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Nuance Communications Inc. (NASDAQ:NUAN)

F3Q 2013 Results Earnings Call

August 6 2013 5:00 PM ET

Executives

Paul Ricci - Chairman and CEO

Tom Beaudoin - Chief Financial Officer

Kevin Faulkner - Vice President, Investor Relations

Analysts

Shyam Patil - Wedbush Securities

Brent Thill - UBS

Jennifer Lowe - Morgan Stanley

Richard Davis - Canaccord Genuity

John Bright - Avondale Partners

Daniel Ives - FBR Capital Markets

Tom Roderick - Stifel

Nandan Amladi - Deutsche Bank

Shaul Eyal - Oppenheimer

Tavis McCourt - Raymond James

Operator

Ladies and gentlemen, thank you for standing by. And welcome to Nuance's Third Quarter Fiscal 2013 Conference Call. At this time all lines are in a listen-only mode. Later, we’ll have a question-and-answer session. (Operator Instructions)

As a reminder, today’s conference is being recorded. With us today are Chairman and Chief Executive Officer of Nuance, Mr. Paul Ricci; Chief Financial Officer, Mr. Tom Beaudoin; Vice President of Investor Relations, Mr. Kevin Faulkner.

At this time, I'd like to turn the call over to Mr. Faulkner. Please go ahead, sir.

Kevin Faulkner

Thanks, Ryan. Before we begin, I'll remind everyone that matters we discuss this morning include, predictions, estimates, expectations and other forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially. You should refer to our recent SEC filings for a detailed list of risk factors.

As noted in our press release, we also issued a set of prepared remarks in advance of this call, which are available on our website. Those remarks are intended to serve in place of extended formal comments and we will not repeat them here.

Now, let me turn it over to Paul Ricci.

Paul Ricci

Good afternoon. Before taking your questions, I'd like to highlight some key points. Following the challenges we faced in the first half of fiscal ’13, we are pleased with the progress evidenced in our Q3 results.

We are also appreciate of the market validation of our leadership position within our markets. For example, we expanded our partnerships with Cerner and Epic for our Clinical Documentation Improvement solutions and achieved an annualized run rate of more than 7 billion transactions in our Mobile Cloud based solutions.

We saw improvements in our sales execution in Q3, including better alignment between sales and product teams, more disciplined account planning and improved focus of resources on the highest priority opportunities.

Better execution contributed to above plan bookings in our Quantim solutions, a prominent OEM placement of our Dragon Notes solution and a 35% year over year increase in professional services backlog. We delivered these results in the context of two important transitions within our business. The first is the transition away from conventional perpetual licenses toward recurring revenues, cloud-based delivery and connected services. For example, our mobile developers program continues to expand and this quarter saw the launch of a TV control application by Comcast and DirecTV.

In addition, many of our consumer electronic solutions now involve a hybrid of tasks executed on the device and tasks executed via connection to a cloud-based service. In Q3, we experienced an 80% year-over-year growth in mobile cloud transactions and 100% increase in the number of unique connected devices. This transition is evident by the increase in our hosting revenue from 30% of revenue a year ago to 32% of revenue in Q3 and by the 11% increase in the estimated three-year value of our on-demand contract. We are embracing this transition despite it affects our near-term revenues due to the increased recurring nature, predictability and longevity this revenue stream.

The second transition is an expansion of our solutions from voice-recognition to natural language processing and reasoning based systems. The broader technology agenda requires increased R&D investments now as we lay the foundation for expanded market opportunities through the deployment of advanced interactive solutions with our OEM partners in the mobile market, mobile and multichannel applications with leading enterprises, such as the one we deployed with USAA and computer-aided coding solutions with the leading health care providers in North America.

Notwithstanding the gains we made in Q3, our fourth quarter requires achievement of significant inter-quarter license revenues. Although we have a strong pipeline it can be difficult to predict when specific transactions will be completed. In addition, we remain committed to maintaining greater price discipline into driving towards a focus on recurring revenues. For these reasons and being mindful of recent execution issues we’ve taken a guarded approach to our Q4 guidance.

In closing, I want to reiterate that I remain confident that we have the plans in place to increase our organic growth and improve the financial performance of the business in fiscal ’14. I am enthusiastic about the long-term prospects as we focus on our mission of reinventing the relationship between people and technology. We are happy to now take your questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from the line of Shyam Patil with Wedbush Securities.

Shyam Patil - Wedbush Securities

First question, when you look at the magnitude of the reductions in September quarter revenue, I think it’s about 30 million, 35 million versus previous expectation. Can you help us understand the magnitude of the each of the factors you just talked about -- and what changed versus the quarter ago?

Paul Ricci

So the context is of course a year in which we’re going through a number of transitions and execution issues. And we have been guarded as I said in my opening remarks as we approached this quarter. We have a very strong pipeline for this quarter and we have lots of transactions within the quarter that can’t deliver revenue. But we are being cautious in the context of execution issues and closing those deals over the last few quarters and in particular we, in the mobile business, are prepared to let deals be delayed for the sake of price discipline, a theme that I spoke about last quarter and I am reiterating this quarter, I believe as we head into fiscal ‘14 and beyond that, that discipline is going to serve us well, but it is painful in the short run.

Shyam Patil - Wedbush Securities

Okay. I guess how much would you attribute -- of the 30, 35, how much would you say is related to mobile deals versus other execution versus shift to recurring revenues?

Paul Ricci

Well I can’t break that down for you specifically. But the areas in which we’re seeing this transition of course include our enterprise business, our healthcare business and our mobile business and there is some contribution in all three of those businesses. And some of it relates to -- are caution about sales execution. Some of that relates to our determination to embrace the migration to recurring revenues.

Shyam Patil - Wedbush Securities

Okay. Just to follow-up, previously you had given some initial guidance on fiscal ‘14 of mid-to-upper single digit revenue growth. How are you thinking about fiscal ‘14 at this point?

Tom Beaudoin

We don’t have any changes to our amendments to the previous comments I made on fiscal ‘14 at this point.

Shyam Patil - Wedbush Securities

Okay. Thanks.

Operator

Next question comes from the line of Brent Thill with UBS. Please go ahead.

Brent Thill - UBS

Good afternoon. Paul, just on mobile, you mentioned 80% growth in cloud transactions. You had -- I think what was the one of the worst organic quarters in mobility at least in our model down 19% year-over-year. Maybe just walk us through the dynamics of what you think is going on there. And if you can just give us a sense of what percent of the business now is gone to cloud versus on-prem and how you think the -- there are some late deals start to layer back in if they do in the next couple of quarters?

Paul Ricci

Brent, I don’t think we’ll see a significant rebound in the fourth quarter and that’s embedded in the guidance we’ve given you. I do think we have options in the fourth quarter but I believe it’s consistent with the comments I made just to the previous questions that our determination to maintain discipline in that market and our acceptance of the shift to connect service model.

We’ll prohibit significant recovery in the fourth quarter. I do think we’ll begin to see it as we head into fiscal ‘14. And I think fiscal ‘14 will be a better year for mobile based on those trends.

Brent Thill - UBS

And just one of the questions I think is just around sales execution, are you happy with the sales execution or is it just fundamentally a headwind that is shifting the entire demand from perpetual that’s just -- it's just tough to overcome that near-term headwind?

Paul Ricci

I think they are sum of both in what’s going on. I have laid that out last quarter and I think it’s true this quarter. We have seen some improvement in Q3. We’ve replaced senior manager in our European operations and we saw some improvement from that. And I think we’ll continue to see improvement going into this quarter.

And we will see other sales execution improvement as we go through the next couple of quarters but it will take some time. And I think it will be more apparent as we head into fiscal ‘14.

Brent Thill - UBS

Thanks Paul.

Operator

Next question comes from the line of Richard Davis of Canaccord. Please go ahead. Mr. Davis, possibly your mute button is on. We’ll go to the next question, comes from the line of Jennifer Lowe with Morgan Stanley. Please go ahead.

Jennifer Lowe - Morgan Stanley

Great. Thank you. Maybe just a follow-up on some of the earlier questions about the mobile and consumer business, I know, last quarter, there were some discussion about some contracts that had gotten pushed out around price negotiations. I know, you sort of, alluded to that happening in Q3 as well.

But were those, sort of, same contracts, same customers that maybe continued to be in negotiation throughout the duration of this quarter or was there any resolution on those and some new contracts that came up from discussion. Could you just give us a little color on sort of how that’s progressed over the last three months versus the discussion on the Q2 call?

Paul Ricci

We had signed some deals and we’ve continued to see this migration towards Connected revenues that I referenced earlier. I think that our decision to approach the mobile market with a more disciplined pricing regimen and to accelerate our movement to Connected Services as one is going to play out over a number of quarters. So I don’t think it’s a single quarter phenomena anymore.

Jennifer Lowe - Morgan Stanley

And maybe just still staying on the mobile topic for…

Paul Ricci

But I do want to add that the support for the trends in the mobile business, I think remain really quite strong and we tried to include some data in today’s call that gave you greater visibility into that, in particular the magnitude of the growth of our cloud-based transactions. So I think you can see some support for the pieces we’re laying out about the medium-term strength of our mobile business based on the population of connected devices that we’re seeing in our mobile business and the growth in our cloud-based transactions. And these are going to result in increased deferred revenues and a growing recurring revenue stream in business as we look out over the next 12 months.

Jennifer Lowe - Morgan Stanley

That’s perfect, and maybe just sort of extend on that, I know there is a cloud based transaction metric that you all reported. But if you think about the backlog in that business or sign and your contract value -- I know this is a metric for the obtained value three-year contracts for the business overall. But specific to mobile, is there any kind of metric there in terms of backlog or anything that you can point to the -- that gives us a little more flavour for what that, that pieces look like, what sort of the building momentum is there that might not be showing up in the reported revenues side?

Paul Ricci

A very reasonable question and perhaps as we head into ’14, we will try and break out some additional detail on the mobile backlog. It’s buried in the -- on the overall on-demand contract and I just don’t have a specific number for mobile.

Operator

Next question, we will go back to the line of Richard Davis.

Richard Davis - Canaccord Genuity

Just a tactical question, so this was the first time you’ve seen on-demand revenues decline sequentially and that's never happened. And I know we have been kind of all circling around the same question from all of us. Is that -- so I know you talked about on-demand getting better, is it just a transition period or in theory I would think that side of the house would continue to grow or what's happening on that side just to kind of help me kind of tying around that?

Paul Ricci

It has grown materially year-over-year in the quarter and there was a slight subsequent quarter to quarter drop. And that owed to a couple of phenomena, there were some issues with revenues in some international markets for one of our mobile services that we had to withhold because of questions of collectability. There was a erosion, there was some erosion in the healthcare on-demand line, so we talked about with respect to EMR and the effect of Dragon sales. But I think you will continue to see the overall trend in that segment to grow as it has if you look ahead on a longer-term basis.

Richard Davis - Canaccord Genuity

The phrase in the prepared remarks that says funding large scale mobile engagement. So when I take the word, ‘funding’ does that mean -- should we assume that that means expenses with modest or no revenues now and then in the future, you’re pre-funding a lot of efforts and then in the future that turns, if so, when should that occur tuning that -- I assume it’s 2014 but -- that was the question I had. Thanks.

Paul Ricci

Yes, the nature of the mobile business is that the contracts provide revenues -- provide the connected service over some period of time and in some cases it’s a couple of years, in some cases it’s longer than that. And as you know the revenues have to be recognized typically over the period in which that service is being delivered but the expenses to implement the systems are by and large upfront and it can be -- these are sizable cents that I’ve talked about this now for some time in these calls is the effect of it on our P&L to be greater now, because we’re seeing more and more movement towards a longer-term connected services contracts. But to answer your questions specifically we will see the benefit of those -- we will see some of the benefit of contracts in ’14 although the terms of these contracts go beyond ’14.

Operator

Next question comes from the line of John Bright, Avondale Partners.

John Bright - Avondale Partners

Thank you. Paul, staying with mobile, in your prepared texts, you talked about, as you’ve been alluding to better pricing discipline to have the effect of delaying signing of some of these agreements. I’m going to assume these agreements are not in your Q4 guidance, so there is something that could benefit as we begin FY ’14?

Paul Ricci

What you said is largely true. There are, of course, some, we haven’t assumed -- we’ve just completed our forecast with the completion of some deals and we’ve assumed that other deals will fall outside of the quarter and those deals would in fact benefit ’14.

John Bright - Avondale Partners

Well, that’s the majority of the reason for the year-over-year organic growth decline in mobile and consumer.

Paul Ricci

By and large, yes.

John Bright - Avondale Partners

I also noted that you, you seemed to call out making more of a significant investment in substantial patent portfolio or protecting your patent portfolio, should we view that as a tactic you are using these negotiations?

Paul Ricci

Well, I don’t want to associate those two things directly. But it is the case that we have this year -- throughout this year, fiscal ’13 we’ve had a larger amount of litigation and patented related expenses than anticipated and that’s been accentuated and particularly true in the second half of this year as specific litigations have moved to more critical phases.

John Bright - Avondale Partners

As it relates to mobile and consumer license revenue and a decline as you shifted toward on-demand and ratable pricing models? Can you give us an order of magnitude on what that did look like and what it looks like today?

Paul Ricci

Just repeat the question one more time, please.

John Bright - Avondale Partners

If you -- in your prepared text, you talked about mobile and consumer license revenue declined due to the continued shift toward on-demand and ratable pricing models versus the prior model? Can you talk to us today about the prior model on an order of magnitude with dollars versus what it looks like in breakup between the two today?

Paul Ricci

Well, I think, I was asked an earlier question that was similar to that. I can’t give you specific numbers, but that is a major factor in the calculation of our Q4 guidance.

John Bright - Avondale Partners

Thank you.

Operator

Next question comes from the line of Daniel Ives with FBR Capital Markets. Please go ahead.

Daniel Ives - FBR Capital Markets

Yeah. Thanks. Paul, as you look into fiscal ’14 in terms of mobile, I mean are there from an economic perspective, is it going to be similar the way large contracts are structured, and obviously, not talking about specifics, but can you just talk from the high level, how you’re thinking about mobile in terms of the structure of the contract in handset growth has given some great success you’ve seen from some of these mobile contracts?

Paul Ricci

Well, I think that the nature of the contracts we’re doing in the mobile business are being dictated by the evolution of the technological solution that that the market that we’re providing and the market wants and that’s substantially and almost always now a connected solution. So the contracts have to take into account the delivery of a cloud-based service typically with some element of embedded software licensing and the contracts reflect that.

Daniel Ives - FBR Capital Markets

Okay. And then, I know you are not giving specific guidance, but just how some of the [expenses you talked], obviously you guys talking some investment and now just open the next call six to nine months, I mean, how should we think about that just directionally speaking in terms of your expense levels in different businesses?

Paul Ricci

Well, I think you can imagine that with the revenue with the elongation of revenues that we’re facing, we’re trying to be very difficult disciplined with expenses, but there are some things we -- there are some expenses we simply must grow and those include R&D expenses in support of these major that the mobile and healthcare initiatives in particular.

We have very ambitious agendas that I referred to in my opening remarks and I think we’re also referred to you in the prepared remarks, in mobile we’re deploying the next-generation virtual assistance, in healthcare we’re building a highly automated Clinical Documentation Improvement solution and revenue cycle management and computer aided coding solution and those require significant R&D investments and we simply have to stay the course and those will require additional hiring. Outside of that there will be some hiring as per geographical expansion in sales, and there will be some expenses related to demand generation in our marketing in our various businesses. I think those -- having said that I think you should assume that we would do the reasonable thing and show discipline in our expense growth as we head into ’14.

Operator

Next question comes from the line of Jeff Van Rhee with Craig-Hallum.

Unidentified Analyst

Hey. This is [John Krulock] on for Jeff. So on the topic of price discipline in mobile, we were wondering -- are you seeing the handset guys change their level of price aggression? Just trying to get a gauge of -- are they being proactive from their standpoint or reactive?

Paul Ricci

The consumer electronics industry and the smartphone industry in particular but not limited to that the mobile industry generally is incredibly rapidly moving aggressive industry in which the contract negotiations involve a lot of sophistication in purchasing by these large institutions. And it takes a fair amount of discipline on our part to maintain the value of the technology investors were making. This is not a new thing to us, but I do think we’ve recently taken a position that we need to hold a discipline in those deals to a greater degree than we might have previously done.

Unidentified Analyst

So are you saying that they are being more aggressive or you’re being more aggressive and --

Paul Ricci

I think I don’t know that if they are being more aggressive. I think we're trying to be more disciplined.

Unidentified Analyst

And then on the gross margin pressure given you’ve been transitioning from prem to cloud and you have been able to keep gross margin flat given the recent pressure that you’ve seen outside of the fact that you are still transitioning, there is an effect from prem to cloud, what is the main driver of that gross margin pressure outside of that transition?

Paul Ricci

That is the main driver and within that -- I might say it more generally as we move from prem to recurring revenues, including cloud revenues, our healthcare recurring services revenue, particularly in our newer offerings they are simply lower gross margins and as those offerings expand and as we get critical mass in them we achieve economies of scale and the margins will go up. But that takes some time to effect.

Unidentified Analyst

One real last question here, just wondering on the progress with the J.A. Thomas and the Quantum acquisition, wanted to see where you are at, or how you progress and then also there is any like competitive reaction in the marketplace?

Paul Ricci

I might rather than address those two acquisitions specifically, we talk about the broader area of our Clintegrity solution family, that includes the technologies and services of the two companies you just mentioned as well as the internal technologies we have been developing. It’s a very promising area, we've made a lot of progress in it. We did reference -- one we did reference is the Quantum bookings in the third quarter were actually ahead of plan, and we’ve I think positioned with the market to expect material growth in that segment as we head into ’14. And I think that we’re on plan with that, that expectation, and I might also mention that I think we’ve either in the prepared remarks today or in recent press announcements, we've announced some important partnerships in that area, including progress with Cerner and with Epic in that area.

Unidentified Analyst

Great. Thanks guys.

Operator

Next question comes from the line of Tom Roderick with Stifel. Please go ahead.

Tom Roderick - Stifel

Hey, gentlemen. Good afternoon. So, maybe a philosophical question with respect to the model for next year and obviously you're not guiding yet but in the context, Paul, of your commentary that you’re sticking with no changes or amendment to the notion that you could still grow next year. With that being the case, do you still expect that margins can expand next year.

And I guess the flip side of that question is to the extent that revenue growth became more difficult what would you -- what would it take in your mind to see, to change that philosophy about margins growing, at what point would you look to cut costs and try to expand margins? Thanks.

Paul Ricci

Tom?

Tom Beaudoin

I do believe that as revenues grow next year, we’ll see margin improvement. But I think I have said in over the last year that we are making investment in the business for future growth and therefore, the expansion of revenues won’t yield quite the margin expansion that we might have seen in the previous years. I think you should model margin improvement as being modest next year.

With respect to your second question, I think my approach to fiscal ‘14 is one that the determination that we’re going to return to organic growth and therefore I’m not really focused on contingencies in other circumstances.

Tom Roderick - Stifel

Okay. Maybe one more question here to try and put a finer line on the mobile business in the transition there. Last quarter, you spoke about a bit of a bifurcation in this market with the Apple’s and Samsung’s of the world holding on the profits and other folks being a bit more sort of dynamic and challenging on pricing. Can you confirm -- understanding how important both Apple and Samsung are, can you confirm that those are still active customers without any sort of major changes or repricing events? And to the extent you can’t talk about Apple or Samsung specifically, can you to make a broader commentary about Tier1 customers? Thanks.

Paul Ricci

I think I have said a lot of about this topic in the past. And I don’t want to add anything to it. I think I can say this. We haven’t had any substantive changes in our relationships with our largest customers in the mobile space, say for some expansions in some specific instances.

Tom Roderick - Stifel

Okay. That’s very helpful. Thank you.

Operator

Next question comes from the line of Nandan Amladi with Deutsche Bank. Please go ahead.

Nandan Amladi - Deutsche Bank

Hi. Good afternoon. Thanks for taking my question. We are almost a year after the Smart TVs and some of the new connected services in the mobile space were launched? I know these are partially reflected in your on-demand revenue? But within mobile and consumer what share of revenue are these roughly?

Paul Ricci

I can’t give you a share of revenue, what I can say is that, in reviewing the metrics in our mobile business over the last quarter. We were rather pleased at the rapid great rate of growth of cloud-based transactions that are coming from the connected television.

And we’ve seen some increase interest in activity in that area in sales and booking as well. I might say more generally that there is real interest in home electronics that go beyond the television and I think that area has some promise for fiscal ‘14 as well.

Nandan Amladi - Deutsche Bank

Okay. And short follow-up if I might on the enterprise side, when you deployed biometrics or Nina, are these applicable to traditional on-premise call centers or these options that only come within on-demand configuration?

Paul Ricci

I don’t know specifically whether we have an on-premise answer or not. So I actually don’t know the answer to that question, what I can say is they’re applicable to existing on-premise customers, I just don’t know whether we have -- whether we have an on-premise licensing for them.

Nandan Amladi - Deutsche Bank

Well, actually I think, you partially answered my question, I was wondering if you have, since you have such a large embedded base of call centers, already most of which are on-premise, are you able to up-sell them biometrics?

Paul Ricci

The answer is our existing customers are an important -- are as you would expect an important target for our voice biometric solutions and in particular the financial services industry of course has been a very fertile ground for us in early sales in that area.

Operator

Next question comes from the line of Shaul Eyal with Oppenheimer.

Shaul Eyal - Oppenheimer

Paul, clearing understanding that you’re trying to apply those to better price and discipline related to your negotiated mobility contract, but are you seeing any contract losses as those contracts are elongated and maybe kind of some competitors on the mobile front are kind of coming with better pricing program for the customer, is that the case?

Paul Ricci

So it’s not -- let me say it’s not an important case if it is. We have competitors and in particular there are some geographical competition that from time to time we may lose the geographical segment. But I don't think that some -- I don’t think that’s a predominant case of what's going on right now. In some segments we have just very, very high share as you know in our participation in solutions.

Shaul Eyal - Oppenheimer

So I know kind of you’ve already kind of commented a little bit on the healthcare segment. But just going to maybe staying on the competitive landscape front what are you seeing on the enterprise imaging, even maybe kind of slightly more color on the mobile front while we're on the topic.

Paul Ricci

So the enterprise business is complex, because as we move to what's often referred to as a multi-channel solution, there are new competitors in that space. Our offering, we think, has differentiated but there are other competitors. And so it will be a more competitive landscape. And the imaging business we do have competitors in our MFP scan and printing solutions, including some competition from internally developed products at the OEMs that we -- through which we market. But there again I think we think we're the predominant name and the trusted name in those particular solutions. What else Shaul asked about?

Shaul Eyal - Oppenheimer

Maybe just another word about the mobile and consumer front?

Paul Ricci

No, I think I have answered that already. There is a regional competition in particular that we have to compete against. But I think that we have very high acceptance rates and ultimately in our solutions in that area.

Operator

And our last question will come from the line of Tavis McCourt with Raymond James.

Tavis McCourt - Raymond James

Hey, it’s Tavis. Thanks for taking my question. I was wondering if you could talk a little bit about the $100 million in acquisitions in the quarter. And then also on the professional services gross margins, looks like they ticked down a bit. Again I'm wondering if you’d provide some guidance on where those should stabilize as hosting revenues continue to increase or where -- might we see the bottom or inflection point on those gross margins?

Paul Ricci

I think your first question was about the acquisition expenses?

Tavis McCourt - Raymond James

Yes, roughly $100 million in the cash flow statement I guess?

Paul Ricci

I believe that those were -- the primary one in that was the acquisition of the Tweddle connected automotive technology and services that we did a conference call about some couple of months ago. I think there were also a couple of very small technology acquisitions in that $100 million as well. And your second question was on professional services margins.

Tavis McCourt - Raymond James

Yeah, gross margins. Yes.

Paul Ricci

In professional services particularly?

Tavis McCourt - Raymond James

Yeah.

Paul Ricci

I’m not sure what drove down professional services margins. I think it may have been mix of our new acquisitions. I’m going to let Tom address that.

Tom Beaudoin

Yeah. So and on your acquisition question, there was one relatively small payment for prior acquisition around a deferred payment, so it was Tweddle plus that. On the professional services it's predominantly a mixed issue just within the various professional services groups across the business units.

Tavis McCourt - Raymond James

Okay. Thanks.

Kevin Faulkner

No questions.

Paul Ricci

Okay. Then, I want to thank you all very much and we look forward to speaking with you again next quarter.

Operator

Ladies and gentlemen, it does conclude today’s conference. As I mentioned, today’s call was recorded, if you would like to listen to a replay it will be accessible at 7 today, at 7 p.m. Eastern, excuse me, through August 20th at mid-night. Please 1-800-475-6701 and enter the access code 296887. Those numbers again, 1-800-475-6701 with the access code 296887. That does conclude today’s conference. I want to thank you for your participation. You may now disconnect.

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