威騰電子 (WDC) 2004 Q4 法說會逐字稿

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  • Operator

  • Good day and welcome to the Komag Inc. fourth-quarter fiscal 2004 earnings conference call. Today's call is being recorded. I will now turn the call over to the Chief Executive Officer of Komag, Mr. T.H. Tan. Please go ahead, sir.

  • T.H. Tan - CEO

  • Good afternoon. I am T.H. Tan, CEO of Komag. With me on the call today are Mike Russak, our President and CTO, Kathy Bayless, our CFO, and other Company officers. Today I will ask Kathy Bayless to discuss our financial performance for the fourth quarter of 2004. Then Mike will discuss customer and market conditions. And I will discuss the fourth-quarter operations, our outlook for the first quarter of 2005 and I will make a few closing comments. Then we will open it up for Q&A. Kathy?

  • Kathy Bayless - CFO

  • Thank you T.H. Before we begin today I'd like to remind the audience that we will be making forward-looking statements during this conference call such as the statements regarding our outlook for the first quarter of 2005 and our expected capacity and capital spending for 2005. These forward-looking statements involve risks and uncertainties that can cause actual results to differ materially from our forecast.

  • These forward-looking statements speak as of today, and you should not rely on them as representing Komag's views in the future. We undertake no obligation to update forward-looking statements to reflect events or circumstances after the date they were made.

  • In addition to the factors that made be discussed on this call today, important factors that could cause actual results to differ materially are contained in our press release today announcing our fourth-quarter results and in our SEC filing, including our Quarterly Report on Form 10-Q for the quarter ended October 3, 2004. Copies of these documents may be obtained from the SEC website at www.sec.gov or by visiting the investor relations portion of our website at www.komag.com.

  • A press release today describing our fourth-quarter 2004 results was placed on the news wires today at approximately 4 PM Eastern standard. If you do not have a copy of our earnings press release, it's currently posted on our website at www.komag.com.

  • Now I will review the financial performance for the fourth quarter of 2004 and the 2004 fiscal year.

  • Net sales totaled 131.2 million in the fourth quarter of 2004 compared to 102.4 million in the third quarter of 2004 and 118.2 in the fourth quarter of 2003. This is up 28% from the prior quarter and 11% from the year-ago quarter.

  • Finished unit shipments were a record level of 19.8 million in the fourth quarter, increasing 19% from third quarter shipments of 16.6 million. Unit shipments in the year-ago quarter were 19.3 million. Other disk revenue provided 18.8 million of revenue in the fourth quarter of 2004 compared to 11.1 million in the prior quarter and 8.4 million in the year-ago quarter.

  • Net income and diluted earnings per share in the fourth quarter of 2004 were 15.8 million and $0.51 per share respectively compared to 9.3 million and $0.31 per share in the prior quarter. Net income and diluted earnings per share in the year-ago quarter were 16.4 million and $0.65 per share.

  • For the 2004 fiscal year revenue, net income and diluted earnings per share were 458.4 million, 51.4 million and $1.71 per share respectively. This compares to 2003 revenue, net income and diluted earnings per share of 438.3 million, 36.0 million and $1.47 per share respectively.

  • Diluted shares outstanding in the fourth quarter of 2004 were 31.9 million shares. Diluted shares included approximately 3 million shares which would be issuable in the future upon conversion of the Company's 80.5 million 2% convertible notes. Based on an accounting rule change in the fourth quarter of 2004, previously reported quarterly earnings per share in 2004 have been adjusted to include these shares. Diluted shares in the third quarter of 2004 and the fourth quarter of 2003 were 31.3 million and 25.2 million shares respectively. Diluted shares outstanding for 2004 were 31 million shares compared to 24.5 million for 2003.

  • On our balance sheet and cash flow, we ended the fourth quarter of 2004 with 104.1 million of cash compared to 91.1 million of cash at the end of the prior quarter and 70.1 million at the end of 2003. Our debt balance remained at 80.5 million, as in the prior quarter, compared to 115 million at the end of 2003.

  • Net interest was positive in the fourth quarter of 2004 and included [0.4] million of interest expense as in the prior quarter.

  • Our income tax provision for the fourth quarter of 2004 was nominal due to a small tax refund from prior years compared to 0.3 million or 3% of pretax income in the prior quarter.

  • Our ending accounts receivable balance was 79.2 million compared to 62.9 million in the third quarter of 2004, reflecting the higher sales in the fourth quarter.

  • Our net inventory balance was 35.8 million compared to 36.4 million at the end of the prior quarter. Inventory turnover increased to 11 times compared to 9 turns in the prior quarter. The primary reason for the decrease in net inventory was due to tightening substrate supply resulting from increased air shipments to expedite shipments between our plants and substrate customers.

  • Depreciation was 9.6 million and amortization and adjustments of intangibles was 0.6 million in the fourth quarter.

  • Capital expenditures were approximately 9.9 million in the fourth quarter and totaled approximately 59.2 million for the year. Cash flow from operations totaled 21.4 million in the fourth quarter and 61.3 million for the year.

  • Now let me turn it over to Mike.

  • Mike Russak - President & CTO

  • In the fourth quarter of 2004 we increased our volume shipments of 100 gigabytes per platter and above advanced disks to over 20% of the total finished unit shipments. That's up from 10% in the prior quarter. These advanced disks are primarily targeted for multiplatter consumer electronic applications. In addition, primarily all of our enterprise disk shipments were new generation 65 mm, 70 mm and 84 mm disks for 10k and 15k RPM high-end server applications. Enterprise unit shipments totaled 1.4 million units, a 47% increase in unit volume from the prior quarter.

  • Sales of our 3.5 inch disks were all at 80 gigabytes per platter and above capacity points. These disks are used in traditional desktop storage applications, advanced, high-performance, multiplatter storage applications, and PVR and DVR consumer electronics applications. All advanced 100 gigabytes and above disks, as well as the new enterprise disks, includes several new processes to meet the ever more complex specifications to achieve high performance in today's advanced disk drives. In addition, many of these new processes are now included in current generation 80 GB disks to maximize drive performance at our customers.

  • Our blended average selling price for current products in continuing production was relatively flat in the fourth quarter compared to the prior year. Sales mix by customer was Maxtor at 46%, HGST at 30%, Western Digital at 18% and all others at 6%. We're continuing to work with all customers on current generation as well as next generation products.

  • We continue to be on track in qualifications of products across our entire customer base in the desktop consumer application based space, as well as next generation enterprise products. Recently we began to send disk samples using [Almag-based] substrates in sub-2.5 inch diameter form factors to several customers. We expect to have pilot capabilities established in our San Jose R&D center to produce premanufacturing quantities of the smaller form factor disks by the end of Q1 '05. We will be working with several drive companies over the next few months to establish the viability of using [Almag-based] disks in these small form factor drive applications.

  • Now I would like to pass it over to T.H.

  • T.H. Tan - CEO

  • We're very proud of our 2004 income statement and balance sheet performance. Fourth-quarter 2004 finished unique shipments unit shipments were a record 19.8 million units. Our fourth-quarter 2004 revenue and earnings per share increased 28% and 65% over the prior quarter. For the whole year of 2004 fiscal year net income grew 42% to $51.4 million and our earnings per share increased 16% to $1.71.

  • In 2004, we refinanced high cost debt, decreasing debt balance from $116 million to $80.5 million, up 2% from (indiscernible). And we grew our cash balance from $70.1 million to $104.1 million, substantially strengthening our balance sheet.

  • We believe our financial performance in 2004 reflects the viability and strength of our business model.

  • During the fourth quarter we incurred some additional production costs to ramp new products and new production processes, as well as higher variable incentive compensation costs and expediting costs for substrates. Further, the increased level of substrate mix as a percentage of total sales has increased our sales significantly and contributed to operating profit and net income. However, the overall gross margin percentage is less than finished disks.

  • With continuing market growth in 2005 we expect our current media capacity to be more fully utilized. Our substrate facilities, including the facilities we purchased in early 2004, are currently running at close to full capacity. As a result, we expect to expand our substrate capacity in this facility in 2005. With the substrate expansion and continuing capital investment for new processes and new generation products, we expect our capital spending to approximate $55 million in 2005.

  • Our R&D and manufacturing operations are continuing to work very hard designing, qualifying and shipping advanced products with ever tighter product specifications, bringing up new capacity, ramping production volumes and controlling costs through all the challenges. I would like to think all of our employees for their continuing dedication, hard work and excellent performance in a very challenging industrial business environment.

  • Now, looking forward, based on the continuing strong market demand that we're seeing, for the first quarter of 2005 we expect total revenue to the relatively consistent with the fourth quarter. This level of revenue reflects current continuing strong demand for finished disks, as well as demand for our substrates. The current level of demand appears stronger than the typical seasonal level.

  • With this level of revenue in the first quarter and some improvement in product costs on new products, we believe that net margin will be in the range of 12% to 14%. We're excited to be a leader in the market where unit shipments continue to grow in traditional markets as well as the expanding market opportunities for disk drives and [disk and] consumer electronics applications. We believe that we are well positioned in the high-growth consumer application market in for PVR, DVR, HDTV, external storage and other home entertainment devices.

  • In summary, we believe we have the right financial model, we are committed to maintaining our low-cost manufacturing structure, advancing technology and strengthening our customer relationships to grow our business and to provide positive financial performance.

  • Now I would like to turn the call over to the operator to conduct Q&A. Thank you very much.

  • Operator

  • (OPERATOR INSTRUCTIONS) Shebly Seyrafi, Merrill Lynch.

  • Shebly Seyrafi - Analyst

  • Congratulations on an excellent quarter, T.H., Kathy and Michael. So my first question is why wasn't your gross margin higher considering the revenue upside and the mix shift to more enterprise. Maybe you can talk about disk yields in Q4 and your expectation for the first quarter.

  • T.H. Tan - CEO

  • The (indiscernible) answer, the higher mix of the newer products, newer advanced products are more difficult to make in the fourth quarter. That's part of the reason that we have higher mix of substrates (indiscernible) towards the revenue and also the profit, but on the whole they have lower margins. Okay? That is where we are.

  • (multiple speakers) we expect the yields to improve (indiscernible) iron out the problems. So going forward, this quarter, the coming quarter, we expect it to improve. That's how we improve our net margin.

  • Shebly Seyrafi - Analyst

  • Do you expect your substrate percentage of revenues to decline in the first quarter, is that what you're saying?

  • T.H. Tan - CEO

  • Nobody is going to predict this because we're trying (indiscernible) our customers' needs. Sometimes (indiscernible) and we can expect a pretty even [Q] mix going forward as we see it now. (indiscernible)

  • Shebly Seyrafi - Analyst

  • A final question. Western Digital became not only a 10% customer but an 18% customer, very impressive. Do you expect them to stay at over 10% throughout the year?

  • T.H. Tan - CEO

  • Again, this is a question we cannot answer. We are always (indiscernible) some customer has a transition, sometimes they have expansion. We will (indiscernible) the numbers [will have to grow] as high as (indiscernible) so I can't tell you (indiscernible) will above 10% forever or not.

  • Shebly Seyrafi - Analyst

  • Thank you.

  • T.H. Tan - CEO

  • Sorry. Thank you very much.

  • Operator

  • Rich Kugele, Needham & Company.

  • Rich Kugele - Analyst

  • It goes without saying, great quarter. I think it would be helpful if, Kathy, you could give us a little sense on what would the gross margins have been had the yields and expedited shipments of substrates and such -- can you quantify what impact was to the gross margin somehow?

  • Kathy Bayless - CFO

  • We're not going to break that out. There were just several factors basically with ramping the new product as the desktop programs as well as enterprise programs, higher mix of substrates and also expediting substrates between the factories and to customers also added more airfreight costs. So we do expect some improvement next quarter.

  • Rich Kugele - Analyst

  • And then I guess as far as industry conditions you're clearly indicating that substrates are tight. Is that an industry-wide condition? And does the 55 million you're talking about for CapEx spending in 2005, does that imply no additional spending for increased finished disk capacity?

  • T.H. Tan - CEO

  • First of all, the substrate capacity is an industry-wide tight situation, has been there for a while but getting more so. And the Cap 55 million includes substrate expansion and improving and upgrading our media capability so we can do the next generation products. But you're right -- it does not include expansion of the media capacity. But if you remember, we have (indiscernible) capacity a quarter or two ago, so we're now reaping the benefit of that expansion.

  • Rich Kugele - Analyst

  • Lastly, you had talked about how the 2.5 inch and under you have an aluminum products that addresses that. Is that how you plan on targeting this market? Is glass something that's a little farther out in the roadmap? Or can you just provide an update on what you're implying by this?

  • T.H. Tan - CEO

  • I'll ask Dr. Russak to answer this.

  • Mike Russak - President & CTO

  • We think our front-up approach is to approach this market from an aluminum based media supplier perspective, which is what we do. We continue to do development work on glass substrates and we're looking at that, but right now the front-up approach is to determine the viability of aluminum-based media in these applications.

  • Rich Kugele - Analyst

  • And I guess just one last question. Kathy, ASPs sequentially, should we expect a further improvement in ASPs as these 100 G and up represent a greater proportion in the March quarter?

  • Kathy Bayless - CFO

  • I think the average blended ASP is going to be dependent upon the mix. And so depending upon whatever the mix is between 80 and 100, that will determine what the overall blended average is. But for continuing products we saw stability in the fourth quarter and we still think there's near-term stability because of good supply and demand.

  • Rich Kugele - Analyst

  • Again, thank you very much.

  • Operator

  • Mark Miller, Hoefer & Arnett.

  • Mark Miller - Analyst

  • Again, my congratulations on a very good quarter. I'm just wondering if you can address what makes you believe that -- the industry has always gone to glass. I think it's basically shock resistance. What innovations or what changes or what differences in product allow you to consider the use of aluminum for smaller form factor products?

  • Mike Russak - President & CTO

  • What we see, there have been changes in drive design, there have been changes in suspension design and in the general direction of heads sliders are becoming smaller. Those combinations, along with smart electronics including things like accelerometers that are being put into drives, we believe are starting to open this end of the market towards the aluminum-based media, because all along the aluminum-based media, at least the longitudinal recording, has always had an advantage in terms of the magnetic performance. So we believe it's becoming attractive to the small form factor guys to be able to increase capacity in order to keep ahead of things like flash memory and so on. And one simple way to do that is using aluminum-based media in the same application.

  • Mark Miller - Analyst

  • With some of the new innovations in suspension and other technologies that might allow you to lose aluminum, glass has a cost disadvantage. Would this significantly narrow the cost disadvantage? Would you still have the cost advantage over glass with some of these changes?

  • Mike Russak - President & CTO

  • What we would have to look at is what the total bill of materials is, but we believe there will be a significant cost advantage of looking at the aluminum and performance advantage in terms of the magnetics. So if there's a cost advantage -- if there is a smaller cost advantage, but it's made by a larger capacity advantage, that may be the desirable trade-off.

  • Mark Miller - Analyst

  • Just wondering -- you're doing a very good job of generating cash. You are building up an impressive cash balance. Any thoughts -- it must be -- it's a little frustrating, I guess, to some investors that you perform so well and people just don't understand the historical low valuations on the stock right now compared to Hutchinson, which is also doing a good job. Any thoughts how you could try to either communicate or get at investors to really pay attention and maybe give you a more fuller value for your stock?

  • T.H. Tan - CEO

  • You can help us by saying more of this to your other associates. We have the cheapest gear in town PE-wise.

  • Mark Miller - Analyst

  • I agree. But what about share buy backs? Are you precluded from some of your debt restrictions from doing that or could you think about doing something like that in the future?

  • Kathy Bayless - CFO

  • I think where we are from a cash standpoint right now, we've got -- we finally -- at 104 million of cash we have build up a little bit of leeway between that and our debt balance. But for the current near-term future with additional capital spending and strong market conditions we think we have better uses for the cash. And also just from a PE standpoint, I think our job is to continue to deliver good performance quarter after quarter.

  • Mark Miller - Analyst

  • Final two questions just housekeeping. What do see for your tax rate this year? And your capacity now is around 24 million a quarter. Is that total capacity right now with the substrates?

  • Kathy Bayless - CFO

  • Yes, finished media capacity is around 24 million per quarter. And as far as tax rate, we don't see any major change in the rate in 2005 compared to 2004. So it should still be in the low single digits.

  • Mark Miller - Analyst

  • Thank you.

  • Operator

  • Christian Schwab, Craig-Hallum.

  • Christian Schwab - Analyst

  • Great quarter. The other revenue, Kathy, was that driven by Trace or Hitachi?

  • Kathy Bayless - CFO

  • We haven't broken that out, so we haven't broken that out in the past. It's just continuing. We have some additional opportunities, I think as we've said previously. There's tight substrate supply situation. And so we have some good opportunities out there to the extent we have any available capacity to sell them on the outside.

  • Christian Schwab - Analyst

  • Fair enough. The better than typical seasonality, obviously driven by -- you're not suggesting that end market demand is actually greater than typical seasonality; what you're suggesting is your customers demand is bigger than it usually is due to shipments that they may be shipping, correct, like more numerous platter disk drives to be one, your market share gains back at Western Digital, etc., correct?

  • T.H. Tan - CEO

  • You're saying all the things that are right, but I think the most important thing is the emergence of the multiplatter PVR DVR in the 95 mm, which is our strength. That is the one that is growing, and [it can't make up] for the seasonality from forth to the first quarter (indiscernible) is made up -- or more than made up -- by the growth in the PVR and DVR. And of course, Western Digital coming back out and will continue to have improvement in other customers that we have relationships with, and you will see that the next quarter.

  • Christian Schwab - Analyst

  • Fantastic. Are you guys working with Hitachi on the 2.5 inch enterprise drive?

  • Mike Russak - President & CTO

  • We don't really comment on any preannounced products that have not been announced yet. So really I don't want to comment on that at this point. But we are working, as we have said, in the enterprise space in that form factor, yes.

  • T.H. Tan - CEO

  • Whenever people want aluminum disks Komag (indiscernible) choice. we are the biggest in both 95 and 65 aluminum. So we can just watch the trend.

  • Christian Schwab - Analyst

  • Thank you, sir. Maxtor business was extremely strong. Can you explain that?

  • Mike Russak - President & CTO

  • Sure. They ask for a lot of disks. We see -- Maxtor has been a strong customer of ours; very consistent performance over the years. And I think they have to listen to what they have to say tomorrow, but we did see strong demand from them. And we're qualified across their product line in the enterprise, as well as the 95 mm format. So we have a lot of access to their products line, and that helps the strength.

  • Christian Schwab - Analyst

  • Mike, they're you're only enterprise customer, right?

  • T.H. Tan - CEO

  • We just cannot go down to that detail please.

  • Christian Schwab - Analyst

  • The lion's share of your enterprise business, is that fair?

  • T.H. Tan - CEO

  • You're right on that one (multiple speakers) good work.

  • Christian Schwab - Analyst

  • One last question, if I may. Kathy, what were your finished goods in the quarter?

  • Kathy Bayless - CFO

  • I didn't specify what it was, but it was very similar to last quarter.

  • Christian Schwab - Analyst

  • Thank you.

  • Operator

  • Kevin Hunt, Thomas Weisel Partners.

  • Kevin Hunt - Analyst

  • A couple questions. First, I wanted to go back to the substrate being very strong in the quarter, and T.H. you're indicating that the market is very tight. Maybe you could kind of give us more detail there on why that market is so tight right now. Is there some issues going on with any other suppliers out there? And again, should we then -- it sounds like we should assume that should stay fairly steady in the March quarter in terms of versus the December quarter if that's the conditions.

  • The second question I have was also on Maxtor announcing that they're not going to be kind of abandoning the efforts on the mobile drive. And I wonder if that's -- what that does to your opportunities in that aluminum mobile product.

  • T.H. Tan - CEO

  • On the substrate, the tightness actually started about three years ago when IBM, before (indiscernible) Hitachi made the decision to return to our aluminum substrate for desktop. There is a performance cost and a few other factors. And Komag was the one that enabled that transition. But there's nobody else in the industry stepping up to provide extra capacity. Immediately there's about 5 million of substrates per quarter that is going to be used by a [newcomer] and there was nobody else there to sell to. So Komag has done over the last three years and eventually Hitachi bought IBM storage. So we continue to go with Hitachi and we step up. We bought the Trace facilities. We have maximized our output. We expanded with (indiscernible) our partners to do the aluminum (indiscernible) keep up with the mushrooming need for the (indiscernible) applications.

  • I want to draw attention to the fact that when people talk about consumer electronics a lot of people say about the glass-based sub 2.5. The biggest chunk of business still has to be in 95 million mm aluminum base. And that's growing by leaps and bounds. So the (indiscernible) is clear the two years ago by (indiscernible) getting worse, and we were the ones that (indiscernible) but that is good because it means the pricing for substrates has stabilized and we're going to be able to get some returns out of the investment.

  • About the 2.5 inch and transformation by Maxtor, we're disappointed but we have a few other customers that are working with us (indiscernible) aluminum-based 2.5 inch and below is quite (indiscernible) about the performance. We also know there's a shortness of glass. And also, as we go forward aluminum when you come to a transition between longitudinal and perpendicular, you can expect aluminum to provide at least one generation of expansion. And we're getting closer to that day now. So I see the aluminum to be a hot topic as far as the transformation by Maxtor.

  • Kevin Hunt - Analyst

  • One other follow-up on that substrate capacity addition. Maybe I missed this, but did you say when that would be coming online this year?

  • T.H. Tan - CEO

  • The additions, we're working on it throughout it the whole year. This additional capacity that I'm talking about is part of the $55 million CapEx, this will be spread out through our whole year.

  • Kevin Hunt - Analyst

  • Thanks.

  • Operator

  • (OPERATOR INSTRUCTIONS) [Arado Bradistila], [Steedman] Investments.

  • Arado Bradistila - Analyst

  • I have a quick follow-up question on the CapEx. You mentioned you expect to spend 55 million over '05. Can you sort of break that down into the following buckets -- the substrate capacity that you're expecting to add verses upgrading to the next generation versus pure maintenance CapEx?

  • Kathy Bayless - CFO

  • We're not breaking that down at this point. So just 55 in total, and it's substrate expansion as well as improvements for next generation products.

  • Arado Bradistila - Analyst

  • Can you then give us some sense on -- I'm trying to get a sense of what the return on invested capital would be for that expansion. Can you then talk about sort of the expected revenue increase from the extra capacity?

  • Kathy Bayless - CFO

  • Basically the main thing is when we bought the substrate facility last year, we bought it to be complementary to the media expansion to 24 million disks per quarter. And to the extent that we have additional capacity, we would sell that. So where we are today, as media grows we continue to need to expand the substrate in order just to stay even.

  • Arado Bradistila - Analyst

  • Okay, thank you.

  • Operator

  • Naveen Bobba, Bear Stearns.

  • Naveen Bobba - Analyst

  • Nice results. First, a couple of clarifications. I guess on the substrate side, Kathy, what's a good expectation for the March quarter? I think it will be down $1 substrate can actually grow through the March quarter.

  • Kathy Bayless - CFO

  • I think at this point in time it's going to be similar to what we saw in the fourth quarter.

  • Naveen Bobba - Analyst

  • I didn't catch your comment on gross margins. Did you say that gross margins could be up from the December quarter into March quarter?

  • Kathy Bayless - CFO

  • In the outlook section basically we said that the net margin range would be 12 to 14. And that's because we're basically expecting to get some improvement in costs.

  • Naveen Bobba Okay. The OpEx as a percent of sales still in the same 11, 12%?

  • Kathy Bayless - CFO

  • Yes, I think we were about 12.5%, somewhere in that range. So we still expect to the somewhere in 12.5, 13.

  • Naveen Bobba - Analyst

  • Finally, for Mike, what's a good estimate as a percent of unit sales for the enterprise drives during the March quarter?

  • Mike Russak - President & CTO

  • I think it's going to be typical of historical levels, in the 10% range.

  • Naveen Bobba - Analyst

  • Is that being driven by your major customers or is it by new customers as well?

  • Mike Russak - President & CTO

  • It's being driven by both.

  • Naveen Bobba - Analyst

  • Thank you guys.

  • Operator

  • (OPERATOR INSTRUCTIONS) Christian Schwab, Craig-Hallum.

  • Christian Schwab - Analyst

  • Kathy, on the adding capacity on the substrate side, should I be thinking about that as it takes the same time as kind of on the media, kind of 13 to 20 weeks to get the equipment, another 10 weeks to install and qualify it? Or is it a lot shorter since people might just need a nickel plating and a textured substrate, etc., etc.?

  • Kathy Bayless - CFO

  • Yes, it's a little bit different. I think T.H. said that we would be bringing up the capacity kind of ratably throughout the year.

  • Christian Schwab - Analyst

  • Thank you.

  • Operator

  • There are no further questions in our queue. At this time, Mr. Tan, I will turn things back over to you for additional or closing remarks.

  • T.H. Tan - CEO

  • Thank you very much. I want to thank all of you for joining with us. We look forward to speaking with you again next quarter. Thanks.

  • Operator

  • That does conclude our conference call. We do thank you for your participation.