China Medical Technologies, Inc. F4Q09 (Qtr End 03/31/2010) Earnings Call Transcript

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 |  About: China Medical Technologies, Inc. ADR (CMEDQ)
by: SA Transcripts

China Medical Technologies, Inc. (CMED) F4Q09 (Qtr End 03/31/2010) Earnings Call June 4, 2010 8:00 AM ET

Executives

Winnie Yam - Assistant Manager, IR

Xiaodong Wu - CEO

Sam Tsang - CFO

Zhong Chen - CTO

Charles Zhu - SVP, Operations

Analysts

Christopher Lui - Morgan Stanley

Justin Liu - Credit Suisse

Bin Li - Morgan Stanley

Operator

Good day ladies and gentlemen, and welcome to the quarter four 2009 China Medical Technologies Inc. earnings conference call. (Operator Instructions)

I would now like to turn the conference over to your host for today, Ms. Winnie Yam.

Winnie Yam

Good morning ladies and gentlemen. I am pleased to welcome you to China Medical's earnings conference call.

China Medical already announced its fourth fiscal quarter and full year results ended March 31, 2010. A copy of the press release is also available on the company's website at www.chinameditech.com.

Today your speakers will be Mr. Xiaodong Wu, CEO; Mr. Sam Tsang, CFO; Dr. Zhong Chen, CTO; and Mr. Charles Zhu, Senior VP of Operations. After they finish with their remarks, they will be available to answer your questions.

Before we continue, please bear with me as I take you through the company's Safe Harbor policy.

The discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the results may be materially different from the views expressed today.

A number of potential risks and uncertainties are outlined in the company's public filings with the U.S. Securities and Exchange Commission. China Medical does not undertake any obligation to update any forward-looking statements except as required by applicable law.

As a reminder, this conference call is being recorded. A replay of this conference call will be available via webcast on China Medical's website.

Now, allow me to turn the call over to Charles, who will give remarks on behalf of Mr. Wu. Charles?

Charles Zhu

Ladies and gentlemen, welcome to our earnings call. Today, I will review our business for the past quarter, and I'll cover strategies and objectives for this fiscal year starting in April 2010.

Our CTO, Dr. Chen, will give an overview about our R&D strategies which are important part of our goals. And finally, our CFO, Tsang, will discuss financial results and estimates.

In the past quarter, we achieved solid organic growth. Our business turnaround is demonstrated by solid progress we made on every line of our business, as well as broadening of our product offerings. Based on strong end-user demand, we anticipate a 5% to 7% quarter-over-quarter growth for each quarter over the fiscal year 2010.

At the same time, we expect to achieve operating leverage which will support our EPS growth to be higher than our revenue growth.

In the past quarter, we executed well on our three strategic imperatives, including formal launch of our SPR system, expansion in product portfolio and investment in R&D for future growth. Our initial SPR launch has resulted in penetrating a number of our top tier hospital customers, and we will start to generate revenue from sales of HPV DNA chips this quarter.

For FISH business, we continue to see significant uptick in the number of applications including prenatal, urology, gynecology, and the hematological malignancies.

We also saw momentum in companion diagnostic tests for targeted cancer drugs such as our HER-2 gene test for the use of Herceptin in breast cancer patients and stomach cancer patients, as well as the EGFR gene test for the use of Iressa and Tarceva in non-small cell lung cancer patients. Our direct sales force has been focusing on these high growth areas with our existing top tier hospital customers.

As for our ECLIA business, we received SFDA approval for our fully-automated analyzers in April 2010. Our major target end users will be the top tier hospitals as well as high volume users among mid size hospitals of our existing ECLIA users, which we expect to be another growth driver for our relatively maturing ECLIA business starting in 2011.

Finally, we continue to invest in R&D and anticipate additional SFDA approvals in the coming quarters, most notably our HPV DNA chip in the near term. With more extensive product offering and broader coverage of top tier hospitals, we believe that we are well-positioned for a phase of accelerated growth starting this quarter.

Now going into details of each business; our FISH business continues at a healthy growth rate. In the past quarter we achieved 4.9% sequential growth, and we anticipate the trend to continue. Currently, we are selling more than 10 FISH applications consisting of over 40 probes in the market, of which five applications consisting of 15 probes were approved by SFDA, which includes prenatal bladder cancer, cervical cancer, a type of hematological malignancies, and HER-2.

The above represents the largest FISH offering in China market, which creates substantial competitive edge over our competitors. In addition, we have penetrated over 400 healthcare hospitals with a goal to cover 800 top tier hospitals within three years in China.

As more physicians recognize the important value of FISH in various areas of diagnostics, we continue to see increasing demand for FISH by hospital labs across a variety of applications, most notably prenatal, urology, gynecology, as well as hematological malignancies.

(Instead of) new competition, we haven't seen any domestic company in the process of SFDA application for FISH. Based on the current competitive landscape, we expect our pricing to remain stable over a considerable period of time.

Regarding our SPR business, we launched our SPR system at the beginning of the past quarter, and we look forward to receiving SFDA approval on our HPV DNA chip in the near term. At the end of the past quarter, we have penetrated into more than 20 hospitals with our SPR analyzers and we are on track to penetrate an average of 30 hospitals each quarter during this fiscal year.

Our sales force is working with hospital customers for initial testing and product adjustment. So far customer feedback has been very encouraging, and there are certain aspects with the result better than management's expectations, such has our cheap pricing and usage. We will start to record revenue from the sales of our HPV DNA chip in this quarter.

In respect of our ECLIA business, the past quarter was productive on many fronts. First, our ECLIA business stabilized, and we anticipate low single-digit sequential growth in the coming quarters.

Since we implemented a 30% price cut last September, we experienced a temporary hiccup on our test volume growth. Since our pricing has become more competitive, we have been attacking new distributor customers. As a result, we are seeing test volume to resume growth.

Second, in the past quarter we successfully renegotiated pricing with our major suppliers for the raw materials of ECLIA reagent kits. There is an average of approximately 15% cost reduction across the board, and as a result, the gross margin for ECLIA reagent kits has improved, which further improved the overall gross margin for the company.

Lastly, we received SFDA approval for the fully automated ECLIA analyzer in April 2010. This represents another significant milestone for us, since this is the first fully automated ECLIA analyzer developed and manufactured by a domestic Chinese company.

Based on our background check, before April 2010, all fully automated ECLIA analyzers marketed in China are supplied by multinational companies. After extensive market research, the management decided that our fully automated ECLIA analyzers should target both top tier hospitals and the high test volume mid-sized hospitals for increasing uses.

We're confident that our ECLIA platform has comparative advantages over imported devices, including our comprehensive reagent manual and our strong direct sales network covering over 400 top tier hospitals in China, with broader offerings of complementary products.

Therefore, we expect our fully automated analyzer to serve as another gross driver for us in the mid and long term.

Based on the recent market research report, the worldwide IVD market was about US$43 billion in 2009. With a compound average growth rate of 7% from 2009 to 2014, China will experience a CAGR of 18% to 20% in the same period.

Our corporate strategy is to focus on providing value added products, and platforms for large marketing opportunities across different molecular diagnostic sub-sectors so that we could capture rapid growth of IVD market in China and maximize the value for our shareholders.

Therefore, we will not only focus on diagnostic fields with the largest market potentials and highest growth, but also on the emerging sectors, such as the molecular prognostics for companion diagnostics with targeted cancer drugs.

Targeting high end markets such as the molecular diagnostic market is a key focus of our growth strategy, because of significant profit margin and high barrier of entry. In this specific area, as a leading domestic company, we have to compete directly with multinational companies in China. Therefore, our priority has always been providing superior quality products and the best post-marketing services, the top two features that top tier hospitals are looking for from the private providers.

Along with the fast economic growth in China in the past decade, a large group of high income and wealthy population already emerged in China. This group of people has high affordability, not only in their consumer product spending, but also in their health care spending, which continue to support the high growth of the diagnostic markets in China.

In summary, all of our businesses are on track, with strong end-user demand and an extensive product offering. I'm confident that we can further strengthen our leading market position in China high-end IVD industry. And the management is looking forward to delivering sustainable, above industry average growth, to maximize value for our shareholders.

I have finished Mr. Wu's remarks, and I'd like to turn the call over to Dr. Chen who will review our R&D strategies. Dr. Chen, please.

Zhong Chen

I will briefly review our current product portfolio and focus on our R&D strategies for the near and middle term. As a leading advanced IVD company in China, we presently have three key product platforms, namely FISH, SPR and ECLIA.

For FISH, we are presently offering more than 10 applications consisting of a total of over 40 probes, of which five applications comprising 15 probes were approved by Chinese SFDA. There are another 12 applications consisting of about 30 probes on the process. Currently, we are the largest FISH provider in China in terms of sales, number of FISH product offerings and the number of hospital users.

For SPR, we expect our HPV DNA chip to be approved by SFDA soon, which is the first product of our SPR platform. For ECLIA, we have over 80 reagent kits, representing the largest ECLIA reagent demand in China. We are also the first and probably the only domestic company which received SFDA approval of fully automatic ECLIA analyzer.

As Mr. Wu just mentioned, our R&D strategies are centered on our corporate strategies, which not only focus on opportunities with largest market potential, but also emerging fields such as molecular diagnostics which directs (drug) usage.

For FISH, our FISH chip is on currently focusing on developing probes for the detection of infectious diseases such as tuberculosis, cancers and infertility.

In particular, the probes for tuberculosis and infertility are important, because they are covering a large group of patients.

For example, there are about 5 million of patients affected by tuberculosis, the leading problem in China, which indicates an even larger patient demand for diagnostics. Besides, infertility has become the third largest disease in China after cardiovascular disorders and the cancers. Based on latest data published by The Ministry of Health in China, around 25% of the young couples have difficulties in pregnancy, which has become an emerging social issue.

For SPR, I believe this is a very strong technology platform with great potential to develop a series of diagnostic products. Our current HPV DNA chip detecting 24 high risk and the low risk subtypes is just a beginning. We are planning to expand our HPV products such as low-risk HPVs subtype chip for sexually transmitted disease, as required by dermatology departments of top tier hospitals in China.

In addition, our SPR team is also working on diagnostic chips in detecting bacterial infections as well as risk prediction for coagulation related disorders. In china, there are about 9 million of patients suffering from coagulation related disorders including stroke and heart disease. Early risk prediction for a larger group of population will effectively reduce the disease instants.

For ECLIA, although this is a relatively mature area, we will continue to develop reagent kits related to meaningful and significant clinical applications. Our ECLIA team will also work with new hospital customers for initial test around our fully automatic ECLIA analyzer for refinement.

To sum up, molecular diagnostics in China is still in nascent stage. We're convinced that there are enormous opportunities associated with it, and we would like to position our product development for this emerging opportunity for the years to come. We have become a leader in molecular diagnostic field in China. Up till now, our hospital customers have contributed over 100 articles for the use of our molecular diagnostic products in both international and the Chinese medical journals.

At China Medical, we have a team of well-trained R&D professionals who have the ability to follow the most (inaudible) medical diagnostic technologies in the world and the ways to develop the most innovative diagnostic products.

I am confident that our investment in R&D will generate significant return for our shareholders in the future.

Now, I will turn the call over to Sam.

Sam Tsang

Thank you, Dr. Chen, and welcome everyone. Let's talk now our financial results in 4Q '09 as well as those of the full year. Our 4Q '09 revenues increased 2% to RMB175.7 million or US$25.7 million on quarter-over-quarter basis.

Our 4Q '09 non-GAAP gross margin increased from 76.4% to 77.7% from previous quarter. Our 4Q '09 non-GAAP operating income increased 8.2% to RMB93.4 million or US$13.7 million on quarter-over-quarter basis.

Our 4Q '09 non-GAAP income from continuing operations, which excludes stock compensation expenses, amortization of acquired intangible assets, non-cash interest expense of convertible notes and profit on purchase of our convertible notes increased 12.8% to RMB51.5 million or US$7.5 million on quarter-over-quarter basis.

Our 4Q '09 non-GAAP diluted earnings from continuing operations per ADS increased 13.8% to RMB1.98 or US$0.29 on quarter-over-quarter basis. We generated net cash from operations in the amount of RMB59.8 million or US$8.8 million in 4Q '09.

Turning to our full year results, our full year revenues decreased 12.9% year-over-year to RMB723.1 million or US$105.9 million. Our full year non-GAAP gross margin decreased from 82.8% to 79.6% on year-over-year basis.

Our full year non-GAAP operating income decreased 35.6% to RMB364.7 million or US$53.4 million. Our full year non-GAAP income from continuing operations, which excludes stock-compensation expense, amortization of acquired intangible assets, acquired in-process research and development charge, non-cash interest of convertible notes and profit on purchase of our convertible notes, decreased 55.5% year-over-year to RMB187.3 million or US$27.4 million.

Our full year non-GAAP diluted earnings from continuing operations per ADS decreased 55.5% year-over-year to RMB7.13 or US$1.04. We generated full year net cash from operations in the amount of RMB279.9 million or US$41 million.

Let's highlight certain financial results. First, despite two important public holidays in China in 4Q '09, our ECLIA revenue only declined 1.7%, while our FISH revenue achieved a 4.9% increase quarter-over-quarter. The sales volume of ECLIA reagent kit has resumed growth after the Spring Festival in February, and we believe that the revenue from ECLIA reagent kit in 1Q '010 will achieve quarter-over-quarter growth.

FISH business will continue its growth momentum in 1Q '010 due to increasing usage of our FISH probes in various clinical applications by our top tier hospital customers. We also expect our SPR-based HPV DNA chip to start contributing revenue in 1Q '010, although the amount is small initially. We expect the contribution from the HPV chip to grow rapidly with the increasing number of SPR analyzers placed with our hospital customers in later quarters.

Second, the overall non-GAAP gross margin, which excludes amortization of acquired intangible assets, improved from 76.4% to 77.7% in 4Q '09, mainly because we substantially reduced the purchase price of our major raw materials used in the production of our ECLIA reagent kit in January 2010. We expect a slight improvement in our non-GAAP gross margin in 1Q '010 since we have used up the high price raw material inventory of ECLIA reagent kit during 4Q '09.

Third, our total operating expenses, including R&D and SG&A, was stable in 4Q '09. We expect slight to moderate increase in R&D and certain expense in 1Q '010, while the G&A expenses in 1Q '010 should be stable.

We made a profit of about RMB26 million or US$3.8 million from the purchase of our 4% convertible notes at a significant discount on face value on the open market in 4Q '09. We purchased additional 3.5% convertible notes as well as 4% convertible notes on the open market in 1Q '010, which will result in much higher other income in 1Q '010. However, we will exclude the profit in our non-GAAP financial numbers.

In addition, our high effective tax rate was primarily due to certain expenses such as stock compensation expense, amortization of acquired intangible assets and interest expense of convertible notes, were not deductible for China income tax purpose, as well as the accrual for withholding income tax on distributable earnings generated in China.

Besides, our cash position at the end of March was RMB815.5 million or US$119.5 million. The sequential decrease in cash and cash equivalents was mainly due to the repurchase of about 110,000 ADS under our share repurchase program and the purchase of our 4% convertible notes from the open market.

We generated cash flows of RMB59.8 million or US$8.8 million from our operations in 4Q '09. Furthermore, our accounts receivable at the end of March increased slightly to RMB303.4 million or US$44.4 million from the balance of previous quarter.

To adjust our high level of leverage, we purchased our convertible notes at significant discount from the open market, terminated our share repurchase program and suspended our annual dividend. We will continue to reduce our leverage by accumulated cash from our operations.

However, we will continue to invest in our direct sales network, covering the top tier hospitals in China and our research and development projects, both of which will sustain our growth in the mid-to-long term. We will resume our annual dividend when we reduce our leverage to an appropriate level.

Last, but not the least, our outlook for 1Q '010 and fiscal year '010. As we expect growth in our FISH business and ECLIA business in 1Q '010, we estimate our target revenues for 1Q '010 to be more than RMB185 million or US$27.1 million.

We estimate our target non-GAAP income from continuing operations for 1Q '010 to be more than RMB56 million or US$8.2 million. Our target non-GAAP diluted earnings from continuing operations per ADS for 1Q '010 is expected to be more than RMB2.14 or US$0.31.

For fiscal year '010, we expect HPV DNA chips to be a new growth driver, which will grow revenue in the later quarters of the fiscal year. In addition, we expect the FISH business to continue its growth momentum and the ECLIA business to continue the rebound from its low level.

We also expect non-GAAP gross margin to improve from the level of 4Q '09 due to more incremental revenue contribution from the higher margin products.

As such, we estimate our quarterly revenues to increase in the range of 5% to 7% on a quarter-over-quarter basis during fiscal year '010. We estimate our quarterly non-GAAP income from continuing operations and quarterly non-GAAP diluted earnings from continuing operations per ADS to increase at a rate higher than that of quarterly revenues. The above estimates are subject to change.

This concludes our remarks. Now we are welcome to your questions.

Question-and-Answer Session

Operator

(Operator Instructions) And your first question comes from the line of Bin Li with Morgan Stanley.

Christopher Lui - Morgan Stanley

This is Christopher Lui calling on behalf of Bin Li. On your guidance, do you include the HPV? And may we have the FISH growth assumption and the ECLIA growth assumption and breakdown?

Sam Tsang

Hi, Chris, this is Sam. We do take in account the potential growth of HPV chip sales in estimating growth for each quarter during this fiscal year 2010. And for the FISH, as we mentioned, we will continue the growth momentum for the FISH business as we see continued and increasing demand for our FISH products in various applications by our hospital customers.

And also, we see that ECLIA already reached the bottom and is rebounding from the demand we have seen in the past few months.

Christopher Lui - Morgan Stanley

Just to follow up on the HPV, can you tell us the key challenges on boosting the HPV sales?

Xiaodong Wu

We are actually becoming more optimistic regarding the potential of HPV market, because after several years of education and product promotion, the Chinese women population are becoming more and more aware about the significant benefits from HPV tests.

And also, from the understanding or the feedback from the hospitals, we are getting the number about the HPV test volume, which is much higher than the number we got from the survey we did about three years ago.

We're becoming more optimistic, because for another reason, in some area in China, some hospitals are actually using HPV tests as frontline screening tests for the cervical cancer.

Christopher Lui - Morgan Stanley

And when you say you effected 7% quarter-over-quarter in sales, does that mean it'll be around 12 % year-over-year in sales next year, and when you say bottomline is going to grow faster, should we expect mid-teens or above 20% growth rate for the bottomline?

Sam Tsang

I think we mentioned clearly the growth we expect for each quarter on a quarter-over-quarter basis for this fiscal year to be 5% to 7% on revenues. And growth for the EPS or the non-GAAP net income or bottom-line, we expect higher contribution. We have reasons we have mentioned, such as, we expect the non-GAAP gross margin to improve from the (NYSE:DK) basis.

(DK) basis, we have reduced the purchase price of our major raw materials, and also we see more contribution, or the growth of the company will come from higher margin products such as FISH probes and HPV DNA chips.

And also, we expect some corporate leverage such as G&A expenses. G&A expenses, we expect it to be stable. So this is also a summarization on operating expenses. And also, you see that we have repurchased our convertible notes from the market and so there will also be decrease in the interest expenses.

At the same time, the interest expense is fixed. And so, we have more revenue contribution and higher operating income on the basis also, and now the leverage.

And so you can see from the whole of we provide for the June quarter this year compared to March quarter, the revenue growth is slightly higher than 5% on quarter-over-quarter basis. But if you look at the non-GAAP net income, actually the growth rate is about 6.5% and the EPS is about 8%.

So you can see that this is the leverage, the reasons we mentioned, which will support a high growth in EPS, and also the reason we expect during this fiscal year we have this 5% or 7% sequential growth rate on our revenue. We expect a high contribution from the EPS growth.

Christopher Lui - Morgan Stanley

I see. Sorry, so many questions. But can you tell us the hospital penetration? Do you have any target for the next year and the next three years?

Xiaodong Wu

Currently we are penetrating over 400 top tier hospitals in China, and our target is over two years to penetrate all the top tier hospitals.

Operator

And your next question comes from the line of Justin Liu with Credit Suisse.

Justin Liu - Credit Suisse

Just to follow on the SPR system. So can you talk about how many hospitals you have successfully penetrated in the SPR system and what's basically the average SPR system per hospital?

Charles Zhu

For the quarter of January to March, we installed over 20 SPR systems in the hospitals. We didn't use the full speed to install the system in the first quarter of the launch of the products because we do want to see some of the feedbacks from the first hospitals.

In terms of average number of system per hospital, at this time we expect only one unit per hospital because the throughput on our machine can handle around 10,000 tests each year for HPV tests, which is the normal volume level for the top tier hospitals in China right now. So we think at this stage, one unit per hospital is sufficient for the potential test volumes.

Justin Liu - Credit Suisse

In terms of the pricing of the kits, do you elaborate what's the initial target pricing you charge? Basically, how much the hospital will charge the patient and what's the price you charge the distributors?

Charles Zhu

Hey, Justin, we do not sell the chips to distributors. And so our direct task for us is pricing the SPR analyzer to top tier hospitals, and currently as we mentioned, we have seen that after these few months of past working with hospitals, we have seen that we can price our chips at level high again than what we expected in the past.

And also, we understand that currently the price charged by hospitals to patients for HPV test is above RMB300 to RMB400.

Justin Liu - Credit Suisse

Okay. Going forward, any bundling and selling opportunities with FISH probes or bookings in certain areas? What's your strategy going forward in terms of the sales strategy with FISH, any synergy you can deliver on that?

Zhong Chen

Yes, you are right, we do have some bundling sales opportunities while selling HPV chip. You remember we have TERC in FISH probe, which is also used for the cervical cancer diagnosis. And in the past, we kept saying that we see potential of bundling the HPV DNA chip with this TERC gene FISH probe as a package to sell to the hospitals.

More and more physicians in China are convinced about the benefits of combining FISH probes with HPV test around clinical significance of combining two products together, because we've been seeing that FISH probes can give the information about the change of human gene regarding the cervical cancer and the progress of the cervical cancer; whereas, at the same, the HPV test gives the information about the virus that has the infection related to the cervical cancer as the external factor.

If you only look at the viral load information from HPV infection, it's hard to tell which pre-cancer stage this patient is at. But actually this is the area where our FISH probe is good at for the differentiation of the different stages of the pre-cancer lesion for the potential cancer patient. So we think this is a perfect combination for the cervical cancer diagnosis.

So we have the reason to believe that by combining two products together, it can give us a competitive edge over the other HPV competitors. This bundling strategy can generate a sales synergy for us.

Operator

And your next question is a follow-up question from the line of Bin Li.

Bin Li - Morgan Stanley

Just a few questions on some numbers. Can you let us know what tax rate we should expect going forward? That's number one. Number two is, we saw there was bad debt allowance for ECLIA. How much reserve you have going forward? And third question is dividend. Are you planning to cut it completely or partially and how much should we expect from lowered dividend?

Xiaodong Wu

So what's the second question?

Bin Li - Morgan Stanley

The second question is bad debt allowance for ECLIA. We saw bad debt allowance and we want to see if you use up any more or less going forward.

Sam Tsang

For the tax rate, because our PRC subsidiary received the status of high-tech company in China, so the standard income tax rate in China is 25%, and our subsidiary enjoys the 15% because of the high-tech status. And also, this high-tech status is relieved at three year.

So we started to enjoy this lower tax rate in 2008. So from 2011, this is starting another (inaudible) year. And we are confident as our products and our technology lab, we should be able to continue to enjoy these high-tech reduced income tax rate.

And for the provision, this is related to going back to June quarter or September quarter last year when we lost some of our ECLIA distributors and we make provisions on bad debt issue for the amount receivable from these distributors who moved or who left us.

And after that, we haven't provided any specific reserve for our ECLIA customers, but we do have some general reserve because of the past incidents. And currently, the amount we provided for the March quarter is less than RMB1 million. And this is just what we serve, and we do not see any problems in our collections from the ECLIA distributors.

We do not think we need to make reserve for the receivable from our direct hospital customers, which are the top tier hospitals. From the experience we have with them in the past and also how they do if they are vendors. The top tier hospitals, we don't think at this point of time any necessity to make any reserve for the hospital customer receivable.

And for the dividend, this is top of our efforts to reduce our high level of leverage, not just dividend, but also you see we are spending our cash to repurchase our convertible debt. And also, we have stopped our share repurchases, and we have committed to accumulate our cash generated from operations.

And as we also mentioned that we will review our leverage level on regular basis. And also, we will review our dividend again each year. And when our leverage level reduces to an appropriate level, we will resume the dividend.

Operator

At this time, you have no more questions, and I would like to turn the conference over to Mr. Sam for closing remarks.

Sam Tsang

Thank you for joining us today. Please don't hesitate to contact us if you have any further questions. Thank you.

Operator

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.

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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.

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