced last quarter that's ramping here in Q1. What's the annualized revenue opportunity for -- ?

Well, we initially issued that this was a follow-on award that would start at 20 and then we came out and said it's incremental 20 so you're looking at somewhere in the vicinity of 40, maybe a little bit north of 40 on annualized basis.

Right.

But 20 million of which would be incremental.

And what do you think gas panels does volume-wise in the flat semi cap environment?

Well, I mean, generally, it will stay flat. It will mirror the semi cap environment with the exception of the possibility of picking up new customers either in the United States or in Asia. So obviously we announced that we have a new customer in Variant. We're obviously targeting new customers in Asia. But in response to your question, the overall demand for gas delivery systems will mirror what the industry does.

And if I think about China a little bit, can you again describe what the tax issue was? I'm a little unclear what that $0.04 was and just to confirm we're talking about 31% tax for all of 2007?

That's our guidance right now, and we generally guide in the first part of '07, but that's the best thing to model for the near future. So Jesse, as you know, we ship our equipment around the world so our equipment goes all around the world. However, we primarily invoice in two jurisdictions, in the U.S. and in China, and we have legal entities in both of these jurisdictions. So, and these entities trade of course with third party suppliers and customers each in the U.S. and China, but they also trade with each other. So on examination of the intercompany trading between the China entity and the U.S. entity, we determined that, that there was perhaps an undercharge or -- so additional income needed to move to the U.S. So basically we increased the charges on those goods and services that go from the U.S. to China, and in doing so, we reapportioned some profit from China, which is, as you know, at a zero tax rate to the U.S. which is at a statutory rate of 39%. And in doing that, we realized an increase in our tax on a consolidated basis.

Okay. I think I understand that better now. Thanks for that. And just finally turning to Sieger, outside of the equipment, the semi cap equipment that it has there, what kind of growth rates are you seeing here in this, in the environment we're in?

Well, in the environment we're in, we're seeing relatively flat rate. In the semiconductor side, the other major customer that Sieger had was Intuitive Surgical in the medical device side and we're still see something pretty good growth there, but that was really, that was only about a 10% customer to Sieger although it does get us a toehold into the medical device industry and it is an area that we're looking to expand in the future.

Okay, great. Nice quarter. And I think we can understand that tax issue. So thanks for clearing that up. Thanks.

Thank you, Jesse.

Our next question comes from the line of [Jenny Ute] from JP Morgan.

Hi, I know that Jay asked you about your growth margin target but can we just get a little near-term color on what we could expect?

Right, Jenny, so we could expect a march towards that 18%--

It's kind of a --

-- quarter-by-quarter. And the one thing I'd like to point out is that the rate at which we're adding new business, and when I say new business, I mean a new process module and/or the new Variant business, gas delivery system, is continuing at a pretty steady pace, and we're adding this new business which, as we've indicated before, sometimes starts out at a little lower. It takes a little while to migrate it to our other margins, but we're absorbing and digesting this new business and maintaining our march toward the 18% gross margin target so I feel quite good about that.

So should I just make it a linear ramp to your target toward the end of '08? Would that be a good way to do it or should -- ?

It's a very linear ramp, a little bit accelerated in the quarters of '07 and maybe slowing a little bit as we move into the quarters of '08, but only slightly. I would start with linear and then bump up just a little bit the pace in '07 and then dial it back a little bit in '08.

Okay, and then I'm sorry to ask another question on the tax thing. But just so I'm clear, is that kind of the reason why your tax rate is going up for '07?

Correct. I mean, transfer pricing analysis that we complete at the end of '06 basically establishes the relationship between our legal entities. And this will change and that as we do more and more with China and China is more self-sufficient in every area, then it will become a state of equilibrium. But that state that stated more or less for 2006, the change will be evolutionary as opposed to an abrupt change that we could expect in '07.

Okay, so as you ramp in China, the revenues there, will your tax rate go back down or will it just stay at the 31%?

The ramping revenue will slightly bring down our effective tax rate to the extent that China is entirely managing the support of that revenue on their own. So basically you have increased activity over there, you have increased profit realized over there. But some of that profit basically returns to the U.S. from the standpoint of basically supplying services and products in support of it.

Okay. Thank you.

Next we have a follow-up question from the line of Tim Summers from Stanford Financial Group. Please proceed, sir.

All right. Thanks for taking the follow-up. In prior cyclical downturns in this industry, OEMs have tended to accelerate their outsourcing of sub tier components and systems and I'm curious as you look at '07, as we're in this pause period, do you see that happening? Do you see the interest level from OEMs beginning to pick up because they have the resources now to devote to looking at outsourcing?

Yes, I would say we're at the very early stages of that but as our customers do have more free time with their engineering resources, obviously during a ramp, our customers get very constrained and very focused on meeting that ramp and all their engineering and supply chain management expertise is focused on meeting the ramp. When ramps tend to level off or go down, our customers tend to have more opportunity to focus on outsourcing so I would say we're at the early stages of that. We would expect that to be consistent with previous trends in terms of industry cycles. Now I don't see, though, in the past, we've seen dramatic cycles where demands have dropped off dramatically. We haven't seen that at this point in time.

Okay. Thanks, Clarence.

You're welcome, Tim.

Next we have a follow-up question from the line of Jay Deahna from JP Morgan. Please proceed, sir.

Thanks a lot. This is the last one from me, I promise. Two questions, Clarence. The first one is where do you stand on the concept of ship from supplier where you build a chamber, perhaps in Shanghai, and it meets the customers main frame at the customer's customer's site, in Asia or something like that?

Yes, sure. In response to that question, all of our major customers are talking about that, but we still haven't gotten to that point with the exception of the flat panel side. AKT, who is part of Applied Materials, is the point now where we're shipping directly to their customers and so that's one significant area where we've seen a first step. The second is in one of our other customers that we announced over a year ago was [Madsen] and Madsen is fairly aggressive at that.

Are they actually doing it?

Yes.

Okay. And then the last question that I have is, what's the general tone that you're getting from your customers about the outlook for this year? I think that some of the OEMs have sort of characterized it as semi CapEx will be kind of in the flat to up 5% range. So modest growth but a slowdown from last year, and just wondering if that's kind of consistent with what you're hearing and if the incremental tone that you're getting in the very recent past is one of confidence in that scenario or something other than that?

Yes, you're absolutely correct in terms of what we're hearing from our customers. Again, this is just general discussion, not a formal commitment on their part. But in general, I think virtually all of our customers are expecting a small increase this year with the majority of it occurring in the second half.

The majority in the second half, and that would be from a tool shipment perspective?

Yes. When we think of that, we -- our revenue closely mirrors tool shipments so that's how we think of it.

That's interesting, because everybody knows that memory CapEx is a little bit front half loaded so in order to have the back end better, either some of that would have to move or the expected pickup in logic, IBM and foundry, would have to more than offset slightly a big spend in memory in the first half. So which of those profiles are you hearing?

Yes. They don't get that specific with us on those subjects.

Okay. Thanks.

Yes, Jay.

All right, gentlemen, there are no further questions at this time. I'll now turn the call back to you. Please continue with your presentation or closing remarks.

I'd like to thank all our investors and analysts for joining the call and we look forward to seeing you on the road. I encourage you to check our website. We're going to be at a conference in late February, the 26th of February in Philadelphia, and then in Boston in late May. Please check our website and we'd love to see you on the road. Thanks for joining the call. Operator, back to you.

Thank you, sir. Ladies and gentlemen, that does conclude the conference call for today. We'd like to thank you for your participation, and ask that you please disconnect your lines. Thank you, and have a great day.