Black Box Corporation F1Q11 (Qtr End 7/3/10) Earnings Call Transcript

Aug. 3.10 | About: Black Box (BBOX)

Black Box Corporation (NASDAQ:BBOX)

F1Q11 (Qtr End 7/3/10) Earnings Call

August 3, 2010 5:10 pm ET

Executives

Gary Doyle - Director of Investor Relations

Terry Blakemore - President and Chief Executive Officer

Michael McAndrew - Vice President and Chief Financial Officer

Analysts

Jeff Beach - Stifel Nicolaus

Greg Burns - Sidoti and Company

Scott Blumenthal - Emerald Advisors

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the First Quarter Fiscal 2011 Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. The instructions will be given at that time. (Operator instructions). As a reminder the conference call is being recorded. I'll now turn the meeting over to our host, Mr. Gary Doyle, Director of Investor Relations. Please go ahead.

Gary Doyle

Thank you. Good evening and welcome to Black Box Corporation's first quarter of fiscal 2011 earnings conference call. My name is Gary Doyle and I'm the Director of Investor Relations for Black Box. With us today are Terry Blakemore, President and CEO of Black Box Corporation; and Mike McAndrew, our Executive Vice President and Chief Financial Officer.

Earlier today, we announced our first quarter fiscal 2011 results by issuing a press release and furnishing it to the Securities and Exchange Commission on Form 8-K. We also posted this press release on our website at blackbox.com.

We will start today's call with an overview of our results from Terry Blakemore followed by a more detailed discussion from Mike and Terry. Following this we will field questions as time allows.

Before we begin, and as a reminder, matters discussed in this call may contain forward-looking statements that involve risks and uncertainties concerning Black Box's expected financial performance. Actual results may differ materially from expected results, and reported results should not be considered as an indication of future performance. Potential factors that could affect our business and financial results include changes in economic conditions in our end markets and the general market at large. Additional factors are included in our most recent Form 10-K and today's press release.

On this call, and as presented in today's press release, we will discuss some financial information that includes non-GAAP financial measures, including operating net income, operating earnings per share, free cash flow, EBITDA, adjusted EBITDA and organic or same-store revenue comparisons. We will limit any non-GAAP financial discussions today to the specific measures in our press release.

As I said earlier, our press release was filed with the SEC and posted to our website prior to this call. Please refer to the schedules that accompany the press release for a reconciliation of non-GAAP financial measurements to the most directly comparable GAAP financial measurement and other supplemental information.

Coming up on the IR calendar, we will present at the Morgan Kegan Technology and Services Conference in New York City on August 11 and the Credit Suisse Defense and Aerospace Boston conference on August 12th.

Now, I'd like to turn the call over to Mr. Terry Blakemore.

Terry Blakemore

Thanks, Gary. I am pleased to report strong results for the first quarter of our fiscal 2011 including our 9% year-over-year organic revenue growth. The Black Box commitment to provide our clients with world class technical solutions has position us to benefit as those client continue to increase their investment in their communications infrastructure.

Revenues for the first quarter were $264 million, which is a 12% increase over last year's $335 million and 9% increase over last quarter's $241 million. This is our highest quarterly revenue since the third quarter of our fiscal year 2007. Our first quarter operating earnings per share were $0.84, up $0.13 from last year's $0.71, and up $0.06 from last quarter's $0.78. First quarter free cash flow was $0.2 million compared to $16 million last year.

I'll turn it over to Mike now for a more detailed discussion of our financial results.

Michael McAndrew

Thanks Terry. As Terry just mentioned, we posted quarterly revenues of $264 million, an increase $29 million over the $235 million reported for the same period last year. I'd like to note that our fiscal first fiscal quarter this year contained four more business days than our first fiscal quarter last year. Including $8 million of incremental revenue contribution in the first quarter related to acquisitions over the last two years and a $0.2 million positive impact from foreign currency, same-office revenues for the first quarter were up $20 million or representing 9% representing 9% organic growth over the same quarter last year. Normalizing for the number of business days in the fiscal quarter, organic growth was 3% year-over-year.

On a sequential basis revenue was up $23 million from $241 million in the fourth quarter of fiscal '10 and excluding a $2 million negative impact from foreign currency same-office revenues were up 10% sequentially. We view the results in the current quarter reflect a macro improvement in our end markets, specifically an increase in capital investment in IT infrastructure.

Looking more deeply on our revenue by the two segments that we report the highlights are as follows. Initially from the service type segment perspective, our first quarter revenues were comprised of 62% of Voice Services, 20% of Data Services and 18% of Hotline products. Secondly, from a geographic segment perspective, our first quarter revenues were made up of 87% from North America, 10% from Europe and 3% from what we call, all other, which is primarily the Pac Rim and Latin America.

Our gross margin for the quarter was 34.0% down from last quarter's 34.8%. Our gross margin continues to run lower than historical rates and we do attribute to this decrease primarily to the continued pressure from competitive pricing factors.

In addition, in the first quarter, we had a large data project and the large Hotline order each of which carried lower gross margins. In the aggregate, these two items had 0.3% negative impact on total company gross margins. Also, a primary component of our revenue growth in the first quarter was an increase in the amount of project in our Voice Services segment. Project work typically runs at a lower margin than the macro maintenance work that we perform. It is also a leading indicator of potential down street maintenance revenue. The effect of this change in revenue mix was 0.5 decrease in total company gross margins.

Before we discuss EPS, I'd like to remind you that we have and we'll continue to discuss some financial information that includes non-GAAP financial measures. Please refer to today's press release for a reconciliation of any GAAP to non-GAAP financial measures.

Our first quarter operating earnings per share was $0.84, up $0.13 from last year's $0.71, and up $0.06 from last quarter's $0.78. The total reconciling items excluded from our operating earnings per share represented $0.09 per share for the first quarter of fiscal '11 compared to $0.27 per share for the same period last year. GAAP diluted earnings per share for the first quarter was $0.75, a $0.31 increase from last year's $0.44 and a $0.32 increase from last quarter's $0.43.

GAAP cash provided by operating activities for the quarter was $1 million, down from $16 million for the same period last year. On a sequential comparison basis fourth quarter cash provided by operating activities was $20 million.

First quarter free cash flow was $0.2 million compared to $16 million last year and sequentially free cash flow was $18 million in the fourth quarter of fiscal '10. The decrease in cash provided by operating activities was primarily driven by the consumption of working capital related to our 9% increase in sequential revenues. This resulted in an increase in our accounts receivable and caused an excess of billings on uncompleted contracts partially offset by billings in excessive line.

This increase in cost in excess billings reflect additional large contracts and primarily with the federal government where contract billing terms do not necessarily coincide with our percentage of completion revenue recognition. It should be noted that the increase in this account represents revenue growth in those sectors and did not impact our DSOs, which I will discuss shortly.

EBITDA for the first quarter was $28 million compared to $21 million for the same period last year. On a sequential quarter comparison basis, fourth quarter EBITDA was $21 million.

Adjusted EBITDA for the first quarter was $31 million compared to $22 million in the first quarter of last year, and looking at that sequentially fourth quarter adjusted EBITDA was $23 million.

Turning to some of our other key metrics, at the end of the first quarter, we had cash and cash equivalents of $17 million and total debt of $211 million for a net debt position of a $194 million. This was a $3 million increase from a net debt position of $191 million at the end of the fourth quarter. Currently, our incremental borrowing rate stands at 1.3%. Total availability under our line of credit is $350 million and at June 30 the unused portion of the line was approximately $140 million. Our credit facility expires in January of 2013.

Company-wide DSOs were 47 days. This is a four-day improvement from the fourth quarter DSOs of 51 days. Having reached our established FY '11 goal of 50 days, we focus on maintaining this metric at approximately 50 days for the balance of the year. Internally, we also track our aggregate DSOs inclusive of cost in excess of billings and billings in excess of cost.

As our federal business grows and these items and these items will come up to a larger piece of our working capital we'll began to discuss aggregate DSO number on a quarterly call. Aggregate DSOs for the first quarter were 77 days, a 3-day improvement from the fourth quarter aggregate DSOs of 80 days and a 3-day decrement from our aggregate DSOs of 74 days from the prior year.

Accounts receivable reserve was $8.6 million or 5.5% of the gross AR balance. This compares to the fourth quarter's AR reserve of $9.5 million or 6.3% of the gross AR balance. The decrease in reserve was primarily driven the rate of previously reserve account.

Moving on to inventory, our net inventory was $53.4 million with inventory turns of 9.5 times or 38 days. This compares to fourth quarter net inventory of 51.5 million or 8.8 turns. Having reached our established fiscal '11 goal of 9 turns again we'll focus on maintaining this metric at approximately 9 turns throughout the year.

As a note, our DSO an inventory turns are at the best levels in nearly 10 years. Inventory reserves were $19.7 million or 27.0% gross inventory. This compares to the fourth quarter inventory reserves of $20.0 million or 28.0% of gross inventory.

For the first quarter new capital expenditures were approximately $1 million. Interest expense for the first quarter was $2.3 million or 0.8% of revenues. This amount excludes a negative non-cash impact of approximately $530,000 attributable to the interest rate swaps discussed in today's press release. This compares to fourth quarter interest expense of $2.2 million or 0.9% of revenues excluding the positive non-cash impact of approximately $100,000 attributable to the interest rate swaps.

Our six month order backlog now stands at a Black Box record $229 million compared to $203 million at the end of the fourth quarter. As a reminder, backlog represents expected revenue related to executed client purchase orders or contracts that we estimate to be complete within 180 days or quarter-end.

Turning to maintenance revenue, which is derived primarily from long-term agreements with our voice clients, it stands at $55 million or 21% of our revenues for the first quarter. Revenue under these agreements is recognized ratably over the term of the agreement, which is typically one or three years for our commercial clients and three or five years for our government clients. I'd also like to point out that this recurring maintenance revenue amount is a subset of the backlog number that we disclosed.

Our team member staffing as approximately 4,400 and although our team moves between data, voice and hotline somewhat, for perspective, our Black Box team breaks down approximately as follows: 2,600 are mostly voice, 1,200 are mostly data and 600 are mostly hotline.

As of the end of the first quarter the basic weighted average common and common equivalent shares stood at 17.564 million, and during the three month period ended June 30, 2010 16,488 shares of common stock were allocated to treasury shares at a cost of approximately $500,000. This transaction related to the share withholding necessary to satisfy income taxes due as a result of vesting of certain team member restricted stock units in May of 2010.

Now, I'd like to provide guidance for the upcoming quarter and an update for fiscal 2011. For the second quarter of fiscal 11, we are targeting reported revenues between $235 million and $260 million, our operating EPS range is $0.76 and $0.81. This operating EPS range includes expected pre-tax amortization of stock-based compensation expense of approximately 2.5 million. Our expected income tax rate remains of 38.0% and we expect capital expenditures of approximately $1 million within the quarter.

Turning to the full year fiscal 2011, we're targeting reported revenues of $1.025 billion to $1.040 billion. This represents approximately 2% overall previously issued guidance for the full fiscal year and represents approximately 6% organic growth over fiscal 2010.

Our operating EPS range for the year $3.10 to $3.25. The operating EPS range includes expected pre-tax amortization of stock-based comp expense of approximately $11.0 million. Again, our expected tax rate for the year is 38.0% and for the full year we expect capital expenditures between $4 million and $6 million. Our expected weighted average shares outstanding is approximately $18 million.

As a reminder, this guidance excludes acquisition related expense and the impact of changes in the fair market value of the company's interest rate swaps and is before any new mergers and acquisition activity that has not been announced.

I'd like to now turn the call back to Terry.

Terry Blakemore

Okay, thanks Mike. Last quarter, we reported that we observed an increase in bid activity and a slight uptick in awards from our clients. This trend continued throughout our fiscal quarter and we are seeing an increase in business activity across multiple sectors.

Our Voice business revenue grew organically 10% year-over-year, Hotline grew 9% and our Data business grew 5%. Geographically, North America revenue grew organically at 9% year-over-year and international grew 8%. Our federal government sector continued the quarterly strong performance that we discussed throughout fiscal year 2010. In addition, we have experienced an increase in activity from some of our retail and business service clients. I believe that we are seeing additional pockets of strength emerge across our client base.

We are cautiously optimistic that as the economy continues to slowly recover we will see other sectors participate in the growth. As Mike noted earlier, the increase in revenue has also brought challenges to our gross margin and working capital metrics. We believe the impact on these metrics is part of the business recovery cycle. Our management team will continue to focus on revenue growth while maintaining our emphasis on profitability and positive cash flow.

Looking forward, we are pleased with our increase in backlog and our ability to raise financial guidance for the remainder of fiscal year 2011. My confidence comes primarily from the outstanding work of our teams and the strong relationships that we have with our clients and our business partners. Recently, we were recognized as a Honda 2010 Top Supplier of the Year, a Top 100 IT Integrator by CRN Magazine and a challenger in the Gartner Magic Quadrant for Communications Outsourcing and Professional Services in North America.

Coming up at the end of this month we will ship our Big Book catalog, our award winning catalog will have over 700 pages of network and communication products with detail specifications and technical case studies. This edition will include over 10,000 products including over 200 brand new products. This year, we will also feature our E-catalog in response to our customers demand.

In summary, I am very proud of our accomplishments for this quarter. As business momentum continues to build I am confident that the team in Black Box will continue to provide our clients an outstanding service and with our broad portfolio of world class technical solutions. We look forward to serving them as they continue to increase their investments in their communications infrastructure.

We now open the call for any questions.

Question-and-Answer Session

Operator

(Operator Instructions). We have a question from the line of Jeff Beach with Stifel Nicolaus. Please go ahead.

Jeff Beach - Stifel Nicolaus

You had a pretty sizable increase in your backlog in spite of fairly significant increase in quarterly revenues, that's really active order rates coming in. Are there some large project orders involved here? Is it heavily weighted towards federal government and private sector? Can you provide some colors on the order flow of the quarter?

Michael McAndrew

Yeah, I'll talk to the backlog and then Terry can touch on some of the activities going on in the bidding space. Our backlog is up, I would say that the big driver in that increase is really some state and local government business, some larger projects that we were engaged to do that we expect to work through over the next couple of quarters. I'd say the federal backlog is up modestly, about $5 million of that increase is related to federal government and the balance is really state and local.

We're starting to see early signs of activity in that particular segment of the government space. These deals are not related to stimulus funds, but we are seeing that occur in other states that aren't in the backlog. So, Terry touched on this broadening of activity beyond the ones we have highlighted here, retail and government, some of our business service clients. So we're hopeful that this continues through some of the other verticals and has a broader impact. It's really state and local that's driving that backlog increase, Jeff.

Jeff Beach - Stifel Nicolaus

The same thing, in the backlog increase, can you look at the three segments voice, data, hotline and talk about where the increases are there in your business?

Michael McAndrew

Yeah, sure thing. It's all in voice, and most of our backlog is tied to the voice revenue stream. Hotline, very little backlog in hotline. Typically, as we ship most of our products, 95% plus on the date of the order, in this case, we did see a $1 million increase in the hotline side. We touched on a large order that impacted hotline in our first quarter, basically a $4.5 million order with $3 million in the first quarter; another million and a half come in the second quarter. That's generally a very small piece of our backlog. Most of our federal work and state and local government work is in the voice sector. So, I think data was relatively flat, so it's really driven on the voice side.

Terry Blakemore

Jeff, this is Terry. We did have a couple of state awards that was tied to stimulus funds that was more data represented than voice, but that was exception. As Mike mentioned the federal government business continues to be strong. The medical or healthcare vertical continues to be strong and we have seen some ticked up in retail quote activity or request for revising quotes that's been in the pipeline for many months now. So, it's really across all areas of the business.

Jeff Beach - Stifel Nicolaus

The last question for now is how much of these strong orders you attribute to Avaya?

Terry Blakemore

On the voice side, we contribute quite a bit. A large content of that is Avaya. Again, our sales activity from new systems to upgrades has ticked up related to our Avaya portfolio and all the various products that we provide under the Avaya brand.

Operator

We have a question from the line of Greg Burns with Sidoti and Company. Please go ahead.

Greg Burns - Sidoti and Company

Just want to follow up on that Avaya questionnaires. Just add a little more color in regards, are you now doing projects with installing Avaya equipment? Is that in the pipeline or are you currently installing business there? Can you just give a little more color on what's going on with Avaya?

Terry Blakemore

Sure, Greg. We have been through, as we reported several quarters ago, that we were in the startup process, if you will, getting all of our sales training employees and our technical certificates updated and revised. We've had got boot camps scattered all across the U.S. getting our teams up to speed on Avaya, in addition to building up our NOC center in Nashville.

Most of the activity under Avaya, as far as new system orders, has been the traditional Nortel related systems. However, having said that, we do have a strong pipeline of Avaya equipment, but of course it's under the Avaya logo today, so we refer to it now as Avaya. To answer your question, it's been a lot of activity there as far as refreshing old quotes and we've actually sold a number of large new platforms for Avaya and we've renewed quite a bit of our maintenance contracts that have been pending out there for several quarters now.

Greg Burns - Sidoti and Company

Okay, just so I understand, it's been more of the Nortel base kind of coming around now that there is a kind of roadmap out there as opposed to Avaya products?

Terry Blakemore

Correct. With the Avaya roadmap that Avaya put out, the customers are certainly getting comfortable with that now and supporting that and certainly asking for quote activity whether it's existing systems or brand new platforms. So, while most of it is the blue, the Nortel equipment, we are seeing some Avaya red, as we call it, order activity as well, but not to the scale as what the current base of equipment that we support.

Having said that, Greg, I will tell you that we are really getting in a strong position with Avaya. I think we are in the top three, as far as our training credentials not only in sales training but in technical training. We are in the top three resellers across the country to get our people up to speed on that. So, we're certainly hoping when the business recovers out there we're going to be in a really good position to escalate our sales. We won't have any training requirements needed at that point. We will be able to hit the ground running, so to speak.

Greg Burns - Sidoti and Company

Okay. Looks like the state and local government is obviously contributing to the backlog here, but not a lot of headlines out there, budgetary issues in that vertical. Do you see that kind of becoming an issue going forward or is your equipment kind of mission critical and not going to be sidelined?

Michael McAndrew

Yeah, I think it's a case by case. We probably wouldn't have highlighted state and local, except that it is a big driver in the backlog movement. At the end of the day, state and local is probably 3%, 2%, 4% of our business with federal being the dominant piece of our government business. So that budgetary scenario has been out there for a year or more, and Terry touched on a couple of stimulus related activities and we have a couple of states in particular up in the Northeast that have some mission critical requirements that we're executing on. So, I'm not sure that the cloud have disappeared over the budgetary challenges facing those entities, but we're there maintaining the system today and obviously there when they have solution that we need to put into place.

Greg Burns - Sidoti and Company

Okay. Lastly on gross margins, just looking out in this quarter there was a few one-time items kind of driving (inaudible). As we look at, what should we be modeling in here a little rebound or?

Michael McAndrew

Yeah, I would say that, well let's just take one at a time. Let's go to the hotline, the real impact there is related to the $3 million order that we had in hotline and came in at 20% gross profit. It came through at a nice operating margin more than 10%, but it diluted the GP. We have a million and a half left of that. So, I think if you take the half way point between last quarter and this quarter that's kind of what we are shooting for in hotline in our second quarter.

The data side, we had a project in there with one of our large clients. It's a lower margin product. So, there is still little bit work to do on that one. So, again, I take the midpoint between last quarter and this quarter on data.

On the voice side a modest improvement. We had a lot more growth than we had expected this quarter and hadn't factored that in because really all that growth. If you look at our maintenance revenue as an example, it's essentially the same quarter to quarter, these are long term contracts. So, the growth is really driven by project activity which is at a lower margin. So, maybe a 200 basis points on the voice side. So, modest GP improvement going into 2Q and then we'll keep an eye on mix moving forward from there.

Operator

(Operator Instructions). We have a question from the line of Scott Blumenthal with Emerald Advisors. Please go ahead.

Scott Blumenthal - Emerald Advisors

Mike, can you give us some idea as to the portion of the voice services backlog that's represented by Avaya and some of your other, I guess, what we would call then, legacy providers?

Michael McAndrew

Yeah, I'm not sure if I have the specifics there handy. I kind of know the revenue mix there. Nortel plus Avaya blue and red, what we call Avaya today, is a dominant piece of our voice business. We didn't expect it to be about a third of our backlog related to that. Then from there it comes on down to and it's focused on voice right now because we have infrastructure products that are cable related. Related to the voice and communication technology partners, the next group down put things on the same group NEC, Siemens and Cisco, probably about 5% to 10% each of backlog there, and then it kind of spreads out from there. So, I think that's a relatively close estimate.

Scott Blumenthal - Emerald Advisors

Okay. So you said about one third Nortel, I didn't catch the Avaya portion and then NEC, Siemens, Cisco 5% to 10% each.

Michael McAndrew

Yeah, when I gave that third it's really a Avaya Nortel combo pack. But, if you're looking at it from our historical Nortel based clients versus Avaya centered clients 95% plus is our traditional Nortel client base out of that third.

Scott Blumenthal - Emerald Advisors

Okay. I guess Jeff mentioned that even with a strong revenue performance here, you've got record backlogs. Can you talk about maybe some of the margin composition of this nice backlog that you have? Do you expect that to be a little bit better than we've seen in the past or have you had to give up a little bit of price still to the economy?

Terry Blakemore

Yeah, I think the gross profit levels from the last couple of quarters I talked about a couple of items here and what we expect to see in 2Q is reflective of the pricing we have out there that we're winning work at. So, again, I think from our traditional target margins for our services, we are sitting at the lower end of all those. So, without a couple of these last bits of larger projects that are going to roll through in the second quarter, we're going to have outlined at around 48, which is the lower end of our 48 to 50 range, we'll have data at 27 to 28, which is at the low end of our 27% to 29% target. Then voice is going to move around in that 33% to 34% range again depending on how much project work comes through as it relates to what's really is driving the growth in that business. We're probably going to be sticking around the gross margins that we saw in fiscal 2010 year for another quarter or two.

Scott Blumenthal - Emerald Advisors

Does any of that have to do with mix? Was that higher or made up possibly a higher portion of state in the local business, government business as compared to may be some of your business customers?

Michael McAndrew

Yeah. Well, I think we've actually had a pretty good mix of federal, which is definitely a lower margin. If we get mid to high 20s in our federal government's clients work that's kind of where we are. I'd say state and local is a little bit higher than that, may be not all the way up to the mid 30s that we see in our commercial base, but it's not quite as thin as we see on the federal side.

Scott Blumenthal - Emerald Advisors

Okay. I guess one last one on the backlog, if I might, Mike, how much do you expect that to deliver in fiscal '11?

Michael McAndrew

Yeah. Well, all of that will be in fiscal ‘11. We actually only go out two quarters. Our backlog in totality is much larger, but I think out of that 229, we have about 60% that we expect to realize in 2Q, the remaining 40% of that 229 recognized in our third quarter. So like a 60:40 split between the next two quarters.

Operator

We have a follow-up question from the line of Jeff Beach with Stifel Nicolaus. Please go ahead.

Jeff Beach - Stifel Nicolaus

Yes. On the private sector, looking back at the history, do you generally see a coincident pick up in demand for your business when you see non-residential construction begin to pick up or does your demand like that when it maybe later in to the cycle when CapEx begins to pick up?

Michael McAndrew

Yeah. That's a good question, Jeff. We definitely see a lag there. I mean we really tied more to occupancy than construction. Ultimately, occupancy is office workers, white collar workers, which there is a correlation whether its expansion or continued investment in infrastructure but there is a bit of a lag there.

Operator

I'll now turn the meeting back to Terry Blakemore for any closing remarks.

Terry Blakemore

Okay. We thank you for your time today. As a remainder, our press release has been filed on Form 8-K and on blackbox.com. As Gary mentioned earlier, we will attend the Morgan Keegan Technology Conference in New York City on August 11th and the Credit Suisse Defense & Aerospace Boston Conference on August 12th. You can see our press release describing these events in more detail. Again, we thank all of you for joining us. This concludes today's conference call.

Operator

Thank you. Ladies and gentlemen, the conference call will be made available for replay that begins today at 7:00 PM Eastern Time. The replay will run for two weeks until the date of August the 17th at midnight Eastern. You may access the AT&T teleconference replay system by dialing 320-365-3844. The replay access code is 164187. Again that number is 320-365-3844 and the replay access code is 164187. That will conclude our conference call for today. We thank you for your participation and for using AT&T's Executive Teleconference Service. You may now disconnect.

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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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