MKS Inc. (MKSI) Q1 2014 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the MKS Instruments First Quarter 2014 Earnings Conference Call. [Operator Instructions] I would now like to introduce your host for today's conference, Mr. Seth Bagshaw. You may begin, sir.

Great, thank you. Good morning, everyone. I'm Seth Bagshaw, Vice President and Chief Financial Officer; and I'm joined this morning by Jerry Colella, our Chief Executive Officer and President. Thank you for joining our earnings conference call. Yesterday, after market close, we released our financial results for the first quarter of 2014. You can access this release at our website, www.mksinstruments.com. As a reminder, various remarks that we may make about future expectations, plans and prospects for MKS comprise forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in yesterday's press release and in the company's most recent annual report on Form 10-K and most recent quarterly report on Form 10-Q, which are on file with the SEC. In addition, these forward-looking statements represent the company's expectations only as of today. While the company may elect to update these forward-looking statements, it specifically disclaims any obligation to do so. Any forward-looking statements should not be relied upon as representing the company's estimates or views as of any date subsequent to today. Now I'll turn the call to Jerry.

Thanks, Seth. Good morning, everyone, and thank you for joining us on the call today. First, I'll provide an update on our progress toward the strategic initiatives I described in our last call, as well as some highlights of recent product wins. Following that, I'll give a recap of the first quarter of 2014 and finally, our outlook for the second quarter. Seth will follow me with further details on our financial results, and then we'll open the call for your questions. On the last call, I spoke about our vision to broaden our global leadership position in vacuum processing and to measurably improve profitability of the company. This vision is supported by several key strategies. The first is a focus on satisfying customers with the best technology coupled with strong OEM relationships and more local support to help solve the complex and yield challenges inherent in sub-20-nanometer geometries and 3D structures. In concert with this, we are expanding our product solutions on our core business and we're continuing to invest in and expand into other high potential advanced markets. Next, we are managing the business for a sustainable and profitable growth. To improve our results, we are taking measured and disciplined steps to improve our operating profit throughout all aspects of the semiconductor cycle. During the first quarter, we completed a number of actions to reduce our costs and realign our workforce to better focus on our key initiatives. These are permanent structural changes unaffected by volume. We will continually pursue these initiatives in order to enhance our profitability while increasing shareholder value. Seth will have more details on this later in the call. Finally, we are committed to deploying our capital in the best long-term interest of our shareholders. In the quarter, we paid an $8.6 million dividend and repurchased additional shares under our outstanding share repurchase program, and since 2007 have returned $340 million in cash to our shareholders. As I mentioned last quarter, we have a robust M&A pipeline and are confident that we will continually successfully identify, acquire and integrate technology-based companies. This quarter, we are pleased to announce the planned acquisition of Granville-Phillips, or GP, a worldwide leader in indirect vacuum gauging for the semiconductor and other advanced markets. As we seek out strategic acquisition targets, there are a number of factors we look for. One key aspect is having complementary products and technologies that we can deliver to our customers. GP's leadership in the indirect gauging market coupled with our leadership in capacitance manometers or direct gauges will allow us to have one of the strongest technology portfolios in the gauging market, with minimal product overlap. As our core semi market addresses the process for clients of finer geometries and 3D structures, GP expands our portfolio with products which can provide critical information to validate vacuum quality. A second consideration in evaluating companies for M&A is their fit within our markets. GP serves complementary customers and end markets. And together, we will have an increased capability to support semiconductor and other vacuum customers. Approximately half of GP's business is outside of the semiconductor market in general, industrial and analytical applications including vacuum furnaces, and some coating, leak testing, freeze-drying and instrumentation. Additionally, they are strong in the analytical markets for use in mass spectrometry. This business profile aligns with our goal to increase penetration of additional markets and will create further synergies. We believe we are in a strong position to give GP products more exposure to each of our target markets to existing global sales and applications distribution channels. Another important element in evaluating acquisitions is the probability of successful integration. Here, we have a thorough understanding of GP's products, as well as their markets and customers, which reduces integration risk and provides opportunities for synergies that we expect will produce higher revenue and improved operating profitability. And finally, as I mentioned in last earnings calls, we'll only seek acquisitions that are both top line and profit growth potential, which meet or exceed our target of return on invested capital. GP is a strong, financially stable operation with financial metrics that meet or exceed our own model. And we expect the acquisition to be accretive in the second half of 2014, the acquisition is proceeding as planned and is expected to close late in the second quarter after regulatory approvals. Moving now to our first quarter results. We expected Q1 sales to remain strong, and we closed the quarter with sales of $206 million, exceeding expectations and up from a very strong Q4. Sales in the semiconductor market were $150 million, a new high for MKS, as OEM customers pulled business into the quarter to meet their customer schedules. Sales through all of the markets combined were $56 million, also up from Q4. As I look to the technology business environment, over the past few calls, we've talked about the increasing challenges should make the space as they migrate to 20-nanometer and smaller devices. If we look at etch, for example, our customers use our RF generators to provide the power to energize the plasma to drill or etch these high-aspect ratio holes and lines through numerous angstrom-thick layers of different materials deposited on the wafer. It is critical that the etch be smooth and precise that adapts to the different materials in the layers and it stops before penetrating too many layers. This requires an unprecedented level of process control. Our industry-leading pulse RF generators combined with our newly introduced Dynamic Frequency Tuning, or DFT, achieved mass power delivery in less than 50 microseconds, 10 times faster than previous tuning, providing virtually instantaneous adjustment of the RF power, and delivering precise set point power to the process. This is important to our customers because it stabilizes the plasma much faster, making the etch more controlled, consistent and repeatable. This is critical when etching extremely thin layers at high aspect ratios as a major advancement in RF technology, which we believe will contribute to future revenue growth and market share gains. Recently, 3 major OEMs evaluated MKS's pulse RF power alongside competitive solutions. They have now selected MKS's pulse RF for their process tools of record. This is an important growth step for our business. Our technology leadership extended to other areas as well in the first quarter. Over the last few years, we've invested to strengthen our infrastructure to support the emerging and increasingly important semiconductor hubs in Asia, especially Korea. Each quarter, we see further benefits from this investment. And recently, we received a large volume order from a major Korean deposition equipment manufacturer for our latest aspects product, the Paragon remote plasma source. Paragon was selected for chamber cleaning because of its high reliability and long life, which provides better performance and lower cost of ownership for our customers. In the quarter, we also had success with a major Korean manufacturer of memory devices. After competitive evaluation, this customer selected our residual gas analyzers we use on PVD tools to identify process issues and improve yield. Through our strengthened local applications and engineering presence, we have improved interaction with our customers, which benefits both them and MKS as we work together to address their needs. While semiconductor was a major part of our sales last quarter, approximately 30% of our business in Q1 was outside of the semi market. These other markets include environmental, medical, biopharmaceutical, energy, thin films, LED and more. The thin film market encompasses a number of applications. One emerging area is carbon-based products such as carbon nanotubes and graphene. Graphene can be deposited using chemical vapor deposition, a process similar to the semiconductor deposition process. Research into properties, applications and best manufacturing methods for graphene, carbon nanotubes and other nano materials is being done in numerous research organizations and universities across the globe. As this research progresses towards commercialization, new tool OEMs are appearing. And I am pleased to report that this quarter, our highly successful G-Series flow controls have been designed in on a new European graphene deposition tool. This is truly an emerging field with much ongoing research. And our technology including pressure, flow and other products are supporting development in this emerging field. Now as we look ahead to the outlook for our second quarter, semiconductor analysts are forecasting there will be a pause in equipment demand after an extremely robust Q4 and Q1. Although not formally announced, several planned projects in areas such as 3D NAND and FinFET logic devices at the foundries appear delayed. And we are seeing this lower demand in Q2. Those of you who follow us closely are well aware that when our OEM customers are ramping, our business accelerates at an earlier and faster rate than our customers. And this was evident in the past 6 months. Conversely, due to our short lead times, when a pause occurs, we typically see the impact sooner in the cycle in a sharper rate. However, we are confident that the long-term secular trends favor MKS. In our other markets, world GDP is improving, and we anticipate revenue growth will continue. Based on these factors, and looking at current business levels, we anticipate that sales in the second quarter may range from $160 million to $180 million. And at this volume, our non-GAAP net earnings could range from $0.21 to $0.35 per share. At this point, I'll turn the call over to Seth to discuss our results and expand our guidance.

Thank you, Jerry. I'll first discuss the Q1 2014 financial results before providing further details on our Q2 2014 guidance. Revenue for the quarter was $206 million, an increase of 1% compared to Q4 revenue of $204 million and a 46% increase, $142 million a year ago. Revenue for the quarter was also above the high end of our guidance range, primarily due to continued strength in our OEM semiconductor business in the quarter. Gross margin was 43.3%, which increased from 42.9% in Q4, primarily due to higher volumes. Non-GAAP operating expenses were $50.2 million, which was favorable to our guidance range, primarily due to the timing of R&D project spending, some of which we expect to incur in the second quarter, and lower discretionary spending. GAAP operating expenses were $51.6 million and included $700,000 of restructuring costs, $400,000 of amortization and intangible assets and $200,000 of costs associated with our recently announced planned acquisition of GP. Our non-GAAP operating margin was 19% of sales, ahead of our target model at these volumes. Non-GAAP net earnings were $27.2 million or $0.51 per share compared to $22.3 million in the fourth quarter and $3.9 million in the first quarter of 2013. Our non-GAAP tax rate was 31%, which was favorable to our estimate due to the geographical mix of taxable income. GAAP net income was $31.2 million or $0.58 per share. And the tax rate for the quarter was 18%, reflected the benefit from favorable settlement of an international income tax audit. Now turning to the balance sheet. Cash and investments decreased by $2.8 million in the quarter to $647 million or approximately $12 per share. The decrease in cash and investments was primarily due to the timing of accounts payable and incentive compensation payments in the first quarter, and increases in trade working capital and the payment of a dividend to shareholders. Approximately 58% of our cash and investments are in the U.S., and the balance is located throughout our international operations. Total book value made of goodwill intangibles increased to $882.1 million or approximately $16.50 per share. In terms of working capital, days sales outstanding were 53 days at the end of the first quarter compared to 52 days at the end of the fourth quarter, and inventory turns were 3.2 compared to 3.3 in the fourth quarter. Capital additions for the quarter were $3.1 million, depreciation and amortization expenses were $4.2 million and noncash stock compensation was $3.2 million. During the quarter, we paid a cash dividend of $8.6 million or $0.16 per share. Also during the quarter, we repurchased approximately 32,000 shares for $945,000 at an average share price of $29.81 per share. As we stated in the prior call, the timing point of any shares repurchased depend upon a variety of factors, including business conditions, stock market conditions and business development activities including, but not limited to, merge and acquisition opportunities. These repurchases may be suspended or discontinued with bank time without prior notice. As Jerry mentioned, we are committed to making continuous improvements in our financial performance over the operating cycle, have initiated reduction in workforce in the first quarter will be substantially completed by the end of the second quarter. The annualized savings of these reductions is approximately $8 million in manufacturing overhead, research and development and selling, general and administrative functions, both in the U.S. and in our international operations. With annualized savings, we plan to reinvest approximately $2 million into various growth initiatives throughout the remainder of the year. The timing of these investments will vary, but we expect to reduce our permanent cost structure by approximately $6 million, which equates to an increase in net earnings per share of $0.06 to $0.07 per share on an annualized basis by the end of the year. We're confident that this realignment position us to both improve our financial performance and to redeploy critical resources to fund our growth opportunities. These actions, in connection with other opportunities, have improved our target operating model throughout the semiconductor cycle, and we posted an updated version of this model in Investor Presentation section of our website. Overall, we've added 100-basis-point improvement in a non-GAAP operating margin throughout all phases of the cycle. We're also evaluating other opportunities that we believe continue to improve our financial operating model. We expect that the planned acquisition of GP will also provide further meaningful growth at our earnings per share. The purchase price will be $87 million of cash, and we expect this acquisition will be accretive and meet targeted returns on our capital deployed, as well as our targeted financial operating metrics. This acquisition is currently undergoing required regulatory review, and we expect the transaction could close late in the second quarter. Now I'll go through more detail regarding the composition of revenues for the first quarter. Sales in the semiconductor market were $150 million, which is a new quarterly record, and a slight increase $149 million of revenue in the fourth quarter and comprised 73% of first quarter revenue. Within the semiconductor market, sales in the semiconductor OEMs increased 4% from the fourth quarter and comprised 61% of total sales. Sales for semiconductor fabs decreased 11% in the quarter and comprised 12% of total sales. As we mentioned in our last call, our sales for semiconductor fabs in the fourth quarter had included shipments for the first phase of a new memory fab in Asia. Sales to other advanced markets increased by 1% from the fourth quarter of 2014 and increased 8% from the first quarter of 2013, and were $56 million, representing 27% of total revenue. Sales in these markets can vary from quarter-to-quarter based on specific projects, but in general, have been growing with GDP improvements until more cyclical markets such as LED, solar and display incur more significant capacity additions. Geographically, sales in the U.S. were 57% of total sales, sales in Asia were 34% and sales in Europe were 9%. Sales to our top 10 customers represented 55% of total sales. Sales to Applied Materials and Lam Research comprised 20% and 30% of first quarter sales, respectively. Our headcount at the end of Q1 was 2,326, down from 2,394 at the end of Q4, primarily due to restructuring actions undertaken in the quarter. Now I'll turn to Q2 guidance, which excludes any impact of announced GP acquisition. Based upon current business levels, we estimate that our sales in the second quarter could range from $160 million to $180 million. Based upon this expected sales range, our Q2 gross margin could range from 41% to 42.5%, reflecting these volumes and expected product mix. Q2 operating expenses could range from $48.5 million to $49.5 million. In the second quarter, R&D expenses could range from $15.6 million to $16 million. And SG&A expenses could range from $32.9 million to $33.5 million. The rate of operating expenses in the second quarter reflects lower fringe costs, which is seasonally higher in the first quarter, and lower compensation cost as a result of reduction in workforce taken in Q1. These reductions are expected to be partially offset by the timing of continued investments in certain key research and development projects and annual merit increases. I've mentioned in previous calls the timing of these projects will depend upon a variety of factors and could vary from quarter-to-quarter. In the second quarter, amortization of intangible assets is expected to be approximately $500,000, restructuring charges expected to be approximately $200,000. The net interest income is estimated to be approximately $200,000. We expect our second quarter tax rate to be approximately 31%, reflecting the anticipated geographical mix of taxable income. Given these assumptions, second quarter non-GAAP net earnings could range from $11.6 million to $19.1 million or $0.21 to $0.35 per share and GAAP net income of $11 million to $18.6 million or $0.20 to $0.34 per share or approximately 54 million shares outstanding. This concludes our prepared remarks. Now I'll open the call up for questions.

[Operator Instructions] Our first question comes from Krish Sankar with Bank of America Merrill Lynch.

I guess you guys did articulate about how you see the dip when your OEM customers here dropped down in shipment. The question I have was Lam was guiding to June quarter shipments down 9%. To look at your semi revenue in June, it's probably down like 18% or 20%, almost 2x the amount of your -- one of your big customers. So my question is if there is an expectation of shipment improvements sometime in like Q4 or towards the end of this year? Should we start seeing a sharper snapback for you guys in Q2 or Q4?

Well, I mean, I think the way to explain this is like I kind of look at this as a bit of a canoe. In the past, we've been in a V or a W, but we see this more of a canoe shape. And typically, what you'll see is our customers will prime the pipeline much earlier than their shipments do us. So you looked at how we went -- had a ramp in Q4 and a sustained ramp in Q1. That's a lot of inventory and pipeline building that they're doing for the shipments that they would then start out over the next several quarters. So the fact that we had record revenues gives me great encouragement that we're designed in where we should be, and that we've seen great benefit from that. So my expectation is that we are falling along the canoe, we'd expect, hopefully based on what we're hearing, that wafer fab equipment spending is going to be around $32 million, $33 million, that we would expect hopefully towards the end of year we would see a recovery. That's how we are expecting it right now. But we're managing the business to the point where we are, but we will be prepared in 10 responders in the past to any shock, any snapback that we see.

Yes, Krish, one of the points here we don't know is the amount of the inventory. For example, we have our OEMs. So if a customer guides down on shipments, that's one data point. But we don't know how much of the inventory they have at the end the quarter, which obviously affects our shipments or revenue in a particular period. So this -- you need all those pieces to really correlate, I think, exactly what's happening. Plus, Lam is one major customer. We have a lot of other semi customers. But typically, we do, as you know, Q4 and Q1, we tend to ramp in advance of our end customers. But it's not exactly a 1:1 correlation in any one quarter.

Got it, that's very helpful. And then did you have any shutdowns in 2Q?

None that we've announced, no.

None that you've announced? Okay, got it. And then one final question. Once you close the acquisition of Granville-Phillips, do you plan to bake it out separately or it'd be rolled into your semi and non-semi business?

Yes, it's pretty integrated, Krish. So it rolled in very nicely with our valve and vacuum business. So we rolled them together.

Yes, it gives us an opportunity to create consolidated restructuring business units, so that we folded in into the other businesses. And there's opportunity there.

Just one final question. Does Granville-Phillips do any kind of like complete tool integration, or any custom-made products, any other OEM?

Not that we're really aware of. They've done some work where they do some integration work, I think, with others unlike RGAs, as they've done with us, as an example. We bought the indirect gauges to make a subsystem on our RGA business out of the U.K. So there's some work that we do actually incorporating this. But for the most part, I believe it's pretty much standalone components.

Our next question comes from Patrick Ho of Stifel, Nicolaus. Patrick J. Ho - Stifel, Nicolaus & Company, Incorporated, Research Division: Jerry, first off, on the non-semi side of things, you've seen some nice quarters recently and a little bit of growth. How does that trend in the second quarter? And are there any specific markets that are providing a boost?

I think it's pretty much steady as we go right now, Patrick. We've still don't -- we still see the LED and the solar market kind of on life support. Although there are some discussions we're having on the solar side which would imply there may be some opportunity there. That's a possibility of some upside, but yet to come to fruition. And on the flat panel side of the display side, we've also heard of -- have some discussions about potential opportunities within the quarter. So I think we see a little bit on the display side if things come as we think they will, pricing a little bit out of the solar side. And everything else will just be GDP plus a point or two, I guess. So pretty much steady as they go with some upside. Patrick J. Ho - Stifel, Nicolaus & Company, Incorporated, Research Division: Great. In terms of some of the restructuring, and I get the redeployment of resources. As you reinvest into the company, is there a target for these reinvestments? Is it more semi-based or is it more non-semi-based?

Well, there's a couple of areas that we think there's some potential opportunity like environmental monitoring. We have some leading-edge technology there. We think that's one of the top growing markets, megatrend globally. So we're looking more involved in there. Biopharm and pharmaceutical, we think there's opportunities there as well, whether it be organic or potentially acquisition-based growth. And the graphene we discussed, we don't really see that taking hold right now. But one of the good things about MKS is we get in very, very early on in technology development, and we get to participate in the design of the products. So although we won't see a big benefit right now, we're positioning ourselves on the nano side to be well-positioned over the next several years, I believe. But those are a couple of the 3 carry areas. And also temperature control is an interesting area for us that we are taking a different view of. We have a lot of control on the semi side. And we think there's some opportunity in temperature within and outside of semi. So a fair amount outside, but we're still committed to our semiconductor core business as through the acquisition of GP. And then there's the industrial side we've looked at. We've made some great strides last year on our flow controller business in the industrial side. We don't participate on the semiconductor side on flow of our own volition, but we think the industrial side has some real opportunity, and particularly in Asia and in other areas. So there's a lot of good places to put the resources to use and see some good benefit, Patrick. Patrick J. Ho - Stifel, Nicolaus & Company, Incorporated, Research Division: All right, that's really helpful. Final question for me. Obviously, with a lot other comments recently by your OEM customers and the equipment guys, they're talking about this kind of midyear pause that we're seeing right now. At same time, on the fab size, it seems like wafer has started to pick up. You can see some healthy outlooks by a lot of the semiconductor companies. How does that trend for you guys into the second quarter from the fab side?

Well, I mean, certainly if there's a pit -- we are very agnostic, so whichever fab picks up in the equipment that's involved with our customer's OEMs into it, we would participate in that. Certainly, there are other opportunities we have within the fabs for hookups, as well as analytical work with the RGAs, which are a pulsed OEM bolt-on most of the time. So we would expect that we would see -- and again, we see some opportunity in the service side. So that probably bodes pretty well for us.

[Operator Instructions] Our next question comes from Tom Diffely with D. A. Davidson. Thomas Diffely - D.A. Davidson & Co., Research Division: Seth, maybe a quick question on the proposed acquisition of GP. If it closes in the second quarter, are there deferred revenues that get delayed? And -- or what is the ramp of revenue once you do close on that acquisition?

Yes, I don't think there's any deferred revenue, Tom. And again, our expectation it will be closed very late in the quarter. I mean, it's right now in regulatory reviews. It's hard give an exact gauge, you can imagine. But I think our expectation has very little impact on a quarter if it closes late. And I think from an accounting viewpoint, we book revenue sort of as soon as we acquire or control that company. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And can you remind us what the split was for them or most recently up for semi and non-semi?

Yes, I don't have any -- it's really part of Brooks' business right now. So I can't really comment on what is currently. The historic has been sort of a 45%, 50% split, non-semi and semi, which is attractive to us in the non-semi piece as well. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And then, I guess, moving on, when you look at some of the dynamics in the end markets right now where you mentioned 3D NAND was a little slower. It sounds like DRAMs is starting to pick up a little bit. Between those trends, does it matter to you if you benefit more from a 3D NAND versus a DRAM or is it fairly close in what you're selling to the OEM customers?

Well, I think the mix of equipment is pretty much the same. It's just that if it was a bigger acceleration based on just the mix, where there's a lot of 3D NAND equipment, because people are migrating to that as a secular change. That'd be a benefit, but that would show it would be volume. The mix is relatively the same throughout all the equipment of the different customers, not much difference. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. And I guess, a question on the restructuring, the net $6 million of restructuring, does that impact revenue at all, are there certain programs you're walking away from?

No, no, this is productivity looking at redundancy that we probably should've looked at in the past but we thought there'd be some opportunity. So we don't see any impact. Actually, we're hoping the investment that we're making with the savings in that shows a positive side, but we don't see any ill effect by that, no, none at all. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay, great. And then finally, Seth, when you look at the tax rate of 31%, that's come down a little bit in recent quarters, it seems like. Is 31% a good long-term tax rate to use now?

Yes, I think for 2014, Tom, that's our expectation for this year, and assuming no change of rates in the future and the mix stays the same, it's probably a pretty good estimate going forward as well. Yes, as said, only 2014 I could give visibility to right now. Thomas Diffely - D.A. Davidson & Co., Research Division: Okay. What has caused the slight decrease in the tax rate?

It's really mix with income resides. And we do a little bit on the planning side, I would say. But primarily, it's where the mix of the income sort of ends up. And we have some lower tax jurisdictions versus U.S. tax rate that's driving most of it.

Our next question comments from Josh Baribeau with Canaccord.

Maybe a follow-up to that, is there anything else that you can do in terms of tax jurisdictions that might be able to lower that going forward maybe, let's call, in 2015?

Yes, I would say, Josh, we are looking at that all the time. It saves a number of internal reviews we're still looking at to drive that tax rate down. So we're not at a point now we can outline the impact of that at this point. We're in early stages, but I can tell you we have a fair amount of effort internally geared exact in that area, and also to ensure the cash flow is readily available for corporate use as well.

Great. And then we're hearing a little bit more on the display side about the growth from the OLED opportunity and how some manufacturers might be focusing more on that versus traditional. Any comments on maybe the capital intensity of the mix of products in OLED versus traditional LCD for you guys?

Well, the -- in terms if you're seeing more direction to business in OLEDs?

Well, I mean, we're seeing continued investment there, just looking at your channel mix.

We have ozone cleaning. Our ozone cleaning system is used in OLED manufacturing at some major Asian fabs. So we've seen some good opportunity in the OLED. So I think that would certainly continue to benefit MKS.

And I'm not showing any further questions at this time. I would like to turn the conference back over to our host for closing remarks.

Well, we've established specific goals and plans to drive increased customer satisfaction, develop innovative product solutions, improve profitability and deploy capital in a disciplined approach to fund growth and increase shareholder value. The actions we have undertaken this quarter are aligned with these core objectives and are part of our long-term strategic direction. I am pleased with the strong start we've achieved this year, and look forward to updating you on continued progress in July. Thank you for joining us on the call today.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.