Good day, everyone. And welcome to the Mercury Systems Second Quarter Fiscal 2020 Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the call over to the company's Executive Vice President and Chief Financial Officer, Mike Ruppert. Please go ahead, sir.

Good afternoon. And thank you for joining us. With me today is our President and Chief Executive Officer, Mark Aslett. If you've not received a copy of the earnings press release we issued earlier this afternoon, you can find it on our Web site at mrcy.com. The slide presentation that Mark and I will be referring to is posted on the investor relations section of the Web site under Events & Presentations. Please turn to Slide 2 in the presentation. Before we get started, I would like to remind you that today's presentation includes forward-looking statements, including information regarding Mercury's financial outlook, future plans, objectives, business prospects and anticipated financial performance. These forward-looking statements are subject to future risks and uncertainties that could cause our actual results or performance to differ materially. All forward-looking statements should be considered in conjunction with the cautionary statements on Slide 2 in the earnings press release and the risk factors included in Mercury's SEC filings. I'd also like to mention that in addition to reporting financial results in accordance with generally accepted accounting principles or GAAP, during our call, we will also discuss several non-GAAP financial measures, specifically adjusted income, adjusted earnings per share, adjusted EBITDA, free cash flow, organic revenue, and acquired revenue. A reconciliation of these non-GAAP metrics is included as an appendix to today's slide presentation and in the earnings press release. I'll now turn the call over to Mercury's President and CEO, Mark Aslett. Please turn to Slide 3.

Thanks, Mike. Good afternoon, everyone. And thanks for joining us. I'll begin with a business update. Mike will review the financials and guidance. And then, we'll open it up for your questions. Mercury delivered solid results in the second quarter of fiscal '20, building on the momentum from Q1. It was a record quarter for total revenue, adjusted EPS and adjusted EBITDA. The industry environment is positive as we begin the second half. There's a Defense Appropriations Bill in place, and design win activity is very robust. Our business model is performing extremely well. We're investing to inflect growth in the business, while at the same time delivering record results. We're again raising our fiscal '20 guidance for total revenue, adjusted EBITDA and adjusted EPS, and we now expect to deliver 13% to 14% organic growth for the year. Turning to our Q2 financial highlights on Slide 4. Total revenue for the first quarter increased 22% from Q2 of fiscal '19. We delivered 12% organic growth, 1 point higher than a year ago. Our largest revenue programs in the quarter were P-8, F-35, Filthy Badger, F-16 SABR and the next generation missile system. Q2 was another very strong quarter for new business. Total bookings were up 21% year-over-year, leading to a record backlog and a book to bill of 1.08. Our largest bookings programs in the quarter were ALR-56, LTAMDS, ProVision, Paragon MODS and in international sale. Profitability for the quarter was strong. Adjusted EBITDA was up 16% from Q2 last year. Free cash flow was above our expectations at 48% of adjusted EBITDA. Working capital continues to improve, and we maintain a strong unlevered balance sheet. Turning to Slide 5. Mercury's ability to win new business has never been better. We've successfully pioneered the next generation defense electronics company.…

Thank you, Mark. And good afternoon again, everyone. Q2 was another quarter of strong financial results for Mercury, marking a solid first half of fiscal year '20. As Mark mentioned, revenue, adjusted EBITDA and adjusted EPS, were up significantly from Q2 last year and all at record levels. We delivered solid bookings growth and concluded the quarter with another record backlog. Mercury's first half performance gives us the flexibility to continue investing for growth during the second half, while still delivering strong results. We're increasing our full year fiscal '20 guidance for revenue, adjusted EBITDA and adjusted EPS and I'll go through those numbers shortly. Turning now to the metrics on Slide 10. Mercury's continued bookings and revenue growth translated into solid profitability in Q2. Following a strong bookings quarter in Q1, Q2 bookings were about $200 million for the third consecutive quarter. Total bookings increased 21% from Q2 last year to $210 million, driving a 1.08 book-to-bill ratio. For the first half, bookings were up 21% from H1 last year with a strong book-to-bill of 1.15.This increase was driven by large contract wins across the business. We ended the second quarter with record backlog of $728 million, an increase of 39% compared to Q2 of fiscal '19. Backlog expected to ship within the next 12 months increased 34% from Q2 last year to $522 million. 12 month backlog is now 72% of total backlog, providing us with solid visibility into the second half. Total revenue increased 22% from Q2 last year to $194 million, near the high end of our guidance of $185 million to $195 million. Q2 results included an aggregate of approximately $16.3 million of revenue attributable to the Gecko Avionics, Athena Group, Syntonic Microwave and APC acquired businesses. APC, which we closed at the end of…

Thank you. [Operator Instructions] Our first question comes from Jon Raviv from Citi. Your line is now open.

So certainly appreciate that adjusted EBITDA margin, you are expanding the adjusted EBITDA margin as part of the business, the differentiated financial profile you've laid out. As we kind of move through the year, any additional visibility on potentially getting beyond the 22% as you digest the mix, the investments as some of those new development programs and new business plans ramp up. Thank you.

So as we look at the year, you can see that our EBITDA margins for Q2 were 22.1%. The midpoint of our guidance for Q3 is 22.1%, and the midpoint of our guidance for fiscal '20 is 22.1%. So we had 20.7% in Q1, which implies higher EBITDA margins in Q4 at the midpoint. So we do expect to see some more operating leverage in the second half, really driven by higher revenue in Q4. And as I mentioned in my prepared remarks, that's somewhat offset by some of the additional investment that we're making in the business.

And then just thinking about customer funded R&D versus internally funded R&D, I feel like at one point we'd had sort of the mix headwinds from the higher customer funded and then your IRAD went down and now we're having some gross margin opportunity here, but then your IRAD is going up, I mean that affect on adjusted EBITDA margin somewhat unchanged. Can you just talk about that journey and kind of what drives that pendulum between the two sides?

So from a numbers perspective, you're right. If you look at our gross margins, they vary quarter-by-quarter and a lot of it's based on program mix of which is some CRAD. And if you look at this quarter, you'll see that CRAD was actually down a little bit, year-over-year it was down about 10% but again, a lot of that's just timing. And in the second half, we expect CRAD to tick back up. And what you'll see is you also see that impact, as you mentioned, in our IRAD numbers. So our IRAD, as a percentage of sales, was higher this quarter. We expect it to be a little bit less in the second half as a percentage of sales, even though we're investing more in the business for the future. And it's really Jon why we started looking at EBITDA margins, because of that mix that we're seeing. We think that EBITDA margins is the right way to look at the business. And as we just talked about, we see expansion of those in H2.

Your next question comes from Seth Seifman with JPMorgan.

I was just wondering, within the last maybe six weeks or six weeks or so here, we've seen a couple of deals announced by others in the space with some pretty big multiples on them. Just kind of wondering what you're seeing out there and if how what seems to be expanding valuations for transactions in the space are affecting your M&A opportunities?

Yes. So clearly, I think the market is being pretty active and we've got a pretty robust pipeline of opportunities. I think you're right. When you look at the few transactions that were announced in the last quarter that where the multiples announced on those deals was slightly higher than what we've seen in the past, we don't believe that it affects our ability to either compete the transactions or to get deals done. But we're going to remain disciplined in our approach as we have in the past, Seth.

And then just, I know some years the seasonality seems to vary a little bit. Are there one or two things you can kind of point to for the fourth quarter that give you the confidence in kind of nice revenue step-up that looks like that's better than the guidance?

Yes. So I think when we build guidance, right, we build it bottoms up program-by-program, which gives us the confidence given our backlog position in terms of our ability to execute against the plan. So it's really those two things, it's knowing which programs that we're on, whether those programs are out coupling -- coupled with record backlog.

Your next question comes from Pete Skibitski with Alembic Global.

Mike, the prior full year R&D guidance, it was 11% for the full year. Has that changed now?

So Pete, we didn't specifically guide R&D in terms of a percentage of sales. And the reason is because of the shifts that we talked about between CRAD and IRAD that are neutral at the EBITDA level. That having then said, we do see R&D in terms of the new opportunities that are in front of us. We do see R&D picking up significantly from last year. You can see it was up over 2 points from where we were in Q2 of last year. So we do see it picking up during the year, but we're not providing specific guidance because of that balance between CRAD and IRAD.

And I'd just add to the, Pete, that I think we're in a very unique environment, with the amount of modernization activity and new design wins. I mentioned in my prepared remarks that this is probably, in fact, is a record in terms of the number of design wins that we've ever achieved in the quarter, and it doesn't look like it's slowing down. So there's a tremendous amount of opportunity for what we do. And given the defense as a long term business, we want to capture those design wins to allow us to continue to grow organically at the rates that we have been.

Mark, if I could ask just one program question, this DARPA GAPS program. I don't usually at least publicly see Mercury name associated with a DARPA program, but it seems like you a big role on there. Can you talk about that program and kind of your role on it? And you know which site is working in it and maybe what kind of opportunity it could lead to in the future?

I'm not actually -- what's the name of the program, Pete?

The DARPA GAPS program, maybe it's too small with -- I think it's with some on the West Coast, Tortuga. Don't mention it, let me ask this instead. Lockheed Martin has been talking a lot more about some of their international radar efforts the SPY-7 apparently just got designated. Do you guys typically get on their international radar programs or they typically have to go to maybe in-country sourcing for your type of role, I was curious.

So, we typically do. So part of the business model is that when we win a position on a specific program, we get dragged along in those international sales. So yes, I mean many of the major radar programs we're providing them domestically and international.

Thank you. And our next question comes from Sheila Kahyaoglu from Jefferies. Your line is now open.

Mark, you mentioned a few bookings in the quarter, programs that I hadn't -- I don't think you've called out before as your top bookings. Would you mind maybe going over them? And if some of them are completely new business? You mentioned the design wins as well.

Yeah. So, ALR-56 is a new program for us. This is a competitive wind in the RF space, the radar early warning receiver, which we're pretty pleased about. The second win, which we announced last quarter, but we actually received the first booking this quarter, was the LTAMDS. We had a large international booking for a customer direct and then Paragon MODS is a second program. So the range of new as well as existing that spans the markets in which we normally operate, so lot of radar and EW.

And I know we've beat the R&D question to death. But should we think about it growing longer term organically in line with your sales growth. If your sales are growing high single digit, that's what R&D should grow or does it outpace that, because of outsized investments?

Yes, it really depends, Sheila. I mean, we don't give guidance obviously beyond fiscal '20. But if you look back at our R&D as a percentage of sales, we were 13% in fiscal '17. We were 12% in fiscal '18. We had a lot of CRAD in fiscal '19. So we were lower. We were 10.5%. We were kind of 12.5% for H1 of this year, 12.7% in Q2. And so it really jumps around depending on the opportunities that we see in front of us where we're investing with our customers, as well as the amount of CRAD that we're getting from our customers. That having then said, we've talked about a lot, but R&D is an important part of our business model and we're going to continue to invest at high levels.

And then last question, once the Phoenix facility is that 100% complete. Do you go back to a maintenance CapEx level or do you continue to grow the business?

So this is obviously high based upon really two activities. One is the consolidation of our RF locations on the West Coast that activity is coming to an end. But right behind it is the decision that we made to invest to expand the capabilities of our trust micro electronics business in Phoenix. So we're going to continue to invest in the business to be able to continue to grow our revenues organically at rates that are well above the industry average. But it really depends upon what's going on in terms of the opportunities to inflect growth, as well as to generate the right returns. So literally it depends on what we see…

If you keep winning, you're going to invest, is the bottom-line…

Pardon…

I said, if you keep winning, you're going to keep building, so…

Yes, I mean, absolutely. We're in a very unique period of time in the industry with all the modernization and we've got some critical technologies and capabilities that we think are important to the industry and to our ability to grow the business. And so we're going to continue to invest in those areas that we think that will allow us to generate higher levels of growth and strong margins.

Our next question comes from Peter Arment with Baird.

Mark, just kind of staying on the outsourcing or the design win theme. Are you seeing the design wins? Is it because you're putting the secure process and capabilities together, or is it just this bow wave of modernization spending? Is there any way to parse the difference?

Yes, it's actually both. So I think we're seeing significant modernization activities in radar, EW, as well as C4I. And we got great growth really across those market segments. And we think we're going to continue to see that going forward. As I said in my prepared remarks, we have seen a pretty substantial uptick in secure processing. I think one is kind of cross the CASM. And we've seen a move away from the use of waivers that have previously been in place. And we are now on our fourth generation of those sets of capabilities and we think that we're very well positioned. So a number of different trends that are underway, Peter.

And just when we think about the monetization efforts or your design efforts, I know it's unfair to compare it to LTAMDS since that was your largest win in history. But are there other large pursuits out there that you see that are other opportunities for the company?

They're all. I mean that one is the largest that we think we've won in the company's history. Last quarter, there was a classified program that we want, while providing some very advanced processing that is $300 million in potential lifetime value. So we're winning some nice awards and pursuing some other ones. And I feel really good about positioning in terms of capabilities and the markets in which we're participating.

And I guess just lastly, you mentioned the M&A pipeline. Any -- in terms of deal size, I mean, you obviously have a lot of capacity generating a lot of cash. Are you seeing larger deals given that you are -- have the capacity now to do that?

As I said in my prepared remarks, we're seeing deals of varying sizes, some larger than what we've done others more in line with the sorts of deals that we've done. Our goal is really, it's not to just focus on the size it's to make sure that we're doing the right deals that fits strategically with us, where we can extract costs and revenue synergies over time and that continue to build the capability set that is in demand from our customers. So I think we're going to remain very active from an M&A perspective but disciplined at the same time. Mike, I don't know if you want to add anything to that.

No, we've looked at deals of all sizes. And as Mark said, our focus is making sure it's got the right strategic fit and the right financial profile.

Thank you. Our next question comes from Ken Herbert with Canaccord. Your line is now open.

I just wanted to Mark ask, if I could, sequentially from the first to the second quarter. I mean, you've had several quarters now of very strong bookings. Is there anything you'd call out on the bookings front that was maybe unique in the third quarter or that might sort of better -- that you talked about that would maybe help illustrate whether it'd be on the flight to quality or subsystem outsourcing or de-marrying. To the extent to which you're seeing those reflected in the bookings, any change sequentially? Or maybe just unpack the bookings a little bit and anything that would specifically stick out in the second quarter?

In the second quarter. So I mean, we had the two largest bookings in the second quarter were, as I mentioned ALR-56, which is a competitive displacement on one part but also greater outsourcing by our customers in the RF -- or customer in the RF domain. And LTAMDS, again, as an example of really outsourcing in multiple different dimensions and us partnering extremely well with Raytheon where they're benefiting from the significant investments that we've made in internally funded R&D in some very advanced capabilities that they taking advantage of. I would say on the design win front, there was some nice ones this quarter, particularly in the mission computing area where I think, again, we're seeing examples of outsourcing for work that was previously done in house. And now that we've built up and continue to build up a strong business in platform and mission computing, we're taking some share. So it's really -- we're seeing those major trends of delayering and outsourcing in pretty much all of the markets in which we participate in, Ken.

And coming out of the Investor Day, obviously, you spend a lot of time there focusing on EW and with the additions to the team and capabilities. Can you just provide, as a follow up to that, provide a little bit more on maybe some of the -- how you're seeing the opportunity set expand, any initial wins or anything else you might call out on the EW front?

Our EW business was up 41% in Q2. Year-over-year in the first half, it's up 52%. And we continue to win some nice business there, whether it'd be on existing programs where we continue to take share or winning new programs, and I think there's more to come. So I feel pretty good about the positioning for a capability perspective and we're seeing that wave of modernization occur.

Our next question comes from Michael Ciarmoli with SunTrust.

Mark, you've got the backlog growth, you've got the bookings, modernization tailwind, outsourcing tailwinds. You've kind of laid out that five year hypothetical model. And you're saying, I guess you construct the outlook with a bottoms-up of all the programs. Can you give us any color, just directionally on the program portfolio? Maybe what percentage of the portfolios in early growth mode? What might be in sort of that mid growth mode, if there are any programs in the portfolio that are declining, maybe some of your legacy programs or even a percent of the portfolio that might be sort of flat lining at a steady state as sort of implementations continue?

It's not something that we've really talked about, Mike and are ready to kind of disclose at this point. But again, I think we feel pretty comfortable about our ability to be able to grow the business organically, at that high-single-digit to low-double-digit rates as we've talked about in the two major markets in which we're focused on, which is Sensor and Effector Mission Systems and C4I. I think as we laid out in detail at Investor Day, we believe that there's still a lot of opportunity for us to continue to grow in our more traditional sensor processing market and we're at the very early stages. It's beginning to penetrate both C3I as well as platform and mission management. So there's a lot of opportunity for us to continue to execute against the strategy that we've laid out and to deliver against the financial profile that Mike discussed in his prepared remarks.

And then just on gross margins, I know you're kind of deemphasizing those a little bit at the expense of EBITDA margins, but they were a multiyear high. You called out I think some of the PO synergies on Themis and Germane. Just wondering if that's more tied to the consolidation and everything going on at Michael Ciarmoli with SunTrust. Can those types of synergies accelerate even as you look at continued progression on maybe APC, and can we maybe see some more leverage there on just overall cost synergies?

Mike, I think that's a core part of the strategy in the acquisition philosophy. So Themis and Germane, the purchasing power synergies have been impressive. If you'll recall when we first did the Germane acquisition, we laid out some of their gross margins and they were down at the 23% gross margin range. And we've really been able to put them together with Themis and get their gross margin profile into our range. And we think we can continue to do that. And we've done it on previous acquisitions and as we look at acquisitions, whether it would be in C4I or Sensor and Effector, as we integrate them together, we think we've got a good track record of recognizing synergies on the gross margin line, but also from an OpEx perspective. And then we've also been able to leverage R&D from an expense standpoint. And don't forget one of the most important things we've been able to do is inflect their growth from a revenue perspective. So yes, I do think it's something that we can continue to do going forward.

Thank you. Our next question comes from Jonathan Ho with William Blair. Your line is now open.

I just wanted to start out with a broader landscape question. You know, as you start to take share on the outsourcing and consolidation side. Are you seeing any changes in the competitive landscape, particularly with smaller players that maybe can't match your scale and breadth of capability?

Yes, I think the answer is yes to that, Jonathan. I think, you know, where we see those smaller companies challenge is really their ability to invest. And in this environment with the shifting defense procurement form to more data for type contracting and the use of OTAs, our customers and our customers' customers are expecting industry to basically step up and invest more. A lot of the small companies don't have the wherewithal to invest in the new capabilities and technologies that the industry is looking for. And in particular, as we've seen, in particular in the RF domain, there's very little capital expenditure, you know, around modernization or facility consolidation that's occurred and we've clearly benefited from that and it's a reason that we're taking share. So I think that we're extremely well positioned with the business model that we've created. We're generating high levels of profitability, but we're investing back significantly in the business to capture new growth opportunities. And you can see that in our forecast for the year and now with organic growth with 13% to 14%, which is significantly up from where it was previously or what we did last year.

And then as we start to look at some of the commercial advances in merchant silicon around chiplets and some of the AMD custom development, can you talk a little bit about. Does that change the landscape? Do others have maybe the ability to take advantage of some of the cutting edge commercial development? And is that starting to show up in some of the new design wins that you're talking about? Thank you.

So clearly our strategy is to leverage the best of what is commercially available silicon, and to package and secure that capability for specific defense applications. And we think that we're in extremely strong position to be able to do that. First of all, we've already got a strong microelectronics business that has more than doubled in size since we did the Microsemi acquisition back in 2016. As a business, we've got very deep domain expertise in the two areas that we're going to target initially, which is in radar and EW. We've got trusted domestic packaging capability, which is critically important to be able to take that commercially available silicon and create these unique silicon devices for use for the applications that we're targeting. We've got industry leading embedded security IP, which comes into play as we're targeting and creating these unique capabilities. And then we have got the cleared workforce to be able to go after these opportunities. So -- as well as having a very strong channel. So I think we've got -- you know, we're in a unique position to really become that conduit for the innovation that's occurring in the high tech world into the defense industry, and that's in essence how we position the company.

And we have a follow-up from Jon Raviv from Citi.

Just on your comment, Mike, about universal the guidance implying that EBITDA margin steps up a bit in 4Q. Is that -- so is the comment there or the implication here that that is where we start to see some of the benefits in terms of mix and biomarkers that should have then flow beyond this fiscal year? I'm surely well aware that this fiscal year is 22%. But thinking a little bit forward and heading kind of within that 22% to 26% range. Is it fair to assume that that 4Q is a bit of a base?

I think I'd look at it on an annual basis, Jon. Because we always have a bigger second half than first half, so we tend to see, depending on program mix we can see more operating leverage. In this Q4, our revenue is going to be up significantly over our midpoint guidance for Q3. So we're going to see a little bit more operating leverage in Q4. So what I look at is EBITDA margins on an annual basis. And then as we talked about at Investor Day, us setting out on a clear path to expand those EBITDA margins overtime.

We have next question from Ronald Epstein from Bank of America.

When you think about the opportunity that China presents? I mean, how do you think about that? Meaning every procurement executive officer whoever you talk to in DoD, there's been this flushing of China out of the procurement system kind of at all levels, right? I mean, everything from private equity funding down to Tier 4, Tier 3, Tier 2 suppliers, I mean the whole 9 yards. What kind of opportunity does that present for you? And then I guess my flip question is also, what risk does that present using commercial silicon?

So I think it's an enormous opportunity. I mean, if you go back to, Ron, how we have positioned of the company, which is to be developing technologies and capabilities and funding it like a high tech company, but recognizing that what we do is operating inside of the defense industry, which requires U.S. citizens' trusted domestic development and manufacturing. So we think that we've created a very unique business model to be able to give the Department of Defense or the defense industry as a whole access to commercially developed capabilities far more quickly and far more affordably than what's ever been done before and that's how we kind of position the company. And we can do that for the capabilities that year that we're working on, which now with this latest investment that we're making, kind of takes it down to chip scale. So if you look at it from a silicon perspective, the risk actually in large part is not in the silicon itself, it's actually in the packaging of the silicon. And that's basically what we're building out in Phoenix is the ability to be able to package commercially developed silicon in very unique ways, combining the best of what's available into heterogeneous devices, add a layer of security IP, which Mercury has invested in certain acquisitions over time and then package it and be able to produce it here in the U.S. So I think there's an enormous opportunity for us to capitalize on what is really a set of capabilities that are really required to take these systems to the next level and to benefit from that given our business model over time.

Thank you [Operator Instructions]. Our next question comes from Noah Poponak with Goldman Sachs. Your line is now open.

Is your M&A pipeline right now substantially more active than your average period in history, or is it more in line?

So we're seeing a lot of opportunities, different sizes. And I think as Mike laid at Investor Day as we have kind of allude from our traditional market of Sensor and Effector Mission Systems processing into these two other markets, in particular C3I processing, as well as platform and mission management, which encompasses our avionic strategy. I think there's far more opportunity available to us than what we've seen in the past.

Mike, you've got the chart that shows the pro forma multiple paid for acquisitions in the past with -- after you've achieved all of your synergies is kind of four or five turns lower than when you announced it. Are the businesses that are less than a year from acquisition, on track to achieve that?

Yes. I mean, I think the way we were able to achieve those is by businesses at reasonable multiples, and multiples that were supported by the standalone value of the company and then integrate those into Mercury. And so if you look at that chart over the years, clearly, with the Microsemi transaction, we were able to do that. Themis and Germane, we talked about on this call. We will feel like that is going incredibly well, both from a revenue perspective and design win opportunity, as well as cost synergies. And as a result of that, we're averaging that multiple down. And then as you look at the newer acquisitions, the answer is we do feel that we can inflect their growth and average down the multiple but to varying degrees. So APC is a new platform opportunity for us. It wasn't a car synergy acquisition when we bought it. We've already seen some really good new design win opportunities associated with that along with the GECO Avionics acquisition. So we do think that as we -- our strategy of integrating the acquisitions and inflecting their growth is going to continue to work, and we're seeing it in the new design wins. As we get more platforms and like we did with Germane when we added that on to Themis, we do see additional opportunity for cost synergies as we integrate those future potential acquisitions into the new platforms.

On the -- the input of new programs ramping up being dilutive to the margin, what kind of margins are new programs coming in at versus the total company average? Just trying to better understand that degree of dilution that you have initially?

We've never broken that out in terms of the margins that we have, it can vary program-to-program but we haven't broken out the margins we normally get on CRAD versus new program wins versus IRAD versus the rate production, because it varies.

Last one just when do you expect the Phoenix build-out to be complete, just so we can think about when CapEx normalizes?

Yes. So right now our goal is to have it complete by the end of this fiscal year. A lot of the clean room build-out has been done. A lot of it is getting new equipment into the facility. So we're targeting the end of this fiscal year although, that could slip a little bit into Q1 of next year, so within the next six to nine months.

Thank you. And Aslett, it appears there are no further questions. Therefore, I'd like to turn the call back over to you for any closing remarks.

Okay, well thanks everyone for listening. We look forward to speaking to you again next quarter. Thank you.

Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program, and you may now disconnect.