TTM Technologies' (TTMI) CEO Thomas Edman on Q2 2014 Results - Earnings Call Transcript

| About: TTM Technologies, (TTMI)

TTM Technologies (NASDAQ:TTMI)

Q2 2014 Earnings Call

July 30, 2014 4:30 pm ET


Thomas T. Edman - Chief Executive Officer, President, Director and Member of Government Security Committee

Todd B. Schull - Chief Financial Officer, Principal Accounting Officer, Executive Vice President, Treasurer and Secretary


Prabhakar Gowrisankaran - Canaccord Genuity, Research Division

Matthew Sheerin - Stifel, Nicolaus & Company, Incorporated, Research Division

Richard Kugele - Needham & Company, LLC, Research Division

Paul J. Chung - JP Morgan Chase & Co, Research Division


Good day, and welcome to the TTM Technologies, Inc. Second Quarter 2014 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Tony Righetti [ph]. Please go ahead, sir.

Unknown Executive

During the course of this call, the company will make forward-looking statements that relate to future events or performance. We caution you that such statements are simply predictions, and actual events or results may differ materially. These statements reflect the company's current expectations, and the company does not undertake to update or revise these forward-looking statements even if the experience or future changes make it clear that any projected results, expressed or implied, in this or other company statements will not be realized.

Further, these statements involve risks and uncertainties, many of which are beyond the company's control, which could cause actual results to differ materially from the forward-looking statements. These risks and uncertainties include, but are not limited to: general market and economic conditions, including interest rates, currency exchange rates and consumer spending; demand for the company's products; market pressures on prices of the company's products; warranty claims; changes in product mix; contemplated significant capital expenditures and related financing requirements; the company's dependence upon a small number of customers; and other risk factors set forth in the company's most recent SEC filings.

The company also will present non-GAAP financial information in this call. For a reconciliation of TTM's non-GAAP financial information to the equivalent measure under GAAP, please refer to the company's press release, which was filed with the SEC and which is posted on TTM's website.

I would now like to turn the call over to Tom Edman, TTM's Chief Executive Officer. Please go ahead, Tom.

Thomas T. Edman

Thank you, Tony. Good afternoon, and thank you for joining us for our second quarter 2014 conference call. I'll begin with a review of our business, and Todd Schull, our CFO, will follow with a discussion of our financial performance. Then we will open the call to your questions.

Let's start with a review of highlights from the second quarter. Net sales in the second quarter were $297.6 million. Gross margin was 13%. Non-GAAP net income was $3.9 million or $0.05 per diluted share. Both revenue and our non-GAAP earnings were within our guidance range.

Second quarter revenue was up sequentially and down on a year-over-year basis. After adjusting the year-earlier period to remove revenue associated with the SYE facility that we sold, revenue decreased 5% year-over-year.

The demand environment during the second quarter was mixed. We were pleased to see solid momentum in the networking end market as the 4G LTE buildout in China continued at an accelerated pace.

We also experienced continued strength in the aerospace and defense market. As expected, softer demand persisted in the mobility market as we saw reduced demand from major smartphone customers. The tablet growth rate also slowed during the quarter.

As I will comment in more detail later, we anticipate a strong seasonal upswing in the cellular phone end market in the second half of the year, and our business will be more heavily weighted towards cellular phones versus tablets.

In Q2, the softer demand for our advanced HDI and rigid-flex PCBs used in smartphones and tablets tilted our product mix away from advanced technology PCBs and a less favorable product mix in our advanced technology facilities resulted in a decline in gross margins.

During the second quarter, our advanced technology work, HDI, rigid-flex and substrate, accounted for approximately 34% of our company's revenue. This compares to approximately 37% in the first quarter.

Our blended capacity utilization in Asia Pacific was 75% compared to 62% last quarter. However, a disproportionate amount of the increase in utilization was at our conventional facilities. We experienced a slight decline in utilization levels in North America, which operated at 60% during the second quarter compared to 61% in the first quarter.

Now moving on to our end markets. Sales in our largest end market, networking/communications grew to 40% of total sales compared to 34% in the first quarter of 2014. On a dollar basis, networking sales were up about 22% sequentially as we continued to experience strong activity surrounding China's 4G LTE network buildout. Excluding the impact from the sale of the SYE plant, networking sales were up about 15% year-over-year.

As expected, we are seeing sales related to the 4G rollout in China plateau. Given this trend, combined with limited visibility in networking, we expect sales for this end market to decline modestly in the third quarter and represent about 30% of total sales.

In the computing, storage, peripherals end market, we experienced continued softer demand in the second quarter, and sales declined to 14% of total sales from 18% in the previous quarter. More pronounced seasonality for tablets combined with continued weakness in the server and storage segments led to lower-than-expected sales in this end market. In the third quarter, we expect sales in computing to increase and represent 13% of sales.

The cellular end -- phone end market declined, as total sales accounted for 12% of revenue in the second quarter compared to 15% in the first quarter. As expected, seasonal lulls were amplified as we saw reduced demand from major smartphone customers. We expect sales in this end market to increase significantly in the third quarter to 27% of total sales.

The aerospace defense end market represented 18% of total sales, up from 17% in the first quarter. On a dollar basis, sales were up due to continued solid A&D bookings. We remain encouraged by the diverse group of programs we are involved in. We expect third quarter sales to be up slightly on a dollar basis and represent about 16% of total sales.

The medical/industrial/instrumentation end market contributed 11% of total sales, up from 10% in the last quarter. As we anticipated, sales on a dollar basis grew modestly due to increases in the instrumentation segment of this end market. We expect third quarter sales to decline and represent 9% of sales.

Sales in the other end market were 5% of total sales compared to 6% in the first quarter. We expect this end market to be stable and represent 5% of total sales in the third quarter.

On to our customers and order update. Our top 5 customers contributed 37% of total sales in the second quarter of 2014 compared with 39% in the first quarter. Our top 5 OEM customers remained unchanged from last quarter and, in alphabetical order, were Apple, Cisco, Ericsson, Huawei and Juniper. We had no customers account for 10% or more of sales during the quarter.

Our book-to-bill and backlog continued to improve since the first of the year. At the end of Q2, our backlog, which is subject to cancellations, was $190.1 million, and our book-to-bill rate for PCBs was 1.08.

For the month of July, our book-to-bill was 1.50, which illustrates the strong momentum in bookings early in our third quarter.

As a result of unfavorable product mix, ASPs declined in the second quarter. In Asia Pacific, ASPs decreased 4% from the first quarter. And in North America, ASPs increased slightly by almost 1% from the first quarter.

In summary, we are very encouraged by booking trends in cellular phone and aerospace and defense and are well positioned in these end markets as we enter the second half of 2014. As we support the ramp of key customer programs, we remain dedicated to the priorities I outlined heading into 2014.

We are focused on improving our cycle time and yields for new products through improved prototyping practices while reducing costs. We are concentrating on increasing our factory utilization and shifting our product mix towards advanced technologies with a more favorable margin profile.

Our outlook for the third quarter reflects a step-function increase in factory utilization at our advanced technology facilities. The investments we made in expanding our capacity in these facilities will serve TTM well as we anticipate running close to full utilization in the second half of the year.

With our growing backlog and customer product ramps, we expect the higher volumes and leverage from our operational initiatives to result in substantial increases in revenue and gross margin in the third and fourth quarters.

Now Todd will review our financial performance for the second quarter. Todd?

Todd B. Schull

Thanks, Tom, and good afternoon, everyone. For the second quarter, net sales were $297.6 million, an increase of $5.7 million or 2% compared to first quarter net sales of $291.9 million. As Tom said earlier, the sequential increase in sales was due to gains in the networking/communications and aerospace and defense end markets, partially offset by softer demand at our mobility markets.

GAAP operating income for the second quarter was $3.2 million compared to operating income for the first quarter of $4.5 million.

On a GAAP basis, our net loss for the second quarter of 2014 was $3.1 million or $0.04 per share. This compares to a GAAP net loss of $3.8 million or $0.05 per share in the first quarter of 2014.

The remainder of my comments will focus on our non-GAAP financial performance. Our non-GAAP performance excludes the amortization of intangibles; stock-based compensation expense; noncash interest expense; and other unusual or infrequent items such as the gain realized on the SYE transaction last year, restructuring and impairment costs or costs associated with the early extinguishment of debt, as well as the associated tax impact of these items. Additionally, we exclude nonoperational changes in our tax expense such as impacts of retroactive changes in the tax law.

We present non-GAAP financial information to enable investors to see the company through the eyes of management and to provide better insight into the company's ongoing financial performance.

Gross margin in the second quarter was 13.0% compared to 13.3% in the first quarter. The gross margin decrease was due primarily to unfavorable product mix at our advanced technology plants.

Selling and marketing expense was $8.4 million in the second quarter or 2.8% of net sales compared to $9 million or 3.1% of net sales in the first quarter.

Second quarter G&A expense was $21.2 million or 7.1% of net sales compared to $20.9 million or 7.2% of net sales in the previous quarter.

Interest expense was $3.4 million in the second quarter compared to $3.7 million in the first quarter. Our effective tax rate in the second quarter was 35.1% as compared to a rate of 30.7% in the first quarter. The rate increased due to a change in the geographic mix of our earnings, was an increased portion of our profits coming from North America.

Second quarter non-GAAP net income was $3.9 million or $0.05 per diluted share. This compares to first quarter non-GAAP net income of $1.2 million or $.01 per diluted share. Adjusted EBITDA for the second quarter was $32.8 million or 11% of net sales compared to first quarter adjusted EBITDA of $29.1 million or 10% of net sales.

Moving on to our segment performance. The Asia Pacific segment had sales of $166.7 million in the second quarter, up 0.6% from $165.7 million in the first quarter. Gross margin for the Asia Pacific segment was 10.6% compared to 12.9% in the first quarter. The decrease in gross margin was primarily due to unfavorable product mix in our advanced technology plants. The Asia Pacific segment's second quarter operating income was $700,000 compared to $4.7 million in the first quarter.

The North America segment recorded second quarter sales of $131.6 million, up 4% from $126.6 million in the first quarter. Gross margin for our North America segment increased to 16.0% from 13.7% in the first quarter. The gross margin increase was due primarily to lower costs and a favorable product mix shift. The North America segment's operating income for the second quarter was $8.6 million compared to $4.2 million in the first quarter.

Cash and cash equivalents at the end of the second quarter totaled $282 million, a decrease of approximately $36 million from the first quarter. This decrease was due primarily to an increase in accounts receivable resulting from a change in the mix of our customer revenue towards customers with longer payment terms. We incurred capital expenditures for the second quarter of approximately $24 million.

Net debt was $322.3 million at the end of the second quarter, an increase of $36 million from the end of the first quarter due to the reduction in our cash balance. Gross debt was unchanged from the prior quarter. Depreciation for the second quarter was $23.4 million.

Now I'd like to turn to guidance for the third quarter. Typically, we experience significant seasonality with approximately 55% to 60% of our revenue being generated in the second half of the year. Consistent with that trend, we expect revenue in the third quarter to be in the range of $325 million to $355 million. Last year, our third quarter revenue was $339 million.

We expect improvement in our operating performance year-over-year. With that improvement, we are anticipating our non-GAAP earnings to range from $0.11 to $0.17 per diluted share. This is based on a diluted share count of approximately 84 million shares. Last year, our third quarter EPS was $0.14 and included $0.04 per share of favorable items below the operating income line.

We expect that SG&A expense will be about 9.5% of revenue in the third quarter. We expect interest expense to total about $3.4 million, and we estimate our effective tax rate to be between 32% and 36%.

To assist you with your financial models, we offer the following additional information: we expect to record during the third quarter amortization of intangibles and stock-based compensation expense of about $2 million each, noncash interest expense of approximately $2.6 million, and we estimate depreciation expense will be approximately $24 million.

Lastly, before we turn to your questions, I'd like to mention our upcoming conference participation. We will be presenting at the 34th Annual Canaccord Genuity conference in Boston on Thursday, August 14, at 10:30 a.m. Eastern time. A press release will be issued with further details on this event.

That concludes our prepared remarks, and we'd now like to open the line for questions. Operator?

Question-and-Answer Session


[Operator Instructions] And our first question will come from Prab Gowrisankaran from Canaccord.

Prabhakar Gowrisankaran - Canaccord Genuity, Research Division

Just a couple of questions on the guidance. Looks like you've seen the step-up in advanced technology this month was one that you'd expected. If you can add some color, is it mainly just driven by the large customers and new product rollout? Or are you seeing broad-based strength in smartphones from other customers too?

Thomas T. Edman

Sure. This is Tom. I'll answer that question. The -- as we look towards the latter half of the year, this is the time for product transition for a number of customers as they gear up for the Christmas season. So we're seeing multiple customers transition to new models as they move to introduce new products. So it is rather broad-based. If you do -- I think their -- the world is evolving, and particularly in smartphones. As we move forward, I think we'll continue to see strength in the Q3, Q4 period with product introductions there. There's also opportunity as you move into January in preparation for Chinese New Year. Those are sort of the 2 peak parts of the season.

Prabhakar Gowrisankaran - Canaccord Genuity, Research Division

Yes, my second question was just on the gross margin and ASP trends. I know gross margin in the quarter was low because of your lower utilization. But -- and where can it trend to with your expectation for full-capacity utilization in the second half, at least for advanced tech? If you can comment on that and then the ASP trends that you're seeing.

Todd B. Schull

Sure. I'll take that one. So our target model, which we still strongly believe in, shows that the potential for our business is really to generate gross margins, potentially at 19%. Now that requires a significant amount of revenue, we estimate that to be about $400 million a quarter, and it needs to be reasonably balanced. We can't have a few factories stuffed to the gills and other factories lying idle. We -- if you go back to our previous fourth quarter, a few -- a couple quarters ago, we actually achieved those kind of margins on a lower revenue level because the mix was quite favorable in our advanced technology. So the potential is there for that. The key for us is driving the volumes and using our advanced technology factories and getting our utilization where we need it to be, and also just driving the preferred ASPs and business that comes in that portion of our business in advanced technologies. As we look to the second half of the year, I think you could -- you can surmise from the guidance that we're looking for substantial improvement in gross margin in Q3, both sequentially as well as year-over-year. And then as revenue trends into the fourth quarter, we would expect to get some carry-through effect of that on our margins in the fourth quarter, also.

Prabhakar Gowrisankaran - Canaccord Genuity, Research Division

And the second half was, on the ASP trends that you're seeing, is it stabilized in the -- in APAC? It looks like you saw some strength in the North America.

Thomas T. Edman

You would -- that will track with the advanced technology mix. So as advanced-technology percentage increases, which we certainly expect in Q3 and Q4, you would also see a commensurate increase improvement in ASP.


[Operator Instructions] Our next question will come from Matt Sheerin with Stifel.

Matthew Sheerin - Stifel, Nicolaus & Company, Incorporated, Research Division

So just a few questions. On the margin guidance for next quarter, it implies pretty good leverage but certainly, I expected a little bit better due to the big volumes and due to the mix shift. How much of that, perhaps, is due to the fact that with these new program ramps with various customers, there's still maybe some yield issues and other ramping cost and startup costs as you go to very, very big volumes from a lower run rate?

Thomas T. Edman

So Matt, sort of a 2-part answer. The first factor is backlog. And you saw that we've had a very strong book-to-bill in July and a strengthening book-to-bill as we moved through the second quarter. What that leads to is a steady ramp cycle that really, as indicated by the book-to-bill in July, means we're really ramping in August and September.

So we get a portion of that improvement, really, the full-loading factor starting in August and into September. The other factor is exactly what you named. We've got -- we always have our eyes on yield, and yield is absolutely critical as we now are moving from the prototyping stage into ramp. And clearly, we are careful on how we model yield. We're hoping operationally that -- to continue to improve yield through the ramp cycle, which would allow us in the latter part of Q3 to improve operating income as we head into Q4. But that's absolutely what we're focused on.

Matthew Sheerin - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay. And as you continue to ramp, and assuming that you should still see sequential growth in your handset business and perhaps in the computing and as -- in the tablet business in Q4, would you expect further margin expansion? And do you think you can -- last quarter -- last year in December, you put up a pretty strong gross margin of 19% or so. Do you think that's still achievable this year?

Thomas T. Edman

That is absolutely -- from our standpoint, operational improvement year-on-year is critical. So there is no question that is the goal for us and to perform at levels at least equivalent to last year's Q4. And as you point -- and again, it's really critical that we ramp, that we ramp successfully and that we yield -- that we get the kind of yield performance that we saw last year.

Matthew Sheerin - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay. That's helpful. And looking at the North America footprint, it sounds like the mil/aero business is starting to bounce back a little bit. And I know margins overall were up. But your utilization rates are still pretty low, and it doesn't look like that's going to change any time soon, particularly in your -- the nonmilitary or nondefense business in North America. So are you looking, at all, about additional restructuring costs or cuts at all and bringing in some of this capacity?

Thomas T. Edman

So the -- we are always looking at our facilities and at our footprint. And as you know, we've -- in the last year, we've gone through a divestment and a facility closure in Asia Pacific. On the North America side, there are a few factors at play. One, when we look at capacity utilization, we tend to look at plating capacity. And often, when you're in a low-volume, high-mix environment, actually, the -- you're looking at capacity constraints that are in other elements of the process. So the number is a little bit misleading. We can't -- difficult to find a better number to use, but it's always a little bit misleading from that standpoint. Secondly, QTA is a big part of our North America business. And as you know, with QTA, you need to be ready to react. And so you do need a portion of capacity that's available. And finally, with the nature of the aero -- particularly the defense contracts that we're involved in, a lot of these programs are long term. We made commitments around our facilities based on those programs. And so you have to move in a very deliberate manner in terms of evaluating the footprint. So answer is we continue to look at it but we do not have any immediate plans for facility -- for a change in the footprint.

Matthew Sheerin - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay, fine. And then as we get through the next couple of quarters, obviously, with this big ramp of handsets and you're going to be looking at another -- next March and June, another big step-down and obviously, we've seen these yo-yo quarters of big movements in EPS and in margin. Any efforts, at all, to try to mitigate that at all, and whether it be increasing things like variable costs? Or are there other things?

Thomas T. Edman

So, yes, a few things that -- a few elements that we're actively working on. On the market side, we're fortunate in that the drivers behind mobility are critical drivers in other markets that we're involved in. So if you look at medical, if you look at automotive, if you look at industrial applications where the customer base is driving for a smaller package size with increased information content, the best way to get there is to go to all layer, any layer, with the advanced HDI technologies that are being used in smartphones and tablets. So we are actively pushing from a marketing standpoint into those new markets. One -- in fact, one of the reasons that this year -- or this quarter we've moved to looking at advanced technology as a portion of our total revenue is because we are also increasing our HDI percentage in what we do in North America. That's responding to an aerospace/defense pull from the marketplace. So absolutely, from a marketing standpoint, we're pushing on markets that would give us a better seasonal mix. On the smartphone mobility side, we continue to look at customers, work with customers that I would call second-tier customers who are customers that are in China, out of Taiwan, that are working on improving share in smartphones. They tend to have a slightly different introduction cycle, so that should benefit us as well. And then finally, we are, in our facilities, working on how we can variable-ize the cost. We actually have a significant portion that we continue to work on in our plants where -- of equipment requirements that we are able to move within our footprint or at least, elements that we can use the rest of our footprint to help support our advanced technology facilities. So that's the benefit of our footprint from a TTM perspective. And also, the -- actively driving to -- into markets where seasonality is not as much of a factor is the second piece of it.


At this time, we have one question remaining in the queue. [Operator Instructions] And we'll take our next question from Rich Kugele from Needham & Company.

Richard Kugele - Needham & Company, LLC, Research Division

A couple of quick questions. So -- and maybe this is kind of tagging along on Matt's question. Should we be thinking, until something materially changes in the broader global end markets, that the first half gross margins should trend in this 12%, 13% range and that the second half is mid to upper teens? And if that's the case, is there any way to move to a more flexible manufacturing and prevent some of those wild margin swings?

Todd B. Schull

It's kind of a -- so 2-part question. Let me tackle the first part and maybe Tom will speak to the second part.

But in terms of the margins, absolutely, because of the seasonality, we're going to have an impact on our gross margins in the first half of the year compared to the second half of the year. And a lot of that is revenue driven. Now that got a little bit -- it got exacerbated a little bit here this year because, I think, the pendulum swung even more than we had expected on our advanced technology to the downside, and that really hurt us. If you compare it to a year ago, our margins were more in the 14% plus range in Q1 and Q2, and we -- this year, we struggled with results that were a little bit less than that. And our big driver, the big variability this year was just that the advanced technology portion of our business really dramatically went soft on us much more than we had anticipated going into the year and certainly, as more than we had encountered in previous years. So to Tom's point, to his response to a question earlier in the call, we are very focused on increasing revenue opportunities that will better balance the load during the course of the year. We see that as the -- as many of the other markets that we support begin to see the benefits of the advanced technology products that we can build and are starting to incorporate that. Now that will come gradually, but that's going to be a favorable trend. And then the challenge for us, obviously, is the work on the marketing side to attract the additional business to have a little bit different product-cycle profile to help balance that load off. So that is our reality. It was probably exaggerated this year, and we would not expect it to be that bad on a year-over-year basis going forward. It wasn't in the past, but that's -- and then we're taking various actions to try to bring that past in terms of growing the business. On the cost management side, as Tom mentioned earlier, we are looking at ways to better balance and better increase the teamwork between our facilities, if you will, in terms of balancing each other out as the different markets have their ebbs and flows, we were very strong in networking this past quarter, and then getting some of our facilities to support that when you're in such a strong -- when you have such a strong market where the primary factories are operating at near-capacity in that market, we support it. And similarly, when you go the other way in some of the advanced technologies, there are some functions that the -- that some of the sister plants can support to help alleviate some of the capacity constraints. So better integrating our facilities with greater teamwork is something that we're seeing progress on, and we need to continue to make that happen.

Richard Kugele - Needham & Company, LLC, Research Division

As a follow-up, do you think that the -- your share -- relative share position in the advanced technology segment is as intact as it was, call it, last year at this time?

Thomas T. Edman

Well, I think, probably the best way to comment on that is if you look at, again, look at our book-to-bill. I'll point you to that. I think generally, what we've been working on is, across the board, improving our share with critical customers. And if you look at the mobility space, that of course includes the first-tier customers, but also improving our share on the high-end smartphone side with the Chinese and Taiwanese customer base. I think we've been pretty successful in doing that. There is a limit, of course, as we go into Q3 and Q4. We're in a situation where it -- our focus is on yield performance and production volume and meeting demands at this point versus improvement in share. But I expect that we'll see at the end of this cycle that we've done pretty well in terms of share gain.

Richard Kugele - Needham & Company, LLC, Research Division

All right. And then just lastly about the 4G LTE rollout. Were you anticipating that business to start rolling over a little bit in the second half? Or is that kind of a recent development? I know that there's been -- some companies like Xilinx and others have had some difficulties in that space, but can you just refresh us on that?

Thomas T. Edman

Sure. Yes. Last quarter, we actually talked to what we saw in the latter half or what I would have -- would call poor visibility in terms of Q3, Q4. I think what we have been -- what I'm really pleased with is that this is much more of a -- it's a situation we're coming off of an extremely strong quarter for -- on the telecom side, in particular -- in line with the China 4G buildout. So as we look forward into Q3, yes, we are seeing this plateauing going into Q3, we're seeing a sequentially down but still a very strong demand environment. And our customers are pointing to what they see as a renewed cycle of investment in -- late in Q4 into -- and then into Q1 of next year. So pretty encouraging from our perspective in terms of both what we're seeing in Q3 and the fact that what we had -- were -- had been concerned with around visibility, it seems to be actually not coming to -- not occurring as drastically as it might. It's just a small sequential down. And then also, the optimism around the end of the year and early next year. So pretty good set of facts there.


And up next, we have Paul Coster with JPMorgan.

Paul J. Chung - JP Morgan Chase & Co, Research Division

This is Paul Chung, on for Paul Coster. Just a quick one for me. What are the margins on the smartphone business versus tablets? And how does this benefit 4Q with the mix shift?

Todd B. Schull

We generally don't get into specific profitability or pricing on individual product. We've said generally that advanced technology, as a segment for us and as a product offering, offers better-than-average margins vis-à-vis the rest of our business, so generally more attractive. You will get some variability within the advanced technology. Some products are more, some products are less. It's just the competitive nature of the different submarkets within that product group that we compete with. Generally speaking, advanced technologies are better-margin business. When we get our plants reasonably loaded, which we're expecting here as we look into Q3 and Q4, you're going to see pretty strong margin performance within those businesses. And that's what we're expecting here. That's what we've guided to here in the third quarter. And if the Q4 plays out as it has the last several years, we'd expect that trend to continue.


And it appears there are no further questions at this time. I'd like to turn the conference back to management for any additional or closing remarks.

Thomas T. Edman

Okay. Yes, and I'd like to thank everyone for joining us on the call. And then just to remind you again that we will be presenting at the Canaccord Genuity Growth Conference in Boston, Thursday, August 14 at 10:30 a.m. Eastern time. We look forward to seeing you there. Thank you.


And this does conclude today's conference. Thank you for your participation.

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