Starz's (STRZA) CEO Christopher Albrecht on Q2 2014 Results - Earnings Call Transcript

Jul.31.14 | About: Starz (STRZA)

Starz (NASDAQ:STRZA)

Q2 2014 Earnings Call

July 31, 2014 1:00 pm ET

Executives

Courtnee Chun Ulrich - Vice President of Investor Relations

Christopher P. Albrecht - Chief Executive Officer, Director and Member of Executive Committee

Scott D. Macdonald - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer

Analysts

Ryan Fiftal - Morgan Stanley, Research Division

Vasily Karasyov - Sterne Agee & Leach Inc., Research Division

Barton E. Crockett - FBR Capital Markets & Co., Research Division

Benjamin E. Mogil - Stifel, Nicolaus & Company, Incorporated, Research Division

David Carl Joyce - ISI Group Inc., Research Division

Bryan D. Kraft - Evercore Partners Inc., Research Division

Robert G. Routh - National Alliance Capital Markets, Research Division

Operator

Good day, everyone, and welcome to the Starz Second Quarter 2014 Earnings Conference Call. Today's call is being recorded. At this time, I would like to turn the call over to Courtnee Ulrich. Please go ahead.

Courtnee Chun Ulrich

Good morning. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements of our business strategies, market potential, future financial prospects, new service and product launches, including Original programming, new programming distribution platforms, the continuation of our stock repurchase plans and other matters that are not historical facts.

These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, market acceptance of new products our services, the timely launch of our original programming, the cooperation of our distributors and marketing our services, competitive issues, regulatory issues and continued access to capital on terms acceptable to Starz.

These forward-looking statements speak only as of the date of this call, and Starz expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements contained herein to reflect any change in Starz's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

During today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA. The required definition and reconciliation can be found at the end of this presentation. And now I'd like to introduce Starz's CEO, Chris Albrecht.

Christopher P. Albrecht

Thank you, Courtnee, and welcome. We appreciate your continued interest in Starz, and thank you for joining us on today's second quarter 2014 earnings call. Also with me is Starz's Chief Financial Officer, Scott Macdonald.

The second quarter was about executing on our long-term strategy to build the Starz and ENCORE brands and create compelling Starz Original programming. I'll discuss a few recent notable achievements and then turn the call over to Scott to provide additional details on the financials.

I'd like to start by recognizing the significant progress we have made in creating high-quality originals. Last month, we received 11 Emmy award nominations for 5 different Starz Original series, both network records. We have a diverse and growing list of creative talent partners, including Michael Bay, Curtis Jackson, Seth MacFarlane, Steven Soderbergh, LeBron James, Tom Werner, Jonathan Ames, David S. Goyer, Ronald D. Moore, Courtney Kemp Agboh and Moira Walley-Beckett. These efforts of transforming the brand in the eyes of consumers and multichannel distributors, opening global business opportunities and further elevating our standing in the creative community. Since last we spoke, we've renewed Da Vinci's Demons for a third season, following the strong second season and very good viewership results.

I'm also very pleased with Power, which approaches its season finale this Saturday. We've seen the viewership rise over the course of the season and it has already been renewed for a second. We've spoken to you in the past about how we believe that there are underserved audiences in the premium category. With White Queen, we successfully reached the female audience. Power is achieving the same success with African-American audiences. The series is a big hit with that constituency, turning our highest ever ratings and concentration of Starz viewers. In fact, no premium pay TV series since HBO's The Wire in 2006 has had a higher concentration of African-American viewers watching its weekly premiere episodes than Power. With the exception of Game of Thrones and True Blood, Power has the highest number of African-American viewers for any premium series currently on air. The series premiere of Outlander is drawing near, with a large multiplatform sampling campaign for the first episode set to begin in 2 days. Our optimism to this series is shared by many of our key distributors. In fact, Time Warner Cable has built its latest Enjoy Better promotional campaign around the Outlander. The Chair will follow on September 6 and overlap with a wholly owned and widely anticipated comedy series, Survivor's Remorse, which premieres on October 4. Two new projects include The Girlfriend Experience from Steven Soderbergh, which we recently green-lit and Neil Gaiman's sci-fi fantasy project, American Gods, which is in active development. We are continuing to monetize past series in our content portfolio. We've completed 2 notable agreements for our Spartacus series, which include both the domestic basic licensing cable deal with Syfy and a German online distribution agreement with Amazon Instant Video. In conclusion, we're tracking well with our long-term plans of ramping up our original [Audio Gap] Effectively changing the perception of the Starz brand and building strong and highly profitable relationships with our distribution partners.

Now I'll turn the call over to Scott.

Scott D. Macdonald

Thanks, Chris. As you may recall, we recognized the one-time adjustment of $18.6 million of deferred revenue that positively impacted Starz's networks and our consolidated revenue and adjusted OIBDA in Q2 2013 and negatively impacts our quarter-over-quarter comparisons for Q2 2014. If you exclude this one-time item from our Q2 2013 results, network's revenue would have increased 2% to $328.2 million due to higher effective rates for our networks. Excluding this one-time item, network's adjusted OIBDA would've increased 25% to $121.8 million as a result of the increase in revenue and lower programming and advertising costs related to Original programming. Network's cash paid for investments in films and television programs increased $38.3 million to $60.1 million due to a greater number of Original series in production in Q2 2014, as we continue to ramp up our Original programming lineup. At Starz distribution, fewer significant new release titles from the Weinstein Company negatively impacted revenue and adjusted OIBDA. Q2 2013 included Weinstein film, Django Unchained and Silver Linings Playbook, while Q2 2014 included smaller releases such as August: Osage County and Philomena. At June 30, we had $365 million drawn under our revolving credit facility, with $635 million of borrowing capacity remaining. Our leverage stood at approximately 2.4x adjusted OIBDA. For May 1 through July 31, we bought back 3.1 million shares of our Series A common stock for $92.7 million at an average price of $29.74. Since January 14, 2013, when our stock began trading, we have repurchased 17.3 million shares or 14.2% of our outstanding shares.

Now I'll turn it back to Chris.

Christopher P. Albrecht

Thanks, Scott. Operator, please open the call for questions.

Question-and-Answer Session

Operator

[Operator Instructions] And we'll take our first question from Ben Swinburne from Morgan Stanley.

Ryan Fiftal - Morgan Stanley, Research Division

This is Ryan Fiftal on for Ben. There have been some press reports out there that Time Warner is thinking about getting more aggressive with HBO and its revenue splits with the MSOs. So I was wondering if HBO were to get more aggressive, how do you think that could impact Starz? Do you think there could be more pressures from the MSOs to push back on your rate? Or maybe on the other hand, it could help prove out the value of the premium formats to the MSOs?

Christopher P. Albrecht

Look, I mean, I saw that in one article, I think it was the New York Post. I didn't see any comments. I don't -- I think these are long-term agreements that -- it'll be hard to know that there would be any ability to change that dynamic in any short period of time. I do think anything that goes to highlight the really superior value of these premium bands is good for all in the category, and we believe that the interest that the distributors have in marketing our products can only be enhanced if they can find ways to get these brands to consumers at lower price points. These are really high-margin products for our distributors, and they certainly are the products that a lot more consumers want than currently have the ability to afford.

Ryan Fiftal - Morgan Stanley, Research Division

Okay. And then another one, just -- I was wondering if there's any color you could give us on what you're seeing in STARZ PLAY user behavior? And maybe if viewership is different on the online platform versus the linear platform for the splits on movies versus Originals or anything you could share there.

Christopher P. Albrecht

Yes, we have data. The data comes in slowly. We have been rolling -- we're having a very successful rollout. Anecdotally, what I can tell you is that the subscribers who use STARZ PLAY are watching more Starz, are watching more Originals. And the research that we've done shows really high satisfaction score with the users and the product.

Operator

And we'll take our next call from Vasily Karasyov from Sterne Agee.

Vasily Karasyov - Sterne Agee & Leach Inc., Research Division

Chris, can you please remind us what -- how many hours of Original programming you have on Starz in the September quarter and then December quarter? What is the latest schedule?

Christopher P. Albrecht

Sure. Well, so you should probably be able to remind me. We're executing -- 2014 was about executing on our strategy to provide a year-round programming, Original programming presence. Certainly, as we ramp up, you're going to see ups and downs in terms of the number of hours and in terms of the impact that has on our financials, but we had a target this year to get to a year-round presence. Originally we had a show called Fortitude scheduled for third and fourth quarter, 13 hours, a partnership with BSkyB. When we determined that wasn't going to be available in time, we may -- we took some advantage of some creative and financial opportunities. We moved up Survivor's Remorse, which we were excited about. But since we had a short fuse on that, we're only able to do 6 episodes. Chris Moore brought what seemed like a really fun idea on The Chair. And then, we read the scripts for The Missing, which was an opportunity to be involved with a terrific project in partnership with BBC and Company Pictures, who we partnered really successfully with on White Queen. So we ended up with a fairly large amount of programming in third and fourth quarter for a relatively small amount of investment. And I think as we go forward, we want to have these franchises in place and certainly have franchises that can repeat, but we also need to be flexible and be able to be spontaneous when interesting opportunities arise or interesting challenges arise.

Vasily Karasyov - Sterne Agee & Leach Inc., Research Division

Okay. And then one other question, we've heard that Epix got a new carriage deal, I believe, it's with U-verse. Is that, at all, a threat to Starz penetration?

Christopher P. Albrecht

We certainly haven't seen Epix be used as a tool against Starz at all. As a primarily movie product, it tends to get packaged you've seen in places around ENCORE. Look, I don't know whether with the consolidations that are being proposed out there, there are going to be opportunities for channels that had trouble getting carriage to get carriage. I had no idea if that's a cosmetic move or a business move or whether there's a difference in this particular case. But we don't really look at it as a threat to our business. It's another offering for the consumer that is in the long portfolio of offerings from our different distributors.

Operator

We will now take our next question from Barton Crockett from FBR Capital Markets.

Barton E. Crockett - FBR Capital Markets & Co., Research Division

I was reading that you've licensed Spartacus, I think to Syfy. I was wondering if you could talk about the materiality potentially of that? Didn't seem to be anything in this quarter. Is that something that could be meaningful in future quarters?

Christopher P. Albrecht

Well, Scott, I don't know how you want to respond to the...

Scott D. Macdonald

Well, it's started to air this quarter on Syfy. I think it's airing right now. It's not a large deal, but it's part of the overall -- taking advantage of all the various ancillary markets on our Originals.

Christopher P. Albrecht

It's also a nonexclusive deal. So we continue to look to monetize the rights that we have, and you shouldn't be surprised if you see more announcements around our programmings, especially when we still retain rights to monetize. But I think that the stuff -- I mean, I think the major point that Scott makes is, the show just launched this quarter. And again, anecdotally, it seems to be doing very well for them in terms of ratings performance.

Barton E. Crockett - FBR Capital Markets & Co., Research Division

Okay. And then if I could ask a separate question. I've noticed that ENCORE subscribers have drifted down a little bit. Even in your 10-Q commentary, you talked about subscriber -- revenue declines tie to loss of subscribers kind of offsetting rate and a lot of this is timing around promotions. I was wondering if you could talk about what's happening there? Why is ENCORE declining? Why were subscribers down low? Why was the promotional environment less favorable? And the potential of that to turn around over the next few quarters?

Christopher P. Albrecht

Yes, well, ENCORE is a different product from Starz. And ENCORE much more susceptible to the packages that are distributors happen to be focusing on in any particular time. Sometimes -- and because ENCORE is much more widely distributed and often packaged lower, it is much more susceptible to bigger swings, given the things that they're focused on. I can tell you that there's certainly doesn't seem to be any ENCORE-specific movement that is affecting this. It's much more about what the distributors are focusing on in their businesses, and it's hard for us to sometimes be able to accurately perceive why a distributor maybe changing a focus on a package that contains, let's say, 250 channels to a package that contains significantly less. But just as you might see fluctuations down with ENCORE, you might just as easily see fluctuations up with ENCORE due to the same kind of effect. It's just a different product, and we had a lot of up quarters. And I think there's been some settling as distributors are seeing the results of some of the efforts that they made on those previous quarters. How's that, Barton?

Barton E. Crockett - FBR Capital Markets & Co., Research Division

That's helpful. But the revenue decline part of it in the 10-Q, is that something that's just kind of a permanent feature? Or is that going to up and down, the revenues declining with subs?

Scott D. Macdonald

Well, we have the combination of the consignment deals with the nonconsignment deals, which help to insulate us when there is decrease in subscribers so you don't see the full impact as you would if you had if everything was a consignment deal. But you do -- we do have that mixture of deals. So when you do lose customers, you do have some impact with the -- from a volume basis which offsets the rate, the annual rate adjustments we have.

Christopher P. Albrecht

Right. Because traditionally, in of all our deals, whether they're consignment or nonconsignment, there are -- generally, year-over-year rate increases.

Operator

And we'll now take our next question with Ben Mogil from Stifel.

Benjamin E. Mogil - Stifel, Nicolaus & Company, Incorporated, Research Division

Just curious on the programming cost side, are you seeing sort of inflationary trends start to moderate a little bit? Or are you still seeing a pretty active environment there? And maybe if you could talk about 2Q programming trends against Q1 programming trends on the cost side, both promotional and production costs, that would be great.

Christopher P. Albrecht

Well, again, because we look at it year-over-year, you're going to see the effects of premier dates, not just on how many episodes fall into a particular quarter, but on where the marketing campaigns for those particular programs fall as well. So those will be quarter-to-quarter fluctuation. In terms of the business in general, and as I mentioned before to the affiliate question about Q3 and Q4, we continue to approach this with our portfolio strategy. It allows us to look at our year-over-year and our long-term plan and be able to make choices that help us meet our business objectives, both on the programming and the financial side. I -- there is a -- I mean, I can tell you there's a tremendous amount of competition out there for programs. There seems to be unending supply of programs whether or not there's an unending supply of high-quality programs is open to interpretation. What I think starts to happen as you see people being more ambitious with what they're doing, but I don't see any general inflation of costs. These things are governed by union. There's tax -- we produce shows all over the world to take advantage of tax incentives. It's not a situation that concerns me at this time.

Operator

We'll now take our next questions with David Joyce from International Strategy Investment Group.

David Carl Joyce - ISI Group Inc., Research Division

Chris, you've been able to get rights to sell some of your Original programming in some international market. I was wondering if you have the -- such capability on the other originals that are coming up in, say, the next 6 to 12 months. And then secondarily, to Scott, if you can talk about the timing on the expense recognition for the year versus the cash spent on programming. Is there still some more step up on an annualized basis we should expect since you're not at the annual target hours yet?

Christopher P. Albrecht

So on the rights issue, the portfolio approach results in our having in different ownership structures on different programs. For instance, in this quarter, or in third and fourth quarter, we licensed Outlander from Sony. We wholly own Survivor's Remorse. We're coproducing The Missing with BBC, and we're licensing The Chair. As you look forward, we wholly own Black Sails and Flesh And Bone, and we have, due to our deal with BBC Worldwide, a little bit broader rights than we would normally have in just a licensing deal on Da Vinci's Demons. But we continue to be opportunistic where we see the ability to secure rights that we think that we can monetize effectively to create the revenue that at the very least will go to net down our programming investment. And you'll see the results of that based on when we take those out to market. For instance, we originally intended to bring Black Sails to market fourth quarter 2014. But given now that we've moved the line up -- a little earlier in first quarter of 2015, we're going to really try to maximize the marketing spend around season 2 with the home entertainment release of season 1. So that will actually happen in 2015 now. I'll let Scott answer the ramp up question.

Scott D. Macdonald

So as we ramp up our Original programming over time, the portion of our programming costs that are associated with the Originals are going to continue to increase. We are -- what we are doing though is we're taking advantage, as we've said on previous calls, of the favorable rate cards we have, and we're in that period now with both Sony and Disney. And then you have -- the Disney deal will start to roll off when you get out into the 2016 and 2017 time periods. So we're working and managing our ramp up in the Originals to take advantage of that so that we're not damaging our margins as a result of our growth in the Original programming. But however, when you look at it quarter-to-quarter, so for example, this quarter having just Power, the new -- the premiere of Power in this quarter versus the 2 shows in the comparative second quarter of 2013, and Chris mentioned this, you're going to see some fluctuations on a quarter-by-quarter basis. Overall, this year, our programming costs were -- with respect to Originals are going to be higher in the first 3 quarters of the year. And in Chris' point earlier about -- we're able to put a lot of hours on the air -- in the -- like fourth quarter and that as a result. We've been able to very cost effectively pick up this programming. So again, you're going to see some ups and downs quarter-over-quarter. We really look at it on an annual basis. And then, when you look out past this year, we're managing that based on what we're seeing -- how our outlook cost are coming -- expected to come in. And the Disney rolloff again, and we'll be positioned when Disney rolls off with a very, we believe a very attractive number of hours, et cetera, of Original programming on the air.

Operator

We'll take our next question with Bryan Kraft from Evercore.

Bryan D. Kraft - Evercore Partners Inc., Research Division

I just have two questions. One, do you see on opportunity to negotiate renewals early with some of the distributors involved in the pending mergers ahead of the deals closing? And separately, Chris, I was wondering if you could just talk about some of the final numbers on Black Sails and how you think that performs overall for the season and how you're feeling about that going to next season?

Christopher P. Albrecht

Sure. I would say it's hard to predict that there are opportunities to move up contract dates because companies are consolidating. We obviously have our eye on what's happening out there. And in terms of the consolidation that's being proposed, in and of itself, it doesn't need to be a negative thing. It certainly -- we think it's important that these large companies that are proposing to be larger do not use their increased size to take advantage of their long-term partners, particularly independent, truly independent partners like Starz. We know that both the FTC and the DOJ are interested in -- and are actively reviewing these transactions, proposed actions, and we welcome that process and the opportunity to be involved in it. With regard to your question about Black Sails, the first season of the show performed very well. The only 2 shows on Starz that have performed better, were the first season of Spartacus, which -- and the -- what was it called? The Prequel. Both of which got -- were also on Netflix back then. And what we saw was, at that time, an effect on our programming viewership from the opportunity of people to see it on Netflix even just as an advertising platform. We also, I think, have realized that contrary to -- this maybe goes back to the competition question to the marketplace. But that contrary to popular wisdom in the past where you thought maybe you didn't need to market a second season as intensely as you marketed the first season. As we're going into the second season of Black Sails, we look at it as a real growth opportunity and we're going to lean into it because it's a terrific show, subscribers really like it. We have a very cool -- promo that we put together that kind of mashes up Outlander and Black Sails, which we think will be a lot of fun for fans of both of those shows and show why both shows could have the same fans. So it's a long way of saying, we're happy with Black Sails. I was just earlier in the week listening to the executive producers pitch their story outlined for Season 3. And it's a show that's going to get bigger every year, not because we're investing more money every year but because all of these shows that have a large component of CGI, blue screen, the more shows you make, the more assets you have to reuse and also, the better and more effective you get. So I think the second season of Black Sails is going to be -- is going to look bigger and even more impressive than the first season. And third season should be -- should blow the gun whales off.

David Carl Joyce - ISI Group Inc., Research Division

How do you -- when you look at the numbers of Black Sails, what's the most important metric for you? Is that average viewership, weekly across all platforms? Or -- and if you can quantify that, that would be great, if you don't mind.

Christopher P. Albrecht

I think what we look, I mean, the most -- aside from achieving the outreach for the demographic group that we targeted with Power, one of the most rewarding things that we see is the show growing every week, that it's becoming not just appointment viewing but that is performing really well on the other platforms that we make it available, either people DVR-ing it or on Starz OnDemand. For us, certainly, the most important thing is how many people take advantage and view the show across all of our -- all of the Starz features. So that's linear that's OnDemand. And then as it ramps up and becomes more of a factor, certainly STARZ PLAY. As I said, the first season of Black Sails performed very well, and we're anticipating an even more successful second season. So I'm not sure what else I can tell you besides that. I don't have Nielsen's information in front of me, all right? But there's well over 5 million viewers per episode across the first 8 episodes of Black Sails.

Operator

We will now take our last question from Robert Routh with National Alliance Capital Markets.

Robert G. Routh - National Alliance Capital Markets, Research Division

A few years back, you guys sold your streaming rights to Netflix for $25 million with Sony and Disney content. And when that came up for renewal, we know that they offered to a large sum of money, it was like $250 million or to $350 million for it , and because you thought your content, and I agree, belongs on a premium tier, you decided not to do anything with it. Could you talk a little bit about, since you haven't done anything with those rights, even though Disney, you didn't renew but you still get that content through '15, which is really '17, isn't that a hidden asset that you have and couldn't you monetize that with Netflix or Amazon Prime if you wanted to do? And what's your thought as far as what you're going to do, given what they were willing to pay to renew that original deal and then you decided smartly not to. What do you think they're worth, those rights?

Christopher P. Albrecht

Well, I think the opportunity to deliver, which is really what the Netflix deal with Starz, the opportunity to deliver the Starz services over broadband connection is, I think, the opportunity of a lifetime for both the premium channels and our distributors. If they will focus on getting -- now that we have the authenticated platforms, they will focus on getting these brands to the emerging consumer groups who are forming the nexus of the next consumer generation, millennials, Hispanics, people who are not capable of purchasing the current video bundle, which is the only way you can get one of the premium channels now with rare exceptions, the experiment by Comcast with HBO GO. So we think that these -- that this form of distribution for our channels is a terrific opportunity for us and anyone who distributes us. Obviously, our current distributors, most of them have the wherewithal to do this, from a technological point of view. We already have commercial agreements with them in place. That is a giant win-win high-margin revenue opportunities for both sides. And to the extent that new companies come in and are interested in the digital description of our services, we, of course, remain interested as long as those relationships conform with what has been traditional in our industry, which is when new distributors come in, they price and package these programs appropriately so that we maintain the premium in nature and we also maintain the importance of our relationships with our long-term distributors. Did that make sense?

Robert G. Routh - National Alliance Capital Markets, Research Division

Yes, it does. It just seems like it's a hidden asset that you have, it's a hidden value that isn't reflected in the stock price, but in the future, ultimately will be, it just seems...

Christopher P. Albrecht

Tell everyone, yes. Tell everyone else, but we know that. So Robert, if you can just carry that message to all of these people that are getting their big companies bigger, this would probably be so much more fun.

Robert G. Routh - National Alliance Capital Markets, Research Division

Great. Great. And just one other follow-up question, if I may. Given the fact that you guys do have -- your obviously unique definitionally programming. The only way to get it to Starz and STARZ PLAY, for large subscription, you can't. It would seem that the deal you signed for Spartacus internationally makes sense, but there are certain areas where your programming does seem to be transferable like the U.K. and given the ownership of Starz originally from Liberty and Liberty Global and Virgin Media, it would seem the Starz channel would fit there. I'm curious if you could talk a little bit about your plans for actually having the channel, the full Starz channel in another country anytime soon. Is that something that you think could happen?

Christopher P. Albrecht

So look, I think that with regard to the U.K., Black Sails launched there and Amazon Prime and what we've heard is that it's their most successful launch of anything to date. They dropped all 8 episodes I think at once, and it was a big success for them. They were thrilled. I think as -- certainly technology has created the opportunity to build platforms, SVOD-type platforms, much more cost effectively and much more quickly. We, as a brand that is investing a lot in -- or as a company that's investing a lot in our brands and creating a kind of programming that seems to have a never ending -- the world seems to have a never-ending appetite for, we do think that there are opportunities to talk to potential partners about potential Starz bringing the platforms outside the U.S. The U.K. market is particularly competitive, and we're not part of the same company as Liberty Global. So obviously, they have to do what's best for them, and we know where to find them. But we are out there and looking at international as a real potential for the Starz brands, both in the licensing of rights that we have into other networks or in trying to aggregate those rights with partnerships that could potentially really extend the Starz brand outside of the U.S. Thank you very much. Thank you all for joining us, and enjoy the rest of your summer.

Operator

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

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!