Universal Electronics Inc.

Q2 2022 Earnings Conference Call

8/4/2022

spk01: Good afternoon. My name is Kathy, and I will be your conference operator for today. At this time, I would like to welcome everyone to the Universal Electronics Q2 2020-2022 Financial Results Conference Call. Onlines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press star one. Thank you. And Kirsten Chapman of LHA Investor Relations, you may begin your conference.
spk00: Thank you, Kathy. And thank you all for joining us for the Universal Electronics Second Quarter 2002 Financial Results Conference Call. By now, you should have received a copy of the press release. If you have not, please contact LHA at 415-433-3777 or visit the Investor Relations section of the website. This call is being broadcast live over the Internet, and a webcast replay will be available for one year at www.uei.com. Any additional updated material, non-public information that might be discussed during this call will be provided on the company's website, where it will be retained for at least one year. You may also access that information by listening to the webcast replay. During this call, management may make forward-looking statements regarding future events and future financial performance of the company and caution you that these statements are just projections and actual results or events may differ materially from those projections. These statements include, The company's ability to timely develop and deliver new technologies and technology upgrades and related products introduced this year, including leveraging our wireless connectivity capabilities to the smart home automation security and hospitality. And our groundbreaking line of ultra-low power and energy harvesting remote controls designed for sustainability that will be accepted by our existing customers and attract new customers. Our ability to manage the global supply chain issues which includes material shortages, that our industry has been dealing with, particularly with respect to obtaining semiconductors, as well as the effects of the natural disasters and public health crises, including the COVID-19 pandemic, both of which continue to have both a direct and indirect impact on our sales. The continued successful collaboration with existing and new customers in developing and introducing next generation products and Operating systems and technologies which result in increased sales opportunities for the company. Management's ability to continue to manage its business, inventories, and cash flows to achieve its net sales margins and earnings through its mitigation efforts. The impact of the company's financial results that it may experience due to the supply chain issues, material shortages, and inflationary pressures we and consumers are experiencing. The company undertakes no obligation to revise or update these statements to reflect events or circumstances that may arise after today's date and refers you to the press release mentioned at the onset of this call and the documents that the company filed with the SEC, including its annual report on Form 10-K and the periodic reports filed since then. In management's financial remarks, adjusted non-GAAP metrics will be referenced. Management provides adjusted non-GAAP metrics because it uses them for budget planning purposes and for making operational and financial decisions and believes that providing these non-GAAP financial measures to investors as a supplement to GAAP financial measures helps investors evaluate UEI's core operating and financial performance and business trends consistent with how management evaluates such performance and trends. In addition, management believes these measures facilitate comparisons with the core operating and financial results and business trends of competitors and other companies. A full description and reconciliation of the adjusted non-GAAP measures versus GAAP is included in the company's press release issued today. On the call today are Chairman and Chief Executive Officer Paul Arling, who will deliver an overview, and Chief Financial Officer Brian Hackworth, who will summarize the financials. Paul will then return to provide closing remarks. It's now my pleasure to introduce Paul Arling. Please go ahead, sir.
spk02: Good afternoon, and thanks for joining us today. Our resilient business model, technological innovation, commitment to service, and financial discipline built our rock-solid foundation. This base sets the stage for long-term growth. In fact, we have successfully leveraged our wireless connectivity advantages to address new use cases and penetrate additional markets such as home automation, HVAC, lighting, and blinds. This strategy is paying dividends as we have continued to win projects in home automation and security this year. Our performance for the second quarter was good as revenue met our expectations, and EPS was higher than expected at 66 cents per share. Over the past few years, we have been asked some difficult questions. When will logistics lighten up? When will the chip shortage end? And when will the economy reach an inflection point? Well, we all wish we had a crystal ball to definitively answer these questions, but we don't. Clearly, consumer behavior is being impacted by rising food and fuel prices. This leaves less of consumers budgets for entertainment, merchandise and other discretionary items. Although economic factors continue to dampen near-term visibility and the exact timing of future improvements is elusive, I will share with you what we do know. Logistics seem to be improving each quarter and we are hopeful the trend will continue. Semiconductor fabs are being refabricated and built in the US and across the world, which will most certainly create increased chip supply in 2023 and 2024. As I have stated before, there has been hundreds of billions of dollars committed to increase semiconductor supply. While we are dealing with this shortage now, we believe that it will dissipate in the not too distant future. At UEI, we continue to manage what we can control, which includes creating new products and engaging and supporting our customers. This strategy has prevailed during other times of challenge in our 35 plus years and it is proving fruitful now as well. Creating innovative industry-leading solutions that simplify a consumer's life in their home has long been our goal. We have succeeded over our history in achieving this goal and continuing to achieve this will lead to our long-term success regardless of any short-term economic headwinds. In the last few months, we have seen a good amount of positive commercial activity by both expanding our footprint at existing customers as well as attracting new customers. These successes keep us excited about our future growth potential. In our home automation and HVAC business, we are gaining momentum. We announced the new smart home controller and gateway for PowerView, the motorized shades and blind system from Hunter Douglas, the world's largest supplier of window coverings. We expanded our activities with leading US security provider Vivint Smart Home with energy efficient connected smart thermostats and sensors. Interest in our products and technologies continues to grow from HVAC OEMs across the world as well as smart home security and hospitality service providers. Multiple wins in these areas will fuel growth in 2023 and beyond. Turning to our entertainment control customers, we are already serving the leaders in the markets, including Samsung and LG, by spending years winning projects, impressing customers with quality and innovation, embedding UEI technologies as must-have features, and increasing our market share. We are confident that our customer roster and strong relationships are evidence of our long-term commitment to growing our position. More recently, we won projects including our award-winning, energy-efficient, rechargeable Android TV remote control platform, our Kwikset-enabled Extreme Low Power Control silicon solution, and the new Apple TV Controller for TV service providers. In addition to new project wins, we also expanded our product and technology offerings during the second quarter. With respect to RDK, the cable industry's leading video entertainment service platform, we introduced two new voice control remotes targeted at operators who want turnkey solutions using the same technology ingredients available in 75 million products UEI has already shipped with the platform. In the climate control domain, we expanded our connected thermostat offerings marketed in cooperation with CommScope's Ruckus to help property managers and hoteliers reduce energy consumption. This solution has garnered significant interest due to rising energy costs across the globe. Additionally, our consumer brand One For All recently launched a new award-winning streaming-centric control solution to address the growing challenge consumers face when they have multiple subscription streaming services on multiple streaming platforms. These are just a few examples of what our teams are working on to create solutions that address the control requirements of the leading players in the markets we serve. Before I turn the call over to Brian, I'll provide an update on legal proceedings. As you all know, we have been engaged in continued litigation against Roku. We have done so to protect our highly valuable and differentiating intellectual property. And as we have previously reported, we have prevailed in our offensive actions against Roku, gaining a win through the International Trade Commission with a finding that certain of Roku's core remote control products infringe one of our key Kwikset patents, resulting in the ITC issuing both an exclusion order and a cease and desist order requiring Roku to stop importing and selling the infringing product. In this continuing effort, I am pleased to report that we again obtained a very important win against Roku this past June when we successfully defended ourselves against Roku's retaliatory ITC action in which two patents Roku asserted against us were found to be invalid. and that Roku failed to prove that it had established the requisite domestic industry in order to prevail. With these two very important wins, we remain confident that we will prevail in the related federal district court cases. Now I'll turn the call over to our CFO, Brian Hackworth, for a review of the financials. Go ahead, Brian.
spk04: Thank you, Paul. First, I'll review the results for the second quarter of 2022 compared to the second quarter of 2021. Net sales were 139.1 million compared to 150.6 million for the second quarter of 2021. Squarely within guidance, Q2 sales reflected a quarter without a factory shutdown or logistical issues related to the COVID pandemic. Although supply constraints still persist, most notably surrounding the chip shortage, our Q3 revenue guidance, which I'll provide in a minute, reflects a positive quarterly trend. Gross profit for the second quarter of 2022 was $40.5 million, or 29.1% of sales, compared to 30.5% in the second quarter of 2021. We've experienced inflationary pressures relative to component parts, freight and labor. In an effort to mitigate the effect inflation is having on our gross margin rate, we phased in sales price increases throughout the first and second quarter of 2022. Operating expenses were $30.4 million compared to $30.1 million in the second quarter of 2021. SG&A expenses decreased to $22.1 million from $22.7 million in the prior year quarter. R&D expenses increased to $8.3 million compared to $7.4 million in the prior year quarter as we continue to invest in developing innovative solutions for a range of products in multiple channels. These internal investments have enabled us to consistently improve the user experience in our core markets, as well as gain market share in new channels such as security and home automation. Operating income was $10.1 million compared to $15.8 million in the second quarter of 2021. Our effective tax rate was 11.8% compared to 15.8% in the prior year quarter. For the second quarter of 2022, net income was $8.4 million or $0.66 per diluted share. compared to 13.6 million or 98 cents per diluted share in the second quarter of 2021. Next, I'll review our cash flow and balance sheet. We ended the quarter with cash, cash equivalents, and term deposits of 54 million, compared to 60.8 million at December 31st, 2021. Cash flow from operations for the second quarter of 2022 was just under a million dollars. In the second quarter, we came across a fortuitous opportunity to purchase a higher quantity than originally expected of certain components. Most importantly, a specific chip which is used across many of our product platforms. Given the current difficulty in procuring requisite parts, we took advantage of this opportunity amounting to approximately $8 million of additional inventory. During the second quarter, we purchased 130,000 shares for $3.9 million, bringing the year to date total to 355,000 shares for $11.2 million. Now turning to our guidance. As expected, we've seen some improvements in the supply chain, most notably for us in transportation. As far as the component shortage is concerned, although we've been able to take advantage of specific buying opportunities relative to certain parts, the environment has remained largely unchanged. However, the macroeconomic environment is more uncertain, with inflationary pressures taking a toll on consumer confidence, as rising prices for essentials such as food and gas are leaving less room for discretionary purchases. Although we are facing these headwinds, our third quarter sales are expected to continue to improve sequentially. For the third quarter of 2022, we expect sales to range from $145 to $155 million, compared to $155.7 million in the third quarter of 2021. We expect EPS to range from $0.70 to $0.80, compared to $1.03 in the third quarter of 2021. We reiterate our long-term growth targets of sales between 5% and 10% and EPS between 10% and 20%. I would now like to turn the call back to Paul.
spk02: Thank you, Brian. We are the global leader in wireless universal control solutions for home entertainment and smart home devices. Many times throughout our history, we have managed various economic challenges and emerged stronger each time. We followed our vision to create smarter living by delivering high quality products with great innovative features that consumers want. As a result, We earned our clear leadership position in home entertainment and are replicating this success within other related applications in the home. The fact is, when today's headwinds dissipate, companies that continue to invest in truly innovative products and technologies, build better products that simplifies people's lives, and foster strong relationships with customers will rise to the top. UEI has done this before. and will continue to in the future. As always, stay tuned. We can now open the call up for questions.
spk01: Thank you. And at this time, I would like to remind everyone, in order to ask a question, please press the star, then the number one on your telephone keypad. We'll pause for just a moment to compile the Q&A roster. And first, we will go to Jeff VanSinderen of B Reilly.
spk07: Hi, everyone. Jump right into it here. Just wanted to see, I guess, it sounds like a couple moving parts as far as your expectations for the P&L. Happy to see sequential improvement expected for Q3. Has the overall demand picture changed at all? I'm sure it's changed a little bit, but has it changed overall in a meaningful way from the last quarter report? And if so, any more color on that? And I guess, you know, it's early, but how are you thinking about Q4 and how the P&L progression may take shape on sales, expenses, margins? Do you expect to inflect year-over-year growth in Q4?
spk02: Yeah, Jeff, it's Paul. I don't think that anything has changed. The projects that we've spoken about are all coming on board. The only thing that may have changed is just the macro environment. I just feel like customers, major companies within the industry are looking at the economy with some wonderment where it will be Three months from now, probably two months from now, but three, four, five, six months from now is a difficult prediction right now. Will inflation temper? Will gas prices drop? If those things begin to happen, more of consumers' money will be able to be spent on other things. If it gets worse, then it won't. You've got other smaller factors. This year, the World Cup, which doesn't really affect the U.S. as much as it does the rest of the world, but the World Cup for the first time is being held in the winter. This is in some ways like Christmas being in July. It's difficult to determine exactly what the effect of it will be. It's usually a very positive effect for entertainment, so there's that as a potential upside, but there's just so much uncertainty right now as to where the economy will be even six months out more than we've seen in past years you know you usually would know six months out you have at least a decent prediction right now I just think it's difficult to gauge where the consumer will be really six months from now we have a pretty good view of the next three because customers of course they have lead times and orders and of course as Brian said sequentially we're up and we've got some new projects in there that we think are good But the effect of these things in a really good market is very strong, and the effect of a new project in a weaker market is still good, but not quite as strong. So it's difficult to gauge where things will be. We know they'll be okay, and again, our products are on track, will come out, but in what type of environment? We've been so burned over the last few years, not just us, but every company in the world, by you know, unpredicted things that have happened between COVID and, you know, the chip supply, the economy, the gas prices, et cetera, that it's just difficult to know where things will be six months from now or 12 months from now.
spk07: Sure. Understandable. And obviously you guys have had some different things come out of left field that you've had to deal with over the years. Right. If we can shift maybe to home control automation and HVAC, I know you spoke to some wins there, extended partnerships. You talked about Hunter Douglas. Maybe you can elaborate a bit more on how you expect that business segment to develop both in near-term and then longer-term. I realize it is a little bit longer kind of a cycle.
spk02: Yeah, the projects there are typically – long to develop but then the benefit is they're long-lived so TVs are typically redesigned every year in these markets once a design is one the design can last for maybe a decade depending on the item so it's important to get the win they sometimes take a year sometimes more to get in But even after you've won the design, it can take a year to design and have the final product ready. Not so much on our end, but on the customers, because we're typically part of the system. But again, the good news on that is it's usually long-lived. And that market is undergoing change. There's a lot of growth there. It's probably the highest growth market, particularly HVAC, that we serve, double-digit growth as a market. And our market share is not as high as it has been in home entertainment, which provides a real opportunity for us, because as we bring innovative solutions to that market, help those customers deal with IP connectivity within their units, bring the intelligence to the product, as well as potentially connect it to other systems within the home, which we're specialists in, we think it's a real opportunity. It'll take a little bit of time, but we've been winning there. So anybody who thinks that we're not in HVAC, it's now a greater than $100 million business. In fact, our largest customer this quarter was an HVAC customer, Daikin. So this is an interesting area. We've already shown proficiency in it, and we're getting design wins across the world now. Some names we can't mention yet, but We will as the next year progresses. So that's HVAC. And then, again, we mentioned Hunter Douglas. This is obviously the number one window covering company in the world. So we are in a market helping them create control products that are interconnected with the remainder of the home. We are clearly a leader here. They see that our design and manufacturing capability in these markets is second to none. And these customers are very interested in what we have to add to their product line. So we think this is a great area for us to be. And again, these markets are growing double-digit type growth rates.
spk07: Okay, good. Well, listen, I'll just say congrats on those recent wins, especially Hunter Douglas. That's great to see, including the legal wins. Throw that in as well. I'll let someone else jump in. Thanks for taking my questions, and best of luck.
spk09: Sure. Thanks, Jeff.
spk08: Okay. Now we'll take a question from Steven Frankel of Frozen Blood.
spk06: Good afternoon, Paul. Thanks for the opportunity to ask some questions. I know in the past couple of years your customers really struggle much with supply chain issues, getting set-top boxes as anything else. But we've also seen some acceleration in cord cutting impacting virtually everybody in that space. To what extent is that affecting their order patterns with you?
spk02: Well, it certainly would affect. But the question is, what are people... People really aren't watching less television. So with specific customers, we may see a fall off, but then we see sometimes order patterns with other customers rise. The number one place that people are accessing... streaming the worldwide is through a television and as you know the three leading companies in that market are in some cases long-term customers of ours so while we're seeing a shift in behavior it's probably not as dramatic as everybody may think in terms of the you know the speed at which it's happening But it definitely does affect things under the line, meaning in the detail there are some customers whose volumes over time have eroded and other customers who have risen. And then, of course, you have an offset with us that HVAC has become a significant business for us. So it definitely has caused an effect, for sure, over time.
spk06: And if I go back, Last quarter, you hinted about a couple of large HVAC or home automation new wins that would ship in the back half and lead to significant increase relative to the run rate where you've been. And certainly, your third quarter guidance implies a move in that direction. Are those wins still on track to ship by the end of the year?
spk02: They are. Yeah, the question will be, with lead times the way they are still in semiconductors, to the extent products are successful, if you haven't ordered enough parts, the issue will be, do you have the chips to make everything that ultimately gets demanded? So you're left in a bind, you either have to order a lot of parts, or or not be ready for lift in demand so we are seeing some of that there are some customers who have actually lifted orders and we're scrambling to get the parts to make the additional demand that's the real challenge right now is trying to predict because with our products typically we don't have it as bad as the example you'll see in the press is the the automotive companies because They're the most affected. They have products that have 2,000 plus semiconductors in them. Our products will only have maybe five. But the challenge for us is some of our customers that we pair with will have dozens or hundreds of semiconductors in their product. So then their demand, while we may be able to get the parts after we've scrambled for them, if they're missing two parts, they then can't make as many. They never get shut out, but they can't make as many. So they'd like to make more, and their demand to us may be more, but we may not be able to deliver all of the products, not just because we can't get the semiconductors, but because they can't. So it's a relatively complex problem today. As I said in the remarks, and I know you know this, as do many others, anybody who's been around a while, these semiconductor shortage issues happen from time to time, I remember a particularly acute one we had 20 years ago, but they pass because the capacity gets built. The companies who make these semiconductors, of course, want the sales opportunity when the demand rises. What's happened over the last few years is the demand rose much more quickly than supply, right? And the supply got truncated because of COVID. So it made a bad situation worse, and they're catching up. And they will. And we've started to see some of our vendors who have increased supply. Unfortunately, not all of them. And we do have parts going into the back half where the demand is probably slightly higher than we'll be able to get ships to ship. Now, I can't say that definitively because our ops people are fighting every day to get the extra parts. a few extra chips, a few thousand or a few 10,000 or 100,000, but it's tough out there. It's not like it was two, three years ago. If you needed an extra million parts, you could get them. Right now, it's a fight. We'll probably live with this into 2023, where I'm hoping we'll start to see the beginning of we're already starting to see it, but it's only the leading edge. I think once these fabs start coming on, we will see, and I know this is hard for people to believe right now, but there's so much capacity being added, we're going to get to a point again where there will be short-term overcapacity. It's hard to envision today, given what's going on in the world, but it's heading towards that. It's a ways out. And once we get to that, then supply will not be an issue.
spk06: Okay. And then on the price increases, will they have any material impact on growth margins in the back half?
spk04: Yeah. I mean, what we did was we phased the price increases in the first and second quarter. the increases in Q1 had a full effect for the most part in the second quarter, and then the price increases that were implemented throughout the quarter will have a full effect in Q3. So it should have an effect in the back half of the year, more so than the first half because it was partial quarters.
spk06: Okay. And then just the banking and Comcast revenue concentrations?
spk04: Yes, Paul talked about Daikin was actually our largest customer for the quarter. They came in at 15% and Comcast was at 13.5%.
spk06: And then, Paul, you want to give us two minutes on the acquisition that you made in the quarter?
spk02: Yeah, well, we bought a very small company that's involved in embedded software within the TV industry. We think it is essentially a synergistic acquisition along with Kwikset. So they have relationships with a lot of companies that we did not have as Kwikset customers and we have a lot of Kwikset customers that they have not penetrated. So it was a very small acquisition but an interesting company out of Nielsen that had done embedded software for televisions and it fits It's a small company, but it fits nicely with with what we're doing with Kwikset in the TV industry Thank you Our next question will come from Brian Rottenberg of Imperial Capital Yes, thank you very much a couple quick questions and I
spk05: I think last quarter call, you talked about a really strong second half of the year. I know you're giving guidance for third quarter, and I know you don't have a crystal ball. You've already stated that. But how is fourth quarter potentially shaking out for you guys or the year, the full fiscal year? Or is it too early to tell?
spk04: Yeah, as Paul mentioned earlier, yeah. You know, right now, Q4, we still have strong orders. We have new customer wins that we mentioned on the last call for the back half of the year, and we're scheduled to ship. I mean, I think there's a couple of questions right now when you look into Q4, and I don't have an answer to it just yet, but there's a little bit more uncertainty today than there was, say, this time last quarter. And that is, you know, consumer confidence is one of them. You're starting to see... you know, consumer confidence wane a bit, and then the question is, does that have, or will that have an adverse effect on our Q4 sales? I haven't seen anything material yet, and I'm not saying it will happen, but it's an uncertainty. We just don't know exactly as consumer confidence wanes, and if it continues to decrease, do people start to order less in the retail space? Does that affect our consumer electronics channel, which ultimately winds up in the consumer space? And again, I'm not saying that will happen, But it is an uncertainty right now. And the other piece is, even though we have these nice winds and we're going to ship, can we fill all the orders? And right now, we're starting to see some improvement in the supply chain, definitely in transportation. When it comes to the chip shortage, we were able to buy more of a specific chip in the second quarter. But there are other chips that we're having difficulty getting. Doesn't mean we won't be able to procure them. But again, it's a bit of an uncertainty. I think from an order perspective, we look strong. From a customer wins perspective, things are going well. Q1, sales were at $132 million. Q2, they were $139 million. Q3, I expected to be $150 million. So I think the trend is positive. I think right now the question is, can we fill all the orders? And will consumer confidence stay strong enough where it doesn't affect any orders in the fourth quarter?
spk05: Great, thanks for that color. In terms of SG&A, you had a big drop from quarter to quarter. Was there layoffs, or was that just less sales, so therefore less commissions?
spk04: No, I think total operating expenses were a little bit less in Q2 than in Q1, but not materially. I mean, I think operating expenses for Q1 and Q2 were somewhat comparable, and in Q3, I don't expect them to be materially different from that.
spk05: Okay. Okay. And then last question on Roku, when can we expect anything in the near term that we should be looking for, stated a different way, coming out of the Roku situation?
spk02: Yeah, as far as the district court cases, they have not been un-stayed yet. And that'll depend on actions by the PTAP on the IPRs. But obviously, Sometime in the next few years, all the IPRs will be exhausted. They filed IPRs against the patents. And in some cases, they were appealed when they didn't go the way that the party wanted. So that takes time. And once those are completed, the case will be unstayed. So it's probably, you know, it's not in the coming months. It'll be in the coming years. that the case will finally be heard. But obviously to date, the two times we've gone to court, we've won both. The exclusion for CDO when we were on the plaintiff's side and when we were on the defendant's side, both patents were ultimately found invalid that they were suing us with.
spk09: Thank you. Yep.
spk01: And again, as a reminder, that is star one if you'd like to ask a question. We'll now go to Bill Delzong of Titan Capital Management.
spk03: Thank you. Would you please remind us what the magnitude of the price increase was in the first quarter and then secondarily in the second quarter and how much of that was fully realized in Q2?
spk02: Yeah, we didn't do, Bill, we were specific by customer because every customer's product is a little different. Obviously more differentiated products with higher cost items in them that would have suffered from a higher inflationary pressure. We tried to be surgical about it and fair where products where the cost went up more would have been prone to a higher cost increase and so yeah we went through it there wasn't a generalized across the board four percent or six percent or a percent it was essentially done product by product and have you taken those numbers on a product by product basis and aggregated them to identify what what that surgical effect ultimately ended up being overall well yeah you could do that I suppose but when you do the price increase you then have to presume the mix of how many units of each you are going to sell right so we didn't do that calculation at that time or since but the reason it comes in over time is customers when you have a price increase sometimes they've put in orders prior to it that you deliver without the price increase if they had existing purchase orders you don't increase the price on existing purchase orders you could but we do not and then so it comes in over time but the goal again is to and it's been absorbed fairly well I mean over time The price increases in our industry are not because typically we go through cost reductions. Customers will have an expectation that you will share some of that with them. I think customers are fairly understanding about the times we're in and that our raw materials cost more money and labor costs more money and everything is costing more and therefore understand the effect of this price increase and the goal would be again to those cost ups that you don't typically see in materials they would absorb those cost ups that they would they understand that you know and competitors would have the same cost up so you know they they have largely accepted the price increases right thank you for the perspective
spk01: And with that, that does conclude the Q&A session. I would like to turn the call back over to Paul Arling for any additional or closing comments.
spk02: Yeah, thank you for joining us today and your continued support of UEI. I would like to say that we plan to present at the Sidoti Small Cap Virtual Conference in September. We hope to see you or talk to you soon. Have a great day.
spk01: And this does conclude today's conference call. We'd like to thank you all for your participation. You may now disconnect.
Disclaimer

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