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spk00: Hello and welcome to Ultralife Corporation third quarter 2022 earnings release. My name is Priscilla and I'll be your coordinator for today's event. Please note this call is being recorded and your lines will be on listen only however you will have the opportunity to ask questions at the end during the Q&A session. This can be done by pressing star 1 on your telephone keypad to register your question. If you require assistance at any point please press star 0 and you will be connected to an operator. I will now hand over to your host, Ms. Jordi Buffening, to begin today's conference. Thank you.
spk01: Thank you, and good morning, everyone. Thank you for joining us this morning for Ultralife Corporation's earnings conference call for the third quarter of fiscal 2022. We apologize for the delay in starting today's call, which occurred due to issues experienced by the conference call provider. With us on today's call are Mike Popolek, Ultralife's president and CEO, and Phil Fain, Ultralife's Chief Financial Officer. The earnings press release was issued earlier this morning. If anyone has not yet received a copy, I invite you to visit the company's website, www.ultralifecore.com, where you'll find the release under Investor News in the Investor Relations section. Before turning the call over to management, I would like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results could differ materially from those projected as a result of various risks and uncertainties. Potential risks and uncertainties that could cause actual results to differ materially include the impact of COVID-19, related supply chain disruptions, potential reductions in revenue from key customers, acceptance of new products on a global basis, and uncertain global economic conditions. The company cautions investors not to place undue reliance on forward-looking statements which reflects the company's analysis only as of today's date. The company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances. Further information on these factors, these and other factors that could affect Ultralife's financial results is included in Ultralife's filings with the Securities and Exchange Commission, including the latest annual report on Form 10-K. In addition, on today's call, management will refer to certain non-GAAP financial measures that management considers to be useful metrics and differ from GAAP. These non-GAAP measures should be considered supplemental to corresponding GAAP figures. With that, I would now like to turn the call over to Mike. Good morning, Mike.
spk06: Good morning, Jody, and thank you, everyone, for joining the call, and I apologize for the slight delay this morning. Today, I'll start by making some brief overall comments about our Q3 2022 operating performance, after which I'll turn the call over to Phil, who will take you through the detailed financial results. When Phil is finished, I'll provide a brief update on the progress against our 2022 revenue initiatives, then open it up for questions. For the third quarter of 2022, total company organic revenue increased by over 20% year over year, driven primarily by strong shipments to government defense and markets. When including the acquisition of Excel, total company revenue increased by over 50%. Each of our business segments, battery energy products, and communication systems delivered solid year-over-year revenue increases. Our overall customer demand remains high, and at the end of Q3 2022, total company firm order backlog was at a level not seen in over 10 years. During the quarter, we continued to be negatively impacted by ongoing input component inflation and procurement cost increases, as well as manufacturing inefficiencies from erratic part lead times and excess material usage during the ramp-up of several new products. As such, these execution headwinds drove B&E gross margins downward and resulted in a total company EPS loss of one cent for this year's third quarter. In addition to continuing to work very closely with our customer and suppliers to address the ongoing component cost increases, lead time fluctuation, and sell price increases, we are implementing a number of actions to mitigate the ongoing gross margin pressures. In a few minutes, I'll give you a further update on our revenue initiatives and provide a summary of some of the gross margin initiatives. But first, I'd like to ask Ultralight CFO Phil Fain to take you through additional details of the Q3 2022 financial performance.
spk03: Phil? Thank you, Mike, and good morning, everyone. Earlier this morning, we released our third quarter results for the quarter-ended September 30th, 2022. We also filed our Form 10-Q with the SEC and have updated our investor presentation, which you can find in the investor relations section of our website. Consolidated revenues for the 2022 third quarter totaled $33.2 million compared to $21.8 million reported for the third quarter of 2021, an increase of 52.7%. Government defense sales increased 99.8% with strong growth in both business segments driven by order flow and the commencement of deliveries of some long lead components. Commercial sales increased 38 percent, reflecting the contribution of Xcel in solid organic growth in oil and gas and industrial commercial end markets. Total organic sales increased 21.1 percent from the prior year period. During the quarter, supply chain disruptions persisted, including increased lead times on components from suppliers impacting both our internal and customer manufacturing delivery schedules, resulting in continued delays in our shipments to future periods. Revenues from our battery and energy product segment were $28.6 million compared to $20.0 million last year, an increase of 42.9%, with $6.9 million of the $8.6 million variance attributable to Excel and 1.7 million of net organic growth, comprised of increases of 66.4% in government defense sales, 7.4% in Suez oil and gas market sales, and 2.4% in industrial market sales, partially offset by a 12.1% decrease in medical sales due solely to component shortages to fulfill increased demand from a large international medical device OEM. Net organic sales for this segment increased 8.5%. The backlog for our battery and energy products business of 88.3 million, the highest in our history, represents an increase of 17.2 million or 24.1% over the comparable amount exiting the second quarter. The sales split between commercial and government defense for our battery business was 80-20 compared to 83-17 for the 2021 third quarter, and the domestic to international split was 47-53 compared to 40-60 last year, accentuating both the continued success of our global revenue diversification strategy and growth in U.S. government defense sales. Revenues from our communication system segment were 4.7 million compared to 1.8 million last year, an increase of 165.3%, reflecting the receipt of components to fulfill a large international order and to continue the fulfillment of a large U.S. order with some modest shipments. The backlog for our communication systems business of 17.9 million represents an increase of $9.8 million, or 120.4%, over the comparable amount exiting the second quarter. On a consolidated basis, the commercial government defense sales split was 69.31 versus 76.24 for the year earlier quarter, again reflecting the growth in government defense sales. Our consolidated gross profit was $6.7 million for the 2022 third quarter, up 31.5% over the 2021 period. As a percentage of total revenues, consolidated gross margin was 20.2% versus 23.5% for last year's third quarter. Gross profit for our battery and energy products business was $5.3 million compared to $4.8 million last year. Gross margin was 18.7%, a decrease of 520 basis points from 23.9% reported last year. The disruptions resulting from supply chain and logistics complications were more pronounced in our battery and energy products business during Q3, in large part because of a sharp uptick for our more advanced rechargeable battery packs, which increased the need for highly sought-after components, including various electronic components, PC boards, chipsets, and certain metals, to name a few. Major contributing factors impacting the gross margin variance included the following, each in a relatively proportional amount. Number one, rapid cost inflation on raw materials and key components not entirely aligned with customer price increases. We experienced more frequent weekly or sometimes daily input cost increases this quarter versus more periodic customer price increases, causing an inevitable lag in cost-price alignment. To reduce this lag, we are initiating more frequent customer price increases closely aligned to cost increases. Number two, incremental fees to source and expedite critical components. Increases in demand with tight shipment schedules from both government defense and medical customers in some cases went beyond the wherewithal of our vendors to obtain key materials in a timely manner, necessitating the one-time use of brokers at a much higher cost and with more complex logistics, and further complicating the timely matching of higher cost with customer price increases. To minimize the use of costly brokers going forward, we have now extended the forward time horizon of our S&OP process with customers and suppliers. Should a demand surge with expedited timing again necessitate more costly sourcing alternatives, we will require customers to fund all of the incremental costs on a timely basis. Number three, internal manufacturing inefficiencies. As a result of irregular component availability and lead times, we experienced continuous production line startups shutdowns, and changeovers, resulting in labor inefficiencies, higher scrap, and decreased absorption of overhead. Most notable were delays in the supply of rechargeable cells for our fulfillment of a large medical order as the vendor changed their focus to supplying large format cells for EV. Accordingly, we are in the process of qualifying another vendor by year-end to meet the strict FDA requirements of our designed-in batteries. Number four, increased and uncertain lead times impacting timely deliveries. More mundane yet vital components such as epoxy, labels, and boxes trickled in well past the expected dates, reducing productivity and increasing cost to expedite shipments. Using our global supply chain, we have worked to secure alternate vendors to minimize these occurrences. And number five, transitioning new products to higher-volume production. We generally incur higher scrap, labor inefficiencies, and lower overhead absorption as we transition our new, more technically advanced and complex products to full-rate production. During Q3, we experienced much higher demand for a key new government defense product, which drove up the startup variances in advance of completing the associated lean manufacturing process. We have bolstered our resources to further our lean efforts in our investing in capital equipment to reduce operator dependence and variability. For our communication system segment, gross profit was $1.4 million compared to $0.3 million for the year earlier period. Gross margin was 29.5% compared to 18.0% last year, reflecting higher factory throughput leading to higher cost absorption and more favorable sales mix. Operating expenses were $7.3 million compared to $5.9 million last year, an increase of $1.4 million or 24.1%. The increase was primarily attributable to the addition of Excel. Excluding Excel, operating expenses increased $0.3 million or 5.1%, primarily reflecting the timing of new product development cost and increased travel. As a percentage of revenues, operating expenses were 22.0% compared to 27.1% for last year's third quarter, a 510 basis point improvement reflecting sales leverage. The operating loss narrowed slightly to 0.6 million from 0.8 million for the 2021 quarter. Including the impact of interest expense to help finance the Excel acquisition and foreign currency gains, net loss was 0.2 million, or one cent per share. This compares to a net loss of 0.6 million, or four cents per share, on a diluted basis for the 2021 quarter. Similar to the first two quarters, Excel was once again accretive. Adjusted EBITDA, defined as EBITDA including non-cash, stock-based compensation expense, was 1.3 million, or 3.8% of sales for the 2022 quarter, compared to 0.3 million or 1.3% for the prior year quarter. Turning to our balance sheet, to proactively influence our position to service our substantial backlog, we increased inventory by 1.5 million or 4% over the second quarter. This represents an increase of 7.6 million or 22.8% over year end 2021. We ended the 2022 third quarter with working capital of 50.9 million compared to 47.6 million for year end 2021. Debt to capital at quarter end remained low at approximately 0.20. We remain well positioned to fund organic growth initiatives, including new product development and strategic capital expenditures, while continuing our focus on expediting growth through a creative M&A. Going forward, With our backlog, liquidity, diversified end markets, growth initiatives, and actions underway to improve our gross margins, we remain steadfastly focused on realizing the full leverage potential of our business model. I will now turn it back to Mike.
spk05: Thank you, Phil.
spk06: For the battery energy products business, our growth strategy, a market and sales reach expansion, is about diversifying more into the global commercial markets and international government defense markets to help soften the cyclicality associated with our historical concentration in the U.S. government defense market. In Q3, and including the new acquisition, the total commercial and international government defense revenues represented approximately 80% of total B&E sales, and we're up 40% year over year. Looking deeper into our third quarter commercial revenue, overall global B&E medical revenue represented approximately 23% of total battery energy product sales. Demand from current customers was for applications such as ventilators, respirators, infusion pumps, digital x-ray, surgical robots, and powered medical carts. We also received over $4.3 million in delivery orders from existing medical customer blanket and or multi-year agreements, and we continue to expand our collaboration with existing major medical OEMs as they pursue new programs for their products. Q3 oil and gas and subsea electrification commercial revenue was approximately 32% of total B&E sales, with oil and gas prices and increasing rig counts continuing to drive demand in our oil and gas end markets. Organically, oil and gas and subsea revenues were up 7% year-over-year. In Q3, we also made the first shipment of a new one-atmosphere subsea battery to an international customer. And lastly, B&E's Q3 U.S. government defense business represented approximately 17% of total B&E product sales and was up 57% year-over-year, consisting primarily of radio battery and chargers to OEM primes. Regarding the conformal wearable battery, U.S. Army IDIQ contract, which we announced last May, with a not-to-exceed value of $168 million during the three-year base award period, the product development process and component testing continues to move forward. The conformal wearable battery first article testing, demonstrating full compliance with the contractual product specifications and program requirements, is now expected to begin Q1 of next year as parts delays have shifted the build schedule. As an IDIQ contract, actual delivery orders including quantities and timing are at the discretion of the DoD and are still to be determined. Market and sales reach expansion through diversification requires having the right products for the end markets, so a cornerstone of B&E's organic growth strategy remains new product development. During the third quarter, we continue to advance several of our products under development over the last few years. One such product is the new X5 medical cart battery system for which we had received in a prior quarter an initial launch order under a $2 million contract for medical cart battery systems. This new product started shipping in Q3, will continue shipping through the early part of 2023, and we anticipate following orders of similar size for delivery later next year from the same customer. OEM customer interest remains high, which has led to more demonstrations throughout Q3 and more positive customer feedback. We are also beginning to see adoption of the X5 battery system product outside of our simple medical cards, expanding the available market opportunity. Other new product development projects currently underway include a limited to higher capacity 24-volt smart U1 battery new 5790 and XR123H CFX blend primary batteries, OEM public safety radio batteries, cell uplifts in multiple products, and next-generation ruggedized modular large-format energy storage batteries. New product development and multi-generational product planning keep us current with market needs and give us the opportunity to remain close with and provide value to our key customers. We also continue to invest in strategic CapEx in our facilities to strengthen our competitive differentiation. The new lithium manganese dioxide primary 3-volt CR cell manufactured on the new line in our Newark, NY facility continues to make progress. Having already passed UN testing, the cells passed UL and IEC testing at the end of Q3, and we are currently awaiting the final reports and facility inspections. This premium product performs favorably to competitors at high rate discharge, which is particularly useful in illumination devices and medical devices with short, high pulse rate applications, and will be one of the few domestically manufactured cells of its form factor. Production and new potential customer testing will continue to ramp up through the end of the year, following the completion of all of the UL and IEC certification requirements. We also continue to develop a hybrid CFX MnO2 3-volt chemistry cell, which we'll be able to run on the same new CR cell line. This product, which would have over 30% higher energy capacity versus standard 123A products, yet in the same form factor, is targeted at industrial and IoT-centered security applications where extended life is critical. At our wholly-owned China facility, we continue to move forward on our project upgrade our final chloride primary ER cells, and manufacturing processes. Several customers are in various stages of testing and commercial activity, with one example being a new 19 amp hour low rate cell to OEMs, specifically targeting long life metering applications. In our China facility, we also manufacture thin cells, 9 volt, and several custom battery pack solutions. Our goal remains to produce the highest value proposition, best quality, and safest products in whichever one of our global locations best serves the supply chain of a specific end market and or OEM customer. Looking at a communication systems business, Q3 new product development revenue from products less than or equal to three years old represented approximately 11% of communication system revenues. For the various military vehicle modernization programs, both domestically and internationally, communication system products have been well received, as demonstrated in multiple awards over the last 12 months. As an update for the U.S. Army's handheld, man-packed, small-form fit and leader radio programs, in the October 2021 announced $4.2 million Vehicle Amplifier Adapters Award, shipping continued in the third quarter of 2022, and we anticipate making the remainder of the shipments throughout the end of this year. For the July 2022 additional $4.6 million award for vehicle amplifier adapters, supply chain actions are underway to support the deliveries to start in early 2023. Regarding the international vehicle program award valued at $7.5 million that was received in September 2022 for A320 HVA and A320 amplifiers, These units start shipping by year end 2022 and will be completed in the first half of 2023. And finally, for the most recent vehicle communication systems award announced today, valued at $5.5 million, the initial supply chain execution process is underway to support 2023 deliveries. In total, these contracts received in the last year represent over $21 million in communication systems revenue. most of which is still in front of us to deliver. As of the end of Q3, just under $1 million has shipped to date due to the ongoing supply chain constraints. New product development activities for both defense and commercial applications continue, with several OEM partners addressing very emerging requirements for integrated systems. One significant power solution, which will support rotary wing aircraft, has completed form, fit, and function qualification trials by the customer on various platforms, and is moving to procurement of production units, which will take place over several years starting in 2023. The Edge Service System Integration product, the EL8000, now in production with over 269 units delivered to date, continues to gain traction in multiple programs, as it provides increased capability with a smaller form factor compared to currently fielded systems estimated at a 50% reduction in Cuban weight. Ultralight provides the case systems and integration to enable this leading edge compute capability to be deployed in harsh military environments. An edge solution dismounted variant, the Crescent Server, continues early prototype test, evaluation, and demonstration at multiple events and customer venues. Interest is high, and collaboration with key strategic partners continues in the development and exploration of the art of the possible when enterprise class compute capability is employed onto an individual. Exportations are that we will field Crescent Server operational prototypes in early 2023. Development in the commercial markets also continues. The initial low rate production units of a mobile data cart delivered in 2021 remain in operational testing with the customer collecting and transporting autonomous vehicle data to their engineering facilities. Another commercial product, the virtualized radio access network enclosure, supporting 5G network deployments worldwide, is undergoing customer testing and evaluation by multiple cellular network providers in two different countries for use in expanding 5G market installation. Supply chain challenges specific to electronic components continue to impact forecasting delivery schedules and are a continued area of engagement by the communication systems team. That said, communication systems ongoing capture defense program awards, improvement in defense core business bookings, combined with diversification in the commercial markets on multiple fronts, provides a pathway to improve revenue continuity and for long-term sustainable growth. In closing, For the third quarter of 2022, whereas we are pleased with the success of our revenue supplemented by our creative acquisition, the uptick in communication systems program awards, strong overall company backlog, and disciplined cost control and operating leverage, we are still battling through the gross margin challenges of the present inflationary and supply chain environment. To that end, some of the corrective actions underway include but not limited to modifying purchase agreement language to enable price increases prior to shipment due to market and or commodity price increases affecting the supply chain, being more aggressive in passing along expediting logistical fees, increasing the reach of our sales and operations planning process with our customers and suppliers to better align a longer future time horizon for component availability with demand, reinvigorating and adding resources to our lean initiatives to better position our manufacturing operators to be more efficient, ascending the learning curve of producing our new products, including allocating CapEx for high return productivity investments, and further leveraging our global facilities footprint to expand our global supply chain network for raw component access as well as cost improvement. As we work to improve our gross margins, through these and other specific variable cost and manufacturing productivity projects, as well as price increases, we remain committed to advancing our multi-year transformational projects and transitioning more new products to production. These transformational projects are expected to yield new meaningful, sustainable annual revenue streams in attractive growth markets from new competitively differentiated products. Our capabilities and the mission-critical end markets we serve, military defense, energy, and medical, align well with current world events and needs. As we approach the end of 2022, we are still targeting total year profitable growth, solid cash flow from operations, and maintaining our strong balance sheet. We are determined to work through the near-term gross margin challenges to gain the full benefit of the success of our revenue growth strategy Refocusing resources on our operating teams as necessary for improved revenue and EPS consistency. Operators, this concludes my prepared remarks and we'd be happy to open the call for questions.
spk00: Thank you. Ladies and gentlemen, as a reminder, if you would like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. To redraw your question, please press star 2. We'll pause just for a moment to allow everyone an opportunity to signal for questions. We'll now take our first question from Josh Sullivan. Please go ahead. Your line is open.
spk04: Hey, good morning.
spk06: Good morning, Josh.
spk04: On the supply chain, Edwin, you know, I think in the past you characterized your holdups with your customers' ability to take orders from you guys. And then there's also the issue of, you know, your own ability to get things like microelectronics. I'm curious, kind of, where's the center of gravity at this point? And maybe what metrics are you watching to maybe suggest, you know, some easing at some point?
spk03: I wish we were getting those signals, at least during the third quarter, that things were easing. And what we experienced during the third quarter compared to earlier in the year, earlier in the year, We ran into weekly or maybe biweekly occurrences of issues that we had to resolve very, very quickly with suppliers. It seemed like during Q3, it seemed like it was a daily occurrence or every other day across a much broader spectrum of suppliers. Now, what we're dealing with, Josh, as you know, is we're dealing with large global primes and medical OEMs, very large companies, our supply chain is comprised of numerous local, smaller vendors, pretty much scattered, that we have done business with for many, many years. So one of the things that we experienced is actually a success-based issue, and that is, let's say, a surge in demand, whether it be for medical, whether it be for government and defense, suddenly, quickly, without too much advance notice, and we have to respond very, very quickly. Now, the response, if we got these in the normal course of business, is extended to start with. So this puts us in a situation where we go to our vendors, and our vendors are pretty much tapped out in their ability to use their normal supply chain, so then we have to look at more extreme means and I hate to use this word, but the word broker pops up, and we all know the cost and complexities of dealing with brokers. I think that the change now is that with the extension of our S&OP process to look further out, and when I say further out, you look at our inventory. Our inventory has increased $8 million, so we're doing the best we very can to... to properly stock our shelves across all of our locations with the cells and some of the critical components for at least what we know about or what we believe is going to happen. When you get hit with a surge that has to go out quickly, it puts pressure across the whole chain. Now, will that continue to happen? It could. Have we developed alternate sources? so that we don't have to go the brokerage route and trying to match costs with price increases and all the mathematical equations of trying to get everything matched one to one, it's hard to say. But at least these situations experienced in Q3, I think, facilitated the path going forward in how we deal with both our vendors and our customers It just adds another situation of experience to the what if. But as far as easing goes, I can't say that there's too many visible signs that we're seeing an overall easing in the five items that I had mentioned.
spk04: That makes sense. And then on the energy side, you know, it seems to be a growing cycle for deep water. You know, your exposure there to electrification, you know, some of those activities. I'm curious if you're seeing any increased order activity or what you're seeing along, you know, the energy front and the forward look.
spk06: No, Josh, just Mike. It continues to increase in both of our businesses. The SWE acquisition and the Xcel acquisition both had a good content in oil and gas. In addition to the oil and gas growth, which we're seeing, which we know is a cyclical market as well, both of those business units are also diversifying into other areas. You know, the SWE operationalities we know in gas, which we're really excited about, but they're also participating in some of our government defense product designs and execution, as well as medical cards. And, you know, Excel acquisition obviously is seeing the benefit of the oil and gas business, also is heavily involved in industrial computing and getting in some even some brand-new products, exciting things we didn't talk about, but we'll talk about probably next quarter where we're getting into some massive tracking. So I think healthy growth, and I think we mentioned in the prepared remarks about a 7% organic growth in Q3. We see that continuing near-term, but we're also extremely excited about the diversification of those two entities as we move forward.
spk04: Yeah, and kind of just to that point, you know, You know, and some other products, the server prototype in 23, the mobile data cards, you know, 5G opportunity. How are we going to measure success externally? You know, are we going to see orders? Are you going to provide some of those testing results? You know, what should we look for in some of those new products coming forward?
spk06: Yeah, we're looking for new, meaningful revenue streams. I mean, we love our communications systems business. It's really good at what it does. You know, it has a reasonably narrow lane, at least traditionally it has, as an amplifier to radios. And so one of the things we've been searching for a number of years is, is there a commercial play that will give us some diversification and have us be less susceptible to cyclicality of the government defense spending? And, you know, what we've developed over the last couple of years is where, you know, we had a strong body-worn amplifier capability, you know, with some vehicle amplifiers. Then we got into integrated solutions involving amplifiers and power supplies and other components. And to be able to build those products for, you know, sort of battle-hardened environments has become a core competency. So the idea, consistent with the military's use in trying to get, you know, more compute capability, you know, closest to where the action is, we're seeing there's an opportunity for some of these solutions to be integrated into military products but as well as to commercial products. So I think we'll define success when we start to get some ongoing, you know, meaningful revenue on a recurring basis. And we'll certainly communicate that during future press releases and earnings calls.
spk05: Great. Thank you for the time. Thank you, Josh. Questions?
spk00: Thank you, Josh. Once again, if you would like to ask a question, please press star 1 on your telephone keypad. It appears there is no further questions at this time. I'd like to turn the conference back to you, Mr. Michael, for any additional or closing remarks. Thank you.
spk06: Great. Well, thank you once again, everyone, for joining us for the third quarter 2022 earnings call, and apologize again for the slight delay at the start. We look forward to continue to share with you our quarterly progress.
spk00: So sorry to interrupt, Mr. Michael. So sorry. We have one participant who would like to ask a question. Sure, sure. It's George Citron from Wells Fargo Advisors. Please go ahead. Your line is open.
spk02: Good morning, Mike. I'm sorry I was a little bit late getting on to the call. Did you touch upon the wearable conformable battery contract and whether or not there's been any progress or information about whether or not you're getting any of the business?
spk06: Yeah, we did comment it in the prepared remarks, and you'll see that in the transcripts. Where we stand right now is we're continuing to move forward on the development of the product. I mentioned, and you probably didn't hear or maybe didn't hear it, that the fat testing, which is a core part of the overall process, will probably be in the first quarter now as we experience some parts delays. But things are still moving along well. We're very excited about that product. And as being an IDIQ contract, we really don't have any visibility to future delivery orders until we get through this whole first article testing process. So certainly when there's any developments in terms of delivery orders and things like that, given the strategic nature of this contract, we would communicate that.
spk00: Thank you very much.
spk05: You're quite welcome.
spk00: Thank you Stuart. Once again, if you would like to ask a question, please press star 1 on your telephone keypad. We will wait for a moment. All right. It appears there is no further questions at this time. I'll like to turn the conference back to you, Mr. Michael.
spk06: All right. Well, thanks, everybody, for participating. Have a great day.
spk00: Thank you for joining today's call. You may now disconnect.
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