China Medical CEO Discusses F1Q2010 Results - Earnings Call Transcript

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

China Medical Technologies, Inc. (CMED) F1Q2010 Earnings Call Transcript August 16, 2010 8:00 AM ET

Operator

Good day, ladies and gentlemen. And welcome to the first quarter 2010 China Medical Technologies, Inc. earnings conference call. My name is Stephanie, and I'll be your operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. (Operator Instructions) I will now like to turn the conference over to your host for today, Ms. Winnie Yam. You may proceed.

Winnie Yam

Good morning, ladies and gentlemen. I'm pleased to welcome you to China Medical's earnings conference call. China Medical already announced its first fiscal quarter results ended June 30th, 2010. A copy of the press release is also available on the company's Web site at www.chinameditech.com.

Today, your speakers will be Mr. Xiaodong Wu, CEO; Mr. Sam Tsang, CFO; 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 US 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 US 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 Web site. Now, allow me to turn the call over to Charles, who will give remarks on behalf of Mr. Wu. Charles?

Charles Zhu

Thank you, Winnie. The past quarter is our third consecutive sequential growth quarter. We continue our focus on operation execution, and has achieved solid progress in all of our three business lines.

For FISH, our directors will continue to triumph sales of recurrent FISH growth revenue from three areas, first, by increasing the tests in FISH in the existing FISH applications in this hospital user; second, by expanding FISH applications to other clinical departments in the existing hospital users; and third, by adding new Tier 1 hospital users.

We have successfully established our FISH test as a frontline medical diagnostic test in some of the key clinical applications. We are glad to see that many of our top tier hospital users are adopting FISH as a routine diagnostic test in prenatal diagnosis, certain cancer diagnosis and prognosis, and companion diagnostic for cancer targeted drugs. And we expect these practices will be formalized by regulatory agencies in China, such as the recent MOH-sponsored project focusing on cancer-targeted therapy standardization as well as early cancer detection and treatment.

One of the subjects of this project is the HER-2 study led by the Cancer Institution and Hospital of the Chinese Academy of Medical Sciences, in which we were chosen as the supplier of the HER-2 FISH probe. The HER-2 study is the first study in China to include FISH test as the gold standard in HER-2 gene amplification detection. We believe that FISH technology has become quickly accepted by the high-end medical community in China, and that we are well-positioned to generate significant growth in our FISH business in the next few years.

More importantly, our direct sales force, which we built for our FISH platform, will start to demonstrate synergies with our other product lines. For example, by promoting our SPR analyzers and related HPV-DNA chip to enhance our top line growth or having lower increase in our selling expenses.

During the past quarter, we installed approximately 30 units of SPR analyzers in accordance with our plan, and have started to sell our HPV-DNA chips after the completion of installation, training, and trial use process for certain top tier hospital users. In addition, we also received SFDA approval on the HPV-DNA chip recently. We expect to keep the current run rate on new system installation for this fiscal year. And we'll reveal the pace of installation later this year.

Meanwhile, we are getting more and more positive feedback from the existing SPR users during their trial use phase as well as clinical diagnosis for their patients. We believe the fast-growing HPV test market in China continues to present a natural end market opportunity for us. And we expect to build on our initial success to establish another business of stable customer base, which will generate recurring contribution to our Q2 or in the future.

Revenue from a relatively material ECLIA business has resumed growth also after absorbing the impact of price reduction last September. Many of our existing ECLIA distributors and end users have expressed their interest in our fully automatic ECLIA analyzer. In addition, the new product has also attracted new distributors to join our distributor network and help us penetrate new end users.

As we mentioned in our previous quarter earnings call, continuous investment in R&D for future growth is always one of our important strategic imperatives. We have a strong new product pipeline. And I want to highlight here a new FISH application we have developed for testing children's acute lymphoblastic leukemia, one of the most common forms of leukemia for children. We plan to launch this new FISH application next quarter.

This follows the Chinese government's recent decision to provide full reimbursement for the costs related to children's hematological disorders. We believe that this type of favorable government reimbursement policy for cancer detection and treatment will continue. And our FISH business is well-positioned to benefit for future growth.

To summarize, all of our individual businesses are on track. And we believe that we will continue to deliver better operating performance to our shareholders.

I have finished Mr. Wu's remarks. And I'd like to turn the call over to Sam, who will review our financial results. Sam, please.

Sam Tsang

Thank you, Charles, and welcome, everyone. Let's talk about our financial results in the past quarter. Our 1Q '10 revenues were down 10.9% year-over-year to RMB186.2 million or $27.5 million, but increased by 5.9% sequentially.

Our 1Q '10 non-GAAP net income, which excludes stock compensation expense, amortization of acquired intangible assets, non-cash expense of convertible notes, and gain on purchase of all convertible notes was down 21.4% year-over-year to RMB57 million or $8.4 million, but increased by 10.8% sequentially. Our 1Q '10 non-GAAP diluted earnings per ADS was down 20.4% year-over-year to RMB2.18 or $0.32, but increased by 10.1% sequentially. We generated net cash from operations in the amount of RMB69.8 million or $10.3 million in 1Q '10.

Let's highlight certain financial results. First, our ECLIA revenue achieved a 4.3% increase quarter-over quarter, and our FISH revenue achieved a 7.1% increase quarter-over-quarter. Our SPR-based HPV-DNA chip started to contribute a very small amount of revenue in 1Q '10. The sales revenue of ECLIA reagent kits increased satisfactorily in 1Q '10. And we believe that the revenue from ECLIA reagent kits on 2Q '10 will continue this growth momentum.

Our FISH business is performing well due to increase in usage of our FISH probes in various chemical diagnostic applications by our top tier hospital customers. We also expect our SPR-based HPV-DNA chip to contribute more revenue in 2Q '10. We have placed about 30 units of SPR analyzers in 1Q '10, and expect to continue this pace of analyzer placement in the following quarters.

Second, the overall non-GAAP gross margin, which excludes stock compensation expense and amortization of acquired intangible assets, improved from 77.7% to 79.1% sequentially in 1Q '10, mainly due to the price reduction for major raw materials used in the production of ECLIA reagent kits, and more contribution from the sales of FISH probes, which generate higher gross margin. However, due to the commencement of sales of HPV-DNA chips, we will classify the amortization of SPR intangible assets in the amount of about RMB27.3 million each quarter from operating expenses to cost of revenues starting from 2Q '10. This is a classification of non-cash expense and will not affect our non-GAAP gross margin.

Third, our total expenses, which includes R&D and SG&A, was stable in 1Q '10. We expect slight to moderate increase in selling expenses in 2Q '10, while the G&A expenses in 2Q '10 should be stable.

Next, we made a gain of about RMB47.4 million or $7 million from the purchase of our 3.5% and 4% convertible notes at a significant discount at face value on the open market in 1Q '10. However, we have excluded this gain 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, which are not deductible for China income tax purposes as well as the accrual for withholding income tax on distributable earnings generated in China during 1Q '10.

Besides, our cash position at the end of June was RMB742.3 million or $109.5 million. The sequential decrease in cash and cash equivalents was mainly due to the purchase of our 3.5% and 4% convertible notes from the open market.

We generated cash flows of RMB69.8 million or $10.3 million from our operations in 1Q '10. Furthermore, our accounts receivable at the end of June increased slightly to RMB311.3 million or $45.9 million from the balance of the previous quarter.

Last, but not the least, our outlook for 2Q '10. We estimate our target revenues for 2Q '10 to be more than RMB200 million or $29.5 million, representing a year-over-year growth of more than 20.4% and a quarter-over-quarter growth of more than 7.4%. We estimate our target non-GAAP net income for 2Q '10 to be more than RMB65 million or $5.6 million, representing a year-over-year growth of more than 267.9% and a quarter-over-quarter growth of more than 14%. Our target non-GAAP diluted earnings per ADS for 2Q '10 is expected to be more than RMB2.49 or $0.37, representing a year-over-year growth of more than 271.6% and a quarter-over-quarter growth of more than14.2%.

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

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) And please stand by while we compile a list. Your first question comes from the line of Bin Li with Morgan Stanley. You may proceed.

Bin Li – Morgan Stanley

Hello, everyone. (Foreign Language). I have a few questions. The first question is on the Herceptin program or the MOH-sponsored project. Can you give us more color on the, say, terms of the timing, the size of the project, the duration of the project, how many hospitals are involved, and what's the total capital that will be involved? That's my first question. And I have a second and third later.

Charles Zhu

(Foreign Language).

Xiaodong Wu

[Interpreted] This project is an MOH project in terms of fund. The total fund for this project is $30 million for the cancer treatment and detection program for the standardization of the cancer treatment and detection. And the funds allocated to the detection study is about RMB10 million.

[Interpreted] The purpose of this project is to setup the standard of the target therapy drug so that – to formalize the procedures of the treatment of using targeted therapy, and also the test procedures.

[Interpreted] And we were chosen as the supplier for the FISH probe for the HER-2 study. The purpose of this study is to formalize the standard and the protocol of using FISH probe for the HER-2 expression detection.

[Interpreted] The project will conduct more than 1,000 HER-2 tests. And all the HER-2 FISH probes will be purchased from us. And currently, more than 200 tests have been conducted for this project.

[Interpreted] This test is – this project is not a market center [ph] test – it's not a market center project. It's going to be conducted only by the Institute of – Institute and Hospital of the – the Cancer Institute of the China Medical Associate – Academy because they are the best cancer center in China, so that it can be uniformed procedures when they perform this kind of HER-2 tests with the FISH technology.

[Interpreted] The project is led by the principal investigator, Mr. – Dr. Shi Yuankai, who is the vice president of this – the Beijing Cancer Institute and Hospital. He used to also get involved in market center projects comparing FISH probes – FISH tests to the IEC tests on the HER-2 detection.

[Interpreted] From his previous market center tests with more 3,000 clinical – 3,000 test samples comparing FISH with the IEC test, the result shows that the IEC procedures in China is not very standardized.

[Interpreted] The result in the IEC test, the test with three positive marks still has 10% of false positive rate. And the test was the result of zero still has the 10% of false negative rate.

[Interpreted] So that's why he proposed to use FISH test, which is the gold standard for HER-2 tests in the international medical community, as also gold standard in China for the HER-2 test.

[Interpreted] The result of the previous 3,000 technical study will be published in one of the international medical journals, Allertum [ph].

[Interpreted] We will update you once the report is published.

Bin Li – Morgan Stanley

Okay. Thanks. I just want to make sure I heard it correctly, the figure for the test is RMB10 million, not $10 million. Am I right?

Charles Zhu

That's right.

Bin Li – Morgan Stanley

It's in RMB.

Charles Zhu

That's right. The total sum–

Sam Tsang

(Foreign Language).

Charles Zhu

The total sum price is RMB30 million. And the fund related to the detection technology is RMB10 million.

Bin Li – Morgan Stanley

Okay. All right. Thanks. I want to ask a question – maybe this is a question for Sam, on the convertibles. So you're buying convertibles from the market at a discount rate. And you're reducing that. Now, looking at the balance of the few something in convertibles now, and also, if we're concluding the RMB30 million due, plus the cash flow, what's your view on this 2011 convertibles? And are you going to continue to buy convertibles from the market? And if you are, which one will be your main focus? Is it going to be the one in 2011 or the one in 2013? That's my second question.

And the third question has to do with the HPV status. Of course, you've installed about 30 machines this quarter. Now, can you tell us what's the sales – I know the sales may not be meaningful this quarter, but if you can give us a magnitude of the sales generated from the chips' sales this quarter? And you said you expected that to contribute to the second quarter number. But can you give us a little bit more color of your expectation for the next quarter?

Charles Zhu

(Foreign Language).

Sam Tsang

[Interpreted] So you see that we purchased about RMB15 million base revenue of 3.5% convert. And also, $16 million – $15.8 million, 4% converts during the June quarter. By the end of June quarter, our remaining convert for 3.5% was $135 million. And our 4% convert balance was $248 million.

And what we are going to do about purchase of convert, we will monitor the market conditions, and the times and the trends, and to make a decision based on that. Currently have cash balance, by the end of June, of about $110 million. And we have receivables from the – another receivable of about $30 million, and also the stable and growing cash flow from operations. And so, when we purchase our convert – if we purchase at 4%, we are going to make sure we have sufficient cash to pay off the 3.5% CB, which will mature November 2011.

So for the HPV, we start to place the equipment in the March quarter, of course, as well as the June quarter going forward. And we mentioned that we have to phase-off the different – and installing the equipment, which is new equipment, and also the technology is new. And we have been training the physicians in the hospital. We are also providing HPV-DNA chips for our customers to try to use and compare to the sample we saw – they have from pathologies.

And so, we did not have much revenue in the June quarter, which are – is very initial stage of using our chips. But by the end of June, we – the order we received from these small number of users are pretty good. That's why we expect the revenue contribution from HPV chips will be better, much higher numbers starting from the September quarter, our 2Q '10.

Bin Li – Morgan Stanley

Okay. Thanks. I'll go back to the queue.

Operator

Thank you. (Operator Instructions) Your follow-up question comes from the line of Bin Li with Morgan Stanley. You may proceed.

Bin Li – Morgan Stanley

Thanks. I have two more follow-up questions. First is on ECLIA, obviously, it resumed growth this quarter, which is good. Now, I think you mentioned about customers expressing interest on the fully automatic machine. Can you remind us where you are in terms of the fully automatic machine for ECLIA? And also, if you could talk about the competitive movement out there, since you cut the price, have you seen – I remember the competitor hasn't matched your price cut probably in the past few months? But is there any latest development on that?

And the question of FISH, once you – if you can answer the ECLIA question first.

Charles Zhu

(Foreign Language).

Xiaodong Wu

[Interpreted] For the ECLIA fully automatic machine, we have produced five units of the new machine, and placed them in the hospital for the trial. So we want to get all the feedback from the trial use of the initial five units. And next year, we are planning to produce another 30 to 50 units of new fully automatic machines to launch to the market.

[Interpreted] So far, from the five trial systems, we didn't get any significant problem that made us to consider the design – the basic fundamental design of the – change the design of the system. It's just some fine-tuning of small problems. And we are confident that by the end of this year, we can reach a more optimal level of the fully automatic system, make it ready for a larger-scale launch to the market next year.

[Interpreted] In terms of the competition movement following our price cut last September, actually, among all the domestic companies in ECLIA, we are the last company to reduce the price on the reagent.

[Interpreted] After the price reduction, it brings quite significant impact on our gross margins. And I don't think the other competitors can afford this kind of margin erosion as well. And so, I believe in the short term, there won't be any further price war on the ECLIA reagent.

[Interpreted] So far, we haven't seen any ECLIA competitors following the price cut. Okay.

Bin Li – Morgan Stanley

Thanks. If I could ask a follow-up on this, what's the price difference between your ECLIA reagent and the competitors' reagent right now? And also, of the five machines – fully automatic machines you've installed in hospitals, what type of hospital size? Is it mid-sized hospitals? And you mentioned that after you optimized the machine, you want to have a larger-scale launch. Are you going to – are you aiming the big market – the big hospitals in order to go head-to-head with multinational's machines? Is that the strategy?

Charles Zhu

(Foreign Language).

Xiaodong Wu

[Interpreted] The five units that we have installed are mainly in the mid-sized hospitals, with few in large hospitals as well so that we can get the feedback from different sized hospitals.

[Interpreted] In terms of the reagent price difference, comparing to the imported reagents, we still have about 20% to 30% difference compared to the imported reagent.

[Interpreted] Our fully automatic ECLIA system is targeting mainly two groups of customers. The first group is the existing ECLIA users, who has the larger consumption of the reagents or have the potential to grow their reagent consumption.

[Interpreted] The second target group of hospitals is the Tier 1 hospitals, who are also at the same time our FISH and SPR customers.

[Interpreted] When we compete in the Tier 1 hospitals, we want to – we want them to use our system to perform some of the unique test value, such as the liver fibrosis test panel in their large hospitals. This test panel is designed only for the China market considering the large hepatitis population – patient population in China. And this is also a unique test panel that those multinational companies don't have. 40:54

[Interpreted] So we want to establish our position in the Tier 1 hospitals by this unique test panel for the liver fibrosis first. And once we are well-established in the Tier 1 hospitals and they see the – they see that the hospital customers see the result from our liver fibrosis test, then we have the opportunity to expand the test value offered to those hospitals, such as tumor markers and hormone tests.

[Interpreted] We're being very cautious in launching this new technology – new product because we want to make sure that once we launch this product in full scale, we want to be – we want to generate 100% satisfaction from our customers. Okay.

Bin Li – Morgan Stanley

Okay. Thanks. And if I may ask a question on the FISH or the new application for leukemia test, you mentioned that it is – it will fully reimbursed by the government. Can you talk about this a little bit? What is the cost for your test? Are they going to be 100% reimbursed by the government? And also, on a market potential, can you share with us what the total volume of testing for leukemia in China right now? What's the current market size, if you can? Thanks.

Charles Zhu

(Foreign Language).

Xiaodong Wu

(Foreign Language).

Sam Tsang

(Foreign Language).

Xiaodong Wu

(Foreign Language).

[Interpreted] The government, because the treatment method and detection methodology for the leukemia applications is very well-established, and so the – so by now, the – a lot of provincial who hospitals who have the clinical departments focusing on the leukemia are talking with us in terms of how to establish the FISH test method in relation to the leukemia treatment.

The FISH test – the FISH probe that is related to the leukemia application has a lot of different purposes. Some of them are used for the diagnosis. And some of them are used to – for the prognosis, and will be used repeatedly during the course of the treatment. So as approximate assumption, we estimate the test volume for the leukemia-related FISH probe is more than a few dozen – dozens of thousands of test volume each year.

Bin Li – Morgan Stanley

Yes. What's the cost? Sorry.

Charles Zhu

(Foreign Language).

Xiaodong Wu

[Interpreted] On average, it's about RMB600 to RMB700. That's the selling price we're selling to the hospitals. Of course, the price is dependent on the different packaging. Sometimes, some of the package we sell to the hospital includes five different probes. And some of the others include 10 probes, but on average, RMB600 to RMB700 selling price to the hospitals.

[Interpreted] I just want to elaborate a little bit more on the usage of leukemia FISH probes because using FISH probes in diagnosis and prognosis for the leukemia application is the most mature than most established applications from all different diseases for related FISH tests. And also, we are – we also see the growing – the growth of the FISH demand related to the leukemia applications in the China market. And some of our existing hospitals are already generating more than RMB1 million in terms of the FISH revenue just for the leukemia-related application for each hospital.

[Interpreted] And as the medical community is discovering more and more targets in related – in relation to the leukemia, we are developing more and more FISH probes based on our current FISH technology platform. We have a very R&D capability on this FISH R&D technology platform. Okay.

Bin Li – Morgan Stanley

Okay. Thank you.

Operator

Your next question comes from the line of Jack Hu with Deutsche Bank. You may proceed.

Jack Hu – Deutsche Bank

Thank you. Thanks for taking my questions. Congratulations for your – for another great quarter. I have a few questions actually. The first one is regarding the big picture here. So you've had three consecutive quarters of growth, have similar numbers of 4% and 2% and 6% quarter-over-quarter. But does this mean you are getting out of the bottom? And if I can pursue on this one, do you see growth maintained here or what? Do you see it accelerating in the near future and what are the reasons behind it?

Charles Zhu

(Foreign Language).

Xiaodong Wu

[Interpreted] From our last quarter's performance, you can see all the three business lines have resumed growth.

[Interpreted] And we're confident that the growth for the coming quarter will be maintained at a very good level.

[Interpreted] Actually, you can see from our outlook for the next quarter, the growth rate will be even higher.

Jack Hu – Deutsche Bank

Okay. Thank you. My second question is actually – if we look at it, your segment growth, FISH has become the backbone of the growth. And can you just comment on the competitive landscape for FISH right now. And also, do you see any potential pricing pressure in the future?

Charles Zhu

(Foreign Language).

Xiaodong Wu

[Interpreted] That's a very good question and I think a lot of other investors may have the same questions. In terms of the competition, so far we haven't seen any of the other domestic companies have started the clinical trials of FISH. And also, we haven't seen any of them started the progress with the Chinese SFDA or submit any of their applications or standards to any of the government regulatory agencies.

[Interpreted] We have the confidence – we have the reason to say that the observation that we have is accurate because the top few hundred hospitals are all our customers. And if any of them are conducting the clinical trials for other FISH competitors, we will know firsthand.

[Interpreted] And also, I want to tell everybody even if today some domestic companies started the process of the clinical trials for the FISH technology, we expect there won’t be any meaningful competitor for us within the next three to five years.

[Interpreted] The reason for that is even some new entrants of the FISH technology, they started the clinical trials – for clinical trials, it will take them about 12 months. And also, it will take – all together, it will take them more than two years for the application procedures and tests in the Chinese FDA. And also, they will also need more time to develop and approve a serious approach so that they have an equivalent, broad offering of our FISH applications so that they can compete with us in all the applications. So considering the timing of – I don’t think in three to five years there won't be any – I think there won't be any significant player entering this market.

[Interpreted] By the time of – after three to five years, when the new player wants to compete with us in FISH applications, they will spend more capital so that they can develop and also they can compete with us in the markets.

[Interpreted] And so far in China, there are limited companies who specialize in IVD, have the capability both in terms of the technology and financial resources, and also the access to markets. In all areas that they can compete with us, there is – very limited companies have such capability.

[Interpreted] And now let's take a look at the important products. So far in China, only Abbott Labs has two of their FISH probes approved by the Chinese FDA.

[Interpreted]Their breast cancer probes and prenatal diagnostic FISH probes are approved by the Chinese FDA.

[Interpreted] But we have very accurate data to show that our market share in China markets, in the existing FISH users – more than 95%.

[Interpreted] One of the main reasons behind this dominant market position for us is that we are selling our FISH products through direct sales while Abbott Labs is selling their FISH through a local distributor.

[Interpreted] And for distribution, they cannot afford to invest a lot of capital and human resources to provide very good quality services such as technical support services and training services. But for us as the manufacturer of the FISH technology, we are investing a lot of effort in China to provide the highest quality after-sales service.

[Interpreted] Actually, last week in one of the training meetings for the pathologists in a city, our customers from the pathology department, they actually came up with a slogan of GT [ph] Medical is the home for pathologists in China.

[Interpreted] Of course, we are not in a position to predict the change – any of the possible changes in the strategy for Abbott Labs' local strategy in China. It could be reduction of their selling price or changing their sales to direct sales.

Charles Zhu

(Foreign Language).

Xiaodong Wu

[Interpreted] Either way, it will have the influence or the impact to the global strategy for the FISH technology.

[Interpreted] That's why we have very high confidence in our FISH business.

Jack Hu – Deutsche Bank

Thank you. I will take my remaining question offline. Thanks.

Operator

Ladies and gentlemen, that concludes the question-and-answer session. I would now like to turn the conference over to Mr. Sam for any closing remarks. You may proceed.

Sam Tsang

Thank you for joining our call. Please do not hesitate to contact us if you have any questions. Have a nice day. Thank you.

Operator

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

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

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

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