Audience's (ADNC) CEO Peter Santos on Q2 2014 Results - Earnings Call Transcript

| About: Audience, Inc (ADNC)

Audience Inc. (NASDAQ:ADNC)

Q2 2014 Earnings Conference Call

July 31, 2014 04:30 PM ET

Executives

Melanie Solomon – Investor Relations

Peter Santos – President and Chief Executive Officer

Kevin Palatnik – Chief Financial Officer

Analysts

Harlan Sur – JP Morgan

Ryan Carver – Credit Suisse

Kip Clifton – Deutsche Bank

Operator

Good day ladies and gentlemen, and welcome to the Audience, Inc., Second Quarter 2014 Earnings Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions). As a reminder, this conference call is being recorded.

I'd now like to turn the conference over to Ms. Melanie Solomon, Investor Relations. Ms. Solomon, you may begin.

Melanie Solomon

Thank you. Bridgette. Good afternoon everyone, and thank you for joining us on today's conference call to discuss Audience's second quarter 2014 financial results. We apologize for the delay in getting started. We just needed to confirm the 8-K filings. The webcast of this call may be accessed through our website audience.com and will be archived for one month.

Today's call is been hosted by Peter Santos, President and CEO; and Kevin Palatnik, CFO. During this conference call, we will make forward-looking statements regarding future events or results of the company. Actual events or results could differ materially from those projected in the forward-looking statements. Please refer to our SEC filings including our most recent Form 10-Q which contain important factors that could cause actual results to differ materially from the forward-looking statements.

In addition, Audience reports gross margin, net income, basic and diluted net income per share in accordance with GAAP and additionally on a non-GAAP basis. Management believes that non-GAAP information is useful because it can enhance the understanding of the Company's ongoing economic performance.

Audience uses non-GAAP reporting internally to evaluate and manage the Company's operations. Audience has chosen to provide this information to investors to enable the comparisons of operating results in a manner that the Company analyzes its operating results. The full reconciliation of the GAAP to non-GAAP financial data can be found in our earnings release issued earlier today and we ask that you review it in conjunction with this call.

And now let me turn the call over to Peter Santos, President and CEO of Audience.

Peter Santos

Thanks and welcome to everyone on the call. First I'd like to highlight that we announced and closed the acquisition of Sensor Platforms, the leader in motion sensor processing for Android platforms just after the end of the quarter.

Going forward, we believe that Audience is uniquely positioned to deliver compelling market leading solutions based on the fusion of our leading edge voice processing with motion. The combination of these technologies has the potential to transform the way users engage with devices by enabling seamless natural user experience, always-on sensor fusion, and context-aware services.

Looking at the financial results for the second quarter, total revenue was $37.5 million. Our largest customer in the quarter was Samsung representing 72% of total sales. Non-GAAP gross margins for the first quarter was 54.9%, and pro forma loss per share totaled $0.10 for the quarter.

On the product front, in the second quarter, we saw increasing adoption of our flagship eS700 earSmart voice processor technology announced earlier this year. In Q2, ZTE announced the Star 1 and Grand S II, both featuring our eS704 voice processor, which includes our fourth-generation advanced voice capability plus continuous VoiceQ delivering high performance, continuous keyword detection, and [command] recognition with extremely low power consumption.

ZTE is beginning this week, to promote this capability heavily in the China market. Although, our second quarter revenue was generally consistent with expectations, we are forecasting a significant drop in revenue for the third quarter. Much of this relates to our business with Samsung, which as you know, a leading adaptor of our most current technology.

In April, they announced the Galaxy S5, which uses our fourth generation eS704 voice processor, and we have a number of other high-end and mid-range models in progress within them that we expect to grow our share.

However, Samsung recently pre-announced Q2 results, but were not up to their expectations and are projecting substantially softer than expected demand for their smartphone products. This has affected all of Samsung's key suppliers and we expect a significant financial impact for our business with Samsung in the second half of this year.

The revenue shortfall expected for Q3 underlines the importance of our growth initiative, which I'll talk about in a moment. However, the magnitude of the expected shortfall also makes it important that we materially reduce operating expense.

Kevin will be speaking to you shortly about our plans to reduce expense and how they flow into our forward guidance. Looking now to additional growth drivers, we continue to gain traction in the mid-range smartphone market with models launched during the second quarter including the Yulong Coolpad K1 and S6, Huawei P7, and Gionee E7 using our current generation es325, es305 voice processors.

Another key product initiatives for us is in Smart Audio Codecs, and we introduced es754 voice processor at Mobile World Congress in February. We mentioned on our last call that several OEMs were qualifying this product. We now have several design wins for the es754, the first of which will be entering production this fall, and we look forward to talking further about these models as they release.

As I mentioned at the outset, we closed the acquisition of Sensor Platforms early this month. SPI is a leading developer of software and algorithms that interpret sensor data to enable broad context awareness on Smartphones, wearables, and other devices.

Their Free Motion Library is the result of collaboration among experts in activity analytics, [pedestrian] navigation, motion, sensor fusion and low power system architectures.

Additionally, Sensor Platforms is leading the proliferation of motion in applications with the release of the open Sensor Platform for android. The first Open Source software to enable implementation of sensor hubs in Android devices.

The acquisition of Sensor Platforms will enable us to tightly integrate voice and motion at the algorithmic level as well as in systems integration and support. The combination of Audience’s hardware and Sensor Platform software will provide a robust framework for Sensor data acquisition, communication, and low power always-on context awareness.

This significantly accelerates time in market for our roadmap of fully fused and integrated sound plus motion solutions to exploit a major opportunity and always-on multisensory processing for mobile and wearable devices.

We believe that these solutions will bring fresh differentiation and end-user value to our customers and their end users. In summary, while we face and will navigate near-term financial challenges, we believe we have laid the ground work for the future of the company through continued product innovation and development, the capability such as continuous VoiceQ and smart codecs, as well as our recent acquisition.

Our efforts are focused on delivery of our leading smart audio codec and our entry into multisensory applications, which we think will provide opportunity for long-term growth and diversification.

With that, I'll now turn the call over to Kevin for his review of the second quarter financials and our forward guidance.

Kevin Palatnik

Thank you, Peter and good afternoon, everyone. Today, I'll first summarize Q2, 2014 financial results, and then move to the outlook for Q3. I will discuss primarily non-GAAP results and ask that you refer to today's press release for a detailed reconciliation between GAAP and non-GAAP financial results.

The non-GAAP adjustments relate primarily to stock-based compensation expense, acquisition related expense, the treatment of non-cash rent expense and related tax adjustments. Q2 2014 results for the Company; key operating metrics were total revenue of $37.5 million, non-GAAP gross margin of 54.9%, and non-GAAP operating margin of negative 7.2%.

In Q2, GAAP net loss was $4.4 million. This amounts to a loss of $0.20 per diluted share based on weighted average shares outstanding of 22.5 million that compares with GAAP net income of $2.7 million or $0.11 per diluted share based on weighted average shares outstanding of 23.2 million in the same period in 2013.

On a non-GAAP basis, we recorded loss of $0.10 per diluted share based on weighted average shares outstanding of 22.5 million. That compares to net income of $0.24 per diluted share based on 23.2 million shares for the same period in 2013. Total revenue for the first quarter was $37.5 million.

Hardware revenue was $35 million and license revenue was $2.5 million. Samsung represented approximately 72% of revenue in Q2 compared with approximately 74% of revenue in Q1. In Q2, our only licensed customer was Apple, so you can see from the face of the P&L that Apple represented approximately 7% of revenue in Q2 compared with approximately 5% of revenue in Q1.

Revenue from customers other than Samsung and Apple comprised 21% of revenue in Q2, the same percentage of revenue as in Q1. Non-GAAP gross margin for Q2 was 54.9% that compares to 51.9% in Q1. The increase in gross margin was a result of an increase in license revenue and a richer product mix of our fourth generation advanced voice processor, the eS704.

Total operating expenses on a non-GAAP basis for Q2 were $23.3 million. Non-GAAP operating margin for Q2 was a negative 7.2% compared to a negative 11.9% for Q1. Q2 ending headcount was 363 compared with 338 at the end of Q1.

With regard to the balance sheet, cash and cash equivalents were approximately $108 million at the end of Q2. In addition, we had approximately $15 million invested in marketable securities. Total DSOs for Q2 were 23 days that compares with 29 days in Q1.

And finally, inventory at the end of Q2 was $20.2 million compared with $18.7 million at the end of Q1. Now I'll turn to our outlook for Q3, 2014. Please note that our business outlook reflects Sensor Platforms revenue and expenses, as we completed the acquisition on July 11.

We expect revenue for Q3 to be in the range of $25 million to $28 million. The sequential decrease represented by this range is primarily result of the lower than expected demand from Samsung. Q3 non-GAAP gross margin is expected to be in the range of 52% to 55%.

Q3 non-GAAP operating margin was expected to be in the range of negative 42% to negative 45%. Now this includes tape out expenses approximately $1.8 million, well approximately 6 points of non-GAAP operating margin.

Given the top line challenges, we expect to face in Q3. We plan to implement expense reductions in excess of 15% of current run rate during Q3. At quarter end, we won't see the full benefit of these expense reductions until Q4.

GAAP EPS for the third quarter is expected in the range of negative $0.48 to negative $0.54 to diluted share and non-GAAP EPS is expected to be in the range of negative $0.37 to a negative $0. 43 per dilute share based on approximately 22.8 million shares.

Operator, we will now take questions.

Question-and-Answer Session

Operator

Thank you. (Operator Instructions). Our first question is from Harlan Sur with JP Morgan. Your line is open.

Harlan Sur – JP Morgan

Kevin, can you just give me a sense for what you're anticipating within your guidance in terms of licensing and royalty revenues for the third quarter?

Kevin Palatnik

It's not going to be materially different than what we saw in Q2 as it relates to licensing. As we look into Q3, it will be a blend of Apple royalty and the existing SPI licensing, but we do expect directionally Apple to decrease sequentially and that gap will be filled in by Sensor Platforms.

Harlan Sur – JP Morgan

Okay, that's great, and so, if I look at what's transpired through earnings thus far and some of the other semiconductor companies would pick fixed Samsung high in exposure, Maxim, saw their Samsung business down about 30%, 35% sequentially this quarter. InvenSense I think saw their Samsung business down about 30%, 35% sequentially in the June quarter, all you know kind of due to the similar sort of high-end smart phone exposure.

So, if I apply that theme, it implies roughly about $9 million, you know $9 million to $10 million of shortfall in your Samsung business, which would also imply that there's probably a bit of slight decline in your non-Apple and non-Samsung business, is that kind of how we should we thinking about it?

Kevin Palatnik

Yes, I think the Samsung decrease is probably closer to the $9 million and $10 million, that doesn't change materially what you said. You know timing of shipments, us to others, as you quoted, everyone is – all key suppliers are down as it relates to Samsung depending on how they order the timing of their orders, it could be a couple of points higher than what you expressed, a couple of point lower.

If we look at our pattern or their pattern on us of ordering, they always order ahead a little bit. So I think, given what they normally do in the second half in terms of managing their inventories in this case related to GS5, the sell through in GS5, I think it's probably a little more aggressive with us.

So it is in that $9 million to $10 million range, closer to $9 million, so we see consistent drops as other key suppliers.

Harlan Sur – JP Morgan

Okay and so then, maybe starting with the Samsung business, I'm assuming that this is all GS5 inventory work down and maybe just overall Samsung channel inventory worked on ahead of the iPhone 6 launch, but can you just comment on your current design win traction at Samsung.

I mean, this question is going to come up about your future position at your largest customers. So the question is, do you have more design wins at Samsung tiered up for the back half of this year and into 2015?

Peter Santos

Harlan, thanks for the question. It's Peter. We do actually see an increase in the number of not just mid-range but also high-end platforms where we are seeing sign win [ph] activity, you may be hearing this from other supplies, but part of Samsung's reaction to their challenges is to do more with additional high-end models and our exposure to those additional models is, I would categorize is very good and those are projects that we'd already delivered and are about to be released or others that are in the process of being delivered.

Additionally, part of Samsung's response as we see it, is to push harder for differentiation in their mid range models, that's a place where they think that they can meet the competitive threat is by increasing the feature set and value in the range, and we're actually seeing an uptick in design win activity in the mid-range for that reason.

In particular for things like continuous VoiceQ, that's a very invisible end user feature and will become increasingly so with the marketing that we expect Yulong is going to be doing in China.

Harlan Sur – JP Morgan

Great and then on, so Kevin if the Samsung business is going to be down $9 million, that would assume that non-Samsung, non-Apple business is going to be down a couple of million dollars assuming you come in at the midpoint of your range.

And so, I think you might have alluded to this, but is this again just sort of your customers not wanting to or maybe slightly pushing out the role out of their flagship platforms so that they're just not bunched around the iPhone 6 role out, is that kind of how you guys are thinking about it?

Kevin Palatnik

Yes, that's a good point, Harlan. We have seen some slips in terms of the leases from some key OEM customers. It's typically a 4- to 6-week slip, but we did see some slips from August to September and September to October, so clearly that has an impact on us as well.

Harlan Sur – JP Morgan

Okay and then, obviously China has been a bright spot for the team, especially on the China mobile 4G, voLTE initiative. So when does the 4G voLTE voice quality spec actually go into place and do you expect to see the benefits of that in terms of meaningful growth in your China smartphone business? Is that more of a first half 2015 type of event, are you starting to see the design win and design activity right now?

Peter Santos

Harlan, its Peter. We still, as we did a quarter ago expect that 4G voLTE spec to come into force at the end of this year and we do expect, therefore, the large effect to be in from a shipment standpoint in the first half of 2015. From a design win standpoint, we think we will start seeing it later this quarter and into fourth quarter.

I highlighted the traction that we have with some of our trailing edge products with China customers in terms of released devices, but along the lines of your question of OEM's responding to increased requirements, we are actually now seeing very significant uptake of the eS700 series and eS754 series in the China market as OEMs there look to meet those higher requirements. So the eS704 especially it's more mature now, is getting a lot of interest and traction in China.

Harlan Sur – JP Morgan

Okay and then just my last question and I'll get back in queue. So factoring all of this in, I mean would you anticipate that Q3 is the bottom from a revenue perspective and should we see a return to growth in the fourth quarter and how much confidence, do you have around that. Is the confidence more around sort of drop off in the inventory draw down or is it more confidence just around new smartphone launches in the fourth quarter.

Kevin Palatnik

Harlan, in for planning purposes I can't say at this point that we would see sequential growth. I think there is potential for that, but the planning purposes I would say its flat, to look at the drivers as we mentioned earlier, there is slippage in terms of releases, but clearly given our concentration at Samsung webcam, swing our numbers pretty substantially.

So growth in China can easily be offset with a big movement that Samsung. So I think again for planning purposes flat will be a good scenario.

Harlan Sur – JP Morgan

Okay, great. Thanks guys, I will get back into the queue.

Kevin Palatnik

Thank you.

Operator

Thank you and our next question is from John Pitzer with Credit Suisse. Your line is open.

Ryan Carver – Credit Suisse

Hi, this is Ryan Carver in for John. Just looking to gross margins, obviously the beat in the gross margins relatively expectations on the life in the royalty but in the third quarter, you guys are guiding for a significant product decline and obviously a much higher mix of royalties relative to guidance, yet.

Gross margins are coming down and I guess, if I assume 100% royalty gross profit, it looks like product gross margin is going to fall in the order of call it 350 basis points sequentially. So can you talk through some of the drivers for that gross margin decline especially as some of the new products are expected to ramp and become more material part of your product revenue.

Kevin Palatnik

Hi, Ryan. This is Kevin. It's a good point and unfortunately, as we talked about with Samsung, this most recent reduction that we received in terms of demand relating to Q3, primarily that's GS5. Inside the GS5, is our most recent fourth generation process the eS704. It carries a premium price if you will, we announced it earlier this year.

Samsung was an early adopter. So given our concentration, given that they're cutting back on their flagship model. Which is from a ASP standpoint or just from gross margin standpoint, that's the largest provider and the sequential drop in gross margins?

Ryan Carver – Credit Suisse

Okay, that makes sense and then I guess, in terms of sort of run rate level of business. Obviously as we enter the first part of next year, we should expect to see sort of the ramp up next generation flagship devices from Samsung, should we think of sort of the September, December numbers implied on this December side as kind of a blip in the road here in March 2015, do we sort of think of that as year-on-year flat or do we sort of build off a sequential level from this, I guess new December revenue level?

Kevin Palatnik

Typically Ryan we only go out one quarter with guidance as you heard Harlan ask about Q4, I say we should for planning purposes at the top line keep that relatively flat, as we look into Q1 and Q2. I'm not going to preannounce any flagships and we still have work to do, to win some of those flagships, but if you look back historically.

Our Q1, 2014, our Q1, 2013 relative to Q4 sequentially has been increased, so using that as an assumption or to use that as an assumption make sense.

Ryan Carver – Credit Suisse

Okay, I guess last, so following up on that, I mean. That would imply sort of, $4 million or closer to $7 million year-on-year decline for revenues. So I guess, I mean do you – obviously you're not explicitly guiding, but I mean is that kind of year-on-year expectation and ASP question, am I just kind of reading too much into that?

Kevin Palatnik

Yes, it's too soon Ryan honestly. If we look at the ramp up of the GS5 in Q1, 2014 currently was much more measured, much more tempered in the ramp up of Q1 of 2013 related to the S4 and as you know the S4, we did a quite a substantial building in the first half and reduced orders in the second half, in 2014 it was much more moderate, but now the sell through in the second half as it been up to our expectation, so they've cut back in orders.

With the next gen phone, it's really difficult to calibrate at this point that far out, so while I believe there is sequential increase between Q1, 2015 and Q4, 2014 give me another quarter to help calibrate that.

Peter Santos

And Ryan, it's not just, this is Peter and not just about visibility, but as you know these are fairly substantial disruptions in Samsung's business and they will be responding in ways, that technically we can't fully see at this point, when we left that far out, that response could either speed up, slowdown, change their flagship out of strategy. So we need to see how that works out.

Ryan Carver – Credit Suisse

Great. Last question on the OpEx reductions, is that 16% reduction off a sort of 20% of a third quarter, guidance X your take out cost, that we should think of that kind of in the high teens or maybe kind of $19 million range, I guess how does that impact potentially your expectations return to profitability and I'll turn back in queue.

Kevin Palatnik

Sure. So the 15% reduction that we talked about from an expense standpoint. The first thing what we should say is, we still got a little work through it, so it won't be fully effective for the full quarter, so to use the full quarter run rate, to calculate the expense reduction. You can get the full quarter, but it won't be effective probably for that a third of the quarter.

You won't see the full benefit until Q4, last quarter from OpEx standpoint, we came in 23.3. As you look at the press release and look at the notes. You'll see that about, $500,000 was non-GAAP out related to the SPI acquisition.

A fair run rate to calculate that 15% reduction on using the high 24's, low 25 range. So yes, net of the take out related to Q3, it's a good zip code [ph] to be in.

Ryan Carver – Credit Suisse

Then on breakeven?

Kevin Palatnik

Well, you know in terms of the reduction itself, we said in excess of $15 million, we had some work to do to achieve the $15 million and potentially beyond that, so let me at this point reserve breakeven. We will work through the expense reduction and will talk about that, at a later time.

Ryan Carver – Credit Suisse

Okay, thanks guys.

Operator

Thank you. Your next question is from Brian Modoff with Deutsche Bank. Your line is open.

Kip Clifton – Deutsche Bank

It's Kip Clifton filling in for Brian, just on the back of that OpEx question, quickly. Can you just talk, I mean is that coming out of R&D or SG&A or both at 15%.

Kevin Palatnik

The way to think about it at this point, Kip is, up 15% for all of OpEx.

Kip Clifton – Deutsche Bank

Okay.

Kevin Palatnik

We have some work to do, to delineate the piece parts and so top level, 15%.

Peter Santos

Kip, it's Peter. We will be taking a program view of this and that ultimately may drive some small differences in one direction or other of R&D and SG&A.

Kip Clifton – Deutsche Bank

Okay and then I just want to go back, last few weeks. Presumably there was some indications of this softness ahead of time and so I wonder, if we can go back to the acquisition and if you can walk us through kind of the moving parts of that acquisition, while I'm guessing you saw the weakness happening at the same time and kind of the decision to move forward with that because I feel like, there was a number of reports about the S5 weakness ahead of Samsung's report. So maybe you can just talk to that point.

Kevin Palatnik

Yes, Kip. Let me start, I'm sure Peter will add. From a forecast standpoint, we typically get a forecast from Samsung on a weekly basis and clearly it looks forward a few months, a handful of months, if you will and they're pretty good about weekly, ever so often it will be two weeks, but at the top level.

We as you know close Sensor Platforms on July 11. We happen to get a forecast on July 8 and July 16 that showed pretty significant reductions. Clearly, we understood the pre-announce that was early July, but we haven't yet seen that in the end put on Audience.

It did arrive, but it did arrive primarily after we closed the acquisition and we get a forecast again this morning with some additional reduction, that others may not see yet. So they really were two separate two events. And maybe Peter wants to add to that.

Peter Santos

Kip to put that in perspective, another way to look at it how do we feel about that acquisition, now and the answer is, we still feel very good about that acquisition. We said at the time, but this is, it's a relatively small team. the expense addition is relatively small and that we felt, that would be accretive in 2015 and we still believe that while we are going to going through expense reductions as a company, we will look to make sure that we maintain the critical capabilities and programs that are going to drive growth.

And one of those is absolutely multisensory processing and computing and the Sensor Platforms team and the capabilities that they bring for in scheme of our overall expense budget, not very much expense, are really a critical piece to the long-term health of the company.

So again, if we ask question but we are still happy that we did that, the answer is yes, not be cavalier about the addition of the expense, but this was a very strategic acquisition for us. Having said that, to reiterate, what Kevin mentioned the visibility we got from Samsung into the reductions has been very recent.

Kip Clifton – Deutsche Bank

Yes, okay. All right, as we look to kind offset some of the softness and maybe with handsets. How is traction with adjacent markets, be it wearable or anything that can help us at this maybe, no necessarily next quarter, but down the line is there a constructive conversations going on in the pipeline?

Peter Santos

There are, so to go I guess in order of maturity of our engagement with market. We have as I have mentioned before in development, a new product targeting PC application and we haven't announced that yet, but we have won some designs with that capability, we'll be talking more about that in the fall.

And so we expect to start seeing revenue starting here in the second half. Based upon I'll say the visibility Samsung [ph] [indiscernible] TV, there is now significant interest in the market in general in voice actuated remote control and we foresee programs actually not just for voice process, but also for smart codes in that market.

And we also, I don't want to make too much of this at this point, but we are pursuing a handful of common opportunities deal with the opportunity stage, not yet design wins in both wearables and Internet Of Things.

Those will be activities and opportunities that will get fresh prioritization in the light of even greater urgency to diversify that this springs.

Kip Clifton – Deutsche Bank

Yes, I got you. Okay. Thanks a lot guys.

Operator

Thank you and we do have a follow-up from Harlan Sur with JP Morgan. Your line is open.

Harlan Sur – JP Morgan

Thanks for taking my follow-up, I know it's kind of tough answering environment for you guys right now, but sort of focusing on kind of the new product traction. You're anticipating your smart audio codec product to start to ramp here in Q3, is that still the case in, can you give us some sense on roughly in terms of how many smartphone models will be integrating this product and rolling out this product, exiting this year?

Peter Santos

Exiting third quarter, we expect that will be one or two exiting this year. I think there will be another one or two that we would add, a lot of the – there's another probably half dozen design wins and we think, we'll start in the first half of 2015.

Harlan Sur – JP Morgan

Got it and then on the motion processor side, MQ100. Are you guys still on track to start to ship that in the fourth quarter?

Peter Santos

Yes, late fourth quarter.

Harlan Sur – JP Morgan

And is that with one or multiple customers. And can you just give us a rough idea?

Peter Santos

Hard to say the exact timing of whether, we want to more than one. Small number at the end of the year.

Harlan Sur – JP Morgan

Okay, got it. Thanks guys.

Operator

Thank you. I'm not showing any further questions. Please proceed with any closing remarks.

Peter Santos

Thank you, everyone for calling in this afternoon.

Kevin Palatnik

Thank you.

Operator

Ladies and gentlemen. This does conclude the conference. Thanks for joining and you all have a great day.

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

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

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