American Superconductor Corporation (AMSC) Q2 2017 Earnings Report, Transcript and Summary

Good day, everyone, and welcome to AMSC Second Quarter 2017 Earnings Conference Call. This call is being recorded. [Operator Instructions] With us on the call this morning are AMSC's President and CEO, Daniel McGahn; Senior Vice President and CFO, John Kosiba; and Manager of AMSC Investor Relations, Brion Tanous. For opening remarks, I would like to turn the call over to Brion Tanous. Please go ahead, sir.

Thank you, Nicole, and welcome to our call to discuss our second quarter of fiscal 2017 results. Before we begin, I'd like to note that various remarks management may make on this call about AMSC's future expectations, plans and prospects constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our Annual Report on Form 10-K for the year ended March 31, 2017, which we filed with the SEC on May 25, 2017, and subsequent reports that we have filed with the SEC. These forward-looking statements represent our expectations only as of today and should not be relied upon as representing our views as of any date subsequent to today. While AMSC anticipates that subsequent events and developments may cause the company's views to change, we specifically disclaim any obligation to update these forward-looking statements. I also would like to note that we will be referring on today's call to non-GAAP net loss, or net loss before stock-based compensation, amortization of acquisition-related intangibles, consumption of zero cost basis inventory, non-cash interest expense, change in fair value of derivatives and warrants, tax effective adjustments and other unusual charges. Non-GAAP net loss is a non-GAAP financial metric. A reconciliation of our non-GAAP to GAAP net loss can be found in the press release we issued and filed with the SEC last night on Form 8-K. All of our press releases and SEC filings can be accessed from the Investors page of our website at www.amsc.com. And now I will turn the call over to CEO, Dan McGahn. Dan?

Thanks, Brion. And good morning, everyone. I'll begin today providing an overview of our financial results for the second quarter of fiscal 2017, which ended September 30, 2017. John Kosiba will then provide a detailed review of our financial results for the second quarter and guidance for the third fiscal quarter, which will end December 31, 2017. Following John's comments, I'll provide an overview of our activities and future expectations. After that, we'll open up the line for your questions. Second quarter revenues were in line with our expectations. In our Wind segment, ECS shipments to Inox increased during the second quarter. We are where we thought we would be. Inox is taking product, and we are delivering as expected. Inox believes that they are at the last stages of India's wind market downturn. Inox won nearly 30% or 300 megawatts of the first national auction. And 25% or 250 megawatts of the second national auction. Inox has nearly doubled their historic win rate with the first and second national auctions. The Indian government expects approximately 4,000 to 6,000 of additional demand to be in queue for national and state auctions this fiscal year. We are diversifying our wind business. We entered into an agreement for our 5.5 megawatts offshore wind turbine design with South Korea's Doosan Heavy Industries. This agreement expands our offshore wind business product line with Doosan from a 3-megawatt to now also include a 5.5-megawatt, which we developed with Hyundai Electric. We are the exclusive supplier of electrical control systems to South Korea's most powerful, domestically manufactured offshore wind turbine: Doosan's 5.5-megawatt turbine. We anticipate strong second half revenues for our Grid tech business. During the second quarter, we expanded our proprietary technology portfolio and believe that we enhanced our ability to increase margins for our Ship Protection Systems, or SPS. We made this possible through a strategic acquisition of Infineon Technologies Corporation, a privately held high-performance cryo cooler company. Feedback from shareholders has been very positive. We have begun the work to deliver the long lead-time items needed for our SPS order for USS Fort Lauderdale, LPD 28, and we intend to begin delivery this fiscal year. We shipped our preproduction VVO units under commercial terms to utilities in the United States. We expect continued commercial shipments beginning in the first quarter of fiscal 2018. Before I get into more detail regarding these development, I'll turn the call over to John Kosiba to review our financial results for the second quarter of fiscal 2017 and provide guidance for the third fiscal quarter, which will end December 31, 2017. John?

Thanks, Dan. And good morning, everyone. AMSC generated revenues of $11 million for the second quarter of fiscal 2017 compared to $18.5 million in the year-ago quarter. Wind and Grid business units each accounted for 50% of total revenues for the second quarter. The year-over-year reduction in revenue is primarily driven by reduced ECS shipments to Inox from our Wind business unit. 12-month backlog at September 30, 2017, was approximately $66 million. Looking at the P&L in more detail. Gross margin for the second quarter of fiscal 2017 was 2.5%, which compares with 11.4% in the year-ago quarter. The year-over-year decrease in gross margin for the second quarter was primarily due to the decreased revenues versus the year-ago quarter. R&D and SG&A expenses for the second quarter of fiscal 2017 were $8.3 million. That was down from $9.2 million for the same period a year ago, primarily driven by reduced expenses resulting from our April 2017 reduction in cost. Approximately 12% of the R&D and SG&A expenses in the second quarter was noncash. Our net loss in the second quarter of fiscal 2017, was $7.3 million or $0.38 per share. This compares to $7.3 million or $0.53 per share in the year-ago quarter. Please, see our press release issued last night for a reconciliation of GAAP to non-GAAP results. We ended the second quarter of fiscal 2017 with $30.5 million in cash, cash equivalents and restricted cash. This compares with $37.7 million as of June 30, 2017. Our cash burn for the second quarter of fiscal 2017 was $7.3 million. This was in line with our previous guidance. Turning to our financial guidance for the third quarter of 2017. We expect Inox to move to higher levels of turbine production towards the end of calendar 2017 and into calendar 2018. This is expected to result in stronger revenues for our Wind business unit in the second half of our fiscal 2017. We anticipate stronger second half revenues for our Grid business unit as well. Driven by D-VAR shipments in the third and fourth quarters. We expect that our revenues in the third quarter of fiscal 2017 will be in the range $14 million to $18 million. Our net loss or net revenue is expected to be less than $8 million or $0.40 per share. We anticipate a cash burn in the third quarter of fiscal 2017 of $8 million to $9 million, including a $1 million capital investment related to the Massachusetts move anticipated to incur in the third quarter. The forecasted cash burn in the third quarter includes higher-than-normal working capital needs to support the increased D-VAR shipments. We expect to realize benefit from collections for these D-VAR shipments in the fourth quarter of 2017. With that, I'll turn the call back over to Dan.

Thanks, John. I'd like to provide a quick update on our move. The new location for our headquarters in U.S. manufacturing operations is just a few miles away from our current location. We remain right on target with our move time line. We believe that the Jackson Road facility can be a fort of additional liquidity to the business. We have begun the process to explore our options in more detail. However, our primary focus is on our customers and employees. We are working to ensure no disruption to our grid tech operations. Updating you on our Wind business. The expansion of our offshore wind business with a global brand like Doosan allows us to participate in the South Korean and global offshore wind market. This is very good news for our business. This may help to create further revenue diversity within our Wind business. Doosan acquired the prototype, design and rights to manufacture itself the 5.5-megawatt wind turbine for the domestic and global markets. The 5.5-megawatt system has been operating for nearly 3 years in Jeju Island and, in turn, earned a reputation for its resiliency and safety. In 2016, during typhoon Chaba, the turbine withstood the fourth most powerful typhoon on record to hit Korea, with winds reaching 124 miles per hour. Doosan is the engineering procurement contractor and wind turbine supplier of the first phase of Korea's Southwestern Offshore Wind Project, a 2,500-megawatt project being developed by state-owned company, Korean Offshore Wind Power. Doosan will supply to the project's first phase a phase of 60 megawatts expected to come online by 2019. According to GlobalData, the South Korean offshore wind market capacity is forecasted to grow to over 6,000 megawatts by 2030. We are diversifying our wind customer base. We look forward to producing and supplying Doosan with our 5.5-megawatt as well as our 3-megawatt ECS for offshore applications. The 5.5-megawatt ECS is expected to be manufactured out of our facility in Romania. There are 2 things on the wind side that I'd like you to take away from this call. The first is our new agreement with Doosan, which expands our wind opportunity, particularly for offshore wind, initially in South Korea. Second, we believe the wind market in India is improving. And we see Inox winning in this new environment. The Indian wind market is seeing an increase in the number of national wind auctions planned in the coming months. Our customer Inox is commencing production on orders they were awarded in the first national auction in February. This fiscal year, Inox Wind announced 550 megawatts of new wind turbine orders won from the first and second national wind auctions held in India. This is very good news for us. The Indian government is expecting as many as 3 additional national auctions for 1,500 megawatts each this fiscal year. India also anticipates state auctions to begin this quarter, specifically, what's anticipated to be a 500 megawatt auction in the state of Gujarat and a 250 megawatts auction in Rajasthan and a soon-to-be-released tender document coming from Andhra Pradesh. We see Inox' winning auctions at a higher rate than previously reached. We are seeing signs of a recovery and continued to be optimistic about the Indian wind market. We do expect Inox to move to higher levels of turbine production in the second half of the fiscal year, which is expected to result in sequentially higher ECS shipments in the third quarter and robust shipments in the fourth quarter as well. We are diversifying our wind business through customer and market diversification. We are diversifying our overall revenue by growth through our Grid business. And as you know, D-VAR is a large contributor to our Grid business. I mentioned that we anticipate stronger second half revenues from our Grid tech business unit driven by D-VAR shipments in the third and fourth quarters. In fact, we anticipate that third quarter revenues could be the strongest that D-VAR has seen in years. We continue to see strength in our D-VAR business from the renewable and industrial sectors. Our D-VAR product targets the power transmission grid. In January, we announced a new product targeted to electric utilities for the distribution grid. Our new VVO platform is designed to bring back order and rhythm to the growing disarray within distribution networks. VVO represents 15 years of experience in volt/VAR innovation on the transmission network, now formatted to stabilize modern distribution networks. This new solution is specifically designed to mitigate power quality issues from increased distributed generation capacity. Distributed generation, or DG, is electricity generated within the distribution system itself as opposed to the stream of electricity generated from centralized power plants. However, DG is not what the grid was built for. Originally designed in the earlier 20th century, the grid brought electricity to consumers by means of low distant generation through long transmission lines and finally, to end users via a distribution network. 21st century energy generation has required a system built for one-way delivery to become a bidirectional one. As the penetration of DG increases, the problems caused by it are also increasing and are, in some cases, causing utilities to limit the amount of DG that can be installed on their distribution grid. Photovoltaic, or PV, generate inherently irregular and unpredictable output wildly across even one area of the distribution grid. Because a large percentage of DG is from PV as well as the proliferation of electric vehicles, grid operation becomes laden with power quality issues for which established equipment simply cannot respond quickly, effectively or often enough. And we expect these problems will increase in the future. Penetration levels of PV generation are expected to continue to grow in North America and increase problems for utilities. As a result of the green movement, electric vehicles are becoming ubiquitous. According to a new report from Navigant Research, the North American electric vehicle market has grown by nearly 10x since 2011. Sales of electric vehicles in North America are expected to grow by nearly 50% in 2017 compared to 2016. Nations around the world confirm policy changes toward renewable energy targets as high as 20% by 2030. DG is estimated to rise globally to 165 gigawatts of power by 2023, with the predominant increase coming from solar. VVO is a unique purpose-built device that is designed to integrate effortlessly into the distribution system with the appropriate capabilities and size. The compact size of VVO makes it optimal for installation on electric poles. Fast-acting power electronic-based devices with no moving parts, such as VVO, can address and solve many of these problems. A core value of AMSC is to listen and learn. VVO was the result of listening and learning from the marketplace and designing a cost-effective solution to a growing problem in our distribution grid. Enabling utilities to stabilize and increase resilience of the evolving modern distribution grid is part of our mission at AMSC. Our sales team at AMSC has been working very closely with utilities and solar developers in the U.S. We are seeing interest in VVO from investor-owned utilities, cooperative public utilities as well as municipal utilities. These utilities are located in different geographic locations, including rural and urban locations. We expect to build a backlog of commercial VVO orders in fiscal 2017. We believe our VVO offering doubles the addressable market for our voltage management solutions. We anticipate VVO could be an important component to the long-term growth of our grid business. Today, we are working with more than a dozen and a half utilities and identifying new REG projects to increase the resiliency of urban distribution grids. Utilities have expressed interest and are performing deployment studies of our REG solution. I believe we've made a breakthrough in our communications with ComEd. We've had close dialogue of ComEd this quarter. We are working with the utility to be in the best position to move the project forward. We are listening attentively to the needs of the utility, and we are learning to communicate more clearly. The second quarter of fiscal 2017 showed improvement over the first quarter. As anticipated, we expect shipments to Inox to increase in the second half of the year. We are focused on continuing to grow our grid business. AMSC's focus on system-level solutions, targeting specific Navy vessel platforms, is paying off. Now that our SPS is designed into the San Antonio class of amphibious assault ships, our work continues to expand our reach to other platforms. But we're not stopping at ship protection systems, our goal is to support the Navy's plan to electrify the naval fleet. Our strategy of creating value beyond the wire is getting the attention of our target markets. ECS, D-VAR, REG and SPS are our systems. This is the new AMSC we've been building. Speaking of the building, I want to remind you that we've begun exploring options for our Jackson Road facility. I look forward to reporting back to you at the completion of our third fiscal quarter. Nicole, we'd like to open up the line to questions.

[Operator Instructions] And we will take our first question from Colin Rusch with Oppenheimer.

This is Kristen on for Colin. So really appreciate the color on the India wind market, but I want to dive a little bit deeper on that. Could you talk a little bit about the pricing dynamics you're seeing there? And then any momentum that you have on the 3-megawatt turbine design?

So specifically with the 3-megawatt for Korea or for India or for where?

I'm sorry, for India.

So with the pricing, you can see in the first national auction, the pricing came down by something on the order of 15%, 17%. And then that further came down maybe a little even more dramatically, maybe 20% more with the second national auction. And from what we understand in the market in India and from listening to what Inox has told us as well as what they're telling their shareholders, a lot of that they feel is going to help them in the market. They've been one of the lowest-cost providers in that market. They think that having the stability of these policies in place, particularly the stability of the payment, will change, in large part, the cost of the financing of these projects, and that a large part is what they're giving on price. They think that the cost to finance the projects are -- in a way, the prices they're giving really is because that cost is less. We have not seen at this point people in the market turning on the supply chain to try to look at changing pricing. We have a long-term contract with Inox that stabilizes our price with a long-term technology provider. And they tend to reaffirm that. And I think, they reaffirm that as well again on their call that they don't do any R&D, we do the R&D for them. On the 3-megawatt, they've talked publicly about wanting to go down that path. Obviously, that means we've had some discussions with them, but we've not yet announced that we're entering the Indian market with a 3-megawatt. We are already in the Korean market with the 3-megawatt with Doosan, that turbine has already gone into production. And now what we announced today with the 5.5-megawatt is that, that turbine, which we originally developed with Hyundai, has now been acquired by Doosan. And the reason is it's because the market is looking to pick up substantially in Korea for offshore wind. And it appears that Doosan seems to be in the leading position as the local high performance, large turbine manufacturer. So we're very proud to continue to further align with Doosan to be able to go after the South Korean wind market. So I think the good news for shareholders is we're diversifying wind, we're bringing in a brand in Doosan by expanding that product line, putting us in a very good position to not only diversify through grid but to diversify within wind itself.

And then if we could transition over then to the grid side of the business. Can you talk about the progress you're making on discussions with SPS for foreign navies?

We have conversations -- in order to export you need to be able to have licenses. And those export licenses, they go through the Department of Commerce and they go through the Department of Defense. We started down that process. We've been able to secure in part some of the licenses necessary to export to some of our target countries. I look forward to, in the future, maybe announcing a program with a foreign navy, but we don't have anything specifically we can report to you today on that.

Okay. And then last one from us, just on the REG and VVO, you've announced some developments there, obviously, making progress with certain clients to meet those needs. But can you walk us through where you think the customer education process is with the broader audience? And how much of that interest is being driven by anxiety around whether it's EVs or other DG sources?

I think a lot of the anxiety over the distribution grid is exactly what you say, is that you have the advent of this rapidly evolving distribution grid, you have the utilities that are ill-equipped to be able to respond to those changes, and they're out actively looking for a solution. What we spent a good amount of time this year, the first half of this year, is really making sure what we're developing was exactly a good fit for the market. I feel comforted from the feedback from utilities that we do have the right solution, giving the right set of features at the right pricing for the market. And what we really announced with this last announcement on VVO is we've now shipped hardware to all of our development partners, and we're getting hardware in the field. And we've gone from doing testing here in Massachusetts to doing testing at a certification body, a national facility that's accredited to do that, to now we're entering a stage where we actually have deployed hardware with utilities. And we'll get feedback, I think, very rapidly from them on performance and suitability. And the hope is that these become kind of the bell cows in the herd that we can turn to and help us in marketing to other utilities. That being said, the sales force has made tremendous progress in doing this education. So part of why we announced the product back at the beginning of 2017 is we knew it would take the better part of a year to really fully educate the market about the problems, the solution and how we are uniquely positioned to be able to solve those problems. So I look forward to being able to announce more in the future on VVO. I do believe it is a good part of our strategy for growth through grid. It should be a growth driver for the business in 2018 and beyond.

Our next question comes from Philip Shen with Roth Capital Partners.

I want to dig a little bit deeper on the Doosan opportunity. I think the first phase is 60 megawatts, and I just want to confirm that, that would be fully supplied by the 5.5 megawatts and -- or you think there might be some 3 megawatts in there. And then beyond that, I think in your release, you talked about a 2.5-gigawatt opportunity. What does it take for Doosan to win the rest of that larger project? Is it kind of in the bag for them? Or is it more -- is it going to be up for bid for a lot of other developers?

So specifically on the 60-megawatt, I frankly don't know what they're going to supply. They do have the 3-megawatt, they do have a track record with that. I could see that as certainly -- probably should be part of the offering. It may be an opportunity for them to field some 5.5s, but that's really going to be up to them, we're going to stand behind them and support them the best we can. I think the good news with this kind of foothold project is that South Korea is starting to finally deliver on the promises earlier this decade of really a move to offshore wind. So this first 60-megawatt is part of, as you mentioned, this larger 2,500 megawatts. What we've seen in other countries and we've seen in Korea, a strong desire to create those jobs locally, a strong desire to, as best as the nation can do, have the rules aligned in a way where the locals can win substantial market share in the local market. And I think, really, the hope is for Doosan in Korea is that they could it in Korea and then they can go global with the product. That means even more job creation in South Korea which, ultimately, I think is one of the main drivers, not just clean energy and helping to modernize energy production in Korea but also to create global brands that can deliver global products to the market. It seems that most of the focus in Korea has solidified around Doosan as that global provider, and we're very proud to be aligned with them. And we are an extension of their R&D capability where we can develop new designs like the 3 and the 5.5. I think the other part, Phil, to be aware and what we said is we're also the exclusive provider for the 5.5 for ECS. So that's an important part of our business we hope. And I can't handicap specifically when we're going to start to see revenue bear from the relationship, but as those opportunities come, we're in a great position to be able to generate revenue from that product line in Korea.

Great. And do they have onshore aspirations at all? Or do you think the work with Doosan will be exclusively offshore?

I think -- when we think of Doosan, we think offshore. And I think test it, develop it in Korea and then go global as the offshore markets starts to evolves further, you now have an Asian brand that people know and value providing world-class performance.

I think you guys went quiet for a bit. So I'm back here. One last question from me. In terms of a -- this is back -- strong wind but for the U.S. markets, with the house tax reform bill threatening to eliminate some wind benefits. And it's probably a low probability. But that said, we're hearing some potential changes that developers are making out there in the field to be more conservative and so forth, meaning they want to lock down perhaps 80% of the $0.015 kilowatt hour subsidy that could expire at the end of this year, and so they might start construction. The question here is, have you guys seen any changes at all to your U.S. wind D-VAR business? Or do you think it's simply too early to tell at this point?

I think it's too early to tell. Our indications show what we think will be a pretty robust '18 and '19, and that comes not just from developers but from wind turbine manufacturers as well that we work with over here in the U.S. I think in the political climate today, there's a level of uncertainty that may be unique to the time that we're living in. So I don't know if people really fully appreciate yet what's going to happen because I don't think it's fully known.

And we'll go to our next question from Jeff Osborne with Cowen and Company.

I was just wondering, Dan, if you could talk in the 3-megawatt history that you had with Doosan and Hyundai over time. It doesn't look like that was that material in terms of historic revenue. Can you just touch on why that was the case and why the 5.5-megawatt will be different?

Yes. So I think that I wouldn't see the 3 in that light, I see it as a market phenomenon. So what's happened, if you go back to the last decade, there is a lot of desire, they were talking about 10,000 megawatts of offshore wind, that all started to slow down. They really didn't come to fruition. We continue to work with Hyundai on the 5.5-megawatt, got that to a prototype. I don't, frankly, know the number of 3-megawatts that have been fielded, but it's more than a few handfuls. There's a number of them up there and operating. That turbine has been very successful for Doosan. I think the real change today that we're talking about is Doosan really committing to go after this market, to do that with the 3 and a 5.5, and that the turning of the tide in the Korean market seems to be happening with this first project. And that's really what's different. The market should be coming stronger. They're setting long-term targets where they want to get to 6,000 megawatts installed over the next number of years. So I think, that we're starting to see the advent of the opening of our Korean market, and we're in a great position with a great partner in Doosan with multiple shots on goal, multiple products.

Got it. That's helpful. I may have missed this, but -- so you talked about the VVO and shipments next summer in 2018. Can you just touch on -- I know you introduced the DistribuTECH earlier this year. But since that time, I guess how many utilities have kicked the tires on the product? Maybe how many are in the field testing it actively? Just any sense of momentum since the introduction in February that you can share?

Yes. I think the big news, and we had an announcement, maybe you missed it, but we actually have fielded the hardware now with multiple utilities in the U.S. We talked kind of about the value and use cases of looking at systemwide challenges that PV presents and also acute challenges that PV can present in the neighborhood level with a significant penetration to PV.

No. I'm sorry to interrupt, but I guess I'm familiar with the advantages that you talked about REG in more than a dozen utilities and discussions for that, does a couple -- is that 2 or 3 that have kicked the tires? Or any sense or perspective on how you're going from 0 to potentially doubling the market for the D-VAR product with the VVO? It seems like an exciting product, I'm familiar with the advantages of it, but just any qualitative comments you can give as it relates to...

Yes, you confused me because you hopped around, you hit VVO, D-VAR and REG in one sentence. So if I answer specifically for VVO, we've shipped our hardware. That's the news we just made. So we now have units out in the field that have gone through testing here and testing at a third-party site. So prior to that point, we were talking about conversations with utilities and potentially getting orders in place. Now we've secured orders, and we've delivered on them. I hope to report back in future calls about how that product's performing in the field and what our future prospects are.

I guess, sorry to belabor the point, but I think it was Duke that gave the presentation at DistribuTECH about the product. Can you confirm that is more than just Duke that's tested it?

I can confirm that more than one utility is testing in parallel.

All right. Perfect. And can you just also, last question, just remind us on what the book value of the Jackson Road facility is?

It's in the low-20s, $20 million-ish.

[Operator Instructions] We'll take our question from Carter Driscoll from B. Riley FBR.

This is Carson on for Carter, and I just had a quick question regarding your offshore wind development plans. So like in the next 2 to 3 years, how do you see yourself expanding your offshore wind development plan? And do you see any changes to that strategy at all?

Yes, I think, what we announced today is a big change for us. I mean we're looking at expanding the product line with a partner that has a strong desire to kind of show it in Korea and then go global with it. I think the fact that the market now is turning on in South Korea gives them a chance to fully prove out their supply chain and get the track record to look to export globally. So I think, for the first time in a long time, we can talk about offshore wind as a real opportunity for the company. For those of you that follow us over the past several years, we really only focused on Inox. We wanted to make sure that, that relationship was healthy. That we're able to get them through growth. We're now at a point where we've gone through the policy challenges, and the downturn seems behind us. I think it's great to show that we're bringing Doosan along as well to add additional diversity within the wind segment itself.

And ladies and gentlemen, that is all the time we have for questions today. I would like to turn the conference back over to our speakers for any concluding remarks.

I thank everybody for being on the call. I think we've made tremendous progress on the objectives and milestones we set out for the company. We're bringing SPS along, we're bringing VVO along, making progress with that. We talked a little bit about progress with REG as well. We feel we're well positioned hopefully to demonstrate growth through our Grid business. And I think the positive surprise today, I think is Doosan and them expanding their product line with us. As well as, I think, Inox came out kind of very clearly on their conference call for their quarter that they think that the downturn in the market is now behind them. They're entering production of their turbines this quarter, and we believe that we're in a very good position here to continue to grow revenue, to continue to manage the cost of the business. And we have, I think, a great product lineup going forward that really spells goodness and growth for the company. So thank you, everybody, and we look forward to talking to you all very soon.

Once again, ladies and gentlemen, that concludes today's conference. We appreciate your participation.