Viasystems Group CEO Discusses Q3 2010 Results - Earnings Call Transcript

|
 |  About: Viasystems Group, Inc. (VIAS)
by: SA Transcripts

Operator

Good day, ladies and gentlemen, and welcome to Viasystems Group third quarter 2010 conference call. At this time, all participant lines are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will be given at that time. (Operator Instructions). As a reminder, this conference is being recorded. I would now like to introduce Dee Johnson. Ms. Johnson, you may begin.

Dee Johnson

Thank you, [Theresa]. I'd like to welcome everyone to the Viasystems Group investor conference call for the third quarter of 2010. If you need a copy of today's earnings press release you'll find it at viasystems.com. We also have a few slides on the website.

Our presenters today are Viasystems' Chief Executive Officer, Dave Sindelar, and our Chief Financial Officer, Jerry Sax.

In the course of our discussion we are likely to make forward-looking statements. I wish to remind you that any forward-looking information that we provide is given in reliance upon the Safe Harbor provisions of the Securities Litigation Reform Act of 1995.

The comments we will make today are management's best judgment based on the information currently available. Our actual results could differ materially from any forward-looking statements that we might make. The company does not intend to update this information to reflect developments after today and disclaims any legal obligation to do so.

Please review today's press release and recent SEC filings such as the annual report on Form 10K filed on February 25 for more complete discussion of factors that could have an impact on a company's actual results.

Some of our discussion today will include non-GAAP measures, in particular, adjusted EBITDA and adjusted EPS. These are reconciled in our GAAP results in our slide presentation. Management believes these measures are useful for analytical purposes and to assist in comparing results over time and across companies but I remind you that they exclude certain material items that are not a replacement for the reported results under generally accepted accounting principles.

I will now turn the call over to our CEO, Dave Sindelar. Dave will begin with slide 4.

Dave Sindelar

Thanks, Dee, and good morning, everybody, and thanks for joining us today. Our third quarter was an excellent quarter in every respect. It was a record quarter. Orders were strong, especially in July and August and we were able to take advantage of some drop-in orders in the electromechanical solutions business resulting in a standout revenue quarter for that segment.

The printed circuit board plants were operating at a utilization level in the mid-90s and their revenue performance was excellent as well. Consolidated organic revenue growth was 8% sequentially and 45% year-over-year compared with pro forma combined sales.

Continued high utilization contributed to cost absorptions and margin performance continued in the strong trend we saw in the second quarter with gross profit also growing 8% sequentially. Adjusted EBITDA margin was 16% and nicely ahead of our previously stated goal of 15%.

Earnings per share were $0.51. Jerry will cover the financial results in more depth a little later. Needless to say, we are very pleased with the results.

Towards the end of the third quarter, however, bookings began to taper off. In the telecom and computer datacom market, bookings slowed down in September and are continuing to lag the pace of the middle part of the year.

In addition, the fourth quarter will have fewer shipping days than the third quarter because of the PRC government mandated shutdowns on top of the normal holiday season. So we have a few reasons to believe that our fourth quarter sales will reflect a slight sequential decline from the third quarter; and as the volumes back off a little, I would not be surprised to see a slight negative impact on the margins in the fourth quarter. This doesn't take away from the very strong year we've had.

But the drop-in orders in the beginning to the end of the third quarter and fewer shipping days will make it difficult to repeat the third quarter performance.

As we anticipated during our last quarterly call, our integration work is now completed. We met the cost synergy goals we set for the merger with Merix which was an annual savings of $20 million. All the actions we contemplated are behind us now.

Some of the cost improvements for which we expected to incur CapEx were actually achieved by other means, so we are expecting no incremental impact from synergies in the fourth quarter. The business integration has gone very well. This, along with the economic recovery, has energized the organization and brought the best out of our people. I'm pleased with the results of the merger and I believe we can call this a successful transaction.

Turning to slide 5, I'd like to talk about sales by end market for the third quarter. The global automotive sector continued to be a great market for us with sales in the sector up 10% sequentially and 42% year-over-year. That's our sixth consecutive quarter of growth in the automotive sector and our sixth consecutive quarter of positive book to bill. This is a market that has continued to give us confidence or even a sense of urgency to expand our production capacity.

In the telecom market, our sales were up 4% sequentially and 62% year-over-year. Telecom PCB shipments remain strong but our PCB bookings in telecom fell compared to the second quarter. Some of the assembly integration opportunities came our way in the third quarter that we were able to execute quickly which boost our overall telecom shipments in the third quarter in this highly variable end market.

In the I&I market, our sequential growth was 13% and year-over-year growth of 39%. This was an outstanding quarter with shipments up nicely in both the PCB and EM solutions segment. We began to see a rebound in assembly orders for the wind power market but that revenue will be spread over several future quarters and will not have a significant impact on the fourth quarter.

In the computer datacom markets, sales were up 7% sequentially and 46% year-over-year. Some of the issues that dampened this market in the second quarter corrected themselves, such as customer experience and shortages in other components and pushing out their PCB orders.

Our Mil/Aero sales were flat sequentially but up 20% year-over-year. We are pleased to announce that our Forest Grove plant achieved their Nadcap accreditation last month. This signifies that our quality performance meets the high stands of the aerospace industry. We believe we are in a very good position to win new programs and have plenty of quote activity in process to grow the sector.

Moving to slide 6, I'd like to spend a little time discussing our capital spending plans that we announced in mid-September. We have a multiyear capacity expansion plan which is predicated on the market continuing to grow and recover over the next few years. As we noted in the last two quarters, we are bumping up against the limits of our PCB fabrication capacity.

Our multiyear plan to spend as much as $100 million in technology investment and capacity expansion within our existing PCB plants is one that we can flex both as to the amount and the timing of those investments.

We have already committed about $20 million of this amount for equipment that we expect to come online during the first quarter of 2011. This will break the bottlenecks in our China plants that serve the automotive market, which, as you know, is our biggest sector and one that has delivered and we expect will deliver steady growth in the PCB segments.

We have not yet determined either the location or the end markets targeted by the remainder of the capacity expansion since this is subject to change based on market conditions as we move through 2011 and 2012.

To summarize, I am proud of the team for delivering a truly terrific quarter and delivering the merger synergies as planned. Our fourth quarter should be another strong one, although probably not one that sets new revenue records.

We have also implemented a few initiatives that appear to be gaining traction, including our expanded agent sales force and our cross-selling the E-M Solutions capabilities to the former Merix customers. We are investing in capacity expansion and technology advancements to meet our customer requirements.

With that, let me turn it over to Jerry Sax to discuss the financial results.

Jerry Sax

Thanks, Dave. As you've already covered the analyses of the sales and the markets, I'll focus my comments on the very few changes in our third quarter operating results as compared to the second quarter and I'll cover a couple of unique cash transactions that occurred during the third quarter. I'll begin on slide 7.

You'll recall that for our first and second quarters we had presented adjusted income statements which excluded the effects of certain costs in the merger and with the later restructuring activities undertaken to achieve the cost synergies.

During the third quarter, the reported cost related to the merger and the restructuring was less than $100,000 in total, so we're not presented an adjusted income statement for this quarter. On slide 7, for purposes of comparison to prior quarters, we presented only the adjusted income statements for the first and second quarters. In the addendum to the presentation materials, you can find reconciliations of the first and second quarter reporting GAAP results.

As we discussed on our second quarter call, we targeted offsetting previous label and materials cost increases with a combination of selling price increases and other cost containment actions. As a result of our actions, we were able to maintain our gross margin rate at 23.6% for the third quarter.

Our SG&A expenses were $20.5 million for the third quarter, which is just under 8% of sales. Again, as we highlighted during last quarter's call and in the earnings release this morning, the third quarter SG&A expenses included about $1 million of incremental non-cash expense which is related to the new equity incentive compensation plan that was approved by stockholders at the end of June.

With little change in depreciation and amortization as expected, we saw operating income had a record 9.9% of sales for the third quarter, which compares to 9.1% of adjusted operating income in the second quarter.

As Dee mentioned in her opening remarks, we also use adjusted EBITDA as a measure of our business and we achieved $41.9 million in the third quarter of 16.2% of sales. The $4.9 million increase of adjusted EBITDA over the $37 million in the second quarter represents about a 25% fall-through rate on the $20 million increase in sales.

We provided a reconciliation of the operating income to adjusted EBITDA as an addendum to the presentation as adjusted EBITDA is not a GAAP measure.

In other expense during the quarter, the largest change we experienced was a gain, loss on foreign exchange where currency rates worked against us during this third quarter. At $6 million for income taxes, our effective tax rate was about 35% pre-tax income this quarter and is about 38% on an adjusted year-to-date basis.

As a reminder, this includes non-cash deferred taxes and reserves for tax positions taken in prior years primarily in Asia. As I've noted on previous calls, we're working on planning measures to reduce the amount of taxes we're incurring, especially in Asia.

Income attributable to non-controlling interest relates to our joint venture partners' ownership stake in the legacy Merix China sites. The sequential increase you see in this line item compared to the second quarter relates to an improved earnings in the joint venture businesses.

With $10.2 million of adjusted net income available to common stockholders and with no change in the 20 million basic shares outstanding, we achieved the $0.51 EPS that Dave highlighted and that compares to $0.46 of adjusted EPS in the second quarter.

I've not included a balance sheet slide in the conference call materials but if you can see in the second table of this morning's earnings release the only notable change in our balance sheet related to the disposal of the idle Hong Kong factory, which had been included in the line item called Properties Held for Sale in current assets.

As all of our working capital metrics are in line with our historical trends, I'll not make any other comments on the balance sheet, then, and will go instead directly to cash flows on slide 8 of the conference call materials or the third table in the earnings release.

During the quarter, operating activities generated more than $17 million cash and, as I noted during our call last quarter, interest payment of about $17 million in July on the 2015 notes reduced this quarter's net cash provided by operating activities.

The majority of our operating cash generated in the quarter was deployed to CapEx. We spent just over $16 million in CapEx for the third quarter, which drew our year-to-date spending pace to the upper end of the $40 million, $50 million annualized figure that we discussed on the last call. As Dave mentioned, we've already launched portions of the capacity expansion projects that we announced in September.

Much of the capacity expansion equipment that we've already ordered has fairly long lead times for delivery but a portion of that CapEx may actually be reported in the final quarter of 2010.

The $9.7 million in net proceeds from the sale of the vacant Hong Kong facility are included in our investing cash flows. The proceeds were used in part to reduce outstanding Chinese revolving credit facility debt and in part to fund a distribution of the prior year earnings to our PRC joint venture partner with the remaining obviously going to increase our cash balance.

The strong cash balance and the positive operating cash flows, I think, have put us in a good position to fund the growth CapEx as needed.

That's the extent of my prepared remarks at this time. I'll turn the mike back over to Dave for his final comments before we get to Q&A.

Dave Sindelar

Thanks, Jerry. I'll briefly conclude. I'm very pleased with the third quarter and the year-to-date in terms of sales, bookings, margin trends, cash flow and the evolution of the company. With that, I look forward to your questions and I'll turn it back to the operator who will conduct the question-and-answer session.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Your first question comes from the line of Matt Sheerin - Stifel Nicolaus.

Matt Sheerin - Stifel Nicolaus

So a couple of questions -- first is on the gross margin, which was flat quarter to quarter, on the higher revenue. Was that partly due to the fact that the assembly business grew faster than the PCB business? Was it mix issue?

Dave Sindelar

It was primarily the bigger piece of the E-M Solutions business growing. As we've mentioned in the past, while the E-M Solutions business has nice margins, it tends to be lower than the overall PCB margins.

Matt Sheerin - Stifel Nicolaus

Then on the -- in terms of your revenue growth, I know that you implemented some price increases a couple quarters ago to counteract against the rising materials cost. Did that have a role as well in terms of boosting your revenue?

Dave Sindelar

I think most of the cost increases and the price increases had the effect of -- I mean, I guess mathematically if you go up -- sales go up $1 and your costs go up $1 it has the mathematic equation of flattening out your margins. But I think in the third quarter we were able to offset the majority of the costs with the price, so that was relatively neutral from the gross margin dollar standpoint and then it was kind of further effected by the mix in E-M Solutions versus PCB.

Matt Sheerin - Stifel Nicolaus

But I guess the question, Dave, is given the growth you saw in your PCB business quarter-in-quarter, how much was that relating just to pricing versus real demand and unit growth?

Dave Sindelar

We haven't disclosed that specifically, but I think the majority of it was organic growth versus pricing growth.

Matt Sheerin - Stifel Nicolaus

Then the tax rate looked like it was up in the quarter 35% or so. What's a good number to be using going forward, Jerry?

Jerry Sax

I continue to model in the 30% to 35% range. It's hard to get a specific number because it depends on where the income is and we're actually making some changes in our business model that will have the effect of maybe more income into lower tax rate areas. So for the time being I’m using 30% to 35%.

Matt Sheerin - Stifel Nicolaus

Then lastly, Dave, you talked in the segments that you talked about you said that computing and datacom, that was up and you talked about some component shortages being issued and also some push-outs. Was that in the September quarter or are you seeing push-outs this quarter?

Dave Sindelar

I think it was really kind of related to what we were seeing kind of towards the end of the second quarter that we were seeing the computer datacom -- we saw some new strength in that market and so those shortages seemed to be [eeking] up a bit. As we got towards the end of the third quarter, the bookings in the telecom and the computer datacom weakened up slightly, not dramatically but it wasn't quite as robust as it was at the beginning of the quarter.

Matt Sheerin - Stifel Nicolaus

Other than the seasonality, you talked about the fewer selling days, et cetera, and then the little bit of the weakness in bookings in the computer datacom. Are there any other segments where you've seen on a daily average run rate any sort of decline in orders?

Dave Sindelar

No, no, no. In fact, we continue to see pretty strong automotive bookings, so the rest of the markets are plugging along like they have been.

Operator

Your next question comes from the line of Eric Reubel - MTR Securities.

Eric Reubel - MTR Securities

David, on the automotive side you mentioned that it's been strong. I wanted to ask if when you look at the orders coming in, can you determine how end market mix will roll out in 2011 for the emerging markets? Are you seeing higher end, higher feature cars, or does the order set project a less feature-rich car?

Dave Sindelar

In the -- that's an interesting question. Unfortunately, as we -- our lead time to know exactly what they're going to order is probably closer to 60 days to maybe at best 90 days but it's probably closer to 60 days, so other than just general trends that we have as we talk to our customers I can't tell you specifically what they're ordering. So it's not like they put nine-month blanket orders. We get an EDI run once or twice a month depending on the customer and we kind of have a look out on what's going on.

So I'm not sure I have an empirically correct answer. But with that said, we have seen over the last 12 months and I think we will continue to see the complexity of the electronics in cars continue to increase.

If you look at the China market and the China market over the last two or three years has been extremely vibrant and the Chinese OEM producers, their cars tend to be less technical, less complex but those were purchases that we don't participate a great deal in and those were also purchases that the government had tax incentives to kind of help promote and build and keep the Chinese automotive industry going.

So everything that I read in here about the China OEMs is that they're going to continue to go up the complexity scale and what was once a five-year wait trying to get close to where the cars are produced today in the Western world, now we're starting to see it look like say two to three years. So that gap is being rapidly closed and I think that that should benefit us as well. There's a lot of statistics out there and they seem to continue to hold true.

Over the last 10 or 20 years is that the level of complexity and the electronic componentry in cars continues to increase, so we should be able to see an increase in our units consumed that's larger than the total vehicle unit consumed just because of the increase in complexity. Does that answer your question?

Eric Reubel - MTR Securities

If you have any comments on the military, aerospace market, that was flat quarter to quarter, but possibly an area of growth as well. Could you speak to any possible drivers that could help that business?

Dave Sindelar

Yes, and as opposed to -- we're a relatively new kind of kid on the block in the mil/aero segment and on an annual basis we say our sales are somewhere in the 4% to 5% range. So you can do the math just as well as I can, so that's slightly under a $40 million revenue run rate. We continue to focus on the market very aggressively.

But, with that said, I think our sales will probably not follow the trend of the industry. We will follow the trend of our somewhat limited customer base and programs we're on. So on a quarter-to-quarter basis I think you may see some sites that are not indicative of what's going on in the market but I think over a year basis you'll see kind of the trends that we think that we're going to be able to achieve.

As I mentioned, I think the number was 20% increase year-over-year, so while I like and we drive to have consistent quarterly results kind of in a new developing market for us, I think we're going to see kind of stair steps. So we'll go out and win a program, tack it on, get it done, go out and chase some more programs and I think it'll trend more like that than it will an even sequential growth.

Eric Reubel - MTR Securities

Jerry, on the call you called out the drop through rate of 24%. I know you've got some mix drivers that can affect the margin but is that a level that we can look to as a baseline as we try to put our models together for 2011?

Jerry Sax

I hesitate a little bit because as we continue to grow and head to capacity there are some costs that go with that. So if we have idle capacity that we are using as we've grown this year I think that fall-through rate is applicable. As we move forward, I don't think it's necessarily a 25% rate because we're heading to add some additional resource and productive capacity.

Eric Reubel - MTR Securities

As overhead gets put on you can see a little moderation in that level?

Jerry Sax

I think so, yes.

Eric Reubel - MTR Securities

If you could, talk about what you would expect for seasonality in the March quarter. Last year was not necessarily a typical year. Normal seasonal trends would indicate what level of increase or decrease plus or minus. Where do you think you'll be in Q1?

There's some thought that perhaps normal, seasonal trends are being somewhat moderated, that Chinese New Year is providing a little bit of a lift into Q1, that some of the datacom stuff is being pulled from Q3 into second quarter . So we could see a little more flat seasonality going forward across the industry. Is that something that you think is happening?

Dave Sindelar

Historically the seasonality was first quarter. We ended the first quarter -- the first quarter was the weaker of the first half quarters. So you had a weaker first quarter, stronger second quarter. We've had a strong third quarter and a weaker fourth quarter.

I think this year in the second half of the year we're probably getting back more to normalized trends and I would think that -- again, it's hard to say when you get back to complete normality -- but, I mean, my guess today is that would be -- you'd kind of get back to normal trends in the first half as well.

Again, we don't see the differences of 10% between quarters. It's usually have 24%, 26%, 23%, 27% kind of slit in your 25% of the year. So my sense of it today is that the second quarter will be strong, third quarter looks like it should be strong. Once you get up to the fourth quarter I'm not sure I’m smart enough today to tell you what it's going to be.

Operator

Your next question comes from the line of Nick Farwell - Arbor Group.

Nick Farwell - Arbor Group

May I just follow up on the questions earlier about the incremental margin? When I try to disaggregate it, as I think, David, you discussed earlier, between the assembly side of the business and the printed circuit board, the assembly side, obviously, with higher growth in revenue, still had what is, I think you termed, a reasonable incremental margin approaching 20%, which is, I think, given its high labor content is what you feel is a reasonable incremental margin for that business.

But the printed circuit board is closer to 20%, when in reality, it's my impression, that you feel it's a 30%, maybe a 40% incremental margin business. I'm curious what is holding back that leverage in the printed circuit board side of the business?

Dave Sindelar

What do you mean? As we go forward?

Nick Farwell - Arbor Group

Why we didn't see more leverage in the third quarter. TTM, for example, is close to 40%. Now, they have modest, almost no auto exposure, and that may account for some of the differential in incremental margin. I'm just curious if there's something else going on that's holding down your profitability in the printed circuit board, certainly on an incremental revenue basis.

Dave Sindelar

Yes, no, I can't speak for TTM. So you've got me a little flat-footed in the comparison there. But all I can say is that the majority of our printed circuit board sales are based in China and so, again, when you look, if you have an 8% increase quarter-over-quarter and if -- and, again, the majority of that was growth but the majority could be 4.1% versus whatever, so we haven't disclosed what that is.

So when you look at the incremental printed circuit board sales, I'm not sure mathematically that's going to have a tremendous affect on your gross margin percent. I could do the math for you but just in my head as I run through it I'm not sure an 8% incremental increase is going to take you from a 16% EBITDA margin to 17% EBITDA margin. It may take you from a 16% to a 16.1% but I'd have to do the math. I don't mean to dodge it but I’m just trying to give you my reaction.

Nick Farwell - Arbor Group

How do you see, looking out over a year's timeframe, assuming a normal cycle, which of course that's a bold assumption under itself, but in a more normalized environment do you see the incremental margin in the printed circuit board business approaching a 30% to 40% level that you, I think heretofore, expected it might occur, or has something changed?

Dave Sindelar

I think you kind of get back to Jerry's comments. When you are running at 50% utilization, if you put 50% more capacity into a plant you're going to have 30% to 40% fall-through. When you're running at 95% and you have to go out and install capacity, you've got to install overhead, you've got to add a little bit. It's not going to take it from a 30% to 40% down to a 15% to 20% but it's not going to be the same incremental fall-through.

So I think that Jerry's comment was that we'll probably see some shrinking of the incremental margin. I mean, I'd have to go through and analyze it to figure out what the specifics are.

Nick Farwell - Arbor Group

In a general sense, what you're saying is that the capacity constraints on that incremental sales dollar is not giving you the kind of return you have, as you pointed out as an extreme example, 50% capacity running to 70%. You'll get, obviously, substantially more leverage. That combined probably would mix the auto (inaudible) in your incremental margin.

Dave Sindelar

You keep mentioning auto like it is a bad margin item. We don't believe that it is.

Nick Farwell - Arbor Group

I just wondered if it has the same incremental margin as other segments of your printed circuit board business. I'm not saying it's bad, at all, by any means.

Dave Sindelar

Given the same assumptions the incremental margin is pretty comparable.

Nick Farwell - Arbor Group

I just want to clarify, I thought I heard, Jerry, you say that the higher, other expense and other non-income, whatever you want to call it, the $1 million, is that virtually all currency?

Jerry Sax

It's virtually all currency, yes.

Nick Farwell - Arbor Group

Then you commented, David, that during the quarter you pretty much fully integrated Merix now and the synergies have been realized. I assume you're not in any way associating the cross selling opportunities associated with the North American Merix operation, the Chinese original Viasystems business. Can you talk a little bit about how that is progressing?

Dave Sindelar

The comments were 100% directed towards the cost synergies, not the cross selling. As we've mentioned in the past, we've gone through in the incremental sales and break them down into two pieces: one, where we take what Via did and try to sell it into the Merix customers and what Merix does and how we're selling that into the Via customers. The biggest piece is the Quick-Turn and the biggest.

The biggest piece because of the nature of the description, Quick-Turn, it's the one that hits the quickest and the fastest. We believe that we have probably achieved approximately $1 million worth of Quick-Turn sales and that when you look at the total Quick-Turn business it's a nice increase and we're hoping that we're going to continue to be able to build on that.

On the reveres cross sell, which is really the E-M Solutions business into the Merix legacy customer base, we're making nice progress. We're, again, right at this juncture we have pipeline, we have opportunities, the cross selling, the incubation period of those sales could be as long as nine to 18 months. It just depends on what the approval processes are.

But we're making great in roads. We're bidding on a fair amount of business and we're hopeful that by 2011 we're going to be able to start winning some of these programs and starting to ship them out the factor door.

Nick Farwell - Arbor Group

The last thing -- I'm curious, in the past, I believe you commented that the Quick-Turn business could use some incremental investment to give it not only some critical mass here in North America but also be able to address the original Via customer base. You haven't commented on that with respect to your CapEx spending.

Dave Sindelar

We've gone in and we've upgraded some of our capabilities at the San Jose facility and things like increased plating capabilities, increased LDI and we brought a laser into the facility. So we're increasing capacity, we're bringing it in-house. Some of those capabilities were outsourced before, so we think that we're going to get positive benefit from that.

So we continue to look at it. We continue to put the capabilities in where the market and customers are pushing us. So we're seeing some positives in that regard as well. I think that's partly reflective of the ability to cross sell and get some of the Viasystems' customers into the facility.

Operator

Thank you. (Operator Instructions). I'm showing no further questions in queue. I would now like to turn the conference back over to Dee Johnson.

Dee Johnson

Thank you, [Theresa]. Thanks, everybody, for joining us today on Viasystems Group third quarter conference call. We would be happy to do follow-up calls with you and to help you with any background questions. Thank you for you interest in Viasystems. This concludes our call.

Operator

Thank you. Ladies and gentlemen, thank you for your participation. That concludes the conference. You may disconnect and have a wonderful 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!