Everspin Technologies, Inc.

Good afternoon and welcome to the conference call to discuss Everspin Technologies' fourth quarter and full year 2023 financial results. At this time, all participants are in listen-only mode. At the conclusion of today's conference call, instructions will be given for the question and answer session. As a reminder, this conference call is being recorded today, Wednesday, February 28, 2024. I would now turn the conference over to Cassidy Fuller, Investor Relations for Everspin.

Thank you, Operator, and good afternoon, everyone. Everspin released results for the fourth quarter and full year 2023 ended December 31, 2023, this afternoon after the market closed. I'm Cassidy Fuller, Investor Relations for Everspin, and with me on today's call are Sanjeev Agarwal, President and Chief Executive Officer, and Anuj Agarwal, Chief Financial Officer. Before we begin the call, I want to remind you that this conference call contains forward-looking statements regarding future events, including, but not limited to, the company's expectation for Everspin's future business, financial performance and goals, customer and industry adoption of MRAM technology, successful bringing to the market in manufacturing products in Everspin's design pipeline, and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends, and market conditions, and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We would encourage you to review the company's SEC filings, including the annual report on Form 10-K and other SEC filings made from time to time, in which the company may discuss risk factors associated with investing in Everspen. All forward-looking statements are made as of the date of this call and, except as required by law, the company undertakes no obligation to update or alter any forward-looking statements made on this call, whether as a result of new information, future events, or otherwise. The financial results discussed today reflect the company's preliminary estimates and are based on the information available as of the date hereof and are subject to further review by Everspin and its external auditors. The company's actual results may differ materially from these estimates as a result of the completion of financial closing procedures, final adjustments, and other developments arising between now and the time that the financial results for this period are finalized. Additionally, The company's press release and statements made during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP net income to adjusted EBITDA, which provide additional details. A copy of the press release is posted on the Investor Relations section of Everspin's website at www.everspin.com. And now I'd like to turn the call over to Everspin's President and CEO, Sanjeev Argawal. Sanjeev, please go ahead.

Thank you, Cassidy, and thanks everyone for joining us on the call today. We are pleased to report record annual revenue and profitability for 2023 with a strong gross margin, a solid balance sheet with no debt, and the highest cash balance in our company's history. During the fourth quarter, we delivered revenue of $16.7 million above the high end of our guidance range of 15.4 million to 16.4 million. This led to a record full-year revenue of 63.8 million, which was up 6% year-over-year. We delivered a gross margin of 58.1% in the fourth quarter, up from 51.4% in Q4 2022. We recorded our 11th quarter in a row of GAAP profitability, a strong focus for the company, and we ended the year with a cash balance of $36.9 million. On the product side, we had a total of 217 design wins in 2023, up 3% year over year. Our pipeline of new design wins for our MRAM products remained strong and exceeded our internal expectations. We expect our existing Toggle MRAM product customers will qualify our new industrial STT MRAM products this year, while our newer MRAM customers will qualify later in 2025. Additionally, our new industrial STT MRAM product line has continued to gain momentum in terms of design wins, showcasing the importance of ramping technology from the last few quarters. Looking ahead, we expect to begin translating these design wins into revenue in the second half of 2024. We remain committed to preserving Evertson's position as a leader in MRAM technology, and this is reflected in our extensive intellectual property portfolio and the successful licensing of our technologies. As we discussed on our last earnings call, we entered into two new radiation hard program agreements. The first related to toggle MRAM to develop reliability models for strategic radiation-hardened toggle MRAM applications. The second agreement was to license our STT MRAM technology to build a strategic radiation-hardened FPGA. This second project remains ongoing into the first quarter of this year. As the project progresses, we anticipate additional government funding to help support the build of this FPGA device. We anticipate this project to continue progressing this year. We also want to provide an update on our existing ad hoc 64 megabit STTM RAM project that we started in early 2022. We expect to receive additional silicon from our supplier, which we will use to create a demonstration of working silicon. This will be a higher margin, lower volume product, and we expect to recognize revenue from this project throughout 2024. As we mentioned on our previous call, a new key focus for us is distributed MRAM or DMRAM. As discussed, we believe our DMRAM approach is revolutionary and will give us an edge on energy efficiency and scaling as we deploy the solution in FPGAs and AI inference engines. We look forward to updating you on our progress here over the coming quarters. Turning to our outlook for 2024, We continue to have good visibility and a strong pipeline driven by solid product backlog. We expect the first half of the year to be more muted given economic weakness in China and softness in industrial and automotive sectors in part due to inventory digestion and rebalance. However, we expect a ramp in the second half of 2024 as we begin to recognize revenue from our design wins for our STTM ramp products that we have discussed over the past two years. Moreover, we expect to see continued growth in our toggle MRAM products as well as additional designments. I will now turn it over to our CFO, Anuj Agarwal, who will take you through our fourth quarter financials and first quarter 2024 guidance. Anuj.

Thank you, Sanjeev, and good afternoon, everyone. As part of our fourth quarter and full year 2023 financial results, we are pleased to announce that we have achieved record annual revenue of $63.8 million and record profitability with net income of $9.1 million in 2023. Q4 2023 also marks our 11th consecutive quarter of positive net income. In addition, we generated positive cash flow from operations resulting in the highest cash balance of our company's history of $36.9 million. We delivered strong quarterly results above the high end of our guidance range of $15.4 to $16.4 million, with revenue of $16.7 million and diluted earnings per share of $0.09. We also recorded positive cash flow from operations of $2 million. Our revenue outperformance was preliminarily driven by the success we had seen in our rad-hard deals, which have continued to progress well from a technology standpoint. MRAM product sales in the fourth quarter, which includes both toggle and STT MRAM revenue, were $12.4 million compared to $14.6 million in Q4 2022. Licensing, royalties, patents, and other revenue in the fourth quarter increased to $4.3 million compared to $1.1 million in Q4 2022. Shipments to suppliers for our high density STT product for data center applications represented 17.1% of revenue in the fourth quarter versus 4.7% of revenue in Q4 2022. Turning to gross margin, our GAAP gross margin for the fourth quarter of 2023 was 58.1%, up from 51.4% in Q4 2022. GAAP gross margin for 2023 was 58.4%, an increase from 56.6% in 2022. The year-over-year increase in gross margin is a result of being able to offset increased pricing from suppliers with increased yields on our toggle products and increased licensing revenue to offset the decrease in product sales. GAAP operating expenses for the fourth quarter of 2023 were $8.1 million compared to $7.5 million in the fourth quarter of 2022. The increase in operating expenses in the quarter compared to Q4 2022 was primarily driven by the development and enhancement of our new XPI family of SDT MRAM products and increased professional service costs. Fourth quarter 2023 net income was $2 million, or $0.09 per diluted share, based on 21.7 million weighted average fully diluted shares outstanding. This compares the net income of $0.6 million, or $0.03 per diluted share, in the fourth quarter of 2022. Fully diluted EPS of $0.09 was above the high end of our guidance range, reflecting our strategic operational discipline and ability to drive profitability in the face of macroeconomic uncertainties. Fully diluted EPS for 2023 was $0.42 compared to $0.29 in 2022. For Q4 2023 adjusted EBITDA was $3.6 million compared to $2.1 million in Q4 2022. Adjusted EBITDA for 2023 was $15.3 million, which includes the employee retention credit of $2 million compared to $11.8 million in 2022. We ended the quarter with cash and cash equivalents of $36.9 million, up from $34.9 million at the end of the prior quarter. The increase in cash quarter over quarter is a result of Eversmith's continued focus on strong cash management while growing cash flow from operations as the company continues to operate debt-free. Cash flow from operations was healthy at $2 million for the fourth quarter. For the full year, cash flow from operations was $13.1 million, up from $9.5 million in 2022. Turning to guidance, we anticipate revenue to ramp as we move through the year, with the first half a bit lower than our traditional seasonality given ongoing economic weakness in China, and softness in the industrial and automotive sectors. We expect growth to accelerate in the second half of 2024 as we begin to recognize revenue from design wins of our SDT and toggle MRAM products. Taking these factors into consideration, we expect Q1 total revenue in the range of $13.5 million to $14.5 million and gap net income per diluted share to be between break-even and five cents. In summary, we are pleased to report another solid year of growth with record annual revenue, profitability, and earnings per share. Our financial position remains strong, boasting a debt-free balance sheet and the highest cash balance in companies' history. While we expect to experience a slower start to the year, we expect a solid second half of 2024. We also expect to see additional growth in our Toggl MRAM and DRAM products, and we expect to begin recognizing revenue for our STT MRAM products. Thank you for joining us today. Operator, you may now open the line for questions.

Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star 11 on your telephone. Again, to ask a question, please press star 11 on your telephone. We do ask that you please limit yourselves to questions, and then feel free to rejoin the queue. One moment for our first question. Our first question comes from the line of Quinn Bolton of Needham & Company. Your line is open.

Hey, this is Neil Young for Quinn Bolton. Thanks for taking my questions. I first wanted to ask about the gross margin number in the fourth quarter. So you gave some color on the year-over-year change, but I was hoping you could share what drove the sequential decline in gross margin, considering that the licensing, royalties, patents, and other revenue appear to be strong.

Yeah, hi there. It's on a Jaguar wall. Yeah, so the gross margin has performed really well over last year, right? So we've been saying we'd be mid-50s in gross margin. I think what you're seeing is as the yields kind of tapered off and we had slightly lower licensing revenue compared to the prior quarter, you see a decline in the gross margin, but it's still above our internal model and expectations.

Okay, thanks for that. And then my follow-up is, last quarter you talked about some of that weakness in industrial automation in China. It sounds like that continued in the fourth quarter, given the quarter-over-quarter decline in product revenues. So did you see that weakness spread across other geographical areas and markets? And then regarding the first quarter outlook, I was hoping you could share what you're thinking across the two segments, products and licensing, and then maybe within products, what you're thinking separately for Toggle and SCTM RAMP. Thanks.

Sure, absolutely. So it's a couple questions. Let me try to go one by one. So I think from a backlog perspective, right, as you look at the backlog, you know, you're seeing challenges within the industrial and automotive space. And to your question in terms of geographies, APAC in general has shown some weakness. So Japan and China, there's been some challenges there. So we saw that starting in Q4, and we see that in Q1 as well. And then from a guidance perspective, sorry, what was the second part of the question for guidance?

Yeah, so I was wondering if you could share what you're thinking across the two segments between product and licensing, and then maybe within the product segment, what you're thinking separately for the two buckets. Thanks.

Yeah, absolutely. So for revenue, we're expecting $13.5 to $14.5 million. We expect Q1 to be strong again from a licensing and royalty perspective. We do see some decline in product revenue and so that's why we're guiding to that number. It's again mainly because of the APAC challenges and the challenges in China. We're also seeing customers looking at bleeding down inventory and concerned with their inventory and so because of that we're conservatively setting guidance of those numbers.

So just to add to that, Neil, I think we are still, you know, optimistic on the second half of this year, and we are really focusing on a few things. One is, you know, this low-density STTM RAM product that we brought out a couple of years. We're seeing good traction in the industry, even in Asia-Pac. So we expect that we'll be able to get some traction in the second half of 2024. And as you know, with all the supply chain issues that everybody had last year and the year before, Everspin actually managed the supply chain very well. And because of that, we have some – earned some goodwill with our customers. So, with our toggle customers, we are actually going back and talking to our customers to see if we can actually precipitate some design wins, actually win sockets from some of our customers. And those discussions are going well. And giving you color on the rad-hard deals, basically, we do expect the project that we are working on for the FPGA to continue throughout the year. And so we will see some, we expect to see some licensing or radar revenue from there. And then also our initial project, the 64 megabit STTM RAM will continue through this year and we will recognize revenue along the way.

Great, thanks. Sure.

Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star 11 on your telephone. Again, to ask a question, please press star 11. One moment, please. I'm showing no further questions at this time. I'd like to turn the call back over to Anuj Agarwal for any closing remarks.

Okay. With that, we conclude today's call. Thank you all for joining us, and we look forward to updating you on our progress next quarter. Operator, you may now disconnect the call. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day. you Thank you. Thank you.

Thank you. Bye.

Good afternoon and welcome to the conference call to discuss Everspin Technologies' fourth quarter and full year 2023 financial results. At this time, all participants are in listen-only mode. At the conclusion of today's conference call, instructions will be given for the question and answer session. As a reminder, this conference call is being recorded today, Wednesday, February 28, 2024. I would now turn the conference over to Cassidy Fuller, Investor Relations for Everspin.

Thank you, Operator, and good afternoon, everyone. Everspin released results for the fourth quarter and full year 2023 ended December 31, 2023, this afternoon after the market closed. I'm Cassidy Fuller, Investor Relations for Everspin, and with me on today's call are Sanjeev Agarwal, President and Chief Executive Officer, and Anuj Agarwal, Chief Financial Officer. Before we begin the call, I want to remind you that this conference call contains forward-looking statements regarding future events, including, but not limited to, the company's expectation for Everspin's future business, financial performance and goals, customer and industry adoption of MRAM technology, successful bringing to the market in manufacturing products in Everspin's design pipeline, and executing on its business plan. These forward-looking statements are based on estimates, judgments, current trends, and market conditions, and involve risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. We would encourage you to review the company's SEC filings, including the annual report on Form 10-K and other SEC filings made from time to time, in which the company may discuss risk factors associated with investing in Everspen. All forward-looking statements are made as of the date of this call and, except as required by law, the company undertakes no obligation to update or alter any forward-looking statements made on this call, whether as a result of new information, future events, or otherwise. The financial results discussed today reflect the company's preliminary estimates and are based on the information available as of the date hereof and are subject to further review by Everspin and its external auditors. The company's actual results may differ materially from these estimates as a result of the completion of financial closing procedures, final adjustments, and other developments arising between now and the time that the financial results for this period are finalized. Additionally, The company's press release and statements made during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the company's press release are definitions and reconciliations of GAAP net income to adjusted EBITDA, which provide additional details. A copy of the press release is posted on the Investor Relations section of Everspin's website at www.everspin.com. And now, I'd like to turn the call over to Everspin's President and CEO, Sanjeev Argawal. Sanjeev, please go ahead.

Thank you, Cassidy, and thanks, everyone, for joining us on the call today. We are pleased to report record annual revenue and profitability for 2023 with a strong gross margin, a solid balance sheet with no debt, and the highest cash balance in our company's history. During the fourth quarter, we delivered revenue of $16.7 million above the high end of our guidance range of 15.4 million to 16.4 million. This led to a record full-year revenue of 63.8 million, which was up 6% year-over-year. We delivered a gross margin of 58.1% in the fourth quarter, up from 51.4% in Q4 2022. We recorded our 11th quarter in a row of GAAP profitability. a strong focus for the company, and we ended the year with a cash balance of $36.9 million. On the product side, we had a total of 217 design wins in 2023, up 3% year over year. Our pipeline of new design wins for our MRAM products remained strong and exceeded our internal expectations. We expect our existing Toggle MRAM product customers will qualify our new industrial STT MRAM products this year, while our newer MRAM customers will qualify later in 2025. Additionally, our new industrial STT MRAM product line has continued to gain momentum in terms of design wins, showcasing the importance of ramping technology from the last few quarters. Looking ahead, we expect to begin translating these design wins into revenue in the second half of 2024. We remain committed to preserving Evertson's position as a leader in MRAM technology, and this is reflected in our extensive intellectual property portfolio and the successful licensing of our technologies. As we discussed on our last earnings call, we entered into two new radiation hard program agreements. The first related to toggle MRAM to develop reliability models for strategic radiation-hardened toggle MRAM applications. The second agreement was to license our STT MRAM technology to build a strategic radiation-hardened FPGA. This second project remains ongoing into the first quarter of this year. As the project progresses, we anticipate additional government funding to help support the build of this FPGA device. We anticipate this project to continue progressing this year. We also want to provide an update on our existing ad hoc 64 megabit STTM RAM project that we started in early 2022. We expect to receive additional silicon from our supplier, which we will use to create a demonstration of working silicon. This will be a higher margin, lower volume product, and we expect to recognize revenue from this project throughout 2024. As we mentioned on our previous call, a new key focus for us is distributed MRAM or DMRAM. As discussed, we believe our DMRAM approach is revolutionary and will give us an edge on energy efficiency and scaling as we deploy the solution in FPGAs and AI inference engines. We look forward to updating you on our progress here over the coming quarters. Turning to our outlook for 2024, We continue to have good visibility and a strong pipeline driven by solid product backlog. We expect the first half of the year to be more muted given economic weakness in China and softness in industrial and automotive sectors in part due to inventory digestion and rebalance. However, we expect a ramp in the second half of 2024 as we begin to recognize revenue from our design wins for our STTM ramp products that we have discussed over the past two years. Moreover, we expect to see continued growth in our Toggle MRAM products as well as additional design wins. I will now turn it over to our CFO, Anuj Agarwal, who will take you through our fourth quarter financials and first quarter 2024 guidance. Anuj.

Thank you, Sanjeev, and good afternoon, everyone. As part of our fourth quarter and full year 2023 financial results, we are pleased to announce that we have achieved record annual revenue of $63.8 million and record profitability with net income of $9.1 million in 2023. Q4 2023 also marks our 11th consecutive quarter of positive net income. In addition, we generated positive cash flow from operations resulting in the highest cash balance of our company's history of $36.9 million. We delivered strong quarterly results above the high end of our guidance range of $15.4 to $16.4 million, with revenue of $16.7 million and diluted earnings per share of $0.09. We also recorded positive cash flow from operations of $2 million. Our revenue outperformance was preliminarily driven by the success we had seen in our rad-hard deals, which have continued to progress well from a technology standpoint. MRAM product sales in the fourth quarter, which includes both toggle and STT MRAM revenue, were 12.4 million compared to 14.6 million in Q4 2022. Licensing, royalties, patents, and other revenue in the fourth quarter increased to 4.3 million compared to 1.1 million in Q4 2022. Shipments to suppliers for our high-density STT product for data center applications represented 17.1% of revenue in the fourth quarter versus 4.7% of revenue in Q4 2022. Turning to gross margin, our GAAP gross margin for the fourth quarter of 2023 was 58.1%, up from 51.4% in Q4 2022. GAAP gross margin for 2023 was 58.4%, an increase from 56.6%, in 2022. The year-over-year increase in gross margin is a result of being able to offset increased pricing from suppliers with increased yields on our toggle products and increased licensing revenue to offset the decrease in product sales. GAAP operating expenses for the fourth quarter of 2023 were $8.1 million compared to $7.5 million in the fourth quarter of 2022. The increase in operating expenses in the quarter compared to Q4 2022 was primarily driven by the development and enhancement of our new XPI family of SDT MRAM products and increased professional service costs. Fourth quarter 2023 net income was $2 million, or $0.09 per diluted share, based on 21.7 million weighted average fully diluted shares outstanding. This compares the net income of $0.6 million, or $0.03 per diluted share, in the fourth quarter of 2022. Fully diluted EPS of $0.09 was above the high end of our guidance range, reflecting our strategic operational discipline and ability to drive profitability in the face of macroeconomic uncertainties. Fully diluted EPS for 2023 was $0.42 compared to $0.29 in 2022. For Q4 2023 adjusted EBITDA was $3.6 million compared to $2.1 million in Q4 2022. Adjusted EBITDA for 2023 was $15.3 million, which includes the employee retention credit of $2 million compared to $11.8 million in 2022. We ended the quarter with cash and cash equivalents of $36.9 million, up from $34.9 million at the end of the prior quarter. The increase in cash quarter over quarter is a result of Eversmith's continued focus on strong cash management while growing cash flow from operations as the company continues to operate debt-free. Cash flow from operations was healthy at $2 million for the fourth quarter. For the full year, cash flow from operations was $13.1 million, up from $9.5 million in 2022. Turning to guidance, we anticipate revenue to ramp as we move through the year, with the first half a bit lower than our traditional seasonality given ongoing economic weakness in China, and softness in the industrial and automotive sectors. We expect growth to accelerate in the second half of 2024 as we begin to recognize revenue from design wins of our SDT and toggle MRAM products. Taking these factors into consideration, we expect Q1 total revenue in the range of $13.5 million to $14.5 million and gap net income per diluted share to be between break-even and five cents. In summary, we are pleased to report another solid year of growth with record annual revenue, profitability, and earnings per share. Our financial position remains strong, boasting a debt-free balance sheet and the highest cash balance in companies' history. While we expect to experience a slower start to the year, we expect a solid second half of 2024. We also expect to see additional growth in our Toggl MRAM and DRAM products, and we expect to begin recognizing revenue for our STT MRAM products. Thank you for joining us today. Operator, you may now open the line for questions.

Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star 11 on your telephone. Again, to ask a question, please press star 11 on your telephone. We do ask that you please limit yourselves to questions, and then feel free to rejoin the queue. One moment for our first question. Our first question comes from the line of Quinn Bolton of Needham & Company. Your line is open.

Hey, this is Neil Young for Quinn Bolton. Thanks for taking my questions. I first wanted to ask about the gross margin number in the fourth quarter. So you gave some color on the year-over-year change, but I was hoping you could share what drove the sequential decline in gross margin, considering that the licensing, royalties, patents, and other revenue appeared to be strong.

Yeah, hi there. It's on a Jaguar wall. Yeah, so the gross margin has performed really well over last year, right? So we've been saying we'd be mid-50s in gross margin. I think what you're seeing is as the yields kind of tapered off and we had slightly lower licensing revenue compared to the prior quarter, you see a decline in the gross margin, but it's still above our internal model and expectations.

Okay, thanks for that. And then my follow-up is, last quarter you talked about some of that weakness in industrial automation in China. It sounds like that continued in the fourth quarter, given the quarter-over-quarter decline in product revenues. So did you see that weakness spread across other geographical areas and markets? And then regarding the first quarter outlook, I was hoping you could share what you're thinking across the two segments, products and licensing, and then maybe within products, what you're thinking separately for Toggle and SCTM ramp. Thanks.

Sure, absolutely. So it's a couple questions. Let me try to go one by one. So I think from a backlog perspective, right, as you look at the backlog, you know, you're seeing challenges within the industrial and automotive space. And to your question in terms of geographies, APAC in general has shown some weakness. So Japan and China, there's been some challenges there. So we saw that starting in Q4, and we see that in Q1 as well. And then from a guidance perspective, sorry, what was the second part of the question for guidance?

Yeah, so I was wondering if you could share what you're thinking across the two segments between product and licensing, and then maybe within the product segment, what you're thinking separately for the two buckets. Thanks.

Yeah, absolutely. So for revenue, we're expecting $13.5 to $14.5 million. We expect Q1 to be strong again from a licensing and royalty perspective. We do see some decline in product revenue and so that's why we're guiding to that number. It's again mainly because of the APAC challenges and the challenges in China. We're also seeing customers looking at bleeding down inventory and concerned with their inventory and so because of that we're conservatively setting guidance of those numbers.

So just to add to that, Neil, I think we are still, you know, optimistic on the second half of this year. And we are really focusing on a few things. One is, you know, this low-density STTM RAM product that we brought out a couple of years. We're seeing good traction in the industry, even in Asia-Pac. So we expect that we'll be able to get some traction in the second half of 2024. And as you know, with all the supply chain issues that everybody had last year and the year before, Everspan actually managed the supply chain very well. And because of that, we have some – earned some goodwill with our customers, so with our toggle customers. So we're actually going back and talking to our customers to see if we can actually precipitate some design wins, actually win sockets from some of our customers. And those discussions are going well. And giving you color on the rad-hard deals, basically, we do expect the project that we are working on for the FPGA to continue throughout the year. And so we will see some, we expect to see some licensing or radar revenue from there. And then also our initial project, the 64 megabit STTM RAM will continue through this year and we will recognize revenue along the way.

Great, thanks.

Sure. Thank you. Again, ladies and gentlemen, if you'd like to ask a question, please press star 11 on your telephone. Again, to ask a question, please press star 11. One moment, please. I'm showing no further questions at this time. I'd like to turn the call back over to Anuj Agarwal for any closing remarks.

Okay. With that, we conclude today's call. Thank you all for joining us, and we look forward to updating you on our progress next quarter. Operator, you may now disconnect the call. Thank you.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.