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Sirona Dental Systems (NASDAQ:SIRO)

Q3 2014 Earnings Call

August 08, 2014 8:30 am ET

Executives

Joshua Zable - Vice President of Investor Relations

Jeffrey T. Slovin - Chief Executive Officer, President and Director

Ulrich Michel - Chief Financial Officer and Executive Vice President

Analysts

Christopher C. Cooley - Stephens Inc., Research Division

Tycho W. Peterson - JP Morgan Chase & Co, Research Division

Robert P. Jones - Goldman Sachs Group Inc., Research Division

Ethan Roth - Stifel, Nicolaus & Company, Incorporated, Research Division

John Kreger - William Blair & Company L.L.C., Research Division

Operator

[Operator Instructions] As a reminder, this call is being recorded for replay purposes. I would now like to turn the conference over to your host for today, Mr. Joshua Zable, Vice President of Investor Relations. Please proceed.

Joshua Zable

Thank you, and good morning, everyone. Welcome to our Fiscal Third Quarter 2014 Conference Call. I would like to remind you that an earnings slide deck presentation relating to this call is available on our website at www.sirona.com.

Before we begin, please take a moment to read the forward-looking statement on Slide 2 of our earnings slide presentation. During today's conference call, we'll make certain predictive statements that reflect our current views about our future performance and financial results. We base these statements on certain assumptions and expectations of future events that are subject to risks and uncertainties. Our most recent Form 10-K lists some of our most important risk factors that could cause actual results to differ from our predictions.

And with that, I'll now turn the program over to Jeffrey Slovin, President and CEO of Sirona Dental Systems.

Jeffrey T. Slovin

Thanks, Josh. It is my pleasure to welcome all of you to our third quarter 2014 conference call. Joining me today is Uli Michel, Executive Vice President and Chief Financial Officer.

I am pleased to report another strong quarter, with revenue growth of 5.8%, or 2.5% constant currency, highlighted by record revenues in CAD/CAM, Imaging and Instruments. On a local currency basis, Sirona grew 4.5%, particularly impressive given the 18.3% growth in last year's third quarter on that same basis. Our revenue growth was broad-based. However, Germany was down. Growing over 23% last year has created a high hurdle for us this year. The German economy remains strong.

The U.S. was strong, up 8.2% versus a very difficult comp. Last year, the U.S. grew 28.8%. U.S. growth was driven by strong demand for our Imaging products. In CAD/CAM, we faced an extremely difficult comparable due to the successful trade-up program in the third quarter of fiscal 2013. New user demand remains robust for our CAD/CAM products. Awareness is increasing in the marketplace and we continue to see greater adoption of Sirona digital solutions.

International revenues were up 4.7%. They were down 0.3% in constant currency but up 2.7% on a local currency basis. Sales growth in international markets was particularly strong in Asia-Pacific, led by Japan and China. The decline in Germany reduced strong sales growth in other international markets.

On a segment basis, CAD/CAM, Imaging and Instruments all delivered record quarters. To have a record quarter in this economy for 3 of our segments is a testament to the strength of Sirona product offerings. Our strategy of innovation, integrated digital solutions and global expansion continues to pay off. For the third quarter in a row, Instruments was our fastest-growing segment. We continue to increase utilization of our state-of-the-art Instruments facility. We are very proud to report margin improvements in 3 out of our 4 segments. Overall, we delivered a very strong quarter in Q3.

I'll now turn the call to Uli, who will review our third quarter financials.

Ulrich Michel

Thanks, Jeff, and good morning, everyone. In the second quarter, our revenues increased $16.5 million to $299.7 million, up 5.8% reported or 2.5% on a constant currency basis. As you know, Sirona's constant currency calculation only adjusts for the exchange rate effect between the euro and the U.S. dollar. However, currently about 23% of our revenues are generated in currencies other than the euro or U.S. dollar. The most important ones are the Japanese yen, the Chinese RMB, the Australian dollar and the Brazilian real. This means that our constant currency calculation still includes the impacts of fluctuations in these currencies. Many of these currencies have moved significantly year-over-year. In effect, these currency movements have negatively impacted our constant currency growth by 200 basis points this quarter. Therefore, when we adjust for all currency fluctuations and look at our growth on a local currency basis, we grew 4.5% in Q3 2014. As I go through the presentation today, I will highlight the foreign currency exchange impact from currencies other than the euro on the constant currency growth for each of our regions and segments.

Turning to revenues by region. As Jeffrey mentioned, the U.S. was up 8.2%, driven by Imaging and strong new user demand for our CAD/CAM products. Revenues outside the U.S. increased 4.7% but were down 0.3% on a constant currency basis. In local currencies, we grew 2.7%. Sales growth in international markets was particularly strong in Asia-Pacific, led by China and Japan.

Moving on to a review of our business segments. Revenues in our CAD/CAM segment increased 6.2% to a record $109.3 million, up 3.5% on a constant currency basis. In local currency, excluding all FX effects, CAD/CAM grew 5.8%. CAD/CAM segment revenue growth was driven by international markets benefiting from our new user demand. The U.S. faced a difficult year-over-year comparison due to the successful trade-up program in the third quarter of fiscal 2013. We continue to see strong new user demand in the U.S. as well. Our CAD/CAM segment margin was 68.9%, up 80 basis points from last year. The gross profit margin improved, with better product and regional mix, including lower trade-ups, partially offset by unfavorable foreign exchange impacts.

Imaging segment revenues increased 8.9% to a record $109.1 million, up 6.1% on a constant currency basis and 7.4% in local currencies. Sales growth was driven by increasing demand for our intraoral and ORTHOPOS product lines, particularly in the U.S. Imaging segment gross profit margin was 60.3%, 310 basis points higher than last year. Margins improved due to improved product and regional mix combined with cost reductions.

Treatment Centers revenues were $51.2 million, down 4.7% reported and down 9.3% on a constant currency basis. In local currencies, Treatment Centers were down 7%. Treatment Centers faced a challenging year-over-year comparison due to the strong revenues in the prior year in connection with the IDS in Germany. Treatment Centers gross profit margin decreased 150 basis points to 38.7%. The decrease was mainly due to unfavorable foreign exchange.

Instruments revenues were a record $30.1 million, up 14% reported or 8.9% on a constant currency basis. In local currencies, Instruments grew 12.1%. Revenue growth was driven by international markets with strong demand for our high-end handpieces and hygiene products. Instruments segment gross profit margin was 42.9%, up 240 basis points over last year. The gross profit margin increase was mainly driven by product and regional mix improvements.

Moving on to a review of the total company third quarter P&L. U.S. GAAP gross profit margin was 55.9% compared to 53.5% in the prior year. The increase in gross profit margin as a percent of sales was driven by improvements in product and regional mix plus cost reductions, more than offsetting unfavorable impacts of foreign exchange. SG&A expense was $88.1 million, up $8.3 million versus last year. This increase was mainly due to the continued and planned investments in our sales infrastructure and marketing activities associated with the launch of new products.

Research and development was $16.6 million, up $900,000 above prior year, driven mostly by foreign exchange. Net other operating income was $4.4 million, up $1.9 million compared to last year due to a onetime gain associated with the sale of certain business assets. Net interest expense was $700,000, down slightly from last year period. The income tax provision for the third quarter of fiscal 2014 was $15.9 million, representing an effective tax rate of 23.5%. Q3 U.S. GAAP net income was $51.5 million, up 26.8% from prior year.

Third quarter 2014 diluted GAAP EPS was $0.92 compared to $0.72 in the prior year. Adjusted non-GAAP earnings per share was $0.99, up from $0.91 in the prior year, an increase of 8.2%. As a reminder, adjusted non-GAAP EPS excludes amortization and depreciation expense resulting from the step-up to fair values of intangible and tangible assets related to past business combinations, gain/loss on revaluation of foreign currency monetary assets and liabilities, gain/loss on derivative instruments, any other cash or noncash items that management does not view as indicative of its ongoing operating performance and any related tax effects. For a reconciliation of GAAP earnings per share to non-GAAP adjusted earnings per share, please see the earnings press release.

At June 30, 2014, the company had cash and cash equivalents of $297 million and a total debt of $79.5 million, resulting in net cash of $217.5 million. This compares to net cash of $175.7 million at March 31, 2014. In Q3, we delivered strong free cash flow of $50 million compared to net income of $51.8 million during the same period.

Now moving on to guidance. We are reiterating our previously provided fiscal 2014 guidance of 4% to 6% constant currency revenue growth and adjusted non-GAAP EPS of $3.60 to $3.70, which represents approximately 6% to 9% EPS growth. This guidance is based on the following key inputs. For the full year, we anticipate the segment gross profit margin to be similar to prior year's level. Reported gross profit margin is expected to be higher than the prior year due to the step-down in amortization expense. SG&A as a percentage of sales is anticipated to be between 29% and 30% of sales for fiscal 2014. R&D expenses are anticipated to be between 5% to 6% of sales. The estimated effective tax rate for fiscal 2014 is expected to be in the range of 23% to 24%. All of this has been incorporated and is consistent with our previous guidance.

Looking at the momentum in our business. Our current view is that the middle of the EPS range is our best estimate. This would imply low- to mid-single-digit revenue growth in the fourth quarter. Keep in mind that we face difficult comparables. CAD/CAM, for example, grew 37% in Q4 last year.

I will now turn the call back to Jeff.

Jeffrey T. Slovin

Thanks, Uli. As you just heard, we've delivered another solid quarter and reiterated our guidance for the full year. We are executing on our short-term goals and implementing our core strategies to drive long-term success. A key strategic imperative of ours is to improve our existing products and to introduce exciting new ones.

In May, we launched our newest Treatment Center platform, the INTEGO. INTEGO is not only a standout on its own, but will open doors to sell other Sirona products. This is significant because we have found that once the dentist buys one Sirona product, they are highly likely to buy another. The INTEGO is aimed at the economy segment of the marketplace, which also happens to be the fastest growing. Our new ergonomic design optimizes comfort for both the patient and the doctor. Sirona is once again redefining a product category with INTEGO. Treatment centers are an important brand shaper of the dental office. They immediately influence the patient's perception of the dental practice and directly impact the patient experience. We are pleased to report that early indications are that the INTEGO is being well received in the marketplace. It is meeting our very high expectations. With our broad line of instruments, our full spectrum of Treatment Centers, CAD/CAM for Everyone and our segmented Imaging offering, Sirona offers products within the reach of every dentist.

The more practitioners work with Sirona, the better they appreciate our commitment to quality and understand how we can help them improve workflow, patient safety, more efficiency, better profitability and a better patient experience. Dentists understand that having Sirona products in the office projects an image of being up-to-date with the latest advancements in dentistry. Dentists are happier working in an environment they can be proud of. The combination of these factors has resulted in more and more dentists asking for Sirona by brand name across our entire product spectrum.

We have all seen the power of branding when people ask for a Kleenex, they want the tissue, or a FedEx, something they need overnight. In the U.S., when it comes to intraoral imaging, dentists ask for Schick. Around the globe, when it comes to 3D imaging, dentists ask for a GALILEOS or an ORTHOPOS. No brand is more powerful in CAD/CAM than CEREC. Dentists don't ask for CAD/CAM, they ask for CEREC, the brand name of our chairside CAD/CAM system.

One reason CEREC is a commonly used term is our commitment towards continuous advancement of our system, most recently with our CEREC 4.3 software. The CEREC 4.3 software helps improve the accuracy of virtual models in providing more details of the jaw with no increase in the data requirements of the system. In more simple terms, 4.3 makes taking a digital impression easier, faster and more accurate. 4.3 is just another example of how we value our customers' feedback and provide them with the solutions they seek. That is exactly how we have made the Sirona brand name synonymous with quality and trust. While our competitors are introducing products to catch up with our old systems, we are already on to the next innovations. These software improvements and updates are critical to the user.

Late in Q1, we launched our SICAT Function for Imaging for the diagnosis of TMJ in the U.S. As the market learned of our software, we've seen more general practitioners offer pure 3D GALILEOS due to the new software. This is not only good for the market and 3D penetration but good for Sirona as well. After all, GALILEOS carries attractive prices and good margins. And of course, there is always more innovation to follow. We've already announced our plans to launch the new orthodontic software at the end of the year and excitement is very high for this product. We believe that the wind is at our back when it comes to leading the way towards creating the dental practice of the future.

We are advancing dentistry, and there is plenty of runway for our products in all areas, especially 3D and CAD/CAM. Others have rushed to the market with their CAD/CAM offering, adding validation to our long-standing thesis of the power of the digital dentistry in the practice. As a result, awareness of technology is increasing, as is the realization of the superiority of the Sirona brand. After testing the claims of other systems, it is easy to see that the CEREC delivers where others fall short. Digital, 3D and CAD/CAM are all becoming standards of care. And dentists know that Sirona is leading these trends.

The equity of Sirona brand is not just valuable to us but for dentists and our over 400 distributors around the globe. During the quarter, we expanded our relationship with Henry Schein in France. Over the past several years, Schein has been acquiring exclusive Sirona distributors in France. With the recent acquisition of our French sales organization, Henry Schein has demonstrated its full commitment to the Sirona brand across France. As part of this agreement, Schein will only distribute Sirona's chairside CAD/CAM in France.

To sum it all up, our brand equity has never been stronger. We have an unparalleled product portfolio. We serve attractive and underpenetrated markets and are in a strong financial position. As I look ahead, our future is very bright, given our unyielding commitment to continuous innovation. Our R&D pipeline is full. We will launch new products in the coming months leading up to the IDS. As always, at the show itself, we will feature our latest offerings. We have high expectations for these new products and anticipate they will garner significant interest in the marketplace. We will continue to demonstrate why the Sirona brand is synonymous with quality and innovation.

Our sales and service infrastructure has us well positioned to capitalize on these trends in digital dentistry. I am confident that with our broad product portfolio and our world-class global distribution, we will accelerate the penetration rates of our dental solutions in the coming years. As always, I'd like to thank our distribution partners, led by Patterson in the U.S. and Henry Schein internationally, and our outstanding employees. Uli and I will now address your questions. Operator, please proceed.

Question-and-Answer Session

Operator

[Operator Instructions] The first question will come from the line of Chris Cooley from Stephens.

Christopher C. Cooley - Stephens Inc., Research Division

It's great to see the results there in the third quarter. Help us a little bit with the implicit guide for the fourth quarter here. I mean, we're a little spoiled here in the growth that you've consistently put up. And I understand that there are some fairly significant comps in the coming fiscal fourth quarter. But would you mind just reviewing for us? If I'm doing the math right, it looks like CAD/CAM and Imaging need to be down here year-over-year in the fiscal 4Q, what the puts and takes are both from a comparison but also from what you're seeing currently in terms of product mix. I know some of your peers have been talking about much stronger growth, and I realized it's off smaller bases. But just kind of help us kind of weigh at the outset the comparable prior year period relative to also what you're seeing in sales mix. And I just have one quick follow-up.

Jeffrey T. Slovin

That's about 5 questions in 1, but okay. Uli?

Ulrich Michel

Number one, I don't think, Chris, you really want to get into discussing how we see the fourth quarter for every different segment and every different region. Look, there is a lot of puts and takes. You know that last year, in the second half, we've grown very strongly. I've mentioned before, CAD/CAM is an example in the fourth quarter. Last year, we grew 37%. So this makes for very difficult comps. But we've also given you a range, right? So you have seen in our business in the past that it's not so easy to exactly predict the quarter individually. Business is a little bit lumpy. At the moment, we see, as we said, good momentum in new user demand, but we also see signs of risk, the situation in Russia, in the Middle East, in Argentina. And we have weighed all of this and included this in our guidance. And where we come out and what we told you, the best estimate is about the midpoint of our range.

Jeffrey T. Slovin

Yes. I think, Chris, being a global business, you have to take into consideration what's going on around the globe. Russia was down for us in the third quarter. We have a low-single-digit business there. We've reflected that in our guidance. We also have business in Argentina. We know what's going on there. The Middle East has some challenges. So we're being prudent. But I think, as Uli said rightly, we've taken into consideration the puts and takes. And what I also see from this information we've given, that we'll continue to show leverage of our revenues in the fourth quarter. So I think, all in all, it's been a terrific year-to-date and we'll finish strong. And I've got to remind you that we give guidance on an annualized basis because of the lumpiness of the business we're in.

Operator

The next question will come from the line of Tycho Peterson from JPMorgan.

Tycho W. Peterson - JP Morgan Chase & Co, Research Division

On cash flow, it looks like you had a drag from the increase in the accounts receivable. Uli, can you maybe just talk about the dynamics there? And are you expecting recovery in cash flow, I guess, in the fourth quarter and going forward?

Ulrich Michel

Yes, Tycho, I can. It's true, we have increased accounts receivable in the third quarter this year. Last year, we had the biggest deliveries in the third quarter in April shortly following the IDS. And this year, our biggest delivery month was June. Also we grew a little bit more with customers that had longer payment terms than we did last year. So our overall receivables has grown more than just our business volume. This is true. But there is no concern from my side on the collectibility of these receivables. Our past dues are well in line with the past experience. And we should see a reduction in receivables as we move through the fourth quarter. Again, depending a little bit on the exact timing of deliveries in the fourth quarter, we probably will have a strong September again, but they should come down.

Jeffrey T. Slovin

And frankly, Tycho, we've seen in through the -- into July them come in. So the quality of these receivables are very high.

Tycho W. Peterson - JP Morgan Chase & Co, Research Division

Okay. And then as we think about some of the gives and takes here, it sounds like you didn't really have a hangover effect in Japan. I mean, you had a strong quarter there last quarter, but it sounds like that kind of continued. And then I guess, looking ahead, any preliminary thoughts, Jeff, you can make on '15? The Street's already had, I think, a 9% top line. So just wondering if you can talk a little bit at this point about '15.

Jeffrey T. Slovin

Well, let me talk about Japan because I think extremely pleased coming out of the March quarter, which we did exceptionally well. With the catalyst of the consumption tax, most dental companies in Japan were down during the quarter. And our team and I really want to give a lot of credit to our team for excelling into this quarter. I think it's no question a testament to our product offering and the success of the Omnicam. In Japan, as you know, they got into the Omnicam game late. And so we continue to do well, but that also was able to help us mitigate issues with Russia. As I mentioned earlier, that was down. With regard to 2015, I think when I think about it from a perspective of what products are we going to show this year and before the IDS and what we have going on at the IDS, I've had the opportunity to work with our team seeing what we're going to have there, what the themes are. I encourage all of you to come to this IDS. We will have a new booth and a lot of new products. So from a perspective of how am I feeling, I'm feeling very good about 2015.

Operator

Your next question will come from the line of Robert Jones from Goldman Sachs.

Robert P. Jones - Goldman Sachs Group Inc., Research Division

Jeff, just to follow up on Tycho's question around next year. If I look at constant currency growth year-to-date this year tracking towards the bottom of the 4% to 6% range, just to put a little bit more context around next year, the Street, as Tycho highlighted, looks like it's high single digit, low double digit. I mean, is that achievable in your mind, given where the portfolio is today? And obviously, you have a better view of the pipeline than we do. Is that a number you think is within grasp for next year?

Jeffrey T. Slovin

Well, Bob, I appreciate the question. We're not going to give '15 guidance. But I think that we are building our business to be able to grow at very nice levels and to show leverage over a long-term period. And what I see that we are going to be able to deliver and also the products that we showed at the IDS in 2013 and their traction also with going -- with what we're seeing from INTEGO, I feel very good about going into 2015. And I think that when you look at the overall guidance that we reiterated today in how we'll perform, given the tough comps of the prior year, I think we're well positioned. I think that is as much as I feel comfortable giving at this point. We'll obviously get into more detail in November.

Robert P. Jones - Goldman Sachs Group Inc., Research Division

That's fair. I appreciate that. And then I guess, just, Uli, if I look at SG&A in the quarter, it looks like it was up almost 11% year-over-year. I know you guys did have the new treatment center launch in the quarter. Just trying to get a sense as to how we should be thinking about SG&A going forward relative to the levels we saw in this 3Q.

Ulrich Michel

Yes. I mean, what we said in our guidance, I think we said that at 28%, 29%, right? This is the level you should think of on an annual basis. It might be a bit higher in the quarter, a bit lower in another quarter, but we should stay around this level for the full year.

Operator

Your next question will come from the line of Jon Block from Stifel.

Ethan Roth - Stifel, Nicolaus & Company, Incorporated, Research Division

This is actually Ethan Roth on for Jon Black. Just a couple of questions, start off on the Imaging. You had a really strong quarter off of a difficult comp. You mentioned that sales growth was driven by intraoral and ORTHOPOS, especially in the U.S. With Schick 33 now coming up on, I believe, the 2-year anniversary of the launch, just curious, how sustainable is the growth in the intraoral side? And then on ORTHOPOS, has the uptake mostly in the U.S. been driven by general practitioners? And just given the strength, do you believe we're starting to see some sort of inflection point in the adoption of 3D?

Jeffrey T. Slovin

Okay, a couple of points. First of all, I think Schick 33 has a lot of legs, being the premier product and all of its features and, of course, we enjoy very nice gross profit margins. And I think you saw that in our margin that we released today. I think -- where are we at as far as digital penetration? Somewhere in the high 50s. And we again believe that there is no reason today that a dentist should not have digital intraoral as its main application. So we think there's still legs there. From the standpoint of 3D, we are seeing the majority of our purchases in the GP category. I would like to say we've seen an inflection. I think it's still too early. I would like to remind everybody about what we told them on the last quarter call about one of the preeminent doctors in dentistry, Dr. Gordon Christensen, said that he felt over the next 5 years, 3D would become a standard of care. And if you think about what that means, it's a huge home run for all of us, if that's the case. Certainly, it could take longer and still be great. I think the point is, is what 3D does to the dental practice. It allows them to see more and to, frankly, practice better dentistry. And so we continue to believe that this will be not only a U.S. but a worldwide phenomenon. And it's really not a matter of if this happens but when it does.

Ethan Roth - Stifel, Nicolaus & Company, Incorporated, Research Division

Okay. And just one here on CAD/CAM, we did some early work on the Omnicam upgrade opportunity. And there seemed to be really strong demand among Bluecam users. What are you seeing on the demand side a year post the initial upgrade? And are there any plans to run a new trade-up program in the next few quarters?

Jeffrey T. Slovin

Yes. I mean, long term, we see that there are a lot of upgrade opportunities to that. I think we highlighted our 4.3, which is another software upgrade that makes it easier for the dentist to do the scan. We are actually running a program trade-up in the U.S. and in Germany as we speak now, albeit we don't expect it to be as good as the one last year. But we could always be pleasantly surprised. But that's not what we're expecting right now. But I think, Ethan, the point is that there are still a lot of Bluecam users out there, and most of them are very happy. But down the road, we do believe that dentists want to go to powder-free and will choose that as their scan of choice. But I continually hear from dentists about how happy they are about our Bluecam. Again, it's still the second-best camera out there in the market.

Operator

And your next question will come from the line of John Kreger from William Blair.

John Kreger - William Blair & Company L.L.C., Research Division

Jeff, you mentioned in CAD/CAM, the bulk of the growth came from new users. Are you still seeing most of that demand at the high end for Omnicam in the higher-end mill? Are you seeing any shift in mix there?

Jeffrey T. Slovin

Yes. John, we continue to see that trend. We see a lot of dentists coming in, thinking about the DI only, but the vast majority have chosen the Omni plus the higher-end mill. And frankly, when they do choose the DI, they've been looking towards the Omni DI, again, this idea of going powder-free. And on the mill side, what we see is once they've made the decision to get into chairside CAD/CAM, they don't want to compromise themselves on the limitation that the lower-end mill gives them.

John Kreger - William Blair & Company L.L.C., Research Division

Great. And then my follow-up. Can you talk a bit more about what you're seeing in Germany and Europe more broadly if you look beyond the tough comp from IDS? How are you seeing Europe holding up at this point?

Jeffrey T. Slovin

Yes. I know we use this, it's patented by Sirona. But frankly, Europe has been a mixed bag for us. It's up for the year slightly. And you have countries, like Spain, that are improving. Italy still has some challenges. Obviously, we talked a lot about France. Today, we are doing well there and we're optimistic about the future. And Germany has been strong as an economy. And I'm happy to say we see some nice order uptake going into the fourth quarter. But again, you still have the issues going on with Russia and that does filter to Europe as well. So I mean, I think when you round it all out, it still comes to a mixed bag. But we've reflected all of that, of course, John, in our guidance range.

Operator

And at this time, we have no other questions. I'd like to turn the call back over to Mr. Jeffrey Slovin for your closing remarks.

Jeffrey T. Slovin

Thank you very much for joining us on our third quarter call. I'd like to congratulate the German team for winning the World Cup. And maybe that's why some of the other European countries haven't done as well this quarter. But I look forward to talking to you in November when we'll release our fourth quarter numbers and give you our guidance for 2015. Enjoy the rest of your summer. Thank you.

Operator

And ladies and gentlemen, this concludes your presentation. You may now disconnect. Enjoy your day.

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