ScanSource CEO Discusses Q3 2010 Results – Earnings Call Transcript

Oct.30.10 | About: ScanSource, Inc. (SCSC)

ScanSource, Inc. (NASDAQ:SCSC)

Q3 2010 Earnings Call

October 28, 2010; 05:00 pm ET

Executives

Mike Baur - Chief Executive Officer

Rich Cleys - Chief Financial Officer

Scott Benbenek - President of Worldwide Operations

Analysts

Ajit Pai - Stifel Nicolaus

Tony Kure - KeyBanc

Brian Drab - William Blair

Reik Read - Robert Baird

Operator

Welcome to the ScanSource quarterly earnings announcements call. All lines have been placed in a listen-only mode until the question and answer session. Today’s call is being recorded. (Operator Instructions)

Now I’d like to introduce your presenter Mr. Rich Cleys, the CFO. Sir, you may begin.

Rich Cleys

Thank you Bobby, and thank you for joining us for the ScanSource conference call to discuss financial results for the quarter ended September 30, 2010. My name is Rich Cleys and with me are Scott Benbenek, President of Worldwide Operations, and Mike Baur, CEO of ScanSource.

We will review with you the quarter’s operating results and then take your questions. This conference call contains certain comments, which are forward-looking statements that involve risks and uncertainties. These statements are subject to the Safe Harbor created by the Private Securities Litigation Reform Act of 1995.

The statements made in this call are made as of today’s date hereof, even it’s subsequently made available on ScanSource’s website or otherwise. ScanSource does not assume any obligation to update the forward-looking statements provided to reflect events that occur or circumstances that exist as of the date on which they were made.

Any number of important factors could cause actual results to differ materially from anticipated results. For more information concerning factors that could cause such differences, see the company’s annual report on Form 10-K for the fiscal year ended June 30, 2010, filed with the Securities and Exchange Commission.

This afternoon the company released results for our first quarter period ended September 30, 2010. I’ll start our discussion by providing overall sales and operating results for the first quarter. Later in the call, Mike will comment specifically on the quarterly result and outlook for each of our business units.

For the quarter ended September 30, 2010, the company generated worldwide net sales of $634.5 million, which represents a 30% increase in sales over the comparative prior year quarter and a 9% increase of the quarter ended June 30, 2010. Included in the quarter sales results are revenues from ScanSource Communications Germany formerly known as Algol Europe, which was acquired November 30, 2009.

Our net sales for the quarter hit another new record for the company and well exceeded our expectations as we experience some good demand and gained market share in all of geographies. On a geographic basis, sales originating from our North American distribution segments increased 24% in comparison to the prior quarter.

Our international segment grew 54% and when measured in local currency, grew 67%. Within our product lines, we experienced a 27% increase in worldwide sales of our POS Barcoding and security product categories, over the prior-year quarter.

These product categories represent 60% of our total sales for the current quarter, with the remaining 40% of our total sales originating from communications products. Our communications businesses experience an increase of 35% in comparison to the prior year quarter.

The company's consolidated gross margin percentage was 10% for the quarter-ended September30, which was lower than the prior year quarter gross margin of 10.5%. The September 2010 gross margin reflects a higher mix of lower margin product line. Sequentially, gross margin increased from the previously reported 9.8%, primarily due to timing of vendor extended program benefits.

Operating expenses in the current quarter increased to $38.6 million compared to a $33.7 million in the comparative prior year period. The increase is primarily the results of higher headcounts in the addition of ScanSource Communications Germany, which did not exist in the prior year's quarter.

The September 2010 quarter, bad debt expense was as expected. However, it is lower than the September 2009 quarter, which was much higher than normal. Operating expenses as a percent of net sales decreased to 6.1% from the current quarter, compared to 6.9% in the comparative prior year period.

Operating income for the September 2010 quarter increased to $24.8 million, up 40% increase from operating income in the comparative prior year of $17.7 million. Expressed as a percentage of sales, operating income was 3.9% in the current quarter, compared to 3.6% for the prior year quarter, and sequentially was up from the 3.6% reported for the fourth quarter 2010.

Interest expense was $366,000 for the quarter, which was flat to the prior-year quarter. The effective tax rate for the September 2010 quarter decreased to 35.6%, compared with the prior year quarter of 37.4%. The decrease in the effective rate from the prior year reflects the benefit of changes from our international capital structure executed during the fourth quarter of last fiscal year.

Our return on invested capital was 19.5% for the quarter, which compares favorably to the 16% reported for the prior-year quarter. In summary, the September 2010 quarter as reported fully diluted earnings per share of $0.58 versus reported fully diluted earnings per share of $0.41 for the September, 2009 quarter. This improvement was due to the increased operating income generated from higher gross profit dollars on higher sales.

Turning to the balance sheet, inventory turned 6.6 times during the quarter, which was higher than the 6.4 times, inventory turns generated in June 2010 quarter, that’s lower than the 7.2 turns in the comparative quarter last year.

As inventory balances leveled off during the current quarter, paid for inventory days were a positive 7.7 days compared to a positive 10.1 days for the June 2010 quarter and 4 days for the comparative prior year quarter.

As you may recall the company has maintained increased inventory levels or sales volumes continue to improve and lead times for our vendor products have lengthened. The magnitude of product shortages that we have been experiencing during last several quarters, have been reduced.

Accordingly, inventory on hand at September 30, 2010 was $345.3 million versus $346.6 million at June 30 and $269.7 million at September 30, 2009. There are $76.5 million in checks written, but not cleared in the September 30, 2010 accounts payable balance. At June 30, this amount was $62.7 million.

The number of days in receivable, DSO was 59 at September 30, 2010, up from 55 days in the sequential quarter and 58 days outstanding for the comparative quarter last year. The DSO in September, 2010 quarter, which is within our expected results increased due to a higher mix of international sales and our higher mix of sales in the communications business within North America, both of which have longer-terms of sale.

As discussed during previous calls, we continue to be cautious about the impact of the economic environment has on our customers and we believe that our underwriting policy is appropriate under the current conditions. The company had cash and cash equivalents on hand of $14.4 million as of September 30, 2010 compared to $34.6 million at June 30, 2010. The decrease from the prior quarter is largely attributable to the growth in our receivable balance over the last quarter.

Total interest bearing debt remained unchanged at $30.4 million for September 30, 2010 and June 30, 2010. Our cash flow includes capital expenditures of $1.9 million this quarter of which the majority is for a new enterprise computer system. This ERP system will enable our continuous growth and provides a worldwide information platform for the company.

Mike will now give you an update on our overall business.

Mike Baur

Thanks Rich. A strong performance by our company this quarter reflects a combination of large deal and better customer demand. In general, our sales teams took market share by having right the products available at competitive prices and executing logistic service and support and high levels of customer satisfaction.

Our strong balance sheet has allowed us to invest in higher levels of inventory and provide appropriate levels of trade credit to our resellers.

As Rich mentioned, we are investing in the future growth of the company by implementing a new computer system across all of our business units and all geographies. This new ERP system will allow us to ensure best practices are being followed across our company.

In addition, we expect to receive productivity gains and financial benefits once the system is rolled out in fiscal 2012. We’ve listened to many company stories about how to ensure success with a project like this, and believe we are in an excellent position to achieve our goals. We have selected some of our most experienced and best people to lead this project, combined with industry expert with many years of ERP experience.

Now, I will comment on each of our reporting segments. Starting with North American distribution, which includes sales in to United States and Canada, posted a record sales of $494.3 million an increase of 25% year-over-year and 7% sequentially. Our North American discussing will start with our POS and Barcode unit. This sale team delivered strong results again as large deals continued this quarter, especially in the retail sector.

Inventory levels continue to rise and bill rates improved as most of the shortages and supply chain issues were significantly reduced. All product categories showed growth again this quarter as our sales and business development efforts performed at high levels. The POS and Barcode team hosted a partner conference in Savannah, Georgia that had record attendance by hundreds of customers and vendors.

Education and networking are key components of this even and a new partner tool called AppSource was launched to the POS and Barcode community. AppSource, is a web store front for mobile application developers to sell their apps to the ScanSource reseller community. We believe the AppSource will enable all resellers to service the SMB end users more efficiently and profitably.

Another announcement at the partner conference was the availability of a new portfolio tools to assist resellers with their sale of payment processing services. In partnership, with Mustang Microsystems and First Data Corporation ScanSource resellers can provide credit and debit card terminals and merchant processing services in a more cost effective of active and profitable manner.

These new offering will expand our reach and open new markets within the AIDC and POS industry. Now we’ll update you on our ScanSource Security sales unit. The security team had another record sale quarter, as they have added 100s of new customers and saw a strong demand across the board.

In video surveillance, Panasonic continues to have strong results and Axis and Cisco had record sales. In card printers Zebra, Fargo HID and Datacard all experienced excellent results in the September quarter. Our marketing efforts continue to drive demand for security products and help educate resellers on new security technologies.

ScanSource Security is hosting regional IP workshops during the quarter, to help educate the channel. In addition, the security team is targeting certain catalyst and ScanSource POS resellers for cross selling opportunities. We expect our run rate business without the help of large deals to continue to grow as we aggressively take market share.

Next I’ll update you on ScanSource Communications. ScanSource Communications had a record sales quarter, led by Polycom, Plantronics and AudioCodes and had strong sales from large federal deals. Recruiting new resellers continues to be a strong focus for the sales team.

In addition to the impressive federal wins, the focus on developing business with service providers has driven significant growth. Overall, the growth in the number of customers has led to incremental market share gains for ScanSource communications.

Now, I will discuss Catalyst Telecom’s results. Catalyst delivered a record sales quarter as demand for Avaya products increased from the previous year and the previous quarter. Some of the Avaya demand was driven by increased sales to Avaya resellers. They need to meet annual sales targets to qualify for 2011 programs. In addition Catalyst grew the sales of Nortel, now Avaya data products significantly. Avaya’s product roadmap is rewarding partners who are certified to sell the full portfolio of voice, data and video.

Catalyst certification training classes have been well received and are being held across the country on a frequent basis. The Catalyst sales team also continue to achieve strong sales of Juniper and Aruba.

Our second reporting segment is international distribution. Our international business, which includes Europe, Latin America and Mexico posted record sales of $140.2 million, an increase of 54% from last year and when measured in local currency grew 67% over last year.

In Europe the AIDC, POS team had a record quarter with almost all countries and all products showing strong growth year-over-year. The sales demand was higher due to better availability of inventory at ScanSource despite continued supply chain issues. We also saw a return of large deals and a lack of a slowdown in business in August as in past years.

Our number of active resellers continues to grow larger as well. During the September quarter we added head count in the sales area and continued our aggressive recruitment of resellers. The ScanSource Europe sales and marketing teams conducted partner tours in Germany, France and Italy that were very well attended.

Turning now to our Europe Communications business, ScanSource Europe communications team achieved another record sales quarter. Our strong results were led by record sales of Avaya ECG and SMB products as we recruited new resellers and took market share from competition. In Latin America we achieved a record sales quarter in September by having higher inventory levels and working closely with our vendors on supply chain issues.

This team saw an increase in big deals, especially in Mexico. ScanSource Latin America gained market share due to inventory and aggressive marketing and sales campaigns. All countries in Latin America showed sales growth over last quarter except for Chile and Brazil. The September quarter is seasonally our best sales quarter of the year, and we are investing in recruiting and education events like our ScanTeach event held in Costa Rica.

So, now we will conclude this part of our call with closing comments.

We believe total revenue for the December 2010 quarter could range from $625 million to $645 million and our earnings per share could range from $0.55 to $0.58 per diluted share. In addition, we anticipate receiving a settlement from a former service provider of $0.07 a share, resulting in combined total earnings per share for the quarter of $0.62 to $0.65 per diluted share.

At this time we’ll be glad to answer your questions.

Question-and-Answer Session

Operator

(Operator Instruction) Our first question comes from Mr. Pai form Stifel Nicolaus. Your line is open.

Ajit Pai – Stifel Nicolaus

Yes, good afternoon and congratulations on the solid quarter.

Mike Baur

Thank you, Ajit.

Ajit Pai – Stifel Nicolaus

Couple of quick questions, I think the first is your comments. I missed a part of it on Chile and Brazil. Why did see some weakness over there?

Mike Baur

We didn’t have, this is Mike, Ajit. We just recognized that those two countries in general didn’t have any significant business, that’s why we called them out. Brazil is not a surprise because today we don’t have an operation in that country, and it’s always been a challenge for us to export business from Miami into Brazil because they have such high tariffs.

So, Brazil is always going to be a very small opportunity from us, operating the way we do today and Chile just didn’t have big deals like they had in previous quarters.

Ajit Pai – Stifel Nicolaus

Got it. The second question, just looking at your gross margins going in to the next quarter, the mix of businesses that you are guiding to for $625 million to $645 million for the December quarter, could you give us some color as to whether that mix will be similar to this quarter, will there be greater big deals than your expectations or few big deals?

Rich Cleys

Yes Ajit, this is Rich. So, if I look at the mid point of our guidance, its 635, I would expect an EPS without that settlement gain of about $0.57. As far as the mix of the business, we expect a similar mix in terms of the big deals and on operating profit coming-in in the 39 area.

Ajit Pai – Stifel Nicolaus

Got it. And then when you look at the sort of seasonality that you saw, you typically said that you saw a slow down in summer and this year it been seasonally stronger. What do you attribute that increased strength to?

Rich Cleys

We were asking that question, we didn’t get a lot of great answers from our teams and then it appeared that even in July, we had a much stronger month going in to that quarter than with historical in Europe. So, in one case we still had some business that didn’t accomplish in June because of some of the shortages.

So, July was better because of shortages in June that weren’t able to be fulfilled, and then I would say August was again a big surprise because we thought we would have the normal holiday slowdown and we just didn’t see it. So, we don’t know if more people were not taking holidays or what, but our business saw continued strength even in August.

Ajit Pai – Stifel Nicolaus

And you’re talking about both of your businesses, the AIDC and Security as well as you Telecom business?

Rich Cleys

Yes. We’re talking Europe specifically.

Ajit Pai – Stifel Nicolaus

Yes, in Europe, but okay…

Rich Cleys

Yes.

Ajit Pai – Stifel Nicolaus

Okay. Thanks so much.

Rich Cleys

Thanks.

Operator

Our next question comes from Tony Kure from KeyBanc. Your line is open.

Tony Kure – KeyBanc

Hey guys, can you hear me okay?

Mike Baur

Yes, we can hear.

Rich Cleys

Yes, we can hear.

Tony Kure – KeyBanc

Okay, sorry about that. A question about the, couple of things The inventory balances, I think the comment was they leveled off during the year and then combining that with the fact that it sounds like the inventory availability was an advantage for you guys.

So, I guess my question is, do you think that your competition is sort of caught up now with your inventory advantage and is that something that you don’t expect to be as significant as an advantage going forward?

Mike Baur

Well Tony, it’s Mike. I don’t know where they stand. I know that we had experienced maybe better than we expected allocations in the June quarter. I think I made a comment on the call that we were somewhat cautious about September’s results because of the possibility that we would not get the same allocations we got in June in September.

Turns out we got excellent allocations which I assume means the other guys got enough too. So, I believe that we have been able to maintain, I guess our view right now that we’ve been able to maintain some of these customers that we may have brought back in the business.

The evidence for that is, that we are selling to more customers now than we did before. So, we believe that there may be some drop off, but that’s not what we’re forecasting at this stage. Not for December.

Tony Kure – KeyBanc

Okay. And then I guess maybe how would that have materialized or sort of come to light with pricing? I mean, did pricing change materially as you were benefiting from these and are you factoring that same advantage into this current quarter? Just maybe talk about how pricing trends?

Mike Baur

Yes, so I would say it this way is that, even when we had product and no one else did, we didn’t charge more for that and I think our customers appreciated it, and I think our vendors did too.

So we were able to maintain margins and I think if you look at our gross margins they are still in the similar range once you take out any run-off items that we’ve called attention to over the last four, five quarters.

We have been able to maintain margins, but we didn’t use inventory to improve margins, and I think our customers appreciate it and I believe that’s why they will stay with us.

Tony Kure – KeyBanc

Okay. And then just a question on the shortages, it sounds like that’s been sort of alleviated or it’s sort of dropped off over the last couple of quarters now. And given that I mean you’re looking at sort of same type of elevated levels of sales into the second quarter here.

So, there is no assumption of pull through, additional pull through from shortages. Is that fair to assume?

Mike Baur

Well, I think the performance we achieved in September was so much higher than we had expected, that as we looked at our forecast for December, looked at what were the underlying results of that, clearly Europe saw more gains from product shortages I would say in the September quarter.

We saw most of those gains and most of the shortages gone by the beginning of the September quarter in North America. So, I would say Europe specifically was somewhat out of phase by a quarter from availability. Europe and Latin America together account for 20% or so of our business as you know.

So, we believe we’ve already gone through that time where everyone else has inventory now and we see a steady state business, so that’s why we feel confident with our forecasting.

Tony Kure – KeyBanc

Okay. And then I’m sorry just one last question on gross margins. I know that you had some vendor program benefits in the first quarter. I guess with the 10%, and maybe Rich you said this when you talked about the expectations for the second quarter, but I mean is it fair to extrapolate that sort of gross margin improvement, from how you ended say the fourth quarter or how you ended last year?

Rich Cleys

I think the overall operating margin should come in similar to how we ended in this last September quarter.

Tony Kure – KeyBanc

Okay, I see what you’re saying. So, if SG&A is flat then gross margin should be about the same too is what you are kind of saying?

Rich Cleys

Yes.

Tony Kure – KeyBanc

Okay, thanks guys. Good quarter.

Rich Cleys

Thanks, Tony.

Operator

Our next question comes from Mr. Brian Drab from William Blair. Your line is open.

Brian Drab - William Blair

Hi, Rich.

Rich Cleys

Hi, Brian.

Brian Drab - William Blair

First question just on Algol, what was the contribution of Algol, I guess we’re calling it ScanSource Communications Germany now?

Rich Cleys

Well, it’s ScanSource Communications Europe, it’s a combined business unit.

Brian Drab - William Blair

Okay.

Rich Cleys

We are not going to disclose the exact sales figure for it, what I can do is say that in terms of -- if we give you remember we said there was a foreign exchange adjusted growth of about 67%, if we adjusted out the Algol from the prior year that would be in the mid 40s.

Brian Drab - William Blair

Okay, thanks. And then is Avaya still on the September year-end and is that something that still has a seasonal influence on your revenue?

Mike Baur

Well, they are still on September 30, and our comments in the call so far were that, we felt like that more the help there was not what had been in prior years, just an end of the year push.

It was more of the resellers had some certification levels that they needed to achieve to set their program benefits for 2011, and those program benefits in those levels are determined by volume.

So, there was some reasons for resellers to do more business in September than October, but it wasn’t like what we saw say three years ago, where we would see a September 30, huge rush of business at the very end, I think it was more stable throughout the quarter and frankly throughout the year.

Brian Drab - William Blair

Okay, great. Then could you also elaborate a little bit on the progress and impact you are seeing from rolling out the Nortel products?

Mike Baur

We’re basically two quarters in actually selling Nortel products, and we feel very good about our progress. A big part of our efforts had been to discuss and solicit business from some of the existing Nortel partners. Also to get our Avaya partners trained to resell Avaya products.

So, I would say we’re very pleased with the business we’ve gotten so far through September.

Brian Drab - William Blair

Okay. Thanks very much.

Mike Baur

You bet.

Operator

(Operator Instructions) And our next question comes from Reik Read from Robert Baird. Your line is open, sir.

Reik Read - Robert Baird

Hey, guys. How are you?

Mike Baur

Good.

Reik Read - Robert Baird

May be just going back to that last question, Mike I think as you’ve talked in the past, the Avaya resellers selling the Nortel data products has been a pretty positive experience for you guys thus far, but the laggard was that the Nortel guys selling the Avaya Voice.

One is, is that correct? And two, what’s the update on those kind of cross opportunities?

Mike Baur

Well you’re right, Reik. The bigger challenge is getting Avaya product sold by Nortel guys and we are talking about enterprise class products clearly, because Avaya does business frankly differently than Nortel did, so there’s this whole getting used to the Avaya processes which means how do you buy and sell service, for example and how do you deploy. But our teams were prepared for that and they have done a really good job.

I think the issue that we have to remember, and a reminder to our investors is the Nortel resellers were all buying from another distributor. So, we’re coming into this having to recruit these guys to buy their Avaya products from us rather than the distributor that sells them Nortel in the past.

So, it’s more work for us, but we’ve got a lot more effort to engage a Nortel partner because Avaya is a different sale form number one; and number two, they have to learn how to do business with catalyst.

So, I would say, we feel good about our progress, but it is a longer cycle for us in getting our Avaya guys to sell data products. You’re absolutely right there.

Reik Read - Robert Baird

And that sounds like what you’re saying is it’s still fairly early in the process. I guess the question is how long does it take to get that up and running where you start to see a little bit more regularity and of the total opportunity, how much is that a piece of?

Mike Baur

I’d say your right. It does take longer and the challenge for us, as I say is they now have more and different distributors. So, the landscape changed after the Nortel acquisition, right and so now in North America, that’s why we are talking about the big change in impact on us, is the addition of Tech Data to the portfolio in addition to the existing distributor Westcon and Jenny.

So, now we’ve got one more distributor to compete with on Avaya than we had nine months ago.

Rich Cleys

So, the Nortel partners have to get to know what everyone’s offer is and clearly we got a lot of people focused on that, but it does take some time and then they’ve got to learn what they have to start selling product, but I would say this is that there’s a huge amount of emphasis within the Avaya community on growth.

We just got back from the Americas Conference and the whole theme was growth and so there is a lot of focus on getting partners ramped up to sell more products right now.

Reik Read - Robert Baird

And does that is that business, the Avaya Voice business with the Nortel resellers of similar size as the data business?

Rich Cleys

It’s larger.

Reik Read - Robert Baird

Okay, and then maybe just going over to the Barcoding side. You again saw a number of large deals, were those heavily skewed towards retail as we’ve been seeing or we started to see those pop into the T&L in manufacturing area?

Rich Cleys

Yes, we call out retail as the main source for those, yes.

Reik Read - Robert Baird

Are you starting to see transportation, logistics and manufacturing pick up those have been clear laggers in that business, and is that starting to move forward?

Rich Cleys

We didn’t call them out, because they didn’t pop out of the pack. So they may be improving, but it wasn’t significant enough, for me to call them out, yes.

Reik Read - Robert Baird

Then just going back to the expediting, you don’t have the advantage anymore, but does that mean you’re done expediting or do you still have to expedite because that is an issue out there?

Rich Cleys

Help me with what you mean by expedite?

Reik Read - Robert Baird

Are there certain instances when the vendors have to expedite simply because there is shortages that exist generally. i.e. you brought in a bunch of inventory as a competitive advantage, but if that competitive advantage has gone it doesn’t necessarily mean that the product shortages are gone?

Rich Cleys

Yes, Let me say it this way because we don’t really talk about expedites and the time as much from the vendors, but what I have said and will say and reaffirm is that the lead times for our products have lengthened and what I think we’ve done very well is we have put our orders into the factories much sooner than our competitors and with more what we call scheduled orders to give them visibility.

So, we’ve given our vendors much more visibility and continue to do today because even though they have recovered, they still need more visibility, means that we don’t have to face a last minute expedite.

So, I think we are run a more traditional business relationship from a logistics with our vendors, but we are living with longer lead times which is why we still believe a higher inventory level make sense.

It gives us that ability as business continues to grow to take advantage of the fact that we have a product and the recovery time is still long. So, again just a quick answer, we probably had vendors three years ago that can provide us product in a week, but we have very few vendors today who can do that. It typically today more like four to 10 weeks.

Reik Read - Robert Baird

Okay. Great, thank you very much.

Rich Cleys

Yes.

Operator

And, I show no further questions at this time.

Rich Cleys

Well, thank you Bobby, and thank you for joining us. Our next conference call to discuss the December 31, quarterly results is expected to be January 27, 2011. Thank you.

Operator

Thank you for everyone’s participation today. You may disconnect at this time.

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!

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!