This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk03: Greetings and welcome to the Frequency Electronics first quarter fiscal 25 earnings release conference call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance during the conference, please press star zero on your phone keypad. As a reminder, this conference is being recorded. Any statements made by the company during this conference call regarding the future constitute forward-looking statements pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of 1995. Such statements inherently involve uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences are included in the company's press releases and are further detailed in the company's periodic report filings with the Securities and Exchange Commission. By making these forward-looking statements, the company undertakes no obligation to update these statements for revisions or changes after the date of this conference call. It is now my pleasure to introduce your host, Thomas McClelland, President and Chief Executive Officer.
spk08: Thank you. Good afternoon, everyone. I'm pleased to report our first quarter results coming in very much in line with expectations. as articulated when we reported the fiscal year 2024 results. Revenue for the first quarter of fiscal year 2025 increased by 22%, and operating income improved by 15% compared to the first quarter of the previous year. We believe revenue, profits, and margins should continue to increase going forward. The backlog of 70 million at the end of Q1 is down slightly from the high of 78 million at the end of the last fiscal year, but it's up substantially from previous years and represents a historically high value for the company. We continue to win significant production contracts in our primary end markets of space, navigation, secure communication, and timing, and anticipate healthy margins on these. This creates some breathing room to work on developing new technologies and also to participate in higher risk programs targeted at developing products for low cost proliferated satellite systems. In fact, we're beginning to see some success in these endeavors in two primary areas that have much larger addressable markets than our core legacy offerings have historically enjoyed. First, we've won some initial contracts for developing low-cost synchronization systems for proliferated satellite programs. We've had a number of questions on prior earnings calls about our ability to participate in the market for so-called small sat programs. which are generally lower cost and produced in higher numbers. These initial contracts are a good indication of our ability to successfully compete and win in this large and growing portion of the space market. Second, we're also attracting outside funding for quantum sensors. As one example, we're working on quantum magnetometer applications which utilize some of the physics building blocks of our core atomic clock technologies and can be utilized as sensors for navigation purposes in GPS-denied environments. This is just one of several new quantum applications which have been developed in physics laboratories around the world and which our company is well-positioned to transition from the laboratory into developing developed products which work in challenging real-world environments. Quantum is also a very large and growing end market, and we're excited about our prospects for participating in it. In order to stimulate further progress in quantum sensor technology, our company is sponsoring a quantum sensor summit in New York City in early October. This scientific conference will bring together leaders from government, university, and private sector laboratories to discuss sensor technologies and how best to realize their potential, and also to ensure that our country maintains a leadership role in this arena. We're excited about the enthusiasm which has developed around this event. Details related to the event are available at the Frequency Electronics website for anyone interested. All in all, this is an exciting time for our company. Combining the disciplined approach to our core business, which is growing, with a studied approach to new technologies, which can sustain us and foster additional growth in the future, puts us on a solid, positive trajectory as a company. The excitement is tangible. As I engage with our employees on a daily basis, there's an enthusiasm and drive apparent, which frankly is unique in the 40 years I've been at FEI. With the support of our board, we've incentivized employees and fostered an environment where everyone benefits from the success of the company. There's plenty of hard work ahead of us, but I'm personally energized and committed to the continued growth of our company. I'll now turn things over to our CFO, Steve Bernstein, who will fill you in on the financial details.
spk04: Thank you, Tom, and good afternoon. For the three months ended July 31, 2024, consolidated revenue was $15.1 million. compared to $12.4 million for the same period of the prior fiscal year. The components of revenue are as follows. Revenue from commercial and U.S. government satellite programs was approximately $8.3 million, or 55%, compared to $4.9 million, or 39%, in the same period of the prior fiscal year. Revenues on satellite payload contracts are recognized primarily under the percentage of completion method and are recorded only in the FEI New York segment. Revenues from non-SPACE U.S. government and DOD customers, which are recorded in both the FEI New York and FEI Zephyr segments, were 6.3 million compared to 6.9 million in the same period of the prior fiscal year and accounted for approximately 42 percent of consolidated revenue compared to 55 percent for the prior fiscal year. Other commercial and industrial revenues were approximately $5,544,000 compared to approximately $672,000 in the prior fiscal year. The significant increase in revenue for this quarter compared to the same quarter in the previous fiscal year was reflected in both segments and primarily related to increases in government space of approximately $3.4 million in sales from space U.S. government customers offset by a decrease of approximately half a million in sales from non-space U.S. government customers. For the three months ending July 31st, 2024, gross margin and gross margin rate increased compared to the same period in the prior fiscal year. The gross margin dollars increased mainly due to the increase in revenue and the gross margin rate increased due to the fact that many of the technical challenges faced in prior fiscal year have been resolved and as a result, the related programs are now moving forward and running more efficiently. Additionally, there were many smaller jobs that were completed at higher margins. This is the highest gross margin the company has recorded on a consolidated business in the last 24 years, and while there will likely still be quarter-to-quarter variability, we believe this is indicative of a direction we can continue to move in when we are producing efficiently and solving engineering challenges in a timely manner. For the three months ending July 31st, 24 and 23, SG&A expenses were approximately 19 percent of consolidated revenues. The increase in SG&A expenses is related to an increase in payroll-related expense. R&D expense for the three months ending July 31st, 24 increased to approximately $1.5 million from 506,000 for the three months ending July 31st, 23, an increase of approximately 982,000 and were approximately 10% and 4% respectively of consolidated revenue. R&D increases for the three months ending July 31st, 24 was primarily due to a focus on advances in modernization of products. The company plans to continue to invest in R&D in the future to keep its products at the state of the art However, we expect the actual quarterly spend to vary. For the three months ending July 31, 24, the company recorded operating income of approximately $2.4 million compared to operating income of approximately $2.1 million in the prior fiscal year. Operating income increased due to higher revenue and gross margin percent while set by higher R&D spend. Other income expense net is derived from various sources. The income can come from reclaiming of metal, refunds of sale of fixed assets, interest expenses related to deferred comp payments made to retired employees. The majority of the approximately $0.2 million of investment income for the three months ending July 31, 24 was from assets in high-yield treasury funds. This yields a pre-tax income of approximately $2.5 million for the three months ending July 31, 2024, compared to approximately $2.1 million pre-tax income for the three months ending July 31, 2023. For the three months ending July 31, 2024, the company recorded a tax provision of $133,000 compared to $7,000 for the same period of the prior fiscal year. Consolidated income for the three months ending July 31st, 24 was approximately 2.4 million or 25 cents per share compared to approximately 2 million or 22 cents per share for the same period of the previous fiscal year. Our fully funded backlog at the end of July 24 was approximately 70 million compared to approximately 78 million for the previous fiscal year ended April 30th, 24. The company's balance sheet continues to reflect a strong working capital position of approximately $21 million at July 31, 2024, and a current ratio of approximately 1.5 to 1. Additionally, the company is debt-free. The company believes that its liquidity is adequate to meet its operating investing needs for the next 12 months and the foreseeable future. I will turn the call back to Tom, and we look forward to your questions shortly.
spk08: Thanks, Steve. We can now start the question session.
spk03: Thank you very much. We will now open the floor for questions. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue. You may press star 2 if you would like to remove your question from the queue. For anyone using speaker equipment, it may be necessary to pick up your handset before you press the keys. Wait a moment whilst we poll for questions. Okay, our first question is coming from George Maremma of Pareto Ventures. George, your line is live.
spk07: Yeah, hi, thank you. Tom, I want to ask a little bit more about this technology. Well, first, are you guys working on any MEMS technology instead of crystal oscillation technology?
spk08: We are not internally developing MEMS technology, but we do utilize MEMS technology in some of our products. Of course, the MEMS devices MEMS resonators don't perform quite as well as the best quartz resonators. And, of course, it's the high-performing applications that are our specialty. But there is definitely a place for the MEMS resonators in particular, they're very good in terms of high-vibration environments. And so we are utilizing these devices in several of our newer products.
spk07: If you can say whether or not, do you have any involvement in the DARPA chip scale atomic clock work?
spk08: Currently, we're not directly involved in any work chip scale activities at DARPA. We have been in the past. We have participated on several of the efforts in the chip scale atomic clock, this going back 5 to 10 years. But currently, we do not have any chip scale atomic clock involvement with DARPA.
spk07: OK. And my next question is either for you or Steve, but on the R&D expenses this quarter, can you illuminate some of that? It kind of went up, looks like about a million dollars a year over a year. Is there any one-time aspects to that, or is that a run rate we should expect, or can you give some commentary about the R&D line?
spk08: Yeah, I'd like to comment on that. I think that... You should not extrapolate that out into the future. I think you do have to realize that something that's going to fluctuate from quarter to quarter, and I know it is a little bit higher this quarter, but, yeah, we do not anticipate significant changes increase in overall RMD expenditures going forward.
spk07: So it looks like this quarter was, what's it called, a million five to round off. What would be sort of, well, how much of the million five would you say is more sort of non-steady state of that? I guess the spirit of the question is to try to get some like for the full year anchoring of expectations there, roughly.
spk08: Yeah, I think a third to a half of that is probably unique. We have some development efforts which have been partially funded by some of our customers and partially funded by us, and this happens to be a quarter where The activity, the funding from our customers is more limited, and so we're taking on a bigger part of the development effort. But I think that we anticipate overall R&D expenditures for the year. What have we planned, Steve? I think... Approximately $3 million.
spk07: Okay, that's helpful. That's helpful to get some idea. And then same for selling and administrative. It didn't go up that much, but it's up like $500,000 year over year. Is there anything unusual about the quarter, or is that sort of a steady state now? Steve, that's your question.
spk04: No, I believe it's a steady state. Also, remember, it's a comparison last year. So the end result is things went up 3% to 5%, whatever, some a little higher, some a little lower. But I think it's going to stay constant. It's not going to continually grow.
spk07: Yeah, okay. And the gross margins were really nice this quarter. I know you mentioned in the commentary, I think Steve mentioned that There were some smaller projects with some higher margin. And then in the press release, he talked about, I forget the exact wording, but sort of higher margins and profits as the year went on. I'm assuming you're not talking about gross margins increasing from here, are you? This seems like a pretty high number.
spk08: No, I don't think it's fair to expect that the gross margins will be going up significantly. But we, you know, I think that the basic strategy is where we're really trying to keep the gross margins up on our core heritage business. And I think we've been very effective at doing that. And we anticipate we'll continue to do that going forward. But some of the newer programs, it's unrealistic to expect that we can get those high margins on all of those.
spk07: Okay. And my last one before I go, the TAM on these new projects, the addressable markets are very large. You know, if you're doing, say, 60, 70 million run rate of revenue these days, what sort of capacity do you guys have currently to – to, to grow into these addressable markets from a plant, a plant and equipment kind of standpoint.
spk08: Yeah, we, we, uh, from a plant and equipment, uh, point of view, I think we're in pretty good shape. Um, we, uh, we, I think the bigger challenge is a people challenge. Uh, uh, the, but plant and equipment, I think we've got plenty of capacity and, uh, room to expand and of course financially we're in a good position to support that but people I think we're watching very carefully we've talked about this previously we need to make sure that we have enough people to get the work done but we don't want to get ahead of ourselves and end up with too many people. And it's a challenge because the way, you know, a lot of our work is government work, and the government is fairly unpredictable when things are going to start. So this is always a challenge for us. But, you know, I think... we don't see any major problems in this regard at this point in time.
spk07: Thank you, Tom. I'm very excited by your direction. Thank you.
spk03: Thank you very much. Your next question is coming from John Gruber of Gruber McBain. John, your line is live.
spk02: Good afternoon. Is there any large contracts you're you're expecting to win or, or being competitive over the next few months. And the, and the genesis of my question is, you know, your orders were fairly, very low this quarter. Um, you have to book the build of, you know, 0.4 and, you know, orders, what is the backlog down eight. So that means orders were 7.1. Um, when are you going to be able to replenish that? Uh, uh, we, we,
spk08: We do anticipate that we're going to replenish that. I think what you're observing is what I was just talking about, the unpredictability of the government in terms of starting contracts. But we are... are definitely anticipating some additional significant new business in the current quarter and also going forward after that.
spk02: I think we're in good shape. That's good news. Could you take us through some of the projects you're hoping to win here over the next quarter, which are decent size, which will help the orders?
spk08: Well, there are several satellite, very significant satellite programs that we are anticipating, and also there are some non-satellite programs that that we anticipate also at this point. I think we don't like to get too specific about these things, at least until we definitely are under contract, but yeah.
spk02: Okay, thank you.
spk03: Thank you very much. Just a reminder there, if you have any remaining questions, you can press star 1 on your phone keypad now to join the queue. Your next question is coming from Frank Wisniewski, who's a private investor. Frank, your line is live.
spk01: Thanks, Tom. I'm really pleased with the direction you're taking the company in. I have a couple of questions. The revenue mix... between satellites and, for want of a better word, non-satellite, was pretty sharp compared to in the past, which is good. The satellite business is going well, but the other non-satellite business seemed to have a decline in the quarter. First, is that part of the reason for the gross margin expansion? And secondly, do you expect Zypher and that part of the non-satellite business to – to continue a run rate of a little over 6 million, or can we expect some improvement in that for the remainder of the year?
spk08: I, I think that, uh, you, you gotta be really careful about, uh, trying to read too much into the numbers. Uh, a couple of, uh, questions, uh, there. I think, uh, I would not say that the gross margin went up because space is up and non-space is down a little bit. I think that's an incorrect interpretation, and I think we do anticipate. I think that's really just a measure of the general lumpiness of our business, and I think we do anticipate that the Zephyr piece of things will increase. And in fact, here in the New York area, we also anticipate some non-space activity. So yeah, I wouldn't read too much into those fluctuations.
spk01: OK. Yeah, you answered the R&D question that came up previously. Did you mean to imply that as opposed to the 10% or so R&D rate of sales rate in this first quarter, that for the year it would be closer to 5%? I think... Yeah, I think...
spk08: Are those the exact numbers? Probably not, but I think that's the general trend. Yeah.
spk01: Interesting. Okay. That's good. Andy, can you give us a feel for what the unfunded backlog is?
spk04: Steve, go ahead. No, the unfunded, we don't publish that number.
spk01: Would it be fair to assume that it's significantly larger than the $70 million you have as a funded backlog?
spk04: Yes, but the end result is, like I said, you know, I can give you a number, but if it's, you know, it never gets funded or if it's Hopkins or other things like that. So we don't feel it's a valuable number to provide. It's a dangerous number.
spk01: Okay. I want to stay out of the dangerous area. That's it for me. Thank you very much. Okay, bye.
spk03: Thank you. Your next question is coming from Michael Eisner, who's a private investor. Michael, your line is live.
spk00: Hi, great gross margin there. I just had one question. In your annual report, it said new business, 70 million. Regularly, you never comment like that. I was wondering what you meant.
spk04: I don't have it in front of me. I don't know. If you want to call me tomorrow, I can look at what line you're saying and I can explain it to you. I don't have it in front of me.
spk00: All right. That's fine. Thank you.
spk03: Thank you very much. Your next question is coming from George Morema of Pareto Ventures. George, your line is live.
spk07: Yeah, thanks, Steve. I just have a little ticky-tacky question. For fiscal 25, what kind of tax rate are you thinking about?
spk04: Well, it's a very interesting question, but I think it'll be a very low tax rate. We do have NOLs. The only issue, and I'm not a tax expert, but I'll tell you, is that California has very different rules on NOLs, and we do a bunch of business in California. So that's why you see the 133... thousand dollar tax provision. Most of our income will be covered by NOLs. However, there will be some that are not covered because of California tax rules. So I don't, this year, I do not expect it to be anywhere near a normal, you know, 21%, 22%, whatever. It's not going to be. So single digit percent? Yes. Yes.
spk07: Okay. Okay.
spk04: Thanks, Steve. No problem.
spk03: Thank you very much. Your next question is coming from Tim Hathara of Synet Capital. Tim, your line is live.
spk06: Yes. Congratulations again on the gross margin. When I went over last year's transcript, you called out one-time contractual adjustment that benefited gross margins a year ago by 8%, which would have made that 31.1% or 2%, let's say, and even higher. Even the operating income was about a million, about 10 or 11 cents. Is there any particular reason why you didn't call that out today and mention that?
spk08: Do you want to address that, Steve?
spk04: That was, I think, happening Q4, correct?
spk06: That's Q4. No, that was Q1, I believe. No.
spk08: I think that was Q3 and Q4. And those were kind of one-off issues. It's not really relevant at this point.
spk06: Yeah. Okay. Yeah. Okay. And then the... Just with respect to the backlog, you know, the three contracts you announced last November, I would assume that there would be, you know, you're still sort of in the beginning stages of that, that that backlog should probably be funded over the next few quarters as well. I know that's what would be an unfunded backlog, but that's, I would assume from the last call or so that that would be coming through here shortly. Would that be accurate?
spk08: Yeah. It's absolutely correct. Those programs, those three programs you mentioned have different durations, but we're actively working on those and yeah, we have still some unfunded backlog associated with those, but a very significant amount of that is funded at this point in time.
spk06: Sounds good. And then, I guess with respect to, you made a comment in the beginning of the press release about some of the newer programs being funded. Can you give a little bit more color on that? Are you referring to government funding of a particular contract versus your own R&D?
spk08: Yeah. For the proliferated satellite systems, we have significant government funding at this point in time, but the A number of these programs that we're seeing, what's happening is nobody knows the best way to go about these satellite systems. So the government is really looking for novel kind of approaches from a number of different suppliers And in particular, they don't want to just get the same old thing from the prime contractors that they deal with all of the time. So they're looking for newer satellite companies with different ideas. And so instead of creating just a single contract for a single company, that goes through the development phase and then production. They're looking at initially funding multiple companies and then funneling this down as time goes on. So in the first phase, they may fund five companies, five prime contractors, and then they go into a second phase where maybe they fund only two of those. And then the idea is that eventually they end up with perhaps one or two suppliers in the end. So we, of course, are a supplier to the prime contractors and really what happens is that we have to accept some risk in the beginning because in order to meet the kind of schedules that are being demanded, we have to work on things. We have to invest in inventory, etc. in the initial phases when we have no guarantee that our customer will make it through to the following phases. We, of course, we are approaching this as cautiously as we can so we don't get involved where we think that the prime contractor is unlikely to proceed to the next phase, but we do not have any guarantees. And that's where the risk comes in. But initially, we are not funding any additional R&D. What we just have to account for is the risk that the programs don't continue. into later phases, and we're left with some expenditures which end up not being reimbursed ultimately.
spk06: Okay, understood. And I guess following up on my first comment about the gross margins, yeah, I'm reading from your first quarter 24 comments saying there are one-time costs Three months into July 31st, 23, there were one-time contractual and other adjustments that also benefited gross margin rate by approximately 8%. My only point is that, you know, versus a year ago, you really did a 31% gross margin versus a 44-plus here. It would be helpful if you spelled that out as well. You spelled that out on the year-ago call but didn't spell it out here. Okay. Just a comment there. Okay. Thank you.
spk04: Thank you.
spk03: Thank you very much. Your next question is coming from Richard Johns, who's a private investor. Richard, your line is live. Hi.
spk05: I'm wondering if you've set a date yet for the annual meeting.
spk08: Yes, we do have a date. I believe it's October 8th.
spk05: Okay. All right. Thank you.
spk03: Thank you very much. Your next question is coming from Frank Wisniewski, who's a private investor. Frank, your line is live.
spk01: Thank you. Just one follow-up to get a little more color on the proliferated satellites. Are those LEOs you're talking about? The what? The proliferated satellite clusters. Are those a low-earth orbit?
spk08: No. Many of them are low Earth orbit, but it's not exclusively low Earth orbit. I think the general concept going forward in the satellite business is smaller satellites, larger quantities, shorter lifetimes. And that's true not only for the low Earth orbit satellites, but also for the higher orbits, medium Earth orbit, geosynchronous orbits, etc.
spk01: Okay, and you're beginning to get into that area now? You said you had a couple of contracts, smaller ones, I assume?
spk08: Yes, yes, indeed. We are beginning. We do have some initial contracts in this arena, yes.
spk01: Would they be government or commercial?
spk08: at this point in time, their government.
spk01: Okay. Great. And it's totally speculation, but before you get any significant revenue, I imagine it would be several quarters at least before you get significant revenues from that area, right?
spk08: Yeah, I think that's a fair assumption.
spk01: Okay.
spk08: Thanks a lot. Bye. Yep.
spk03: Thank you very much. And your next question is coming from George Marima of Pareto Ventures. George, your line is live.
spk07: Yeah, hi, Tom. I was wondering if you could talk a little bit more about these quantum sensor area in terms of, like, do you currently have product or what's the product roadmap and what sort of addressable market you think there is on that and just sort of timing of that? Just a little more illumination on this area. Sure.
spk08: I think a couple of questions. Let me try to address each of them. First of all, currently we do not have any products. We're not shipping for any military missions or anything of that sort at this point in time. But we do anticipate there are The whole goal of this effort from our point of view is to develop products. So what are we talking about? I mentioned the magnetometers. This is just one example. But there are a slew of... sensor technologies that really utilize the same basic physics that we utilize in our atomic clocks. And so we, because we are really experts in those technologies and we have a lot of experience making practical products that work in the real world, we're in a really good position to take some of these more esoteric technologies, sensors like magnetometers, from the laboratory and make them into real-world products. One of the difficulties with a lot of these technologies is there have been these exquisite demonstrations in laboratory environments of of the sensitivity of some of these sensors in measuring things that people are really interested in. But getting them out of the laboratory and getting them to operate with that kind of sensitivity in the real world is always a challenge. And that's where we come in. And we're really excited. We have some activities which are just getting started with some of the major national laboratories where they've developed some of these technologies. And we have developed a really good working relationship with some of these labs because they recognize that they do not have the capabilities. Frankly, they don't have the interest either in developing practical products. and we understand the basic physics, but we also know how to make these into real-world products. So the magnetometers is one example. We talked about that. That's measuring the magnetic field of the Earth, and there are multiple applications for that sort of thing. One of them is this alternate... navigation when the GPS is not available. So it turns out that there exist really pretty good maps of the magnetic field around the surface of the Earth. They're called magnetic anomaly maps because the whole point is that the magnetic field to a first approximation looks uniform, but when you look more closely, it varies at every point on the Earth. Then it turns out that by measuring the magnetic field at an unknown location and then correlating the exact details of the measurement at that location to these maps of the magnetic anomalies, you can do a pretty good job of locating yourself, not necessarily within a couple of centimeters, like is possible with GPS in a lot of applications, but certainly within hundreds of feet. And for a lot of applications, it's certainly better than not knowing anything about your location. There are other applications that we're looking at. One of the interesting areas is so-called Rydberg sensors. And these actually are sensors in which we look at Rydberg transitions in atoms, which are very high energy sensors. levels of atoms where the atoms are almost but not quite ionized. And people have developed sensors in such a way that it's possible to utilize a cell containing rubidium as a receiving antenna for microwave frequencies. And these cells containing rubidium are exactly the same kind of cells that we use in our atomic clocks. And a lot of the techniques of measuring the microwave fields and utilizing this device as an antenna are exactly the same techniques that we use in our atomic clocks. The interesting thing about the Rydberg sensors is that Most antenna applications are really tied to the wavelength of the signals that are being measured. So typically for RF and microwave signals, these have wavelengths measured in meters. And so antennas need to be sized in several meters in diameter. But these Rydberg sensors, even though the wavelengths are longer, they have a sensitivity, you know, a cell that's one centimeter in diameter can measure with the same sensitivity as a more conventional antenna that has dimensions of meters. So there's the potential to make very, very small antennas. So these are just a couple of the kind of things that we're involved in and working, as I say, with some of the laboratories. And we are very much seeking external funding and we're beginning to have some success in getting that external funding.
spk07: Okay, that's great. Thank you.
spk03: Thank you very much. Your next question is coming from Frank Wisniewski, who's a private investor. Frank, your line is live.
spk01: Last question, I promise. It's governance more than anything. In most of the companies I've ever been involved with, the Chief Executive Officer is on the Board of Directors. Is there any particular reason that you can give us so that you're not on the Board of Directors?
spk08: Yeah, I don't think I'm in a good position to answer that question. I haven't been invited onto the Board at this point in time. Okay.
spk01: Thank you.
spk03: Thank you very much. Well, we appear to have reached the end of the question and answer session and also the end of the conference. Ladies and gentlemen, this does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful rest of the day. Thank you for your participation.
Disclaimer