Ladies and gentlemen, thank you for standing by and welcome to the II-VI First Quarter FY 2021 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Ms. Mary Jane Raymond, Chief Financial Officer. Thank you. Please go ahead, ma'am.

Thank you, Marcia and good morning. I’m Mary Jane Raymond, the Chief Financial Officer here at II-VI Incorporated. Welcome to our earnings call today for the first quarter of fiscal year 2021. With me today on a call are Dr. Chuck Mattera, our Chief Executive Officer; and Dr. Giovanni Barbarossa, our Chief Strategy Officer; and the President of the Compound Semiconductor segment. This call is being recorded on Thursday, November 5 2020. Our press release and our updated investor presentation are available on the Investor Relation’s tab of the website, ii-vi.com. Just as a reminder, any forward-looking statements we may make today during this teleconference are given in the context of today only. They contain risk factors that are subject to change possibly materially. We do not undertake any obligation to update these statements to reflect events subsequent to today, except as required by law. A list of our risk factors can be found in our Form 10-K for the year ended June 30, 2020, filed in August. We will also present some non-GAAP measures for which the reconciliations to GAAP are found at the end of each document that includes those measures, such as the press release or the investor presentation. With that, let me turn the call over to Dr. Chuck Mattera. Chuck?

Thank you, Mary Jane. Good morning, everyone, and thank you for joining us today. I am pleased to report that our fiscal year 2021 started off very strong, led by demand at our photonics solutions segment. Despite the impact of our fully compliant reactions to the government orders against Huawei, we delivered revenue of $728 million at the midpoint of our guidance. Our consolidated revenue grew 114% year over year on a reported basis. Among the many highlights this quarter were sustained bookings that reflected expanding trends in all of our end markets, while the continued drive by our compound semiconductor segment to achieve a greater share of the consumer electronics market opportunity was evidenced by our tremendous growth in 3d Sensing during the quarter, both sequentially and year over year. In addition to a continued strong market pull and our firing on all cylinders, the main highlights of this quarter were our continued focus on the safety of our II-VI family in the face of the pandemic. The successful completion of the first 12 months of our Finisar acquisition and our rapid and agile response to the increased trade restrictions while successfully positioning II-VI to lead in the growth markets we have chosen to serve. September 24 was the 12-month anniversary of the largest and most bold transaction, thus far, in our history, the merger of two great companies into II-VI. We brought together two incredible teams with best-in-class IP, technology and manufacturing assets, leveraged our collective experience of integrating over 20 acquisitions prior to the Finisar acquisition, and proved our ability to identify and execute on even large opportunities in the market at scale. Our combined teams went right to work on September 24, 2019, and collaborated with one another while aiming to over-deliver on the synergies that…

Thank you, Chuck. I'm pleased to report that 3d sensing grew more than 200% year-over-year and over 160% organically. We believe this is significantly faster than the market growth rate. The combined company 3d sensing grew sequentially 20% for the second quarter in a row. Our Sherman fab, along with our other 3d sensing fabs, are operating as planned due to some very solid execution. We have recently secured multiple VCSEL design wins for Android smartphones and laptop applications, which will complement our existing design wins. Starting in 2016, we invested strategically in our -- on [Inaudible] AP, fab, assembly and test operations in North America and in Europe to create the worldwide first and, we believe, only vertically integrated VCSEL manufacturing operations on the exchange. We did this with a conviction that we would have produced the results that we have been enjoying so far. And we believe we will continue to enjoy as 3d sensing functionalities are further deployed in the consumer electronics, automotive, and industrial market. In addition to shipping production quantities of laser for LIDAR sensing for smartphones, we've been shipping lasers for in-cabin automotive uses, such as driver monitoring and finger navigation for several years now from our fabs, which are also automotive-certified. We expect these products to be increasingly required for Europe's five-star safety rating over the next three to five years. As 3d sensing expands beyond smartphones into tablets, laptops, cars and other products, we are poised to take advantage of those trends not only with our compound semiconductor optoelectronic components, but also with our brand, broad, and market-leading portfolio of passive components, including the factive optical elements, diffusers, filters, mirrors and lenses. In fact, we expect these technologies to be used in the future for bio-sensing as well as augmented virtual and…

Thanks, Giovanni, and good morning. During the quarter, the total revenue of $728 million was split 70% in communications, 9% in industrial, 7% in aerospace and defense, 7% in consumer, 4% in semiconductor capital equipment and the rest is in other markets. Let me review a few highlights of the first 12 months of the Finisar acquisition. The underlying inorganic growth for the Finisar business was 18% year-over-year on a pro forma basis in the September 30 quarter. As a reminder, pro forma refers to the full quarter of Finisar revenue in Q1 FY '20, not just six days, so that we can show growth on a comparable basis. We are now delivering non-GAAP gross margins well above Finisar's last independently reported non-GAAP gross margin of 31%. We delivered $89 million of cost synergies in our first 12 months when we expect to reach the $150 million target in 30 months instead of $36 million. We spent $32 million to achieve these synergies, less than half of our anticipated first year spend. The one-year measurement period for purchase accounting for the acquisition ended on September 23, with no significant changes from the June 30 position. With respect to consolidated II-VI, one year into the integration, we are already exceeding the last stand-alone legacy II-VI margins, the margins we last reported on June 30, 2019. Our non-GAAP gross margin at that time was 38.2%, and the non-GAAP operating margin was 15.7%. As of today, the consolidated II-VI non-GAAP gross margin was 39.6% for Q1 of fiscal year '21, 140 basis points ahead of our last independent report. The non-GAAP operating margin for Q1 was 19.1%, compared to our last independently reported 15.7%. At the segment level, the non-GAAP operating margins were 15.7% for photonics, and 26.4% for compound semiconductors. Compound semi's…

[Operator Instructions] Your first question comes from the line of Jed Dorsheimer with Canaccord Genuity.

Thanks and congratulations on a quarter, as well as the integration of Finisar.

Thank you.

First question for you guys. I guess, if I look at the silicon carbide business, pre Ascatron and INNOViON, I'm just curious, you had talked about sort of a 5% to 10% increase of capacity over the next 5 years. Has anything changed with respect to that? And is there an update on your thinking now that you have these assets in the business? And then I have a follow-up. Thanks.

Hi, Jed. Thanks for the question. This is Giovanni. No, we see no change. We continue to increase our production capacity as required by the market. And those two acquisitions are complementary to the silicon carbide growth infrastructure that we have.

Got it. And then just as my follow-up. I was wondering if you could maybe talk about some of the differences in the 5G market from a technology perspective between China as well as the U.S. I mean, we're aware that there's differences in tower design and capabilities. What does that mean in terms of chip architecture and sort of how are you positioned with respect to that? And what I'm getting at is, does that, for example, shift in terms of a hemp device in one market versus another? How should we be thinking about that as your product portfolio is set up.

Hi, Jed. This is Giovanni, and thanks again for the question. When it comes to high-performance applications, such as in 4G, 5G and eventually, in the future, 6G, it's all about physics. And as far as we know, the performance that you can achieve with gallium nitride and silicon carbide can't be achieved with other material platforms. So, you know, of course, there are competitive technologies, which are not mutually exclusive. So, we believe that our investment for gallium nitride and silicon carbide, together with our partner, Sumitomo Electric Device Innovations, continue to be a great opportunity for our growth. As you said, we do see differences between maybe China, some OEMs choices, and some other OEM choices in Europe. We're also selling in the United States. But for us, that's -- we're quite far from where we are at chip level. And as far as we see now, we don't see any effect on our short- and long-term plan.

Your next question comes from the line of Paul Silverstein with Cowen.

Thanks. Giovanni, I was hoping you could give some incremental color on the health of the market in demand. Obviously, we're all aware of Steven's comments from roughly 90 days ago. It doesn't sound like you're seeing any weakness or at least meaningful weakness, but any granularity you can provide would be appreciated.

I'm sorry, Paul. Hi. This is Giovanni. So, are you talking about any market in particular or in general?

Well, I'm talking about the telecom piece of the market, in general, given Steven's comments. But I'd ask you to address both telecom and datacom.

Yeah, I think they are both pretty solid. I don't think we – you know, we have seen a nice comeback of a number of customers, which I think, like very normally, were on the sideline doing the transaction, you know, whenever there is an acquisition, a merger of the size that we just went through. Some customers were waiting to see, you know, combination and so forth. And so those customers are coming back to us. So, there is, for sure, a customer intimacy that we had with these customers is helping a lot. And then, I think the general cloud infrastructure upgrades, as well as the -- all of the telecom infrastructure upgrades to support 5G deployment, we are benefiting for both at the same time. So, I think it's a pretty healthy demand right now.

Okay. And then on the compound semi side, I think last quarter and preceding quarters, not surprisingly you had referenced relative weakness in the automotive market, given what was going on relative to the pandemic. That market is obviously picking up. Are you starting to see that come back meaningfully maybe look at over the next…

Yeah. I'm sorry, Paul. Sorry to interrupt. Yes, absolutely, Paul. Absolutely, yes. In fact, I have to say that, I guess with no supplies, China is coming as much faster than anybody else. So, the demand from China for our compound semiconductor products, as well as our passive optics products is very strong. And so, it's a very competitive environment. There's a price pressure. And as I mentioned in my prepared remarks, I think our investments, particularly on the six-inch gallium arsenide production line to basically accumulate a demand of semiconductor laser chips, which can go well beyond the demand -- the internal demand of any fiber laser manufacturer that is vertically integrated. As that demand accumulates, I think we can be as competitive, not actually more competitive with the cost structure of the individual chips. So, in other words, our customers that are not vertically integrated are benefiting from our cumulative demand. And therefore, they end up with a cost structure as if they're actually vertically integrated because we have such a large scale, particularly on six-inch, which, as I mentioned earlier, we believe we are the only one in the world to have such a capability. So, going back to the industrial market, I think it's definitely much healthier than it was in the past few quarters.

Your next question comes from the line of Vivek Arya with Bank of America Securities.

Thank you for taking my question, and congratulations on the strong results. First question, Mary Jane, for you. Good to see the OpEx discipline OpEx around 20%, 21% of sales. I'm curious what drove this low OpEx? Can you maintain this kind of OpEx intensity, right? What are you thinking about OpEx in Q2? And just what would be the puts and takes as we try to model out expenses for the next several quarters?

So, first of all, I think, you know, we have made the OpEx a very significant priority for the company as evidenced in the fact that we delivered, in the first year, acquisition synergies that were twice the first-year target. I do think that the correct way to look at OpEx is as a function of the sales level. Because, obviously, there are some costs that are associated with growing those sales. But generally speaking, you know, we would expect to be able to hold as we go forward, inclusive of investments that I think are important as we go forward between, say, 22% and 25% of sales. Some examples of the investments that we have started this quarter and will continue are the investments for silicon carbide modules and devices, but there are a few that we will add. For example, the company is going to undertake at least in the United States, and I imagine that might expand COVID testing in the company to continue to ensure the health and safety of all of our staff.

Got it. And one question for Giovanni or Chuck, which is, you know, as we are at the start of calendar '21, I'm just curious to hear your thoughts on the one or two things you're most excited about and also one or two things that perhaps concern you. And where I'm coming from is that was any part of the growth or the market trends you saw this year was just there because of COVID? And, you know, do they perhaps decelerate next year? Or were some of these changes more structural in nature and can actually continue into next year? Thank you.

Okay. Thank you for the question. So, I think, in general, the -- our investments in compound semiconductors platforms, whether gallium arsenide, indium phosphide, silicon carbide, I think it's probably where most of the excitement is not only because, obviously, we are merchant suppliers or components. They rely on those platforms. But also, we are the direct beneficiaries for our subsystems and modules, which are basically integrated around those technologies. So, we have a very fruitful discussion with our module and subsystem designs internally, as well as our customers. They rely on those platforms to differentiate their products. So, I just want for them, maybe one detail about indium phosphide. As I mentioned in my prepared remarks, we are very excited about it because we are relying on 20-plus years of investment made by Finisar on the platform, which we believe it's well world-class, and we'll continue to invest in it as we see an array of customers really interested in scaling up the capability to leverage the -- you know, the performance of the individual lasers and [indiscernible] that we make for the internal demand as well as the standard demand. So that's probably where we see the greatest upside because we're starting from zero. We started from zero when we closed. And so now that's growing rapidly, and we see that eventually to become a major portion of our market places in the optoelectronics compound semiconductor technologies.

Your next question comes from the line of Mark Miller with The Benchmark Company.

Congratulations on your results. Just a few questions. Did you say what the bookings were for the quarter?

We haven't reported bookings in the quarter for a while. The backlog, as I said, remains very, very strong at 899 and the rolling 12-month bookings is still over 1.

So, what are your competitors indicated they were seeing some delays in 5G for certain type chips, have you seen anything like that, like this in China?

Hey, Mark. This is Chuck No, we have not.

Your next question comes from the line of Ananda Baruah with Loop Capital.

Hi, guys. Good morning. Thanks for taking the questions. Congrats on the strong execution. I guess just two quick ones, if I could. Can you talk a little bit about what your expectations are for 3d sensing for the December quarter relative to the September quarter. And congrats on the strong performance there. And then I have a quick follow-up after that. Thanks.

Hi, Ananda. This is Giovanni. Thanks for your questions. So, we expected the -- our Q2 3d sensing revenue to be higher than Q1. And I think we'll -- we believe we'll continue to gain share in the market like we have done for the past few quarters. And I'm sorry, what was the second question?

Actually, I didn't ask it yet. But I’ll ask it in a moment, Giovanni, but I’d pinch in to context. Any -- guys, this is not the second one, this is a follow on to the first, any chance you could give some -- sounds like you’re gaining momentum there. I mean, would you expect with the staggering rollout of certain phones that you could be up potential for it to be up sequentially in March quarter as well?

We'll have to see. We have forecasts. But, you know, we don't have that visibility in terms of orders. So, I think we have to sit there.

Got it. And then Mary Jane, my follow-up is on the operating margin. How much of the expansion you saw this quarter was from, you know, the work that you've talked about with Finisar? And it's a decent amount, meaningful amount from the 3d sensing ramp as well. And if there's anything else about Finisar, we'd love to know about it.

Sure. Well, we've told in the past that any time we launch a new product, that the single biggest driver of change in operating margin is anything that has nearly begun ramping. So sure, the fact that we are seeing 3d sensing ramping is really very, very good. Now a lot of excellent work has been going on at Sherman since the March quarter. But the truth is, across all of our operations, not the least of which, as Giovanni talked earlier about the automotive and industrial market coming back, that also leads to greater fab utilization, for example, and in the Zurich fab. So, all of that, I think, is really a function of what drove it. And 3d sensing probably was the kind of last one out there to start to move, and it did in the March quarter. And that's been very, very good. But I would take nothing away from the OpEx intensity that has been going on in the company since the acquisition closed.

Your next question comes from the line of Jim Ricchiuti with Needham & Company.

Hi. Thank you. Good morning. I was wondering if you can go back to an earlier comment that you made about if I -- hopefully, I heard this correctly that you were unable to ship at roughly about $40 million of finished goods. Can you elaborate on that? Where -- what areas? And where are you in terms of some of the supply chain challenges?

Okay. Hey. Good morning, Jim. This is Chuck.

Hi, Chuck.

Hey. Good morning, Jim. The bulk of it is in the [indiscernible] Solutions business. And that's the first part of your question. What's the second part of your question?

Well, just in terms of where are you in terms of those supply chain challenges. Is this something that you expect is going to persist?

I would say that it came up. I think we did a -- we did one heck of a job. First of all, even in this quarter, our supply chain team, global supply chain team is just fantastic. I think what began to happen is that as the industrial markets, automotive markets, and the markets in China began to heat up and became kind of back on to the track they were on, I think that the supply chains were generally under pressure. We were able to mitigate everything that we needed to be able to deliver strongly on this quarter. But as you can tell from our guidance, we thought there was a possibility that we could hit $750 million. And what -- our supply chain people have been able to do is not only mitigate the impact in this quarter. But also, I'm expecting the impact to Q2 to be immaterial.

That's helpful. And Chuck, the follow-up question is just with respect to the announcement, on the 6-inch fab for the laser diodes for industrial applications. I'm wondering what does this do for the customers that you deal with in China the fiber laser side in terms of their ability to perhaps move up market to higher-kilowatt class fiber lasers?

That's pretty simple, it enables it.

Your next question comes from the line of Sidney Ho with Deutsche Bank.

Thanks for taking my questions. A couple of them. First question is regarding the inventory at your customers on the supply chain, what's your updated view on that in terms of just the supply chain inventory? Or any pre-purchases that is happening, especially given the strength that you are seeing in China?

Sidney, is your question, can we comment on whether the shipments we've made are going into inventory and what the customer's level of inventory, is that it?

Yes. Customer levels inventory in the supply chain.

Well, let me -- Sidney, we're not going to be able to give you anatomically precise answer. Let me just comment about inventory in general. I mean, we are focused on our operating performance at every level and in every comp, on our cost, on our working capital on our inventory management. But the world has just gone through a number of climate-based challenges, the virus itself. And our customers and our suppliers are shifting, I think, conversations a little more from just in time to just in case. And so, we need to stay focused on that because we're expecting to grow. And, you know, we just -- we have to be really smart about it. And we're engaged with customers where we're trying to win share, serve their unforecasted needs, and inventory is a part of the conversation, meaning our ability to produce it, our ability to procure it. It's a balancing act. And we're not going to get carried away. But by all means, we intend to continue to grow and inventory is a strategic part of that equation. Okay?

Okay. That’s helpful. My next follow-up question is can you talk about what portion of your revenue is coming from 3D sensing and from silicon carbide today over the last quarter?

So, yes. So, the consumer part of the company was about 7%, I think -- 7% of the total. And then the portion that is silicon carbide proper is probably in the neighborhood of 4%, 5%.

Okay. Thanks. And then maybe one last question for me. Thank for the gross margin guidance for the year in the slide deck. I think you guys are expecting 38% to 42% for the fiscal year. What are the major factors you see driving margins toward the high end versus low end, recognizing you're already at kind of like the midpoint of that range right now? Thanks.

Right. So, honestly, as Chuck and Giovanni both commented on, and Engineered materials company, volume is pretty critical. The margins are very affected by the extent to which the grown materials are in demand and sold. That is going very, very nicely right now, as Giovanni commented on the variances across the board, whether that be EUV, industrial, 3d sensing, etc. So that's the first one. The second point is, from an operating efficiency point of view on the ground, we have worked very hard into to put capacity in when we need it and to add capacity by breaking line bottlenecks. So, when we need a new line, the first thing we do is to figure out whether we can make a new line of an old line by breaking bottlenecks and putting in, say, different metrology equipment. We will continue to do that. And if that is further deployed in the combined company, that also has significant benefits as well. Chuck is correct that the supply chain teams continue to be relentless on the goals that they have taken on for themselves. And then, I think really, finally, the last point is being sure that we're really in lockstep with the customer on their timing, what they're taking when, what they really need and that we're really right there with them on their forward-looking, strategical, so that the portions of the engineering guys that might come off the line to do the design for manufacturability is also used to the most efficient extent. So those are the main things that tend to drive the gross margin. But at the end of the day, volume is very important.

Your next question comes from the line of Richard Shannon with Craig-Hallum.

Well, good morning, Chuck and Mary Jane. Thanks for taking my questions. I think my first one is on the Compound semi segment for Mary Jane here. Your operating margins are up very nicely in the September quarter versus June. I wonder if you could describe qualitatively how much of that is due to gross margins versus OpEx efficiencies? And then kind of simultaneously here, while you’ve never given us the gross margin level there, what kind of opportunity do you see for growth in Compound Semi gross margins over the next few quarters or a couple of years or whatever time frame you choose as well?

Right. So, a couple of things. One, the operating margins in the segment tend to be, for compound semi, I'd say there -- as we've said before, their gross margin tends to be above the corporate average and in Photonics, it tends to be slightly below. Comp semi's game really is almost one or lost on the gross margin because we make every growing material except 1 in that segment. All the laser diodes are made in that segment. It is the classic situation where the volume and the efficiency of the growth process is really, really important. So, having said that, Giovanni has been very, very diligent in the OpEx as we look at, for example, where do we make sense? And our company has never had a situation where we make the same thing in a lot of places. But he does continue to work very hard of, really what is the footprint we have, and then that also affects his OpEx footprint. In photonics, photonics, it tends to have quite a bit more people in it, right, and a little bit more assembly, so the supply chain has a huge effect there. As Chuck's already said, they're already doing a wonderful job. And in their case, just efficiency of line flow tends to have the biggest effect. So, any way you cut it inside the segment, the gross margin is a big deal. And the second part of your question was, do I think compound semi could go up. So, if you all would have asked me before what I saw the rest in margin for comp semi was, I probably would have said between 18% and 21%. So then, as usual, Giovanni just flows that out of the water. And so, I do think that they are at a pretty nice level at this point. But at the end of the day, they do have the highest-margin products in the company. And I think we really need to see how the demand develops over time, how we see various design shifts going. But I'm sure that Giovanni's [Inaudible] segment has not given up on whatever progress they can make in the segment. But generally, I'd say that I was very proud of them for what they achieved in this quarter, and that was not easy.

Great, Mary Jane, for the detail there. My second question is on datacom here. Wondering if you could give us sense of your -- how long your visibility within cloud looks like relative to normal or whatever normal is? And also, have you seen any potential share gains at the 100-gig speed? And what's your position in 400-gig so far?

Hi. This is Giovanni here. So, as I said earlier, we have seen a nice pickup on those sales. And I think it's a combination, as I said earlier, you know, between customers engaging the combined team, which probably took a pause of 12, 18 months not only because we're going through the deal, but also because probably some deployments were kind of slow down. So, I think it's -- they're both coming back, the demand just from the market as well as the customers we engage with us. So, I think we're pretty positive about the EMEA outlook to continue that plan. And then -- I'm sorry, what was the second part?

Have you seen a potential share gains in 100-gig and where do you sit in terms of like design win share in 400?

So, you know, 400, we are shipping in volume. As I said in my prepared remarks today, we are already shipping in volume. We believe that with, you know, quite a cycle around 400, we think that, for example, until 2025, less than 50% of the market would be 400, right? And with -- I mean, 400 G. So, we have plenty of time to grow and gain share while we continue to be a leader, we think, at 200 G. And of course, the 100G is still going to be more than 40% of the total addressable demand until 2024. So, we had to have multiple platforms ready and competitive. And I think over time, eventually 400G could be -- will become the largest, the dominant segment of the market. But even in 2025, we'll still be maybe 45% of the total still less than 50%. So, it's important that we sell all of them. And while we lead the 200G, we'll grow the 400G in parallel.

Okay. Great. Thanks for the detail, Giovanni.

Thank you. You're welcome.

Your next question comes from the line of Tom Diffely with D.A. Davidson.

Hey, guys. Good morning. A question on the indium phosphide opportunity. What is the length of the design cycle and the sales cycle for the components or subsystems in that space?

Thanks, thanks for the question, Tom. This is Giovanni. So, it really dependent on the customer needs. We have shipped products, which wasn't even qualified. So much was the demand for our lasers, which is really -- at least for me, it is always the first time of your life. I just couldn't believe the laser, with where its performance, that we got POs and we ship even before the [indiscernible]probation cycle was completed. I think that the whole design cycle for some of these devices can be short for 6 months and as long as maybe '18. So, it really depends on the application. But there is no doubt that the fact that we made available to a number of customers a platform in which, as I said earlier, Finisar investors for a very long time. I think it was really, really attractive to several of them. And not only in terms of performance. But as I said earlier, also in terms of scale, right? So, we have a cost structure with a very well utilized spots between Fremont, California, Jafal and Sweden and we think those parts are doing extremely well. And so, the internal volume helps utilizing those fabs, and therefore, providing a very competitive platform to our external customers, too.

Great. Thanks for the color. And as a follow-up, what do you seen in the EUV market, have you seen a near-term pause and has your long-term outlook changed?

Not really. No, I think we are proceeding as planned. As more and more systems are deployed and operational. Obviously, the percentage of spare replacement as a total of the EUV business for us increases, right, because that's a nice and steady, eventually, over time, growing demand for components. So short term, no, I don't think we have seen any change in the deployment. I think we are benefiting from the incredible need for these tools. That, as you know, they are seven years behind in terms of the promised deployment. So, everybody is really looking forward to deploying more and more tools in the field. And as we are so sourced on over 100-piece parts, a unique path that go into the system. So, I think we are well positioned to take advantage of that -- those deployments over time.

This concludes the Q&A portion of today's call. I’ll now hand it back over to Ms. Mary Jane Raymond for closing remarks.

Thank you, Marsha. Thank you, all, for joining us today. Once again, thank you to all the veterans that we are talking to. We thank you for your service, and we will talk to you again in one quarter, if not before. Thanks again.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.