Bally Technologies' CEO Presents at J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum (Transcript)

| About: Bally Technologies, (BYI)

Bally Technologies, Inc. (NYSE:BYI)

J.P. Morgan Gaming, Lodging, Restaurant & Leisure Management Access Forum

March 08, 2013 4:30 pm ET

Executives

Ramesh Srinivasan - Chief Executive Officer, President and Director

Michael J. Carlotti - Vice President of Treasury & Investor Relations

Analysts

Joseph Greff - JP Morgan Chase & Co, Research Division

Joseph Greff - JP Morgan Chase & Co, Research Division

Okay. You guys can move closer if you guys want. Well, we're excited to have the team from Bally here, Ramesh and Mike.

And I was thinking just to start off with maybe you could share with us some of the newer product sales and game op titles that you're excited about. What's in the pipeline that highlights some of the newer things that you're more excited about. And if you could share with us some of the casino operator/customer feedback, that would also be helpful.

Ramesh Srinivasan

Sure. In general, we are very happy with the entire spectrum of product momentum, right, without going into the specific details of the titles, game sales, gaming operation systems, every area you look at. And you compare where we are product-wise and where we are in the floor share, how well we are represented in casinos, I think we have tremendous growth opportunities in all the 3.

And in general, all casino operators, the feedback we get from our customers points to the fact that our products have improved a lot over the last couple of years. They are in a good state now. And also we got a lot of great product coming behind. We've added a lot of game development studios. We've added a lot of diversity to our game development as well. We have a studio in Sydney. We have partnerships with third-party developers. And also, overall, every way you look at it, our products are at a much better state relative to our floor share. So there is a lot of gravity pull. Customers want more of our products, and also we got a lot coming in the pipeline.

Now specifically, with respect to games operations, you saw in the recent research study that NASCAR is one of the most anticipated games. And that should be coming out in the next few months. The Hot Shot Dual Wheel, Hot Shot is an internal brand, we recently introduced a WAP game with a dual wheel, a big cabinet. That has just hit the floors, very small sample size, not statistically significant but very, very good start. It's off to a very good start. Pawn Stars in the premium segment, we know the reports have been very good from casinos.

So overall, we feel very good about our product momentum.

Question-and-Answer Session

Joseph Greff - JP Morgan Chase & Co, Research Division

All right. Can you review with us your share of the wide-area progressive floor here in North America? And how do you -- knowing what you have in your product backlog, how do you view the growth opportunities to improve that share?

Ramesh Srinivasan

Yes. We view the growth opportunities as very good. Our market share in WAP is probably about 10% now, give or take, around that, and that applies to the premium segment as well. So both in the WAP and premium segment, we have tremendous opportunities for growth. One of the reasons is our market share is very low, and it is not a fair reflection of where we are relative to our competitors' products now. We have a lot more products to offer to our customers, and 10% is a very low share. So the growth opportunities are very good. And also, our WAP and premium pipeline of titles that will be coming over the next year or 2 on a regular interval of few months is much better than what it was 12 months ago. And it is being managed in a very disciplined manner. And our game development studios, our game development capacity has gone up a lot. So there is a good set of WAP and premium titles that are being worked on now that will hit the market at a steady rate. And also we've become much better at handling brands and licenses. And when you do a good job with games like Grease and Michael Jackson, what tends to happen is the next set of negotiations tend to become easier. So we are becoming much better at handling brands and licenses, so good flow of titles coming up.

Joseph Greff - JP Morgan Chase & Co, Research Division

Great. How would you characterize math and video versus a few years ago?

Ramesh Srinivasan

Video, we are a very good video company now. About 4, 5 years ago, we were mostly a staple company. We made the transition to video a few years ago. Then we had ALPHA 2, an operating system that has much better processing part and is a lot more state-of-the-art, is one of the best operating systems in the market today, so that gave us a lot of strength. So every year thereafter in the last 3, 4 years, we have become a better and better and better video company. And so now we are very good video company so that gives us the opportunity to do games like Michael Jackson, Pawn Stars, if you're aware of, and a whole lot of other cool video titles as well. In a meanwhile, we've always been good at hardware cabinets. Our V32 kind of cabinets are doing extraordinarily well. We were the first ones to introduce Pro Curve, which is a curved LCD, which is doing great. And then iDeck kind of innovations we have done is performing very well. Those kinds of innovations are performing very well in the marketplace. So video wise, every way you look at it, from the game screen to user interface kind of impacts like iDeck, every which way we've gotten much better. In terms of math, that again is progressively getting better. We are now focusing on the kind of math it requires to be more successful in international areas. So international game sales is a good growth opportunity for us. So our math has always been good, but we are making it a lot more diverse now so that it does well in all regions of the world.

Joseph Greff - JP Morgan Chase & Co, Research Division

You mentioned that you're improving the capacity of the studio developers. Can you remind us how many studios you have? And can you also talk about working with third parties studio developers there?

Ramesh Srinivasan

Yes. So the number of studios -- different companies counted differently, so I wouldn't put too much credence on the exact number of studios. It's in the high 20s. It's almost doubled in the last few years. And it is also a diversity of talent. We have a studio in Sydney. We have -- studios in India are doing better and better because they've gained a lot of experience. We've added some topnotch game developers to our game development seams in the U.S., who after doing stellar work in some of our competing companies have joined us, so that's added a lot of strength. So game development studios-wise, we continue to expand. And that expansion is not yet completely done. As our games continue to perform better than the marketplace, it becomes a good cycle, because of which we are able to improve game development capacity. So that's become better. And then in the meanwhile, like you said, we've also strengthen our third party development partnerships. We recently signed an agreement with High 5, one of the best third-party developers out there. And there are also other third-party development companies with whom we have agreements with. And a lot of the output of such third-party development companies and our newer studios are all going to hit the marketplace in the next few months. In the June, July, August time frame, we have a whole lot of new titles that come from these diverse studios and third-party partners. So we have a lot to look forward to in the future.

Joseph Greff - JP Morgan Chase & Co, Research Division

To what extent when you do work with the studios would you want to hire them full time or perhaps buy them outright?

Ramesh Srinivasan

You need a good combination of the 2, right? You cannot pull everyone into your fold because when it comes to things like game development, what you're looking for is a wide array of ideas, wide array of math, wide array of styles and graphics, that's what you need. So it is not always a great idea of pulling everything in-house. So you keep it as diverse as possible both from a geographical location point of view, from a management style point of view. And if some of them remain third-party developers, there's nothing wrong with that. So our objective is to provide as diverse and as wide array of styles of games that we can. So we are not trying to run all of them exactly the same way. You've got to allow creativity to work the way it does. And some third-party development partnerships are very good to retain as third-party developments.

Michael J. Carlotti

We don't have to take all the content that the third party developers throw our way. We can choose the titles we think will do best, and so it allows us to be a bit more selective in the titles we get from them.

Joseph Greff - JP Morgan Chase & Co, Research Division

Michael Jackson and Grease were these game-changing titles for you, maybe more so from a lot of investors' perspectives. Can you just talk about how those games have been performing more recently since -- even after for a bit now?

Ramesh Srinivasan

Yes. So Michael Jackson and the Grease games were kind of a start of an era for us. It was a start of an era where Bally starts -- we became serious contenders in the WAP and premium market. And since then, there's a whole lot of other bands and titles that are coming along the way. Now Grease and Michael Jackson met our objectives. Like we announced publicly, we expected each of them to be about 750 number WAP and NAP together. NAP were in jurisdictions where WAP is not permitted. So both of them beat that target of 750 very comfortably. So both of them did very, very well. And it also taught us a lot, taught us a lot how to work with brands and how to do the high-level games. And we have become much better at that on how to develop. It also becomes easier when you have success like that to negotiate and include more brands in our portfolio, so that process is going on. And there are good negotiations with a lot of leading brands that are going on currently, and that you will see in this year's G2E show and next year's G2E show as well. So Grease and Michael Jackson marked an era. They did very well as games, and now there are a whole lot of other titles following their footsteps. And also remember, we continue to invest in those franchises. They are not one game kind of franchises. So there's a whole lot of other investments going on in those 2 brands as well and a whole lot of other brands that are going to be very interesting for you when we announced them.

Joseph Greff - JP Morgan Chase & Co, Research Division

With the NASCAR and the Pawn Stars new product, would you expect their installed based growth to be in a similar type of metric?

Ramesh Srinivasan

We've not announced any specific numbers with respect to those brands, but we expect those brands to do very well.

Joseph Greff - JP Morgan Chase & Co, Research Division

Okay.

Michael J. Carlotti

Yes, there's lots of surveys out there that point to NASCAR as one of the most highly anticipated brands to be launched. And that's coming from the slot managers that are looking forward to its release in the June time frame.

Joseph Greff - JP Morgan Chase & Co, Research Division

Great. Can you talk about your outlook in Canada and Illinois in the LTE market?

Michael J. Carlotti

Sure. So in Canada, the LTE, we were awarded 2 separate contracts for about 2,200 units. About half of those were sold in the first half of fiscal '13, probably finish up the rest of that in the second half of fiscal '13. Within Illinois, we have contracts in place for 4,000 units. We’ve sold a little under 600 so far through December. Probably take about 2 years to complete those, with the bars and taverns getting licensed throughout the state. I think the market overall is probably about 15,000, 18,000 VLTs, assuming that Chicago does not opt in. If they do, that could be another 10,000 or 12,000. And we'll certainly continue to work hard in the state of Illinois and try to improve upon the 4,000 units that we've already got under contract.

Joseph Greff - JP Morgan Chase & Co, Research Division

Great. And on this topic of new market opportunities, we're hoping you could provide us with an update on the latest and greatest going on in Italy.

Ramesh Srinivasan

Yes. Italy has not been -- when you think of Bally and good execution and how well we've improved our product momentum and delivered very well in a lot of areas, Italy is not a shining example of that. Italy has been, like we have told you, more than a little bit of disappointment. So the status report on Italy is that we are live at one concessionaire, with a few hundred games like we've announced already. Those games are doing kind of okay, not great. There are improvements to those games. We are just beginning to understand the market. And we now understand better what it takes for games to be successful there. But those improvements to those games, even though we finished the development efforts quickly, takes an extraordinarily long time to get through the regulatory process there. But it's -- I mean, we are used to regulatory environments, but this one is particularly challenging. So it's going to take some time for our improvements to hit the marketplace. And then there are other concessionaires who we are talking to. So Italy is not going to be a major needing more [ph] for us in the near term, but it's a very good market for us to be in the long term. So that's an investment we are making for our long term because that's a significant market that we are committed to.

Michael J. Carlotti

And certainly, the political and regulatory environment in Italy is probably the most complex, convoluted one we've seen thus far and going into new international markets as well.

Joseph Greff - JP Morgan Chase & Co, Research Division

Can you provide us with an updated outlook or your most up-to-date outlook on the Systems business? It's been a pretty good performing business over the last few quarters, the backlog is nicely being chopped away and being converted into revenues. And the recurring nature of that revenue stream has been increasing nicely. When you look at beyond this year, how do you kind of think about the growth profile of that segment, and what would be then those drivers within sort of a longer-term growth outlook there?

Ramesh Srinivasan

Yes. I mean, whichever way you look at it, short-term, medium-term, long-term, all the hard work we've done with Systems in terms of improving our products and customer service and support and every area of business of the Systems business that we have done a lot of hard work to improve, puts us in an extraordinarily good position as far as performance and growth potential and everything is concerned. So you think about it in multiple ways. Number one, over the last couple of years, you've seen a whole lot of major operators all over the world have chosen to switch to our Systems products, which is more than the impact it has on revenue and more than the fact that it gives us very good revenue visibility as we go along to the next 1 or 2 years. What it really signifies is the GAAP between us and the competition as far as the Systems products functionality, breadth and depth and ability to support and all that. So that's a vital sign of how healthy our Systems business is. Now, when you look at the current set of customers we have and the 450,000-odd games that are connected to our systems, even within that world of current customers, there's a whole lot of new products we have now. Our Elite Bonusing Suite set of bonusing products, iVIEW DM kinds of products have a lot of potential, there's a lot of sales possibilities, lot of deal possibilities within even our current segment of customers. Maintenance, of course, has been very healthy. That's, again, a good indicator of the Systems business in terms of how much we have sold more to our current customers, how well we are different to the territories and got new customers. If you look at the last 3 or 4 years, about 120 casino sites, approximately 116 or so, have moved from competing systems to us. That, again, if you do the math, it's multiple casino sites every month making a decision to move to Bally system. So that's a very healthy sign as well. And if you look at our base of 450,000-odd game connections we have, only about 30%, 40% of them actually have in-game hardware like iVIEW. So there is a whole lot of other potential there as well. And also, big corporations who have been our customers for a long time, they are experimenting with a lot of our newer products like DM EBS in 1 or 2 casinos and finding very good return on investment numbers, very tangible, very measurable numbers. Because of which, they have plans to spread it to their other casinos. And also, the casinos are competing amongst themselves a lot more today than before because of the competitive pressures. They need better operational efficiency tools, better marketing tools, that also increases the demand for Systems. So a lot of growth levers in the Systems business.

Michael J. Carlotti

And then to be clear on the competitive replacements, the 119 casinos that we have signed with customers, not all of those have gone live obviously. That would include some key customers like Sony International and British Columbia where the go-lives are just starting now and should progress over the next couple of years.

Joseph Greff - JP Morgan Chase & Co, Research Division

Okay. I always look at Bally as being less dependent on a domestic replacement market to grow. Having said that, what's your view on the domestic replacement market?

Michael J. Carlotti

Well, you're right. I mean, if you look at our fiscal '12, which is a record revenue and earnings year for the company, less than 15% of the gross profits came from the sale of slot machines in the North American replacement cycle. That being said, the replacement cycle continues to improve, albeit at a measured pace, probably about 55,000 units replaced in calendar '12. I think most people in your shoes think that it probably goes to about 60,000 in calendar '13, which makes sense to us. You are seeing some of the larger operators start to invest in their floors. There's more competition coming online. The strategy of shrinking your floors has all but played out. And floors are getting older and older. Slot machines are a form of entertainment, so refreshing your floors is always critical if you're going to at least maintain your share of the market that you're in. So for us, we think it's a good opportunity because only about 13% of what's out there today in North America are Bally slot machines, and the other new casino will use somewhere between 18% and 25% Bally, which would suggest that there are a lot of casinos that need to invest more in Bally as they start to refresh their floors more frequently.

Joseph Greff - JP Morgan Chase & Co, Research Division

Right. In game equipment sales, we've seen the gross margins improve nicely more recently. Can you talk about what some of those drivers have been to improve margins, and what your outlook is there for further margin improvement?

Michael J. Carlotti

You want to take that one?

Ramesh Srinivasan

Go ahead.

Michael J. Carlotti

Sure. When we initially launched a new cabinet like the Pro Series. The goal is to get it out into the marketplace and build customer demand, particularly for new innovation like the iDeck. And then once we've got it out in the marketplace, then we start looking at reengineering opportunities where we can take certain things out of the cabinet to make it more cost-effective. The inputs of the raw materials that go into those cabinets eventually decline over time, so we get to take advantage of that as well. We get better purchasing efficiencies with higher volumes and things of that nature. So the Pro Series V22/22 has been out almost 2 years now. So we've been able to take a reasonable amount of cost out of that particular cabinet, as well as the iDeck and some of the newer cabinets like the Curve, we're now starting to get cost out of as well. The other opportunity for us in game equipment margins is conversion kits as we build out a bigger presence of the newer cabinets, the video versions, that should give us an opportunity, longer term, to sell more conversion kits into that footprint.

Joseph Greff - JP Morgan Chase & Co, Research Division

Recent news of Sci Games agreeing to acquire WMS. Can you talk about how you think that may -- that transaction may impact you and how that might have an impact on the overall environment here in the U.S. from a market share or ship-share pricing competitive pressure, where there's an opportunity for you? And is it a chance for you to maybe acquire talent that might be looking to leave?

Ramesh Srinivasan

Too early to tell you. I mean, really too early to tell, and you know that these kinds of big-size -- relatively big-size acquisitions take a lot of great execution to make them successful. And I'm sure, very capable people and very capable leaders and people in WMS, Scientific Games. I'm sure they'll work hard to make it a success. So it's just too early to tell. It's actually not -- you can't consider that as consolidation because it's -- because Scientific Games is not necessarily in our space directly. So our -- no major change in our competitive environment or anything like that, but something we are watching very closely. And should the opportunities arise of any sort, obviously, as a business, we will be there to take -- to help Bally with those opportunities as best as we can. But at the moment, too early to tell if that is going to have any special impact on the environment. But what I can tell you is this. Taking the question to a more general sense about the competitive environment today and where I think Bally is, when you put all the inputs into a bucket, you'll think about where our products are now in terms of game sales, game op systems, in terms of how much we have improved, the kind of customer service we provide, how well we have taken care of employees and how happy they are, and you look at the competitive environment outside, you take everything into account. I can tell you that I've been in this industry for 8 years now, almost exactly 8 years now, and if I'm doing my multiplication right, that's about 96 months, and of all those 96 months, I will take March 2013 over any of the other 95 months. So in terms of how far Bally has come and looking outside at the environment and everything else, March 2013, I would say, is about as good a place that Bally has been with respect to the competitive environment as I've seen in my 8 years at Bally.

Joseph Greff - JP Morgan Chase & Co, Research Division

Now I'd like to open it up for questions.

Unknown Analyst

Yes. You've seen a lot of -- [indiscernible] seem to be reducing [indiscernible] probably what is going around 5 years ago. I was wondering [indiscernible] if you've seen those [indiscernible]. Can you do it [indiscernible] if you're thinking about R&D [indiscernible]

Ramesh Srinivasan

So you're referring to the smaller vendors?

Unknown Analyst

Yes.

Ramesh Srinivasan

Yes, yes. So to repeat the -- you want to repeat the question.

Joseph Greff - JP Morgan Chase & Co, Research Division

Yes, I'll repeat the question. The question is can you talk about some of the smaller guys with their product momentum and how big of an impediment is that for your growth?

Ramesh Srinivasan

Sure. So when you look at the competitive environment and your competitor 5 years ago, like you said, there have always been smaller-sized vendors. I mean, this is not a new phenomenon. There's always been, 10 years ago, 5 years ago, there's always been smaller vendors. And some of them have done well and some of them have not done very well. So in terms of everyone's content getting better, that's a healthy sign for the industry, and that is true of the bigger vendors as well. All of us have improved our operating systems. All of us have improved our video content, and so have the smaller vendors as well. And about 10% to 15%, call it 12% or 13%, of the share goes to the smaller vendors because casinos are seeking more diversity, right? A more -- a wide array of cabinet styles and software title styles that they need. So that's all good. But if you compare it with 5 years ago, there is a lot more ship-share at play for us, lot bigger opportunity for us relatively than it has ever been. So the fact that the smaller vendors are doing is good, we don't see that as a major threat. And I think overall it's good for the industry that more people providing good content.

Joseph Greff - JP Morgan Chase & Co, Research Division

One of the bigger themes of late emerging out of the industry is the passage of online poker in New Jersey or online gaming in New Jersey and online in Nevada. Can you talk about your strategy how to participate on that? A cynic in me would say you've intelligently not said much about it, so you don't have any disruptive relationship with your casino operator or customers, unlike maybe others who are in a similar position to you. But if you can share with us how you view that opportunity and how you might participate in that, that will be helpful to a lot of us here.

Ramesh Srinivasan

Okay. And we've just not been given enough credit for the work we have done in that. And you can do a lot of good work in interactive and online without being in competition with your customers. So you can be a good content provider, a good technology provider to customers, which we will always be, and there will never be a change in that. We are never going to go tell a customer that we are not going to provide content or technology to the extent we have them. So within that, we can still play a very important role in interactive and online, like I think we are playing now. But let me just break that down very briefly in terms of the details. Some of the major areas in the interactive online space where we are making an impact is number one, being a content distributor. There are online portals in Europe that are operating in legal jurisdictions today to whom we are getting ready to provide content. In fact, that starts like right now, in a matter of days and weeks away, where there are a number of operators in Europe who are going to carry Bally content on their portals. And just like the gaming operations business that you see in land based casinos, this is a gaming operations business in the virtual online world. So we are getting ready for that. We did a lot of work over the last couple of years preparing ourselves from a technology standpoint so that we can control the content. And even if something goes wrong, we can quickly turn off the pipe. So that technology has been -- we've gotten that ready over the last 12 to 18 months or so, and that is ready now and we are just launching it. So that's one aspect of interactive online. The other 2 major aspects of interactive online that's probably a little bit underestimated where we have done a lot of work to prepare ourselves is the mobile world and the iGaming platform world. So in the mobile part of it, we acquired a company called MacroView that produces the technology, where you provide content it can easily be distributed across all devices, whether it's Android or iPhone or BlackBerry or any other device, you will be able to distribute that. So we acquired that, we built it up. Now we have about 70 to 80 casinos using that. That's by far #1. And when mobile wagering becomes legal in whichever state, we can easily transform that into wagering. Today, it is used for marketing and free play purposes, but that can be switched to wagering very quickly. So we have prepared ourselves for that. The iGaming platform that we have is an open iGaming platform, to which casinos can attach any of the front-ends, like poker or bingo, any such content can be attached to it. Now that is live today in the U.S. We are probably the only major supplier who has an iGaming platform live in the U.S., and there are free play poker sites that run off that. Once poker becomes legal for wagering in various states, that iGaming platform can be extended to wagering. So mobile iGaming, we have done a lot work to prepare ourselves to the online interactive world to be a good technology provider for our customers. There's also one other aspect of this online world that is underestimated in a lot of ways. The ultimate success for casinos is going to be how they see a player as one, one view of the player. You as a patron go to a casino, you play in their LAN-based slot machines, you continue playing on your mobile device and then you go home and play on the Internet, the casino corporation needs to see you as one customer. And for that, you need mobile, iGaming platform and the core systems to be integrated together. There's nobody in a better position to do that than Bally today, and we've already done a lot of work to integrate that 3. So if you think of it in those terms, in terms of as being a content and technology provider to casinos, we're in very good shape.

Did I answer your question?

Joseph Greff - JP Morgan Chase & Co, Research Division

That was great answer. Any additional questions?

Unknown Analyst

[indiscernible] talk about the size of the value opportunity you think, and how do you breakdown and how [indiscernible]

Ramesh Srinivasan

Yes. So you want to repeat the question for the webcast?

Joseph Greff - JP Morgan Chase & Co, Research Division

Sure, for the webcast here. The question is can you help size the opportunity just described?

Ramesh Srinivasan

Yes. At the moment, it is too early to tell. At the moment, we cannot size it. We are generating revenue both on the mobile and iGaming platforms. And at the moment, we are reporting it as part of our Systems revenue base. It is not significant enough to be spoken off separately or to set a number on it.

Joseph Greff - JP Morgan Chase & Co, Research Division

Based on our forecast, you're going to be generating excess free cash after reinvesting in the business. Your balance sheet is in a fairly good place with low leverage. How do you view capital allocation decisions?

Ramesh Srinivasan

No change, Joe, in our capital allocation strategy and what we do with the excess cash we produce. We are comfortable with our leverage now. It's about 1.7. Also, we are very comfortable with that. And in terms of making the right use of cash and making the right decisions with that, we continue on our strategies that we've had for the last couple of years that have worked very well for us.

Joseph Greff - JP Morgan Chase & Co, Research Division

Okay. Do you want anything add to that or?

Michael J. Carlotti

Yes, I mean, obviously, as we continue to generate significant free cash flow. The best use beyond some of the smaller tuck-in acquisitions that Ramesh talked about earlier is to buy back our stock and return capital to shareholders. And we've been doing that for about 21 quarters now and don't expect any significant changes in that strategy.

Joseph Greff - JP Morgan Chase & Co, Research Division

What would cause you to accelerate buybacks? Would it be share price? Would it be absence of hoarding cash or maintaining low leverage for potential acquisitions that just may come up and you want to be prepared for it? How do you -- what would cause you to be more aggressive with buybacks? With still fairly low leverage, really low debt costs, on our estimation, fairly attractive EPS accretion from buybacks.

Michael J. Carlotti

Sure. So we definitely want to maintain balance sheet flexibility to the extent we do find any sizable acquisitions that we can use cash and debt to finance that acquisitions as opposed to using stock. Our plan for fiscal '13 was to do about $15 million to $20 million a quarter in share repurchases. We're obviously well-ahead of that with about $90 million repurchased year-to-date. So we're obviously mindful of the cost of our debt capital vis-à-vis the cost of our equity capital and continue to make what we think are prudent allocations to that excess free cash and putting it to work for the shareholders.

Joseph Greff - JP Morgan Chase & Co, Research Division

Great. Why do you think you trade at your valuation versus others in the group? We'll end our session on that easy question.

Ramesh Srinivasan

Because folks like you are not giving us enough credit for what we've done so far. No, I think you should answer that question, Joe, better than I can.

Joseph Greff - JP Morgan Chase & Co, Research Division

Okay. Any additional questions from the audience? Great. Thank you so much, guys.

Ramesh Srinivasan

Thank you. Appreciate that, thank you.

Michael J. Carlotti

Thank you.

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