Red Cat Holdings, Inc. (RCAT) Q3 2022 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Good afternoon and welcome to the Red Cat Holdings Fiscal Third Quarter 2022 Financial Results and Corporate Update Conference Call. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the Internet and is also being recorded for playback purposes. A webcast replay of the call will be available approximately 1 hour after the end of the call through June 17, 2022. I would now like to turn the call over to Mr. Scott Gordon, President of Core IR the company’s Investor Relations firm. Please go ahead, sir.

Thank you, Shabby. Good afternoon, everyone and thank you for joining us for the Red Cat Holdings’ fiscal third quarter 2022 financial results and corporate update conference call. Joining us today from Red Cat Holdings are Jeff Thompson, Chief Executive Officer of Red Cat Holdings and Joseph Hernon, Chief Financial Officer. During this call, management will be making forward-looking statements including statements that address Red Cat’s expectations for future performance or operational results particularly. Forward-looking statements involve risks and other factors that may cause actual results to differ materially from those statements. For more information about these risks, please refer to the risk factors described in Red Cat’s most recently filed periodic reports on Form 10-K, Form 10-Q and Red Cat’s press release that accompanies this call, particularly the cautionary statements in it. The contents of this call, contains time-sensitive information that is accurate only as of today, March 17, 2022. Except as required by law, Red Cat disclaims any obligation to publicly update or revise any information to reflect events or circumstances that occur after this call. It is now my pleasure to turn the call over to Jeff Thompson, Chief Executive Officer. Jeff, please go ahead.

Thanks, Scott. Thanks for joining our third quarter 2022 earnings call. First, I would like to thank all the employees at Fat Shark, Rotor Riot, Skypersonic and Teal Drones. They have all worked hard to get their businesses on a path to scale and grow and we expect different contributions at different timelines to grow revenues over the next three or four quarters again, good work team. Fat Shark has new products coming. Skypersonic will be playing a key role in the infrastructure inspection space. Rotor Riot continues to grow and build an audience and their annual event rampage, which hopefully I get to this year, is sold out. Next, let’s talk about Teal Drones. And I am sure there is going to be a lot of activity around this from the recent weeks. So, let me start with some housekeeping. The number one question we get is supply chain. We have just under 4,000 chipsets to build just under 4,000 Golden Eagles, which would equate to over $15 million in revenue. I want to start by talking about you Ukraine demand for drones before we dive into SRR Tranche 2 contract award that we received this week. Just last Thursday, we have been slammed with inbound inquiries from many countries looking for thousands of drones not made by the Chinese to deliver to Ukraine. We have been working through all hours of the night, all weekends, every hour to respond to these proposals and we hope to have something soon in the near future to report on this as it just started development last week. From various sources, we expect large and continued demand for drones in the Teal category, basically that Teal style drone in Ukraine and for obvious reasons they are not looking for Chinese drones. This is already creating a giant demand vacuum, not just in Ukraine, but across all segments like police and first responders, because everything from every manufacturer that exists today or is being built is now being sold. So regardless of the drones are sold to Ukraine or sold to the police, we expect this massive demand spike to outstrip the potential supply from all non-Chinese alternatives for at least the next 12 months. We are working aggressively as possible to scale our production, because of this. Let’s move on to Teal Drones SRR contract. Teal Drones was awarded a prototype contract for SRR, which is Small Range Reconnaissance Tranche 2. This contract award was for $1.5 million. Teal was one of two who received the Tranche 2 contract. So let’s get some details on the SRR program. I get a lot of questions about it. Tranche 1 had 5 contracts awarded for prototypes. Teal was one of those 5 contracts. This was 2 years ago. There was one Tranche 1 production award for $100 million. There has been some confusion about that, because it just came out in February, even though it was awarded 2 years ago, mostly because of COVID. Tranche 2 has two prototype contracts. And we will be competing for the Tranche 2 production contract, very similar to what happened in Tranche 1. Each tranche has a production contract. So, we are pretty happy about this. We are very proud to be one of two chosen. And this is pretty exciting news. This is going to be a long-term relationship with the Army. But with those statistics, I think we have at least a 50:50 chance for the production contract. But anyway, I am looking forward to your questions. And I am sure will be a bunch, there is a lot going on in the world right now. And with that, I’m going to hand it over to Joseph Hernan.

Thanks, Jeff and to everyone for joining the call today. I will now provide a review of our financial results for our fiscal third quarter, which ended on January 31, 2022. Revenues during the quarter totaled almost $2 million, which were flat with the second quarter, the previous quarter and down approximately 13% compared to the third quarter of fiscal 2021. During the 2021 period, we have just closed the Fat Shark acquisition. And we benefited from a new product launch by Fat Shark, which drove revenues at that time unusually high. However, year-to-date, our revenues for the 9 months ended in fiscal 2022 increased 64% compared to the 9 months ended January 31, 2021, reflecting contributions from all of our acquired subsidiaries, I think our year-to-date revenue growth is a much better measure of how we are gaining traction across all of our subsidiaries as drone technology becomes more and more pervasive and more visible in our lives. During the quarter, much of our focus, as Jeff touched upon, was on building out the Teal organization and preparing Teal for the multitude of revenue opportunities that are emerging. During the quarter, we doubled the size of the Teal facilities, both to increase its manufacturing output capabilities as well as to house its workforce, which is doubled in size since we acquired Teal. While this strategy adversely impacted short-term revenues, we strongly believe that it better positions us to take advantage of much larger and more durable long-term sales opportunities. Operating expenses totaled $3.5 million in the third quarter compared to $1.7 million in the third quarter of last year. This represents an effective doubling of our operating expenses and can be attributed to the closing of both the Skypersonic and Teal acquisitions as well as the significant investments that was made in Teal since we acquired them back at the end of August. During this past quarter, we also continued to build out our own internal sales and marketing team, which is, as Jeff touched upon, already starting to gain some impressive traction. Our net loss for the 3 and 9 months ended in the fiscal quarter January 31 totaled $2.6 million and $6.9 million respectively. As both Jeff and I have noted, we have been making a lot of capital investments in Teal both in its facilities and its people to take advantage of what we see as significant commercial opportunities for the Golden Eagle. Despite this increased spending, we remain in a very strong financial position. We closed the quarter with almost $56 million in cash and marketable securities. As I just mentioned, our last and the most recent quarter, excluding stock-based comp, which is a non-cash charge, was less than $2.5 million. So, if you compare the $56 million in the bank to the $2.5 million in the most recent basic cash burn, you can very quickly see that we are in a great position to execute on our growth initiatives. We are really excited about finishing strong in 2022 and our outlook for fiscal 2023, which begins on May 1. I will now turn the call over to the operator for questions.

[Operator Instructions] Our first question comes from Ashok Kumar with ThinkEquity. Please go ahead.

Hi, good afternoon. Thank you. Just an operational question, in terms of the revenue contributions for the January quarter, could you please highlight the Fat Shark and Teal contribution? And then as it applies to gross margins as you continue to see operational improvements and supply chain improvements and at what timeframe do you see your gross margins hit normalized levels and during what timeframe? And the last operational question would be cash burn about $4 million a quarter. Do you see that sustain at current levels? And then looking forward, Jeff, could you also highlight – congratulations on the T2 production – not production, I think prototype contract, what is the timeline for the production award and the same question would apply to the T1 program as well? Thank you.

Sure. There is a lot of questions there, but let me do my best to as I was trying to write them down as you were saying them. So the last Q to be very frank, we had a lot less Fat Shark revenue in the quarter, mostly because they are at the end of one product cycle going into a new product cycle. And when that happens, it’s very similar to the iPhone. No one likes to buy iPhones in August when the new iPhone is coming out in September. So, we expect the revenue to come back up in that phase. For the Teal contribution, it basically was not that significant in because there is only 4 weeks available for them to be in that. And what’s interesting is we knew about ourselves being down selected in I think it was even November. So, as we started looking at how to scale once we – and then we were – I think it was reconfirmed in December. So, we knew we were down selected. We were glad that it never was – never got out until we are able to release it this week. So, we knew that we were going to have to start scaling. So, we did a lot of extra work to the production line to get the production capabilities capable of meeting all the things that we are seeing on the demand cycle. And we are pretty lucky that we did that, because now with the Ukraine situation, we are going to be able to fulfill drones at a lot of – that almost no other companies can fulfill. And the Teal, to go to the gross margins, the Teal Drone margins are about 40% as they start to ramp in scale. We can get a couple of points here and there as we are getting some better pricing on our supply chain. But we are very happy where we think their margins will be. And the cash burn with – I mean, with the – we mostly have Teal as – let me backup a little bit. Our burn before we acquired Teal was about $1.4 million for the last 12 months. Most of the burn has been coming, because we got a fully loaded company with a product that’s just about to launch, but has not launched yet. So, we will see – once these orders start coming in and now they are producing drones, I don’t think you will see that burn level go on much longer, it will come down. And as Joe mentioned, we have many, many quarters of money in the bank. I don’t know if you want to add anything to that, Joseph.

Yes. I would say that, yes, we don’t have a full quarter of all the employees with hired for Teal and a full quarter of all the additional overhead expenses associated with doubling the facilities for Teal. But the additional incremental cost of a full quarter is not going to be a lot. So, this quarter largely reflects it. And it is a little bit of a step back, because any time that you double manufacturing capacity and that comes with a commensurate increase in fixed overhead costs and that makes the hurdle a little bit higher, but we gave it a lot of thought and we see the opportunities, we see drones finally becoming mainstream. And it’s amazing to watch on CNBC in the morning and you’ll hear a couple of times across the conversations, whether it’s a CEO of a business or just the panelists, screamer or whoever it might be, mentioning drones. So I think we made a very thoughtful additional increase in our spending for Teal. And that might have some short-term margin impact. But certainly, over the long-term, it’s going to increase our margin capability and our margin dollars just through increase.

Alright. Well, just to clarify, Jeff and Joe, the T2, is that going to be all or nothing? Or you’d mentioned the odds of winning are 50-50, right. So I was wondering, could you just clarify the outcome there, please?

Yes. So all we have to go by is the – our previous experience from Tranche 1. So one of – there was five awards for Tranche 1 prototypes and then the production award – Teal has didn’t have production yet. So the production award went to another company for $100 million, and that was over 2 years ago. And it confused a lot of people because it didn’t come out until February because they never got the deal signed once COVID hit, but they did get a $100 million production contract. And to be frank, before that, we – no one thought that Tranche 1 was going to be that significant. And the SRR program is a pretty large program. So Tranche 2, we would expect the same type of numbers to be in the production award. So there is two companies that were put into Tranche 2. So we think we have a pretty good chance now that we have one of the premier world-class drone facilities being made right here in the U.S. And so we think we have a relatively great chance. And the time frame on – with government entities, I’m not going to put a time frame on Tranche 1. They did their demonstration and they got the award within 6 to 8 weeks. We did Tranche 2 September 14 and didn’t hear anything until November into December for Tranche 2 award. The good news is this environment has accelerated everybody’s desire to get drones in everyone’s hands, whether it’s the program for SRRs to put rucksack, put a drone in every rucksack for every soldier. So I think you’ll see this accelerate. But I can’t put a – I’ll never put a time frame on a government contract award, production contract, too.

And also, given your success with the domestic defense supply chain, I was wondering, would you be able to translate that into any of the NATO members as well? Or what are the options there?

Yes. So the team, our guys, Geoff Hitchcock and his team have been doing a great job. They were over in meeting with all these NATO countries right before the war broke out. And they actually extended their stay once the war did break out. There is a lot of activity with the NATO countries. Some of the countries that we’re talking to right now that want to get drones to Ukraine are from that – those meetings. And we’ve been filling up proposals all weekend to get contracts signed to – for these folks to buy our drones. We’re dealing with Ukraine and almost every country in that region wants drones right away. We’re dealing with the U.S. So it’s a pretty high pressure go fast for government, at least situation for us to be selling these drones. We’re literally just had meetings on how we can double triple and quadruple our production, if it’s possible. It always comes down to chipset. But we have almost 4,000 drones worth of chips to get through right away while we ramp our scale to meet this additional new demand.

Alright. Again, thank you very much and congratulations.

Thank you.

The next question comes from Priyanka Mahajan with ThinkEquity. Please go ahead.

That’s Priyanka Mahajan from ThinkEquity. How is Skypersonic and NASA collaboration going? And is there a way to quantify its impact on Red Cat’s top line in the short to medium time frame?

Yes. So the good news is they just started work on the Mars simulation. We are not only supplying them with aerial drones for the Mars simulation with remote piloting, but we’re also doing the rovers for them, and we’ve supplied them a Skypersonic rover that has the remote piloting software from Skypersonic. We think that, that capabilities and some of the other things that they are doing in Italy right now for inspections is starting to progress, but the Skypersonic team, their drone systems are a little bit behind Teal in maturity, but ramping up nicely. And they also are well suited for any inspections from the infrastructure build. There is almost $280 billion earmarked for all of that. So they are – it won’t be for 9 to 12 months, but they are well positioned to be able to capture some of the infrastructure spending for sewers, bridges, all the things that need to be inspected before they can be fixed.

Great. Thank you.

[Operator Instructions] Our next question comes from Kevin Dede with H.C. Wainwright. Please go ahead.

Hi, Jeff, Joe, thanks for having me on the call.

Thank for joining us.

So Joe, yes, you kind of brushed over the sequential comparison from October. Could you just sort of dig in on that at sort of flattish? I guess sort of the – yes, sorry, go ahead. Then I’ll give you another aspect of it.

Yes. So let me start with this, Kevin. Teal could have been better, but we wanted – we decided that it made more sense long-term to focus on expanding. We basically doubled the amount of space we had for Teal. So we took our – I don’t want to say we took our eye off. We made a thoughtful decision that we wanted to ramp up our manufacturing capacity at the expense of short-term sales. As Jeff noted, Fat Shark is, unfortunately, in a sense, I mean, of course, we’re going to come out with better technology, but they are kind of caught on the downside of their most popular products life cycle. Skypersonic is getting there, but really isn’t generating a lot of revenue at this point. And actually, Rotor Riot had its best quarter since we acquired the company and almost reached breakeven this quarter. So Rotor Riot was a real surprise for us. We don’t look at that subsidiary as really capturing the market’s attention, but it’s a really good marketing and visibility platform for us. So that’s kind of what happened this quarter compared to last quarter.

Okay. So I guess sort of a maybe the 20,000 foot sort of strategic question is a balance between consumer focus and enterprise/military. Jeff, could you just sort of take a step back and sort of walk us through how you’re addressing those markets?

Yes, absolutely. So we’ve actually – as we’ve announced previously, we broke the company into those actually two different departments. One is our consumer division, the other is the commercial enterprise and now defense seems to be ramping up most dramatically for us. So on the consumer side, you have Fat Shark and you have Rotor Riot. And as Joseph mentioned, Rotor Riot has been doing great. They are growing. They have got some great things that they have been doing. But even then just at breakeven, it’s a great asset for us because people launch all their products. They go to Rotor Riot just to sponsor episodes to launch any new drone product. Our biggest competitor in the Chinese drone market is DJI, and they sponsored many, many episodes on Rotor Riot to launch their product. So, we think it’s a very valuable company because of its marketing power to the early adopters in the drone industry, which are typically working in the drone industry as commercial operators. Fat Shark is the – it’s the leader in the goggle space for FPV. It’s – if anyone saw Drone Racing League recently on TV, all those pilots are using Fat Shark goggles. And as Joseph mentioned, we are right at the end of their last product cycle going into this brand-new product cycle, which you will be hearing more about as soon with some really exciting stuff coming. So, that’s kind of – those two companies are grouped together and on the consumer side. On the commercial and enterprise side, we have Skypersonic and Teal. And Skypersonic is really focused on the inspection space. We have done some great preliminary trials in Italy. We actually work with Leonardo, the defense contractor there. We are hoping to start seeing some contracts that actually contribute and will start making a difference in our Qs very soon, but their big focus is the infrastructure build that went through. And they have an expertise that’s not a sexy business or a sexy word, but we are really good in expecting sewers, which are very difficult to inspect and there is over 3 million miles of sewer that need to be fixed in the infrastructure bill. So, that’s kind of where the commercial side and the inspection side that Skypersonic is solving for us and solving for the entire industry. There is only one other real competitor in that space, and they actually use a Chinese drone. So, even on people like General Motors who we have worked with in the past, they do not want to use Chinese made drones in their factories. So again, made in USA continues to be something that’s very important even if it’s not military or DoD. And then obviously, we have Teal drones, which we are investing a lot. We have – you can see on our balance sheet, all the chipsets that we bought. We are basically now we are poised to grow like crazy. The plant is ready to go. We have got a great plan in place, and we are now thinking of how do we accelerate construction, do we add a second, third shift, do we simultaneously start building another production line right next to it because we have the room. We have – our focus right now, which is – has been for quite some time. We are keeping our heads down and getting our manufacturing capability to be able to put out thousands of drones a month. We got to get from where we are now to thousands of drones per month, and that’s our focus, and everyone is doing a great job on it.

So, regarding the Short Range Reconnaissance Tranche 2, granted you are in there. Is Tranche 1 sealed, signed and you have done?

Yes. Actually, Tranche 1, it was over a few years ago. We – Teal was awarded $3.1 million for the first prototype, which is basically going from no bird, no drone to making a brand-new bird. So, the original prototype was higher. And again, there was five prototypes awarded, and that was basically to all the Blue UAS folks and then one Tranche 1 production contract was awarded. That’s typically that – there is only going to be one Tranche 2 production award. But yes, Tranche 1 is gone, signed, sealed and delivered and the competitor got that deal.

Right. Okay. Can you share a little insight on, I guess the military demand that you are seeing vis-à-vis international events of late?

Yes. I mean we have been getting inquiries from direct phone calls into our biz dev team. We – that resulted from our almost three-week tour in the NATO countries that we visited. We have been – I have had people find my number on LinkedIn to call me from different departments of state ex-ambassadors. We have had over almost 15 inbound inquiries from not all different countries, some – three or four sometimes from the same country, but the demand is just kind of overwhelming that everyone is realizing that no one wants to use Chinese drones to help over in Ukraine. I think what happened was, at first, people thought they could use these consumer drones from the Chinese manufacturer. And then they found out that your position could be known because China let it be known. So, everyone just stopped using the Chinese consumer drones. So, we have heard demand – the demand could be thousands and thousands of drones that need to be built immediately.

And is that to the spec that you have met sort of through your Tranche 1 development?

Yes. So the Golden Eagle 1 is the – it’s actually the bird that we demonstrated on September 14th for Tranche 2. But it’s accepted by the DoD. We are – yes, we were accepted in Blue UAS 1.0, and we were accepted as – it didn’t make news, but we were also had the Blue UAS – 2.0 Blue UAS credentials also. So, a lot of the NATO countries accept our DoD approval to not have to run their own process to go through their approval and they will just buy our drones.

Okay. So, the big question is just sort of timing and revenue rec. Can you spoke – can you speak to that a little bit?

I think that’s – I mean we don’t have anything to announce yet. As soon as we get some signed POs, we are not giving these birds away. We are selling them. And as soon as we have POs, almost every ones – of the ones that we are talking about are all material contracts if we can get them signed. So, you will probably be hearing about that soon. The DoD stuff is steady throughout the year. So, it’s not going to be a huge spike for Teal. But once – I pretty much think every drone that we can make will be sold over the next 12 months and going forward. It’s – the demand is there.

Thanks Jeff. Appreciate the insight.

Thanks Kevin. Thanks for joining the call.

The next question comes from Scott Michael, a private investor. Please go ahead.

Thank you for taking my call. A quick question just for clarity purposes. I am trying to understand how the tranche system works. I know that we have been accepted for Tranche 2, that’s for development. Are we marketing for a contract within Tranche 2, or does that lead us to the third tranche? And if so, is there a demonstration of a developed product? And when would that be?

Yes. So, we were – you have to go and demonstrate your drone for Tranche 1 and that was 2 years ago plus actually, and five prototype deals were awarded and one production deal. So, that’s kind of – that’s how it is to reach. There is only going to be three tranches. There is prototype and production awards. Tranche 2, there was almost 36 people at in September 14th, last September, and two people were awarded prototype contracts after demonstrating their drone. They are small reconnaissance drone. So, it’s us and one other player. Now, we are competing for the tranche to production contract, which just like Tranche 1’s contract was a $100 million contract, $20 million in the first year. And that was – that’s already awarded. Tranche 2, we are looking to compete in, now that we have one manufacturing facility that we think is one of the best in the country. So, we are competing for Tranche 2 production right now. In the meantime, there is all sorts of milestones for this new prototype to get the drone to do all the things that the SRR contracts wants, new features, different things that they want the drone to be capable of. It actually has more capability than the original prototypes from Tranche 1 and Tranche 2. So, as we hit these milestones throughout the year, that gets us to the Tranche 3 award, which is kind of the – probably the biggest award of the three tranches where you are now the drone for every rucksack in the army.

Is there an amount for the Tranche 2 production that we are aware of? And is there a timeframe for the Tranche 3 presentation?

They do not have the Tranche 3 presentation announced yet. Tranche 2, we do not know the numbers. We actually didn’t even know what the number for Tranche 1 is. We solely go by some of the rumors is the entire program is about a $500 million program. We don’t know if that number is accurate. They don’t let us have those details. But when Tranche 1 came out at $100 million, we were awe. Even though we didn’t win it, everybody in the industry was pleased knowing that it’s actually a real contract. It has some real dollars behind it. We expect, but we have no idea that Tranche 2 production contract will be at least $100 million, if not larger, but we expect it to be at least $100 million and that’s just us guessing from what we saw happen in Tranche 1.

Thank you very much. I appreciate it.

Thank you. Thanks for joining us.

Next question is a follow-up from Ashok Kumar with ThinkEquity. Please go ahead.

Thank you. Just a follow-up question, Jeff and Joe. To clarify on the production side, you had indicated you have current capacity of 2,000 a month and with the potential to double that capacity at the same facility. And a related question, you had indicated you have a good solid source for chips. To clarify, these off-the-shelf chips, are they bespoke product and what functionality does this chip provide?

Yes. So the – on the chipset right now, we are – we have just a little bit under 4,000 chipsets to produce almost 4,000 Golden Eagles. So, we are – that’s pretty good stock for us right now. But if we start to get some of these contracts, then we are going to have to adjust. And we are waiting for some of the things that are happening over the next week or two weeks to figure out if we have to get another order in for chipsets and really start to go ahead with these numbers.

So, are these catalog products? Are they specific? Are they…

There is – well, there is 550 items that go into the Golden Eagle. I don’t know exactly how many chips that go into it, but there is – I mean our main chip is – comes from Qualcomm. The other item that we really – I wouldn’t say we have concern, we just want to make sure that we are get ahead of it is the Flora camera. I mean one of the other reasons that we are getting so much inquiries on the Golden Eagle is its capability to do thermal. It’s not just a consumer drone. So, we can actually do thermal, which the – which everyone – I mean police and first responders love that. But specifically over in Ukraine, they would love to have thousands of Teal Golden Eagles with thermal right now to really help what they are doing.

So, are these all fab that TSMC through Qualcomm or?

I don’t have the exact – we had Dr. Evans on with us. He could give you every detail of that or George Matus. I don’t want to misspeak and quote the wrong piece of equipment.

And one last question is in terms of timeline for this. T2 from start of the program to being two of the finalists, was that a 2-year process, or I just want to clarify the timeline for that.

The – well, the timeframe, like I said, they don’t put it on the website. Here is Tranche 1, here is Tranche 2, here is Tranche 3. They have you go through the process of each tranche and then tell you when the next tranche begins is what we have seen. It was – I mean there was a significant delay. The award for the $100 million production contract didn’t get awarded till February of this year, and it was awarded. It was well known that they received that 2 years ago. That was mostly COVID related. And now we don’t see the delays from COVID anymore and Tranche 2 demonstration was September 14th. So, we expect things to start to accelerate just also because COVID is not getting in the middle of this process anymore. And the fact of the existing environment seems to be accelerating. Everyone’s budget that we have talked to has gone up for drones. So, everyone is accelerating their request for drones. So, we are just trying to scale as quickly as we can.

Got it. Again, thank you very much and all the best. And then on your cloud program, right, so that continues in parallel, right?

Cloud software development program?

Yes. The cloud software development?

Yes. Absolutely.

Okay. Thank you.

This concludes the question-and-answer session of the call. I will now return the call to Mr. Jeff Thompson for closing remarks.

Thanks, folks. Thanks for hanging out on this call. I am glad we got a lot of questions. There is a lot of confusion out there between the different tranches and how it works. We are really working hard right now to just to scale our production. We believe that not just us, but every drone that’s made in the U.S. right now is going to be sold. So, we are just ramping, ramping, ramping and focusing on production. So, we thank you for your support, and you stay tuned. You are sure to be hearing from us soon. Thanks.

I would like to thank everyone for taking the time today to join the call and for your ongoing support. You may now disconnect.