Raven Industries' CEO Discusses F4Q 2014 Results - Earnings Call Transcript

Mar.12.14 | About: Raven Industries, (RAVN)

Raven Industries, Inc. (NASDAQ:RAVN)

F4Q 2014 Earnings Conference Call

March 12, 2014 10:00 a.m. ET

Executives

Daniel A. Rykhus – President and Chief Executive Officer

Thomas Iacarella - Chief Financial Officer, Principal Accounting Officer, Vice President, Secretary and Treasurer

Analysts

Andrea James – Dougherty & Company

Robert Kosowsky – Sidoti & Company

Marc Heilweil – Spectrum Advisory Services

Operator

Good day, ladies and gentlemen and welcome to the Raven Industries, Inc. fourth quarter 2014 Earnings Conference Call. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this call is being recorded.

I would now like to turn the conference over to Mr. Tom Iacarella, Chief Financial Officer. Mr. Iacarella, you may begin.

Thomas Iacarella

Thank you, Operator. Joining me on today's call is Dan Rykhus, Raven's President and Chief Executive Officer. Before we begin, we'd like to remind participants that the information contained in this call is current only as of today, March 12, 2014. The company assumes no obligation to update any statements, including forward-looking statements. Statements that are not historical facts are forward-looking statements and subject to the Safe Harbor disclaimer in today's press release.

With that, I would now like to introduce Dan for a strategic look at Raven's fourth quarter.

Daniel Rykhus

Thanks Tom and welcome everyone to our fiscal 2014 fourth quarter conference call. I’ll start off with an overview of our performance and then talk about each of the divisions in more detail and finally speak to our expectations going forward. Tom will then provide you with a look at our financials, including a discussion of margins and the balance sheet. And after that, we'll open up the call for your questions.

So let’s begin with our performance. Sales rose 3% to $92.6 million from $89.6 million in the prior year fourth quarter. Gains in our Engineered Films and Aerostar division of 16% and 3% respectively were partially offset by a 5% decline in our applied technology division. As we said in today’s press release, fiscal 2014 was a year of important progress for Raven as we set the table for the future. We advanced our strategy and better positioned areas of the business where we intend to grow long term.

As a company, we’re moving to more proprietary product lines while intentionally reducing our lower margin low growth contract manufacturing business. This had an impact on our performance and reflects our ongoing adjustments to conditions and opportunities. Our vision is to be a leader in providing the world with more food and energy, protecting the environment and allowing people to live more safely by delivering diverse technology solutions. In short, we solve some of the world’s greatest challenges. This clear vision brings meaning to the work of the organization and ensures our focus on profitable opportunities with strong fundamentals. Tackling the world’s greatest challenges while the company aggressively expands and pursues new adjacent opportunities requires important capital investments.

During the fourth quarter we invested $11.2 million in research and development and capital expenditures to support our product and growth strategy. As a company, we rely on our strong cash position to fund dividend growth and deliver above average returns on invested capital for our shareholders. I’m pleased to report that our cash and investment balances at the end of the fourth quarter stood at $53.2 million, up from last year as well as sequentially from the third quarter.

Now I’ll talk about each of our three divisions, starting with Engineered Films. Looking at the quarter, sales in Engineered Films rose 16% to $35.6 million from $30.8 million a year ago. Operating income was $3.4 million compared with $4.4 million in the year earlier quarter. Within the division, sales of energy, construction and industrial films were higher in the fourth quarter of fiscal 2014 than in the comparable quarter last year and Barrier films for agriculture, fueled by sales of fumigation and silage films, also rose significantly compared to last year. The addition of new extrusion capacity earlier in the year was a key factor in our ability to meet demand for these high-tech films.

Operating income was constrained in the quarter due to higher resin costs compared to a year ago, combined with persisting market conditions that have not allowed us to pass through these higher expenses. In addition, much of our sales growth was from lower margin films. To some degree, that’s seasonal as we saw strong demand for lower end construction films during the harsh winter months. While Raven cannot control resin prices, we’re focused on developing and growing sales of higher-margin barrier films and we’ve introduced pricing changes to improve margins at current run rates. At the same time, we’re pursuing operating improvements, including leveraging our new reclaim production line and optimizing capacity scheduling to achieve additional cost savings.

Despite competitive pricing pressure, we were able to increase our average selling price about 2% sequentially from the third quarter and 6% from the fourth quarter last year. We continued to raise prices when possible and emphasize marketing of our more highly engineered films with stronger margin potential. Looking back at the full year for EFD, I’d like to highlight three things. We measurably grew our presence in the high value Agricultural Films market. We introduced new environmental films using water protection applications and we successfully launched our reclaim operations which reduces by over 60% the amount of our unused films that would have otherwise entered a landfill.

In fiscal 2015, our top growth priorities for Engineered Films are to execute on the opportunities in our existing markets, including Barrier Films for Agriculture, multi-layer environmental solutions and industrial bulk packaging. We’ll also continue to develop new, innovative high value solutions and explore future opportunities in alternative energy, while working diligently on operational excellence and pricing to improve operating margin.

Now let me comment on Applied Technology. For the fourth quarter, sales were $36.4 million, versus $38.4 million last year. Operating income was $10.8 million, compared to $12.3 million in the prior-year period. Lower after-market demand in the US and Canada led to the declines. This was partially offset by higher demand from our OEM customers, rising performance in Brazil and solid contributions from our new products released in the fall. While we expect fluctuations within the division quarter to quarter, the fourth-quarter drop-off in aftermarket orders was unanticipated. We’d seen accelerating demand through late fall, but as the quarter progressed we did not receive the normal level of follow-on orders from our aftermarket distribution.

On the OEM front, demand continued to rise for certain products, including our advanced field computers, planter and seeder controls, boom controls and application controls. We also remained steadfast in our focus to develop and deepen relationships with our more than 30 OEM partners, expanding market share and extending Raven’s innovative technology to a broader range of customers. Internationally, we experienced sustained demand in Brazil both from an OEM and an aftermarket perspective. Emerging agricultural markets abroad operate at different life cycle stages and, therefore, have different needs, and Raven has the breadth of precision products to meet those needs. We continue to see opportunities abroad in markets that are less mature.

I’d like to touch on an emerging trend in the precision Ag space. There’s growing interest in leveraging the power of big data in agriculture. While Raven is not directly involved in the big data analytics, we are a critical player in providing Ag market participants with solutions to act on the decisions they make. We feel that this will continue to provide opportunities for us since we focus on data collection and the tools to execute agricultural decisions in the field.

For the full fiscal year, I have three themes relevant to applied technology. We introduced new harvesting and planting products that will fuel growth in fiscal 2015 and beyond. We made significant inroads in Brazil to pave the way for future successes and we generated substantial growth in our OEM business and strengthened long term relationships with key industry leaders. In fiscal 2015, we look to drive growth both through sales of recently released products and through international market expansion.

Turning now to Aerostar; we reported sales of $23.9 million, up from $23.2 million in the year-earlier quarter, despite a $6 million decline in contract manufacturing revenues, which we expected. Our growth strategy in Aerostar emphasizes proprietary products over contract manufacturing, and strength in our Vista Research and lighter-than-air products offset the reduced contract manufacturing delivery, demonstrating the progress we’re making in this business.

For the quarter, operating income in this division was $2.3 million, versus $2.8 million in fiscal 2013, as improved gross profits were offset by R&D investments needed to support Vista radar technology, as well as Project Loon with Google. Within Aerostar, Vista Research's strong sales continued in the fiscal fourth quarter. Vista's Radar Systems fueled a 45% quarterly revenue increase. As we’ve mentioned previously, Vista Research was selected by Raytheon as a preferred radar solution for U.S. and export opportunities. And we continue to receive and deliver orders for our unique radar technology to this important customer.

An update on Google's Project Loon. We continue our support of this project which strives to provide Internet access in remote and underdeveloped areas. We bring decades of experience in high altitude balloon engineering and manufacturing technologies to this program, including the latest breakthroughs in super pressure balloons. During the quarter, we accelerated certain spending on Project Loon, completing new manufacturing capacity for this project. This filled out a flexible production space originally expected to start later this year, has been configured to support large scale balloon manufacturing.

Let me underscore the fact that Project Loon has the potential to change millions of lives through improved medical care, access to knowledge and enriched agriculture, all benefits of connecting people through the Internet. And should this project be fully realized, this would be a monumental achievement. In terms of sales, we anticipate modest revenues from this project through fiscal 2015 first half, with the possibility of significant revenue growth later in fiscal 2015, subject to continued success with the program.

Looking back at the year, I’d like to draw attention to three highlights in Aerostar. We delivered robust growth from our line of Vista Radar products. Second, we were selected by Google for Project Loon and further advanced the project during the year. And finally, we established important infrastructure and regulatory processes to sell our aerospace and situational awareness products overseas. In fiscal 2015, Aerostar is focusing on expanding our proprietary technology opportunities, including advanced radar systems, high altitude balloons and aerostats to international markets. We’re excited about the strong growth that these three market segments provide. .

Let’s now discuss our expectations for the fiscal 2015 first quarter and year. From a macro perspective, the markets we’ve chosen in agriculture, situational awareness, and natural resource protection will continue to provide profitable growth opportunities as we use technology to solve great challenges. We’ll also apply our core technology to adjacent opportunities that fit our purpose as we have with the use of balloons for internet connectivity.

Our focus in fiscal 2015 will be on measurably growing revenues from our situational awareness and lighter-than-air product lines; driving Applied Technology growth through international market expansion, new products and broadening OEM relationships; and bringing high-value plastic film applications to each of our Engineered Films market with improved margin.

For the first quarter, we expect to see solid growth in Engineered Films revenues from agriculture and higher OEM delivery in Applied Technology, offset by ongoing contract manufacturing declines and uncertain agricultural aftermarkets. We anticipate the impact of contract manufacturing decline to lesson as the year progresses. At this point, we do not see substantial upside or downside for Q1 earnings compared to the performance last year. However, we do expect to resume earnings growth in our second quarter.

For the fiscal year, we anticipate profit improvement to be derived from renewed growth in Applied Technology, realization of Aerostar's growth drivers and stronger operational performance in Engineered Films. As we progress through the year, we expect to improve our year over year growth rate resulting in full year growth.

Now I’ll turn the call back over to Tom and after that we’ll be glad to take questions.

Thomas Iacarella

Thanks Dan. Hopefully all of you had a chance to review this morning’s release. I will discuss our balance sheet changes and operating margins in more depth and then as Dan said, we’ll take questions.

First, the balance sheet. We ended the year with $53.2 million of cash. This was up $3.9 million from last January. We’ve been able to increase our cash position, while maintaining investments in production and infrastructure capacity and research and development. We reported operating cash flows of $52.8 million compared to $76.5 million last year. The $23.6 million reduction reflected lower net income, very favorable working capital in the first quarter of the prior year and unfavorable working capital flow in the current year.

Inventories rose $8.7 million from the previous January. While we’re cycling down contract manufacturing inventory level, overall inventory growth in Engineered Films and Applied Technology more than offset Aerostar’s reduction. Inventory turns were 5.2, down from 5.4 last year at this time. We believe that about $5 million of the inventory growth in Engineered Films resulted from ensuring our ability to meet customer demand as we installed new production scheduling software. We expect this inventory fluctuation to reverse itself during the first half of fiscal 2015 and we believe we have opportunities to further improve our inventory position over the year.

Accounts receivables were down $1.7 million from last January. Overall we did see a positive movement in the quarter on receivable aging. Our average day sales outstanding for the year was 51 on January 31, 2014, up from 49 days last year. Raven’s current ratio is 5.68 versus 4.74 last year, demonstrating that our balance sheet remains very strong.

Our overall working capital position increased by $15.9 million from last January. We believe we have the capacity to fund the investments we’re making in our operation and dividend growth.

Turning now to capital spending. We continue with our investment to invest -- our commitment to invest in Raven and our businesses. Capital expenditures were in the $30 million range each of the past two fiscal years. We expect capital expenditures to be in the $25 million to $30 million range in fiscal 2015 and the actual amount will likely reflect the progress of Project Loon.

Looking at key growth investments in specific areas within the company; in Engineered Films, we invested in the expansion of our extrusion and conversion capacity for multi-layer agricultural films, giving us the capacity we need to support growth in this business. Our reclaim production line which came online in fiscal 2014 is designed to capture and recycle excess polymer material from internal manufacturing processes and it’s proving to be a positive contributor to earnings.

In Aerostar, as Dan mentioned, we’ve accelerated certain spending, including building new manufacturing capacity to support Google’s project Loon. And finally on the corporate front, we’re in the last phase of our headquarter building conversion.

Regarding SG&A and R&D, we believe there are significant opportunities Raven must be prepared for. To that end, over the past 3 years, we have targeted investment growth in research and development capability, corporate finance, legal, compliance, information technology and human resource development. We believe that these areas will play a vital role in our future growth. As a result of this spending, corporate expenses rose 2% in the fourth quarter year-over-year. R&D spending though primarily to support Vista Radar and Project Loon, along with new products for applied technology, was up 51% in the quarter, reflecting our commitment to building our growth pipeline.

Now I’ll comment on fourth quarter operating margins per segment. In Applied Technology, operating margin was 29.7% versus 32.1% in the prior year fourth quarter. The impact of lower sales and production level on overhead costs reduced growth gross rate. Additionally, operating expenses increased slightly in the quarter, due primarily to higher R&D spending. Within Engineered Films, operating margins came in at 9.5% compared to 14.3% in the fiscal 2013 fourth quarter.

As Dan indicated, we continue to be impacted by resin price fluctuations in a challenging market place. In addition, there are opportunities to improve operational performance. For example we believe we can reduce scrap, return and warranty costs. Warranty costs, which we do not expect to recur cost us almost $500, 000 in the fourth quarter. Production levels have increased, in part to prepare for first quarter seasonal demands. Compared to fourth quarter last year, pounds extruded rose about 18%, reaching near 20 million pounds. In Aerostar we reported fourth quarter operating margins of 9.8% versus 11.9% last year. As expected, a higher proportion of proprietary product sales lifted gross profit margins over both prior year and third quarter rate.

Startup and development cost related to new product initiatives accounted for the difference in operating margins. For the company overall, fourth quarter sales rose 3% and profits we down 25% compared to last year. Higher R&D spending and unfavorable product mix combined to offset the impact of higher sales. I should remind you that the prior year’s fourth quarter tax rate was 29% due to the renewal of the R&D tax credit as part of the fiscal cliff legislation in January 2013. Therefore we benefited from 13 months of R&D credit in the fourth quarter a year ago over 800,000. Until the credit is renewed, we expect to see tax expense in the 33% range.

With that, I would like to turn the call back to the operator so we can take your questions.

Question-and-Answer Session

Operator

(Operator instructions). Our first question is from Andrea James with Dougherty & Company you line is open.

Andrea James – Dougherty & Company

You seemed to be a bit more bullish on Ag in your Q3 call in November and I guess it seems like the after-market changed pretty quickly on you guys. Can you just talk about what might be driving that change and then what a reasonable growth rate might be for the 2015 year?

Daniel Rykhus

Sure. It did change abruptly for us. We finished off third quarter and really the first few weeks of the fourth quarter. We continued to have strong orders and I think just the accumulation of concern out there among the U.S. growers around commodity prices, at that time farm bill uncertainty and use of crops for ethanol, lots on uncertainty combined with a lot of spending over the last few years has sort of slowed things down in the aftermarket. And we’ve done a lot of checks and you probably have too and our aftermarket partners continue to be cautious with some optimism that things will turn around and start to improve again. But so far, we did see -- we saw a decline in the fourth quarter in after-market orders. We’re seeing softness continuing in the first quarter in the aftermarket for us, but not to the same extent as you saw in the fourth quarter.

So as far as outlook, when I look at ATD, we’re going to have difficulty growing in the first quarter in ATD. We expect to grow throughout the year, but not at the rate that we’ve posted historically in that division. So how do we grow? Our OEM partners in the U.S. we think overall machine production will be down as you’ve heard on all the rest of the calls. But for us, we see increasing take rates of the different equipment that we provide those OEMs. We saw it increase this past year and we expect it to continue to increase as people buying machines want more of the technology put on at the factory. And by the way that has an offsetting effect on the aftermarket business as well.

We also plan to bring on a couple new OEMs this year that we’ve been working on for quite a while and that’ll help boost sales. We did see strong orders in confidence in our new products we released last fall and we expect that that will deliver some growth for us throughout this year. And again we see some of our international markets provide us an opportunity for growth as well. But no question, we have some big headwinds this year to work through in Ag, but we think we can post modest growth for ATD for the full year.

Andrea James – Dougherty & Company

Thanks for that thorough answer. I’m going to move over now. How do any of us get a sense of the size of the Google opportunity near term and long-term? And then just as a little follow on, can you comment in any way on what Facebook is doing, looking to provide a similar solution but using drones?

Daniel Rykhus

I’ll take the second question first and I really leave that to the Google folk to talk about. I’m aware of it. I’ve read the same articles you probably have and I just don’t have comment on that. We continue to make good progress with Google given the model that they’re pursuing to bring internet access to underserved areas of the world. And as far as the program performance, we’re meeting milestones along the way as we go as we continue to launch balloons and build confidence on the system.

We’re feeling good about the progress overall. As far as the scope, we’ve been really reluctant to give a lot of color on that. On the last call I talked about how do we grow Aerostar and the fact that we have Vista surveillance technology. We have lighter-than-air stratospheric balloon opportunities with Google and others. And then we have our tethered aerostat line of products and any one of those three have the potential to double the size of the division and we continue to believe that. So --

Andrea James – Dougherty & Company

Maybe if I just drilled down on the Google thing, so you guys sell these high altitude research balloons to NASA and NASA can sometimes publish their average selling price data or the data that they’re paying for these research balloons. Would it be accurate to assume that Google is doing the same or is there sort of like an R&D component or extra revenue beyond just the selling price of the balloon itself like similar to what you do with NASA? I guess that’s my question.

Daniel Rykhus

I’m not able to give you that color.

Andrea James – Dougherty & Company

And finally and then I’m done, when do we see margin improvement in Engineered Films?

Thomas Iacarella

Throughout the year starting in Q1.

Andrea James – Dougherty & Company

Thank you.

Thomas Iacarella

We’re confident that we’re going to improve our margins. We’re not pleased you’re proud of the margins that we posted last year in Film and we’ve taken steps in the last several months that will start to show improvement in the first quarter.

Operator

Our next question is from Robert Kosowsky with Sidoti. Your line is open.

Robert Kosowsky – Sidoti & Company

On Applied Technology, I was wondering on the aftermarket weakness. Was this more a broad inventory destocking or was it driven by poor current sell through?

Daniel Rykhus

I really don’t have a great handle on that. I would probably pin it on sell through. I’m not going to say that there was a lot of stock in that. I think fundamentally there are things that I talked about on the last question are there and that that probably is what held back orders.

Robert Kosowsky – Sidoti & Company

And then also just wondering if you can give us an update on Aerostar’s international market because we haven't really heard too much about the progress you’re making in that niche.

Daniel Rykhus

We are pursuing a couple of opportunities right now that I can’t really give you details on. I can tell you that we’re making progress and that we do count on sales both internationally and domestically in our plans for Aerostar this year and we do that believing that the pursuit that we have underway are going to be successful. I wish I could tell you more about them, but we’ll let you know as soon as we can let you know.

Robert Kosowsky – Sidoti & Company

But it looks like the pipeline looks better than it did I guess six months ago. Is that kind of a fair way of looking at it?

Daniel Rykhus

I would agree. Yes.

Robert Kosowsky – Sidoti & Company

And then also on Vista Research, the growth that we’re seeing there, just wondering kind of broadly, how do you look at the product offering? Do you have any holes that you think need to be filled either from like a product technology or distribution stance? And I'm wondering also which channels are you having a better success with from relative to OE versus retrofit?

Daniel Rykhus

With the Vista Radar technology, I would say our best success is coming through selling to U.S prime contractors such as Raytheon like I mentioned in my comments. But there’s others as well. We also have some U.S agency customers that we provide our technology to directly. So those would be the channels where we’re having the most success. As far as any major product line holes, what we provide is a fairly niche type technology offering as it is. So for us to “fill out” the range of radar products, we have a long, long way to go I think within the narrow niche of technology that can sense slow moving small objects, such as ultra-light planes or jet skis or a soldier. We have a very strong offering within that niche and we continue to refine that. But I don’t feel like we have any major gaps within that niche. But we don’t pretend to have a broad line of radar products beyond that at this point. I do want to -- let’s just let that go.

Robert Kosowsky – Sidoti & Company

Okay. But it seems like the infrastructure or the foundation is placed to kind of continue this rapid growth you’ve been seeing for the next few years?

Daniel Rykhus

We feel good about Vista and what we have in place. We’ve built some good customer relationships. We’ve had some excellent demonstrations with different U.S government agency partners and we just feel really good about our prospects. But this business is going to be lumpy. So there’s going to be some good quarters and some tougher quarters, but as we’ve shown, we can grow this business and we believe we can continue to grow it long term at a rate much higher than what our historical growth rate is for the company. I would tell you also on the tethered aerostats that that in the fourth quarter we did deliver an integrated system with a Vista Research Radar and a tethered aerostat to a U.S client contractor. So that was good to see some movement again with our tethered aerostat solution and particularly integrating that with our Vista Research Radar solution.

Robert Kosowsky – Sidoti & Company

It’s good to hear. And then finally on the contracting manufacturing decline, I wonder if you can give us any idea to how much of that revenue is maybe in fiscal 2014 versus what fiscal 2015 might look like just so we can get a better sense of like the numbers of the revenue decline?

Thomas Iacarella

Sure. In fiscal 2014 we saw about a $30 million revenue decline over the prior year in contract manufacturing. In 2015 we will see, but I would estimate it at around $20 million.

Robert Kosowsky – Sidoti & Company

Okay. So a $20 million negative variance?

Thomas Iacarella

Yes.

Operator

(Operator Instructions). Our next question is from Marc Heilweil with Spectrum Advisory. Your line is open.

Marc Heilweil – Spectrum Advisory Services

Thanks for all your hard work. I’d like to look ahead and get a little bit more flavor for this capital spending plan in the next several years. You’ve spent a fair amount, done some more investment. Do you see that continuing over the next few years or do you think there is going to be a decline or even ramp up? And do you have a rough number for what the new headquarters spending has been as opposed to capital and when that will end?

Daniel Rykhus

Tom, why don’t you go ahead and handle those?

Thomas Iacarella

Sure. On the capital spending front, as we look forward, I said, be in that $25milion to $30 million range this year. I think that will probably be augmented by some increased acquisition activity as well and we will continue to invest in R&D to build out our product line as we go forward. More specific to capital spending, we’ll continue to work with the folks in Engineered Films to help them build out some of the higher tech films that they have in the pipeline that carry the higher margins and that will continue for the foreseeable future. The other areas that we will spend will be to support project Loon as we have talked about. And beyond that I think you had asked about the corporate headquarters, it’s been a multi-year project. It’s probably in the $20 million range that we spent over a series of years.

Marc Heilweil – Spectrum Advisory Services

Okay. And are there expenses that are in the income statement related to that that are significant at all?

Thomas Iacarella

Pardon me?

Marc Heilweil – Spectrum Advisory Services

Are there expenses related to that that are going through the income statement and when will those begin to -- when will those terminate?

Thomas Iacarella

I think the expenses are really just for depreciation that relates to that spending. We’ve talked about some of the other overall infrastructure that we’re building here at Raven to support a bigger and more complex company with more international opportunities and a different set of revenue drivers. And you see the corporate spending move up over the last few years, although as the revenues have slowed down we certainly slow that pace of increase on a 2% increase in the fourth quarter this year.

Operator

(Operator Instructions). I’m not showing any further questions at this time. I’d like to turn the call back over to Dan Rykhus, Chief Executive Officer.

Daniel Rykhus

Thank you, and thank you again for taking the time to join us on the call today. Despite the headwinds in fiscal 2014, we continued to deliver strong returns on sales, assets and equity, demonstrating the strength of Raven even during challenging years. In fiscal 2015 we will leverage this strength to drive growth from the core businesses in all three of our operating divisions, and aggressively pursue close adjacent opportunities. We look forward to updating you on our first quarter in May. Thanks again.

Operator

Ladies and gentlemen, this does conclude the program. Thank you for participating in today's conference. Everyone have a wonderful day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!