Monolithic Power Systems, Inc.

Good day, ladies and gentlemen, and welcome to the Monolithic Power Systems Inc. Q2 2019 earnings conference call. At this time, all participants are on the listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. Should anyone require assistance at any time during the conference, please press star then zero on your touchtone telephone. Also, as a reminder, this conference call is being recorded. At this time, I'd like to turn the call over to your host, Bernie Bleggen, Chief Financial Officer. Please go ahead.

Thank you. Good afternoon, and welcome to the second quarter 2019 Monolithic Power Systems Conference Call. Michael Singh, founder and CEO of MPS, is with me on today's call. In the course of today's conference call, we will make forward-looking statements and projections that involve risk and uncertainty. which could cause results to differ materially from management's current views and expectations. Please refer to the Safe Harbor Statement contained in the earnings release published today. Rifts, uncertainties, and other factors that could cause actual results to differ are identified in the Safe Harbor Statements contained in the Q2 earnings release and in our SEC filings, including our Form 10-K, filed on March 1, 2019, and Form 10-Q, filed on May 10th, which are accessible through our website, www.monolithicpower.com. NPS assumes no obligation to update the information provided on today's call. We will be discussing gross margin, operating expense, R&D and SG&A expense, operating income, interest and other income, net income, and earnings on both a GAAP and a non-GAAP basis. These non-GAAP financial measures are now prepared in accordance with GAAP and should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. A table that outlines the reconciliation between the non-GAAP financial measures to GAAP financial measures is included in our earnings release, which we have filed with the FCC. I would refer investors to the Q2 2018, Q1 2019 report, and Q2 2019 releases, as well as to the reconciling tables that are posted on our website. I'd also like to remind you that today's conference call is being webcast live over the Internet, and will be available for replay on our website for one year, along with the earnings release filed with the SEC earlier today. MPS achieved record second quarter revenue of $151.0 million, 6.8% higher than revenue in the first quarter of 2019, and 8.0% higher than the comparable quarter in 2018. Looking at our revenue by market. In our computing and storage market, second quarter revenue of $41.6 million increased $2.4 million, or 6.1% from the first quarter of 2019. Computing and storage revenue represented 27.5% of MPS's second quarter 2019 revenue. Storage revenue was down from the first quarter of 2019. The computing revenue increased. Nevertheless, the growth in computing was slower than what we had planned for back in the second half of 2018. The slower than anticipated growth rate was primarily due to customers delaying product launches or absorbing overcapacity. Having said that, our design activity in the first half of 2019 with top-tier customers reached an all-time high in server, storage, and AI applications, positioning MPS for long-term success in these critical markets. In our consumer markets, revenue of $43.8 million increased 14.8% from the first quarter of 2019 to and represented 29.0% of our second quarter 2019 revenue. The sequential quarterly revenue increase reflected improved sales of products for wearable applications and a seasonal increase in certain legacy consumer markets. Second quarter 2019 industrial revenue of $22.4 million increased 5.2% from the first quarter of 2019 due primarily to increased revenue for smart meters and point-of-sale systems. Industrial represented 14.9% of our total second quarter 2019 revenue. Second quarter automotive revenue of $21.2 million grew 3.5% over the first quarter of 2019. Similar to computing, revenue growth in automotive revenues was lower than we had anticipated three-quarters earlier due to a slowdown in the broader market, and like computing. Our superior technology and design activities, both in standard and custom products, have been widely accepted by Tier 1 customers. The range of applications MPS encompasses includes infotainment, smart lighting, ADOS, and autonomous driving. Again, we believe MPS is well-positioned to accelerate growth in automotive when the market returns. Automotive was 14.1% of MPS's total second quarter 2019 revenue. Second quarter 2019 communications revenue of $22.0 million was essentially flat with the first quarter of 2019. Sales for our legacy router and wireless applications decreased sequentially while infrastructure sales, including 5G network, increased. As 5G spending ramps, MPS is well positioned to benefit as existing design wins move to revenue. Communication sales represented 14.5% of our total second quarter 2019 revenue. Gap gross margin was 55.1%. 10 basis points lower than the first quarter of 2019 and 40 basis points lower than the second quarter of 2018. Our GAAP operating income was $20.1 million compared to $21.7 million reported in the first quarter of 2019 and $24.9 million reported in the second quarter of 2018. Non-GAAP gross margin for the second quarter of 2019 was 55.6%, matching the gross margin reported in the first quarter of 2019, but 40 basis points lower than the second quarter from a year ago. Our non-GAAP operating income was $43.7 million, compared to $39.6 million reported in the prior quarter and $41.4 million reported in the second quarter of 2018. Let's review our operating expenses. Our GAAP operating expenses were $63.1 million in the second quarter of 2019 compared with $56.3 million in the first quarter of 2019 and $52.7 million in the second quarter of 2018. Our non-GAAP second quarter 2019 operating expenses were $40.3 million up from the $39.0 million we spent in the first quarter of 2019 compared and up from the $36.9 million reported in the second quarter of 2018. The difference between non-GAAP operating expenses and GAAP operating expenses for the quarters discussed here are stock compensation expense and income or loss on an unfunded deferred compensation plan. For the second quarter of 2019, stock compensation expense, including approximately $663,000 charged to Cost of goods sold was $22.7 million, compared with $16.0 million recorded in the first quarter of 2019. Switching to the bottom line, second quarter 2019 GAAP net income was $20.7 million, or 45 cents for fully diluted share, compared with $26.2 million, or 58 cents per share, in the first quarter of 2019, and $24.2 million, or 55 cents per share, in the second quarter of 2018. Q2 non-GAAP net income was $41.9 million, or 92 cents per fully diluted share, compared with $37.9 million, or 84 cents per share, in the first quarter of 2019, and $40.0 million, or 90 cents per share, in the second quarter of 2018. Fully diluted shares outstanding at the end of Q2 2019 were 45.5 million. Now let's look at the balance sheet. Cash, cash equivalents and investments were 369.7 million dollars at the end of the second quarter of 2019 compared to 362.3 million dollars at the end of the first quarter of 2019. For the quarter, MPS generated operating cash flow of about 44.1 million dollars. compared with Q1 2019 operating cash flow of $38.8 million. Second quarter, 2019 capital spending totaled $19.3 million. Accounts receivable ended the second quarter of 2019 at $55.4 million, representing 33 days of sales outstanding, which was five days lower than the 38 days reported at the end of the first quarter of 2019 and two days lower than 35 days at the second quarter of 2018. Our internal inventories at the end of the second quarter of 2019 were $143.6 million, up from $142.5 million at the end of the first quarter of 2019. Days of inventory of 193 days at the end of the second quarter of 2019 were 12 days lower than at the end of the first quarter of 2019. As we've said in the past, we are comfortable carrying a higher than normal level of inventory during a downturn given that most of our products are not customer application specific and carry minimal obsolescence risk. Having said that, we do not expect meaningful reductions in the near term and inventories are likely to remain elevated through the second half of 2019. I would now like to turn to our outlook for the third quarter of 2019. We are forecasting Q3 revenue in the range of $162 to $168 million. We also expect the following. Gap gross margin in the range of 54.9 to 55.5%. Non-gap gross margin in the range of 55.3 to 55.9%. Total stock-based compensation expense of $18.3 million to $20.3 million, including approximately $600,000 that would be charged to cost of goods sold. GAAP R&D and SG&A expenses between $57.1 million and $61.1 million. Non-GAAP R&D and SG&A expenses to be in the range of $39.4 million to $41.4 million. We are continuing to invest in our new 55 nanometer process technology on 12-inch wafers and are selectively adding headcount despite slower revenue growth. Litigation expense should range between $400,000 to $600,000. Interest income is expected to range between $1.4 million to $1.6 million. fully diluted shares to be in the range of 45.3 to 46.3 million shares. In conclusion, for the remainder of 2019, we remain cautious amidst the market uncertainty. I believe MPS is well positioned for long-term growth. I will now open the phone lines for questions.

Thank you, sir. Ladies and gentlemen, if you have a question at this time, please press star and 1. If your question has been answered or you wish to move yourself in the queue, please press the pound key. Our first question comes from Rick Schaefer from Oppenheimer. Please go ahead.

Hi. Congratulations, guys, on results. I know it's not easy to do in this environment. So maybe my first question is if you could just give some more color, maybe parse out the areas of relative strength heading into 3Q, sort of which segments, just at a high level, which segments you expect to grow and maybe which segments might be lagging a little bit.

Thanks, Rick.

They're kind of all lagging a little bit now.

If you look sequentially, automotive is expected to probably contribute both in terms of dollar and also percentage gain. Likewise, I'd say that industrial, which you know can be rather lumpy business, should show some improvement from Q2 to Q3. Again, when you look at the comparison against last year's Q3, To Michael's point exactly, consumer usually is the bellwether, and in fact, that has remained down from last year. And industrial will be sort of flattish, but we do expect to see continued improvements in both automotive and communication year over year.

And maybe on that topic, Michael or Bernie, Maybe just a little color on what's happening with China auto. It doesn't sound like it, but I guess you did mention auto is picking up a little. So is China specifically, are you seeing signs of pickup there? And maybe as part of your answer on auto, I'm curious just if you could talk about some of the design momentum you guys have there with auto OEMs, tier ones, sort of how the pipeline is stacking up through all this downturn. I assume there's still a fair amount of design activity going on.

Yeah, our auto goes up slightly. I don't know if this is from a noise or just on a certain project where we're still very small in the entire auto segment. Our market share is very small. And in terms of engagements and the designing activities, we actually surprised ourselves. After we qualified from first-tier suppliers, including OEMs, and the level of engagement and the level of meetings that they requested, it cannot be better.

And just as a finishing point there, I think that the results that we saw in the first half of the year were colored mostly by the soft demand, particularly in the China market. And then the uptick that we expect to see in the second half of the year is the result of the new model years being rolled out, particularly in North America, Europe, and Korea.

Thanks. And then just a quick housekeeping question, if I can sneak it in. Just on your Huawei exposure, I know it's small for you guys. I think you said low single digits. I mean, Some companies have talked about being able to ship, you know, basically everything because they're non-national security. Can you give some color on what you're able to ship to Huawei? You know, sort of how much of that low single-digit exposure are you able to actually ship out to them? Thanks.

Sure. There's a couple points there. You know, I mean, obviously in the middle of May, that's when the Department of Commerce added Huawei to the entity list. And so, like our peer companies, we did an evaluation of how the ban would affect us and how to implement it. And after we completed that review, we concluded that MPSICs are really not subject to the entity list prohibitions. We basically determined that certain components were deemed compliant within the sales ban framework. And so we have resumed shipping. One thing to add is that Historically, Huawei has been a very small percentage of our business, and I'm not talking to them in total here, but I am saying that in China in particular, with the level of uncertainty related to tariff and trade, that we did see a step up in volumes in Q2 as certain customers built inventories in advance of any further bans.

not depend on Huawei to grow.

Got it. Thanks again, guys. Thank you.

Our next question comes from William Stein from SunTrust. Please go ahead.

Great. Thanks for taking my questions. Normally, downturns, in my experience, tend to trigger an increased pace of innovation. Customers sometimes look to use the weak demand environment to sort of leapfrog competitors. And I'm wondering if you're seeing this trend now and how it affects your view to your future revenue growth.

Yeah, Will, I think that is a very accurate observation. And particularly when we look at areas that really are exciting for our future, in particular within computing, We've talked about cloud-based server and AI, even storage, you know, which has been down now for about three to four quarters. We're seeing a very high level of engagement, and the same can be held true for automotive in particular. And a point that Michael made earlier that I do want to emphasize is that in the past, you know, we've had to go out and really get them excited at MPS. And now that engagement is starting to occur where they're calling us and setting up meetings at the executive level. So we're not going to try and tell you the timing of when the market's going to turn around. From a theme for this quarter, we really believe that we're well positioned to take advantage of it.

Maybe one more if I can squeeze it in. The Q3 guide is remarkably in line with consensus, but I think – at least by my analysis, it looks slightly above typical seasonality, so still not as robust year-over-year growth as we've come to expect from monolithic, but looking like maybe we're passing through the bottom in terms of year-over-year growth. When we think about Q4, while you're not guiding it, I think normal seasonality is up mid to high singles. Any reason to think that would be better or worse than typical?

Think of Q4 usually as we are slightly lower and not up a single digit. And in the last few years, the last two or three years, the seasonality, we don't know what's our seasonality. When you grow 16, 17, 20-some percent. And So the seasonality is not very clear to us. But the Q4, I think we are either flat or slightly down. I don't know, I forgot the last year number, maybe slightly up. Or the last year was down.

Yeah, last year was down. The year before, we were actually up, and that was after we started to get traction in the server business. Yeah, and... We're actually continuing the theme, Will, that in both Q1 and Q2, however you define sort of our historic norms, we're underperforming in Q3 by about two to three percentage points. But I think that Michael's point is spot on that we've had a lot of volatility, particularly in the last two years, as we've had a change in sales next. So it's not as predictive anymore. as it once was, but I do feel good to add your point that we basically stayed in a good position relative to expectations for the quarter.

One more thing. I very much agree with you. This year we can we don't have a clear view on how the industrial growth and only we can do this as is to do our best effort to have a design wing and to engage with our customer closely. Great.

Thank you.

Thank you. Our next question comes from George Svanberg from Stiefel, Nikolaus. Please go ahead.

Thank you, and congratulations on the results in this environment. First question, the consumer revenue, the yearly declines continue to improve, and as we look at the September quarter, should we expect that trend to continue? Again, I'm not asking for that to be up or anything, but it does seem like the yearly declines are certainly moderating each quarter here.

Tori, thank you very much for your earlier compliment. The consumer is a little bit hard to handicap. I think that you're aware that we parse it into three general groups, high value, gaming, and traditional or legacy. Historically, I think that legacy is has had a certain seasonality that was relatively predictable. But even that's gone out the window as we've seen a softening of demand, you know, more clearly in Asia, China, but not exclusively there. And actually the high value, which has a lot of exposure to home appliances, actually has rebounded nicely and is continuing strong And I think you're also aware that as we start to go into the holiday season that gaming is going to pick up. So it's not clear that I would be cautious in using any term like bottomed out or that. It's more that we have a slightly different mix within those three buckets.

That's very helpful. And as we start to look at your design activity, it sounds like you're getting a lot of traction with what we refer to as really high-end processors, you know, whether these are AI engines, you know, in server, maybe even in 5G equipment. Could you elaborate a little bit on that? And, you know, should we start to see some revenues already from those high-end processors this year, or is this more of a 2020 growth story?

Yeah, I think those are, to the extent that they're commercially available, they're very early stage, and we don't have enough momentum to clearly identify a trend line. As we said, take 5G, for example. We're very well positioned with our technology to on any number of different platforms with any number of different companies in any of the representative geographies. So we think that, again, this diversification both in far of the technology and what our point of entry is gives us a lot of confidence that we'll do well. But again, it's going to take time for that market to develop. I think initially That and some of the other high-end processing, which you can include AI in, are going to start out a little bit lumpy before a true ramp becomes apparent.

That's great. Just one last question. You mentioned 15 watts per nanometer on 12-inch. I assume you're not getting any benefit from that yet, probably more 2020. Would that be more of an enhancer to gross margin, or would you use that process node to basically continue to accelerate the growth?

Yeah, I don't know if this is 15.5 nanometers. Is it accurate enough? Okay. Yeah, we do use two nodes. We do use a 12-inch, and we're starting two 12-inch wafers. And those are, as you said, these are used – we always use a trading edge of advanced equipment. And when these equipment are available, then we move it in. And when we started development, always about two or three years later, it would benefit our cost and also the features that we can offer to our customers.

And I think an example of that is if you look at Yeah, if you look at how our fifth generation rolled out, we're now getting the benefits of that, even though that that has been in the market for about the last three and a half, four years.

Sounds good. Thank you, Bernie.

Thank you. Our next question comes from Alessandra Vecchi from William Blair. Please go ahead.

Hey, congratulations on the good quarter. Just a quick question on the gross margins. It's not a surprise that they've sort of been trending flat over the last few quarters. But if we look out into next year, what do you sort of need to see happen to resume that 20 basis points of sequential improvement? Is it really – is it a mixed situation or is it predominantly an in-demand situation? Okay.

The one begets the other. So we need to see an increased ramp in overall demand. But really, if you look at each of the last four or five quarters, we've actually seen sequential decreases in the sales mix.

Yeah, we've built our production for much higher capacities. And now we see the growth are slower. So that is partially also impacted in the growth margins.

No, that makes perfect sense. And then just expand on Tori's comment or question with regards to some of the strong first half design wins, ramping in the second half. or starting to trickle in, I should say. On the AI front there, are you predominantly talking about the 48 volt product, or how should we think about how you play in AI on the processor front?

Yeah, we have a design wing, and we have a design wing, and 48 volts, we believe, is an inevitable solution as power keeps going up. And so we started a few years ago, we developed that kind of a solution and it's kind of widely accepted. And we expect to have a revenue to ramp now. But the We don't know if customers push all the projects, but we're still expecting a ramp in the near future, in the next couple of quarters. Perfect.

Thanks. That's it for me.

Thanks, Alex. Thank you. Our next question comes from David Williams from Loop Capital. Please go ahead.

Hey, thanks so much, and congratulations on navigating this tough environment. First, I guess I wanted to see if you could kind of talk maybe about your channel inventories and how you're feeling about that. It sounds like maybe some of the appliance over inventory has been digested a bit. But throughout your other markets, how do you, I guess, do you get a sense on how your inventory levels are there and just kind of how you expect those to trend over the next quarter or two?

Yeah, and again, I just want to clarify, you said channel inventories?

Yes.

Yeah. So I think at the end of Q1, we acknowledged that we were above our normal range for channel inventory. Some of that had to do with sort of a back-end loading of the quarter where we Sales that we made in the last month of the quarter did not go out to the final end customer You know in q2 we had much more balanced sales on our side by month And the channel responded and actually particularly in China and Taiwan we've seen a significant reduction we're back down within our sort of comfort zone and with the channel inventories, it's a little bit hard to call out by necessarily end market application. It's easier. We have greater visibility as it relates to geography.

Great. Thanks. And, Murray, you had noted prior that you thought that you could maintain kind of revenue growth that was 10% to 15% above what the industry was averaging. Do you still feel comfortable with that? And just kind of looking at where you are this year, do you think you can do better? Or how do you, I guess, is that still a good stick to measure by?

Yeah, well, I was saying earlier, this is kind of an uncertain market now in the And our customers will not give us a very clear feedback. So these are out of our control. What we do the best is they have a product designing. And one way or the other, they will turn into a revenue.

Yeah, and just to agree with Michael's point there is that it's just very – difficult for us to project further than one quarter out. And there's sort of an interesting – we have the elements in the business that are within our control, and then we have other elements that aren't necessarily directly within our control. And to the extent that we can continue to secure design wins and get the customer engagement – I think that we're doing a very good job both in execution within the quarter, but also as far as securing our longer-term future.

Yeah, we're doing a good job because we ignored all the micro, okay, total micro economy. And we do, we can do the best where we can control it. Sure.

Okay, great. And then one last one for me, if you don't mind. Just kind of look at the computing and storage. How are you seeing, I guess, the demand for the hopper-scale data centers? And I guess if you're thinking about that segment in particular, where do you think you see the greatest degree of demand today, and how do you think that plays out for the rest of the year?

I think that I can acknowledge that somewhere about Q4 and certainly in Q1 and for a portion of Q2, that we saw a dip in demand by hyperscale. We believe, based only on our experience, that it was broad-based. It was not just related to an individual company. However, if you look particularly at the long-term demand forecast for e-commerce, eventually we believe that a lot of this has to do with just absorbing excess capacity or inventory that it built on their shelves and that the demand for e-commerce based solutions is going to expand and there will have to be renewed investment. I don't know exactly when that's going to start to pick up and it might be not even across the board. For example, we might see a little bit more on the server side before we see it in storage. but I think that sometime in the next few quarters it will return to building momentum again.

Great. Thanks, Robert Teller, and good luck on the quarter. Thank you.

Thank you. Next question comes from Quinn Bolton from Needham. Please go ahead.

Hey, guys. This is Michelle. I'm for Quinn. Thanks for taking the question. So I guess the first one is – Consensus estimates for 2020 as far as, like, revenue growth, it looks like the street has you at 19%. So given these, you know, macro uncertainties going on, just wondering if you could discuss the revenue growth drivers in 2020, what would be driving towards, you know, this growth?

Yeah, so let me restate the question, if you don't mind. You have two there. The one is that currently the street has us growing at just under 19% for 2020. And within that, you know, what growth drivers do we believe are significant in those assumptions? Correct. Is that correct?

Yeah. I don't know. Is that 19% now? Yeah. I think a wee bit. kind of committed that we can grow better than the industry average by 10 to 15%. That's what we're committing. And even that, I look at our history, that's what we have done in the past. And this year's I think it's the same as this year. It's not very certain, and we look back, and it seems like 2012 and 2008, okay? And those are very uncertain years, and that's what we achieved.

And I think that as far as the growth drivers, and again, Michael's right, there's too much uncertainty to sort of affirm or even not say that we can't live up to the expectations. But I think you're going to see continued increased demand for our products, particularly in computing, automotive, and we're also going to see the initial uptick in the communications markets.

That's helpful, thanks. And then one just on the project delays, I think you guys kind of touched on it, but I was just wondering, you know, if there's an update as far as if you've seen an increase in any delays or, you know, how the delays you saw since the first quarter call have changed over the past quarter?

Yeah, we don't. It's difficult. Some are big project delays, some small project advance. So the weight of each project, we don't have a very clear method of accounting. And the companies and the way we migrate, we become like 3,000, 4,000 products. And we have, again, at any given time, we have a few thousand projects going on. And so we don't know.

Okay. And just one clarification. For 3Q, computing and storage, did you say, you know, what was the trend that you said for that in market?

Yes. Overall, we see a delay, delay of launch and a delay of projects. I agree. And in we see overall slowing down. And starting from earlier this year and even now, similar conditions.

And one thing to add there is the second half of 2018, actually, we did very well with computing and storage. So we're going into a situation where we see some signs of improving momentum. but we have more difficult comps in the second half of the year.

Okay. That's really helpful. That's all for me. Thanks, guys.

Yeah. Thank you. Thank you. Our next question comes from Matt Ramsey from Cowan. Please go ahead.

Hey, guys. This is Josh Buckhalter on behalf of Matt. Let me echo my congrats on some solid results in the top backdrops. I guess I wanted to circle back to industrial. It took a step down compared to last year, but it's still growing solid double digits in a notably weak environment. I realize it's fragmented, but are there any verticals in particular that you would like to call out that are help insulating you here?

Yeah, I think that if you're looking at sort of sequential growth, I think we called out the fact that smart meters and point-of-sale systems picked up to a degree that frankly, we hadn't fully anticipated. And when you look at the year over year comparisons, remember, our industrial tends to be a little more fragmented. We've got like four verticals that we depend on. And in fact, power sources and security in addition to smart meters, seem to be continuing with good momentum right now?

I think, as Bernie said, our industrial market is fragmented. Our entire company is fragmented. And the beauty is, okay, if one segment is slowed down, the other one will pick up. So nothing is more than a bigger percentage of total revenues. And when we look at overall, NPS will grow this year. And will they grow the same pace as last year? We cannot say it.

Understood, and I appreciate the color. And then as I follow up, I think it's been a couple quarters, but I was hoping maybe you could provide an update on e-commerce and e-motion, if there's anything to share there. Thank you.

Still very early, early stage. We try to figure out why people tell us they have a good solution, but then nobody buys it. Okay. And at least we're not selling the hotcakes. And we are still in the midst of figuring out, you know, why in the house. But we committed. And as long as the people say, our customers say there's good solutions and good We will keep figuring out. But overall revenues and also design customer request is I don't have a clear number, but increases tremendously. And we have difficulty to handle that. And that's a very, very good good encouragement. But once we feel we have a handle on it, we'll give a revenue commitment.

And again, most of the comment is related to the e-commerce platforms. Actually, in eMotion, we're seeing very good engagement this year with products that are beginning to ramp in revenue. and there is a pretty broad and diverse number of end state applications that we probably wouldn't have anticipated even as recent as two years ago. But I think that that is holding up two expectations for the current year and also as we look ahead to the next year or two.

I appreciate the candor as always. Thanks, guys.

Okay, thank you. Thank you. Ladies and gentlemen, if you have any further questions at this time, please press star and 1. If you have a question at this time, please press star 1. I shouldn't have further questions in the queue at this time. I'd like to turn the call back to Bernie Leggin, Chief Financial Officer, for closing remarks.

Great. I'd like to thank you all for joining us for this conference call, and look forward to talking to you again during our third quarter conference call, which will likely be at the end of October. Thank you, and have a nice day.

Thank you, ladies and gentlemen, for attending today's conference. This concludes the program. You may all disconnect.

Good day.