Ballantyne Strong, Inc. Q2 2010 Earnings Call Transcript

Aug. 9.10 | About: Ballantyne Strong, (BTN)

Ballantyne Strong, Inc. (NYSEMKT:BTN)

Q2 2010 Earnings Call Transcript

August 9, 2010 10:00 am ET

Executives

Robert Rinderman – Jaffoni & Collins, IR

John Wilmers – President and CEO

Kevin Herrmann – Secretary, Treasurer and CFO

Analysts

Eric Wold – Merriman

Bob Evans – Craig-Hallum Capital

Marla Backer – Hudson Square

Thomas Duffy [ph]

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Ballantyne Strong 2010 second quarter results call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question and answer session. (Operator instructions) As a reminder, this conference is being recorded Monday, August 9, 2010.

I would now like to turn the call over to Robert Rinderman of Jaffoni & Collins, Ballantyne Strong Investor Relations. Please go ahead, sir.

Robert Rinderman

Thank you, Lindsey. Good morning, everyone. Welcome to our 2010 second quarter results call. This call will contain forward-looking statements relating to the future financial results of Ballantyne Strong. Listeners are cautioned that such statements are based upon current expectations and assumptions and involve certain risks and uncertainties within the meaning of the US Private Securities Litigation Reform Act of 1995. Listeners should note that these statements are only predictions.

They are subject to inherent risks and uncertainties and may be impacted by several factors, including but not limited to customer demand for the Company's products, development of new technology for alternative means of motion picture presentation, domestic and international economic conditions, the achievement of lower costs and expenses, credit concerns in the theater exhibition industry and other risks detailed from time-to-time in the Company's Securities & Exchange Commission filings.

The Company's actual performance and results could differ materially because of these factors which are discussed in the management's discussion and analysis of results of operations and financial conditions section of the Company's SEC filings, copies of which can be obtained from the SEC Web site www.sec.gov or Ballantyne Strong's Web site www.ballantyne-strong.com.

All information in this conference call is as of today and the Company undertakes no obligation to update these statements or to update expectations from prior conversations. I also would remind listeners that this call is being webcast live over the Internet that a replay of the call will be available on Ballantyne's corporate Web site for 30 days after the call ends.

With that I'd like to turn it over to our President and Chief Executive Officer, John Wilmers. John, please go ahead.

John Wilmers

Thank you, Rob, and thanks to all of you for joining today's call and webcast. With me this morning is Kevin Herrmann, our CFO. I will review Ballantyne’s Q2 progress, discuss our outlook for the balance of the year and then Kevin will provide a more comprehensive preview or review of our operating results and financial position. We will then open the call to your questions.

We are very pleased to report that Ballantyne achieved all-time record net revenues in Q2, led by strong digital equipment sales as well as solid results our MDI screen manufacturing business which is operating at full capacity and a significant pick up with the STS cinema services subsidiary as the global digital cinema rollout picked up additional momentum during the period.

The large number of 3-D title set for the second half of 2010 and then coming years theatre exhibitors are aggressively focused on digitizing their screens to take full advantage of consumer demand. They are also installing large-format screens and state-of-the-art auditoriums, offering consumers a variety of ways in which to enjoy a movie or some form of alternative content, ranging from Opera to the World Cup which was successfully shown in 3-D earlier this summer at many theatres.

Although still in the early stages we believe alternative content will play an increasingly important role for exhibitors as they look to increase their capacity utilization, especially during less busy non-weekend periods.

Most domestic independent and moderate size theatre circuits that we deal with are continuing to self-finance their digital roll-outs, as expansionary growth capital remains hard to find in this economic environment.

The key remains their ability to secure virtual print fees from the major studios which the DCIP Consortium and Cinedigm have been able to do.

MDI’s screen order backlog continue to roll as a result of 3-D silver screen demand, as well as an increasing number of large-format screen owners primarily from our long-time client, IMAX, as they continue their aggressive growth both domestically and abroad, especially in Asia.

As you know, Asia, particularly, China is a region where we are also achieving significant success with digital projector sales. The country has an aggressive effort underway to open new cinemas to catch up the much the world in terms of per capita screen count. We are also positioning ourselves to participate in their growth by shipping uncut cinema screens to our partner in the region.

In addition to silver and large-format screens, we are also developing a high-gain screen for non-3-D usage. We believe these will prove to be superior in brightness to standard gain screens and we have begun to market them to our exhibitor customers.

Our value proposition is that they are a good investment that can save the exhibitor over the long run by reducing xenon bulb replacement extensive, specifically, allowing exhibitors to use less expensive lower voltage lamps in the auditoriums.

To capitalize on continuing strong global screen demand, we initiated a $6 million expansion program at MDI. The program includes the purchase of our Quebec-based building, the acquisition of an adjacent parcel of land and the addition of 26,000 square feet of production space. This initiative should be completed by year-end raising capacity by Q1 of '011.

The third bright spot this quarter was our STS Cinema Services division. In mid-April we began a long way to digital projector integration and installation work for Regal Cinemas, the nation’s largest exhibitor and long and value Ballantyne client.

For the first time since launching this service group our technicians are very busy and we are starting to see the utilization in margin that are possible in the business. We are very pleased with how the Regal work is progressing and we expect our teams to further improve their efficiency yet they get a few more quarters under their belts.

Given these operating improvements and reflecting substantial benefit from our Digital Link joint venture with RealD that Kevin will review in more detail, Ballantyne’s net earnings rose almost three full during the quarter.

Worldwide digital cinema transformation is solidly upon us and looking at yet we see lots of indications from customers that they want to keep pace with the industry in converting to digital.

Adding 3-D capability remains a primary driver for conversions and in just the last few months we have seen several of the top circuit expand their near-term goals for 3-D digital installations.

The 3-D slate continues to grow and now includes 17 3-D titles in the second half of this year more than the 13 release during all of 2009 and 30-plus titles are already scheduled for 2011. The expanding slate creates demand for 3-D digital projection systems in two respects.

First and foremost there is a desire to show 3-D which is commanding a $3 or more per ticket premium on average versus 2-D showings. And as the slate expands exhibitors want to be able to show multiple 3-D titles concurrently.

Having only one or even two 3-D screens in a complex is no longer going to be sufficient during peak release periods. Recently, 3-D movies have been competing for screens and the less fortunate films have been pumped to lower revenue generating 2-D auditoriums reducing the bottom-line.

As I mentioned earlier, our skilled STS technicians are presently working diligently on Regal Cinemas’ projector installations as they ramp up their capacity for both digital and 3-D.

We are also facilitating in this process but are performing critical integration work before the equipment leaves our Omaha facility. Much of that activity shows up in our theatre product segment not in the services segment results.

Our STS subsidiary continues to be one of the top performing digital cinema service organizations in the industry and as I mentioned last quarter I hope to soon be seeing that STS is number one. A key advantage is that our team is hardware agnostic a depth that working with NEC machines of course but also with every other manufacturers projectors.

They can handle any and all jobs in a theatre projection booth including server, sound. This is a key selling point. Our current team consists of 55 plus technicians with the target of as many as 70 as our installation and maintenance business continues to grow. We also have access to a number of talented equipment subcontractors should we need them.

The Regal installation integration work should take a few more years to complete giving us good visibility for our group. Last quarter I mentioned that we expected approximately 900 to 1,000 installs for Regal this year.

During the second quarter we completed approximately 460 installs over about a 2.5 month period. And we now believe we can complete a total of 1100 to 1200 system installs for Regal alone going forward in this year.

In addition to the Regal work, we are also installing many of the NEC projectors we have sold around the world and also have been doing install and service work for Barco.

We remain comfortable with margins for our service group to be in the mid-20s although we do not yet have a long history to go by. The important thing is that after a few years of getting this group trained and ready is now turning an operating profit for us and we certainly expect that trend to continue.

We remain very focused on growing our successful Asian business, particularly in China. China is moving quickly to expand their cinema penetration and have indicated desire to rapidly grow from 6,000 screens to 7,000 screens today to 12,000 screens to 15,000 screens in three years to five years, presenting one of the most dynamic growth opportunities in the history of our industry. Ballantyne’s new Shanghai office is now open and we are also planning our office in Taiwan, to be opened by the end of the year.

Domestically, we are focusing on sales opportunities with independent operators both large and small. Examples, our recent sales to Marcus and National Amusement via our Digital Link joint venture which was successful and ceding the market for digital projectors early on. We are also seeing strong cinema demand in the Caribbean and Latin America.

Keep in mind that when we talk about our projectors say that I’ll often include the screen and an installation in addition to other related products that we sell such as servers, lenses, sound systems and xenon lamps.

After spending decades in the analog cinema world as a leader in 35mm projector manufacturing, we have successfully positioned ourselves as the complete supplier of digital cinema projects and services to our customers around the world both old and new.

On the 4K front, our partner NEC is expecting to debut their new 4K DLP projector in time for ShowEast this fall which with delivery expected in the early 2011. The 4K platform will allow us to combat the prior marketing issues that have worked in favor of the competing LCoS Technology sold by Sony.

However, we firmly believe that the 4K DLP solution is the best-of-breed, DLP as a superb track record in a very large installed base that has been proving its reliability in recent years.

Before I turn it over to Kevin, I would also like to touch on our desire to once again explore M&A opportunities. We continue to view acquisitions as the best use of our $24 million in cash and we believe keeping ourselves liquidated enables us to be opportunistic at a time when capital is somewhat scarce.

It also enables us to meet future working capital demands from the growth of our digital projector business. Some investors have asked about our excess cash position and possible plans to return it to shareholders via share buybacks or dividend.

Our Board takes a long-term view of creating shareholder value and we are therefore not in a hurry to deploy our cash, particularly, as we have made two excellent acquisitions by being patient and waiting for the best opportunity.

The MDI Screen and STS Cinema service businesses have both substantially benefited our industry’s leadership position. Having said that we will continue to look at anything related to the exhibition industry that might make sense.

Components like servers, lenses, lamps and sound for example, could all complement Ballantyne’s present portfolio. Further expanding our cinema service group might also be an attractive alternative. We have a few things in our sides but because our criteria are stringent and we continue to extensive due diligence, it’s difficult to predict the timing for potential outcome.

Kevin will now walk you through our Q2 financials.

Kevin Herrmann

Thank you, John. Good morning, everyone. Ballantyne’s second quarter net revenues increased 67% to an all-time quarterly record of $32.7 million, primarily due to a 97% rise in digital cinema equipment sale to $19.7 million in the period.

International sales amounted to 13.1 million or approximately 40% of our total revenues during the quarter compared to 9.5 million or 48.5% in the second quarter of 2009. China and South America represented the two largest components of our non-US net revenue increase during the quarter.

During the second quarter we sold a total of 346 digital projectors compared to 190 digital projectors in the second quarter of 2009. Approximately, half of the projectors went to U.S. exhibitors and additional 85 are sold to Asia, primarily China during the quarter, which John highlighted as a significant growth opportunity for Ballantyne. In the first half of 2010, we sold a total of 610 digital projectors, up significantly from 282 digital projectors a year ago.

Our MDI screen subsidiary turned in another excellent quarter with net revenues rising 45% to 4.5 million with continued strong margins and profits, largely due to continuing demand for silver screens that are utilized for digital 3-D projection.

Our STS service’ group nearly doubled net revenues to 2.1 million and generated an operating profit for the quarter for the first time since fiscal 2006 as they began the digital projection system installations for its largest current customer mid-April and also experienced a pickup of business with other digital customers.

Gross profit amounted to $6 million or 18.2% of second quarter net revenues. This compares to a year-ago gross profit margin of 21.7%. As we’ve stated previously, the gross profit margin decline is largely than expected due to a product mix shift with digital projector sales now representing a larger percentage of overall net revenues and these high ASP items generate a lower gross margin, profit margin than other products and services we provide.

SG&A expenditures increased 12.6% to approximately 3 million during the quarter but they represented only 9.1% of net revenues down significantly from 13.5% in the second quarter of 2009. Going forward, we expect to maintain a low SG&A growth rate excluding seasonal factors enabling us to achieve key operating leverage as gross profit improvements enhance our bottom-line.

As we mentioned in this morning’s news announcement our results for the second quarter included approximately 1.3 million of equity income and gain or $0.06 per share after-tax related to our equity ownership in our Digital Link II joint venture with RealD.

This income is primarily related to digital projector sale sold by the JV to exhibitors that were previously held within the joint venture and compares to a $200,000 net loss in the year-ago period.

As a reminder, this joint venture was originally formed approximately three years ago to assist some of our exhibitor customers in funding their early digital cinema deployment. We maintain a 44.4% ownership and our partner RealD controls the remainder.

Now that the joint venture has generated cash flow, the JV will pay down its existing debt which approximated 4.1 million at June 30th. After this debt has paid down and also after all the remaining equipment deployed into the joint venture is purchased by the exhibitors over the next 24 months, we expect to receive approximately 3.2 million of cash return to Ballantyne and record over 1 million an additional gains from these exhibitor purchases over this period.

Given the equipment purchases in the second quarter and without considering further exhibitor purchases we would expect our net loss related to the JV which is principally related to depreciation of the equipment to approximate $230,000 per quarter going forward.

Reflecting our strong second quarter digital cinema performance including the aforementioned results that our screen and service subsidiary coupled with the Digital Link II impact, net earnings for the three months period rose to 2.8 million or $0.19 per diluted share compared to net earnings of 900,000 or $0.07 per diluted share in the second quarter last year. Weighted average diluted shares outstanding were 14.4 million compared to 14.1 million in the year ago quarter.

We ended the second quarter with 24.1 million in cash and cash equivalents, up from 23.6 million at our 2009 year-end, as we generated 3.3 million in cash from operating activities and spent 3.3 million in capital expenditures, including the $2.9 million purchase of our screen manufacturing facility in Canada, a facility we previously leased for approximately 300,000 per year.

With the strong balance sheet and our $20 million credit facility with Wells Fargo we remained well positioned to continue our solid recent growth and we have the financial flexibility to fund working capital needs and to also explore attractive acquisition opportunities that meet our disciplined criteria, as John mentioned.

That’s the end of our prepared remarks. Operator, please open up the line for questions.

Question-and-Answer Session

Operator

Thank you. (Operator instructions) Our first question comes from the line of Eric Wold from Merriman. Please go ahead.

Eric Wold – Merriman

Thank you, and good morning. I wanted to double check what you just said, Kevin, on the commentary around the Digital Link II, so you said the 230,000 estimated loss for quarter that’s assuming no additional gains from expense from the projectors?

Kevin Herrmann

That’s exactly right. That’s just the basically, the quarterly depreciation that we’re going to take into our income statement.

Eric Wold – Merriman

Okay. So over the next 24-month period is this is all so to speak the remaining potential gain is another million bucks?

Kevin Herrmann

Right. Now that actually grows, each month that goes by that we have additional depreciation, we expect to get that back as well. So for example, if we go another quarter and we have another $236,000 of expense, once they take out the projectors we get a $1.2 million back to us, so it’s kind of a growing gain that goes forward.

Eric Wold – Merriman

Okay. So over the next 24 months then it will be basically eight quarters albeit call roughly $2 million of additional depreciation plus a million gains you could be getting about $3 million there depend when it happens?

Kevin Herrmann

Yes.

John Wilmers

Yes, is the other rate.

Eric Wold – Merriman

Okay. Help me understand, on the screen business, I thought it was fairly close to your full utilization, you had a nice almost a million dollar uptick, Q1 to Q2 into revenues, is this kind of $4.5 million level, is this kind of the new level of full utilization and then how does that, that the number kind of assume a 40% increase in capacity next year?

Kevin Herrmann

Well, we’ve talked about that our capacity over a 12 month period is around $16 million. I think we are still sticking with that number. You got in the summer time, you’ve got a couple weeks of low here and there just with the plant being down for some maintenance, you got some other seasonality built in to that, so we’re still comfortable with $16 million for the entire year.

John Wilmers

But keep in mind with this expansion we’re looking at them of course increasing the capacity and then increasing the (inaudible). That’s the full reason behind it. But we are up against about $14 million to $16 million.

Eric Wold – Merriman

And then lastly on where you are on China I know you won the 200 projector award and another 60 beyond that what else you are bidding on now, what else you think could is potentially in the mix for 2010?

John Wilmers

Well, I hate to put out a different bunch of different tenders there, we don’t get all of the tenders then it’s difficult for us, a disappointment and it’s setting expectations. I am real comfortable that we’re going to hit that 500 machine mark for the year over there. And we have right now several tenders that are out there and they continue to come on, we have like new theatre companies that just appear out of nowhere that are looking for a tender for a certain amount of machine, so I’d rather not be specific about the tenders, there are a lot of them and I feel very comfortable with that 500 machine mark this year over in China.

Eric Wold – Merriman

And then just lastly the year-to-date shipments in China have been what?

Kevin Herrmann

Around 175 that we’ve reported.

John Wilmers

Keep in mind there’s always been a recognition problems in China so that 175 to-date could be a few more, could be a few less in the end, 500 is the number for the year.

Eric Wold – Merriman

Perfect. Thank you, guys.

Operator

Our next question comes from the line of Bob Evans with Craig-Hallum Capital. Please go ahead.

Bob Evans – Craig-Hallum Capital

Good morning and congratulations on a strong quarter. Speaking with the theme of number of units can you give us a sense kind of your updated view now for the year, China you’ve given us, but break out in terms of year-end total for digital projectors as well as the U.S. market?

John Wilmers

As we look forward for the next two quarters we’ve got to keep in mind our things like vacations and plans and periods of time when the exhibitors don’t want us in their theaters to do these installs and all that so we take that and all and stir it all up. As we look to the end of the year we are looking at the numbers to not necessarily mirror the second quarter by any stretch, because remember that was the largest in our history, but if you take an average during the first and second and somewhere near we don’t see anything that it indicates to us that those numbers will change or diminish.

The demand here at the end of the year because of 3-D and the number of titles that are out there we think it’s going to push it and the only thing that will mitigate the business would be as I said our screen company shuts down for a couple of weeks a year that sort of thing that the exhibitors don’t want us in the auditoriums during holiday seasons and things like that.

And remember there is a still little bit of seasonality in this business meaning the second quarter is typical of our quarters in the film business really. It’s generally been and then also the third quarter or actually the fourth quarter tail of the third quarter and the beginning of the fourth quarter as things ramp up for the Christmas season. So we see the pace continuing with some slight reductions because of some of the conditions out there.

Bob Evans – Craig-Hallum Capital

Okay, so as we think about Q3 relative to Q2 your say take into account some seasonality and shutdown of the Screen business for a couple of weeks?

John Wilmers

Yes, things like that because any number of things that can happen out there, but those things we know about, we know that we are losing a couple of weeks with production and sales time in the screen business, we are looking at some other things like that that come into as I said the installation rate, although the installations are wholly not been the numbers are going up to so they will mitigate the screen thing a bit but we’re at a point where capacity of the Screen business, STS is still in its almost learning phases how far we can go and how efficient we are going to become in terms of profitability there, but we look at things to continue at a pace like they are right now with a few of those factors coming into slow it down just a little bit.

Bob Evans – Craig-Hallum Capital

Okay, and what’s your view of how far this can persist in terms of what kind of legs this digital transition has and perhaps your growth trajectory in terms of peers certainly out there that you are going to see the spike up and then spike down but do you view this as a couple of years, three years, five years, can you give us a sense of where you see things going in terms of growth?

John Wilmers

Well I think we’ve always talked about three years to five years, I think three years is very clear in our minds, what’s going on for next three years, we see everything to continue at a brisk pace over the next three years, there is going to be that point but things will start trailing off and that’s one of our main concerns nowadays, because we have such good visibility of the next three years now with our service business, our screen business, everything is looking very good.

What we are doing and concentrating now is what happens in three years to four years from now when it does slower, that’s one of the emphasis we’re placing on our M&A initiative as we move forward in that areas to, I think I’ve said in the past make it a bigger, a bigger mouse trap here, more products own some of the products we sell and things like that to make up for as the digital rollout starts to slow, but remember there’s a lot of screens around the world and it’s just a matter, it’s a matter of availability of product, ability to install the product, those kinds of things so I think that we might see the rollout, maybe it’s not a three-year cycle where we start really getting concerned it, maybe I believe it will be more of four year and then it will start to diminish within.

Bob Evans – Craig-Hallum Capital

Okay, thank you.

Operator

Our next question comes from the line of Marla Backer with Hudson Square. Please go ahead

Marla Backer – Hudson Square

Thank you. So you’ve obviously done a really strong job in terms of the screen sales and equipment sales and STS, given your pace and your momentum have you had any conversations with NEC about potentially getting additional territories or is that something that still you have an interest and right now you have more than you can had along your plate with what you have?

John Wilmers

No, we are always looking for more, I was with them last week and we talked that was one of the topics. Primarily now today at this point in time we are talking more about our agreements, the conditions of it, pricing and all those kinds of things but there is always that desire on our part to expand further as far as where we cover with the NEC product.

Marla Backer – Hudson Square

So, stay tuned, there might be something.

John Wilmers

There is always a possibility, Marla, as you know, I am an optimistic guy and I always feel that there is an opportunity out there and I certainly keep bringing that to them when we meet.

Marla Backer – Hudson Square

Right, okay, and also we are hearing that generally there is a little bit of an equipment bottleneck because demand has increased so dramatically for digital and 3-D equipment is that consistent with what you are hearing and if so, do you think that will cause any hiccups in terms of timing for Ballantyne?

John Wilmers

Not at all for Ballantyne, we don’t have that problem, although I do understand that our competitors do, so quite frankly what it's doing is it's helping Ballantyne.

Marla Backer – Hudson Square

Okay, and then last question is just housekeeping on the Digital Link profit that you recognized during the quarter. I am just curious why RealD’s profit was so much higher than the one you realized, so are they accounting for differently than you’ve been accounting for…?

Kevin Herrmann

No, I mean obviously, a lot of these is coming right from the Digital Link to joint ventures financial statements which are consolidated into theirs. I think there is a couple of reasons probably is that, number one, they have a bigger ownership percent, so they are recognizing 56% of the gain plus I assume that they probably have other types of deals going on other than Digital Link too that they may be getting benefit from. But we’re using the same financial.

Marla Backer – Hudson Square

Okay, thank you.

John Wilmers

You’re welcome.

Operator

Our next question comes from the line of Thomas Duffy, a private investor. Please go ahead

Thomas Duffy [ph]

Thanks for taking the call and congratulations on the quarter; can you give us an update on the Regal installations, where you are at in the process like percent that may have been completed?

John Wilmers

I don’t have it exactly, we’ve done 460 right at the beginning of April, 2.5 months and I would say probably 90% of those are Regal, so if you had to look at it 350 or so are probably the Regal installs to-date.

Thomas Duffy [ph]

And what did you say previously that the Regal installs represented, is it like 800 for the year?

John Wilmers

We expect to do 1100 to 1200 Regals this year.

Thomas Duffy [ph]

Okay. The AMEX listing that you are on now, any thoughts of going to the New York Stock Exchange or the NASDAQ, are you happy where you’re at right now?

John Wilmers

I would say right now we are happy where we’re at, certainly, it’s something that always crosses our mind, but if you’ve been around the company long enough you know that we did go there throughout the number of years ago and then things didn’t work out very well, so we started on the AMEX and we are back on the AMEX and right now as we sit, we feel comfortable here right now.

Thomas Duffy [ph]

Okay, last question here is more of like a technology type question, do you ever see a time where the dealer would not need going after to see moving in 3-D?

John Wilmers

That’s the $100 million question. I don’t know of anything in the works right now, but I would venture to say that the guys like the RealDs of the world and those guys are in the corner trying to figure it out, but it’s pretty difficult and other than a logger fee, those kinds of things, I don’t know whether we will see that very soon. Obviously if it wasn’t that difficult they’d be doing it, the day because that’s what everyone said, when you are going to do without glasses.

Thomas Duffy [ph]

Okay, that might start a whole new cycle in that does happen for you guys would be a good thing.

John Wilmers

Hope for sure.

Thomas Duffy [ph]

All right, thanks a lot and congratulations again.

John Wilmers

Thank you.

Operator

(Operator instructions). We are not seeing any further questions at this time, sir.

John Wilmers

Alright, well, listen, we greatly appreciate all of your ongoing interest in Ballantyne. We are pleased with the first half of 2010 and believe the Company is uniquely positioned to continue capitalize on the ongoing worldwide digital cinema growth and transformation. We remain focused on running our efficient and well managed business so that we can continue to achieve strong top and bottom line results and create additional value for our shareholders. As mentioned we are actively reviewing and pursuing accretive M&A opportunities to further expand our turnkey product and service portfolio.

We also continue to invest a fair amount of our time in working to expand awareness of our company within Wall Street. We are active in meeting and speaking with investors and we certainly appreciate the support of the analysts who have taken up coverage of the Company. Kevin and I look forward to speaking with you again following our Q3 results later this year. Thanks again for joining us and have a great day.

Operator

Ladies and gentlemen that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.

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