Silicon Graphics CEO Discusses F3Q11 Results - Earnings Call Transcript

May. 3.11 | About: Silicon Graphics (SGI)

Silicon Graphics International Corp. (NASDAQ:SGI)

F3Q11 (Qtr End 03/25/11) Earnings Call

May 3, 2011 2:30 pm ET


Jason Golz - IR

Mark Barrenechea - CEO

Jim Wheat - CFO


Brian Freed - Wunderlich Securities

Shebly Seyrafi - FBN Securities

Rajesh Ghai - ThinkEquity

Brian Freed - Wunderlich Securities

Bill Smith - William Smith & Company


Good day ladies and gentlemen and welcome to the Silicon Graphics International Corp. third quarter 2011 financial results conference. (Operator Instructions)

I would now like to turn the conference over to your host for today, Mr. Jason Golz, Investor Relations for SGI.

Jason Golz

Thank you for joining us to discuss our third quarter fiscal year 2011 financial earnings results. On the call with me today are Mark Barrenechea, SGI's Chief Executive Officer; and Jim Wheat, our Chief Financial Officer.

Our third quarter fiscal 2011 financial results were released just after today's market close. Our press release and earnings slide presentation is available on the Investor Relations section of our website at We have arranged for an audio replay of today's call, which will also be available through our website for five days.

A replay of the webcast will be available two hours after the conclusion of today's earnings call and will be available until the next call. The date of this call is May 3, 2011. This call is the property of SGI, and any recording, reproduction or transmission of this conference call without the expressed prior written consent of SGI is strictly prohibited.

Before I turn the call over to Mark, I'd like to call your attention to the Safe Harbor disclosure in our earnings release regarding forward-looking information.

Today's conference call may include forward-looking statements and projections, including financial projections for FY '11 and FY '12, market growth and product development plans. There can be no assurance that we will achieve these projected results and we ask that you refer to our most recent filings with the SEC for important risk factors that could cause actual results to differ materially from these projections. We do not take any obligations to update our forward-looking statements unless required to do so by law.

To obtain copies of our latest SEC filings, please visit or visit our website at Additionally, we note that we continue to use and refer to certain non-GAAP measures. The non-GAAP figures we present in today's call are also contained in our earnings release along with a reconciliation to the applicable GAAP metric.

Separately, we are pleased to let you know that SGI will be presenting at the Annual JMP Securities Research Conference in San Francisco on May 10 and at Baird's 2011 Growth Stock Conference on May 11 in Chicago. We invite you to join us by webcast if you are unable to attend these conferences.

Also, we will have a presence at the International Supercomputing Conference, June 19 through June 23 in Hamburg, Germany.

I'd now like to turn the call over to Mark Barrenechea, SGI's CEO.

Mark Barrenechea

Welcome everyone to our FY '11 Q3 earnings call. This was the strongest March quarter and fastest start to a calendar year we've experienced to-date. Our strategy of technical computing is working as evidenced by our results.

On a non-GAAP basis, revenues were $135.8 million; margins were 29.9%, OpEx was essentially flat quarter-over-quarter at $40.1 million. We grew our cash 20% to $133.8 million and generated $13.7 million of cash from operations. I note, this is a 10% free cash flow yield over revenue. We generated $0.07 of EPS.

Our revenue mix metrics were all in line with our expectations. Products represented 72%, services represented 28%. As a percent of product, storage was 32%, compute was 68%. Public sector contributed 48%, Cloud 21%, manufacturing 11%.

Domestic contributions were 66%, International 33%, Direct 79% and Channel 21%. Storage was slightly higher within the quarter due to solid contributions from our COPAN product line.

Our ongoing strategic business is diversifying our book of business by customer, by industry, by geography. More paths to revenue will create an even stronger foundation for our business results in the long term.

This quarter, I'd like to highlight our geographic distribution. We won business in U.S. Federal, U.S. Commercial, Canada, Brazil, U.K., Germany, France, Japan, China, India, Korea, Singapore, Australia, Israel, Netherlands, Denmark, Norway, Ireland, Switzerland and Eastern Europe.

Specific customer highlights included Amazon, the Department of Defense, NASA, 3M - I note on 3M, it's one of our first UV windows wins - University of Delaware, Carbonite, Complete Genomics, the Nuclear-Test-Ban Treaty Organization, Meteo France, Iwate University, the Genome Institute of Singapore and Semiconductor Energy Laboratory of Japan. It was just a good quarter on these dimensions.

I'd like to spend a few moments on our core segments and our core competencies, which are really the underpinnings for our growth strategy. SGI is focused on technical computing. This is a market we defined last year, and positioned the company within. Customers are responding well. To say this simply that our business applications that our technical applications and the underlying compute, storage and network requirements for these two markets are very different.

Technical computing requires the extremes of scale and speed. We deliver leading compute and storage products for technical computing with the services that integrate our products and third party products into complete solutions. As well, the services that ensure customers receive a stellar production experience.

IEC sizes the overall technical computing market at $24.7 billion by 2014 with a cumulative average growth rate of 7.6%. The overall market is segmented into compute, storage, services, middleware and application software. By 2014, the compute segment is expected to be $12.4 billion, storage $4.9 billion and services $2 billion. Combined, SGI is focused on addressing what will be a $19.3 billion addressable market in 2014.

The barriers to enter the technical computing segment are high. It requires the ability to translate complex customer requirements into architected, ready-to-deploy solutions with an expert sales force.

Customer trust and proven relationships, the technical and scientific domain expertise, strategic industry partnerships, expertise across many vertical industries, global delivery capabilities and products designed at the extremes of scale and speed, SGI has these competencies. We remain focused on expanding our opportunities within the technical computing market.

Today we are focused on scientific and commercial HPC, public and private clouds, persistent and real time data storage and emerging big data opportunities. We believe that we are well positioned for growth and earnings within these core markets and remain intelligent in our analysis on where and how to expand the business. We are very pleased with our progress in technical computing. And there is no better indicator than our view of our fiscal 2011 outlook.

Today, we are reaffirming our previously announced FY '11 non-GAAP guidance. At the mid-point of that revenue range, we would grow revenue 17% year-over-year, more than twice the market growth rate of 7.6%. This fiscal year we are expecting to earn between $0.40 and $0.50 of EPS, an expansion of between $1.22 and $1.32 year-over-year.

Not only is the team executing well to our annual financial plan, we are also executing well in investing for the future; in people, and product and in processes, as we look to grow our market share.

So I want to continue to emphasize our commitment to profitable growth, operational excellence and long-term earnings power for SGI. As we expect revenues above $600 million this fiscal year, our internal FY '12 growth plans implied expected revenues above $700 million. We projected FY '11 EPS between $0.40 and $0.50. We are hopeful we can expand earnings in FY '12 based on what we see today.

With our continued execution, expected revenue and earnings growth, we believe this combination should grow shareholder value.

Before I turn the call over to Jim, let me spend a few movements on Japan. Within the quarter, we completed our acquisition of SGI, Japan. Our rationale for significantly increasing our selling and service capabilities in Japan has only strengthened in the first 45 days of owning the business.

We believe SGI products and services are well-aligned to the market needs, as potential infrastructure investments increase within the government, research, energy, university and scientific segments. With this acquisition, we added over 400 customers, many talented employees and geographic coverage across Japan.

We recently announced customer wins and production GoLives at the International Fusion Energy Research Center, Iwate University, Kyoto Sangyo University and a Semiconductor Energy Lab. Based on current business trends, we are expecting Japan to make strong contributions in support of our anticipated FY '11 revenue growth of 15% to 20%.

Our thoughts and good wishes remain with those affected by these terrible events in Japan with the earthquake, tsunami, and nuclear crisis. Our employees are safe. Our facilities are operational, and we are currently experiencing no supply chain disruptions.

With that let me turn the call over to Jim.

Jim Wheat

Hopefully by now you have seen our earnings release and presentation, which can be found on the IR section of our website. As we did on the last earnings call, I will no longer be discussing quarterly results and relevant comparisons to prior periods. That information, as well as key factors with the changes in the figures have been captured in the financial slides of our earnings presentation.

Instead, I will summarize our financial performance at a high level and discuss some key updates. To begin, this was the first quarter in which GAAP revenue exceeded non-GAAP revenue. And I anticipate this will remain the case into fiscal year '12. For consistency however, we will continue to discuss FY '11 revenue in non-GAAP terms.

Key highlights from this past quarter were year-on-year non-GAAP revenue growth of 5%, two consecutive quarters, non-GAAP profitability. We are maintaining a disciplined approach toward costs. Cash from operations of $13.7 million. Cash increased $22.3 million. Two 10% or greater customers on a GAAP basis; this includes Amazon and the U.S. government.

We purchased the remaining outstanding shares of SGI, Japan for $17.9 million. That purchase included $33.4 million of positive networking capital and approximately $90 million of NOLs, increasing our overall NOL position to $425.2 million.

We also acquired $9.4 million in debt. Net debt is at approximately a 1% interest rate and comes due over 1 to 2 years. As the notes become due, we expect to retire them. Additional details on SGI Japan will be found in our 10-Q to be filed on May 04.

We continue to emphasize a disciplined approach toward cost which we have noted is an important differentiator between the new SGI and the old Silicon graphics. Without the Q3 SGI Japan operating expenses, OpEx would have decreased quarter-over-quarter.

Separately, I am pleased to say that we continue to execute against each of our focus areas for the year. First, we are comfortably within our fiscal 2011 guidance and are maintaining our fiscal 2012 planned, of 15% to 20% non-GAAP revenue growth. Second, to augment sales opportunities for our products we have made a strategic investment in acquiring SGI Japan. Japan is a large technical computing market, and acquiring this talented sales force and service team along with an attractive customer list was an important rationale for the acquisition.

Third, we have achieved continued support for our products, evidenced by UV and COPAN that has allowed us to expand our market opportunity for technical computing.

Finally, to accelerate market driven innovation, we are making product investments for Intel's upcoming Romley architecture. Mark will discus this later in the call.

Let me turn to guidance. We expect to be within our fiscal year '11 non-GAAP guidance ranges. To reiterate, that guidance includes revenue up $600 million to $625 million, gross margin of 27% to 30%, operating expenses of $171 million to $175 million, and EPS profitable. With less than 60 days left to the fiscal year, we have reasonably good visibility.

While we remain on annual guidance, we wanted to provide visibility into Q4. Note that these ranges are subject to foreign currency fluctuation. Revenue at the midpoint of that range, gross margin in the upper half of the range, operating expenses within the range and EPS between $0.40 to $0.50.

Earnings between $0.40 and $0.50 is great progress after losing $0.82 last year. During Q4 we will complete our fiscal year '12 plan and will share those details, as well as our external metrics with you on our next earnings call. But what we see right now as outlined in our high level internal plans and our earnings that we are expecting non-GAAP revenue growth of 15% to 20% with bright line profitability.

We are very excited about the potential growth rates and profitability this year and next.

Let me turn the call back over to Mark.

Mark Barrenechea

We're currently in a strong product cycle with rackable Altix ICE, Altix UV, InfiniteStorage servers and COPAN. During the quarter, we made two product announcements. First, new pre-defined, pre-certified Rackable dedupe configurations. We make sure these complex configurations work in our factory so customers don't have to make them work at their locations.

We are seeing growing dedupe interest outside of large internet datacenters. Second, ArcFiniti; ArcFiniti is a pre-defined, pre-certified NAS solution for long term persistent data. We integrated COPAN, Rackable storage servers, our XFS Filesystem and our DMF hierarchal storage management software into one integrated appliance.

There is one theme here; big data is big opportunity for SGI, and we now have three solutions for big data in the marketplace. First solution is Altix UV on Linux or Windows, running Oracle, MySQL, or SQL Server for large-scale, centralized data. 3M and the U.S. Postal Service are first examples in this category. Second solution, Rackable dedupe for large-scale distributed data. In fact we recently deployed and integrated 9,600 core, 10 petabyte factory integrated cluster. We have a second line order already. And third, ArcFiniti to store big data for long periods of time, cost effectively and with high speed online availability.

Once again, big data is big opportunity for SGI, and this is an emerging area for us. Lastly, we are also on a strong R&D cycle, preparing for the next generation of the Intel architecture called Romley, as well as the next generation of InfiniBand called SDR. This is a powerful R&D cycle where we are expecting increased competitive differentiation. This is the first full R&D cycle planned and choreographed from start to end by the new SGI.

We are expecting factors of improvement as it relates to scale and speed. In fact we are designing for two outcomes; one, a greater ability to compete at the higher end of the market; and two, the ability to provide a better TCO in the middle of the market.

Let me highlight an example. To deliver a petaflop of computing today takes roughly 100 cabinets. Our next product cycle, it will take us directly five cabinets. Within the same physical datacenter footprint, we can help customers' scale from one petaflop to 20 petaflops. This is a 20X improvement across one product cycle.

In summary, we're really pleased with our performance at the two-year mark of the new SGI, our financial outlook for both FY '11 and FY '12, our current product portfolio and what we plan to deliver in the very near term. As I said earlier on the call, with our continued execution, expected revenue and earnings growth we believe that combination will continue to grow shareholder value.

With that I'd like to turn the call over to the operator and open the line for your questions.


(Operator Instructions) And our first question comes from the line of Brian Freed from Wunderlich Securities.

Brian Freed - Wunderlich Securities

So couple or three questions, I guess the first, as you look at your Storage business, you guys have historically refilled some of the LSI products. Can you talk a little bit about what you expect to be the potential impact from the pending NetApp acquisition, if any?

Mark Barrenechea

I would say our first take is that the partnership will remain in place, and in fact potentially expand into other opportunities. So we have certainly been in good conversations with NetApp and we are optimistic that we'll continue the relationship and perhaps add additional product to the portfolio.

Brian Freed - Wunderlich Securities

And then secondly, as you look at the impact of Japan in the quarter, can you give any more color in terms of the metrics there? Were you able to still execute to what you thought you would despite all the disruptions over there, or did you see some pressure on revenue in the quarter relative to what you anticipated?

Mark Barrenechea

Well, when we announced the acquisition, we also increased our outlook for the year. So we just started kind of the macro view. And as you've heard Jim and I speak to today; we were reaffirming the guidance between $625 plus $0.40 to $0.50 of EPS. So at the macro level across four to five quarters we're right on where we thought we would be.

There is no doubt, and I can say firsthand because I was there during the earthquake, the first few weeks of the earthquake and tsunami, all companies experienced quite a bit of disruption in those early weeks. For us, we are back to operating in the new norm. And we feel good about hitting our increased projections because of the acquisition.

Brian Freed - Wunderlich Securities

And then, as you talk about these new Storage architectures, particularly the Rackable dedupe configuration, as I looked at your Rackable Storage historically, you guys have really provided a lot of the building blocks for the cloud-based storage architectures such as Amazon, but it's typically not been the provider of the file systems or the dupe architecture.

Is this configuration a change from the norm, and can you talk a little bit about what intellectual property or expertise you should bring into this configuration?

Mark Barrenechea

I'd highlight two things. So on the dupe config, we're certainly bringing our IP on density and backplane technology as well as integrated compute and storage integration. So we have built dupe configurations for very large scale companies. We have understood sort of the technical requirements very well, but we now can very cost effectively expand that to the greater market. And our IP in there are our servers, our backplane storage technology and our density.

The second example is ArcFiniti; and ArcFiniti is a real nice example of a new class of product that we are interested in bringing to the market, which is assembling many of our great components into an integrated appliance. Then you would bring MAID technology with COPAN or accept that Filesystem or DMF hierarchical storage management components and integrated storage servers to deliver a (inaudible) archive platform under $0.25 a gigabyte.

So dupe is taking what we've learned in the large-scale internet, bringing it more broadly to the market. ArcFiniti is a predefined, prepackaged collection of existing technology to meet a market need. This is the style of product we hope to introduce more and more of.

Brian Freed - Wunderlich Securities

And as you move forward with this type of architecture where there is a lot more value add than the traditional kind of JBOD, (NASDAQ:EBOD), is it logical that it would drive an upward trajectory in your storage gross margin over time?

Mark Barrenechea



(Operator Instructions) Our next question comes from the line of Shebly Seyrafi of FBN Securities.

Shebly Seyrafi - FBN Securities

So your guidance for the year implies, for the fourth quarter, I think 9% to 27% growth sequentially. And you just had very strong growth in the Storage, but your Compute segment, I'm having, was down significantly in the third quarter. I am wondering if you can talk about what maybe drove that steep decline in Compute and how you see a rebound in the Compute segment in the fourth quarter?

Jim Wheat

Certainly it was a slightly stronger Storage quarter for us. But there is nothing out of sort of bounds within the quarter to suggest our Compute business is on a downtick. I think if I've got the arithmetic right, if we looked at Q4, our guidance would imply kind of a revenue range of the low end of $148, a high end of $173 would be within the $600 to $625 range and about $160 at the midpoint.

I would say, from everything we can see it should be a relatively strong compute quarter for us. So its nothing more than timing within a quarter. Delivery mix is not a long-term trend at all that compute might have been slightly down within the quarter.

Shebly Seyrafi - FBN Securities

Okay. And your COPAN business was quite strong. Can you give us some sense of what portion of your storage business is COPAN right now?

And as you look forward, how do you see the growth rate of COPAN comparing to the LSI, NetApp business and your other storage business?

Jim Wheat

So typically, we don't breakout the individual segments of storage. But I will tell you, we're pleased with the progress of COPAN and the time that we acquired it for $2 million. It is certainly part of our growth plan, and as you may have heard Mark mention on the last question, it's also a key part of our new offering with ArcFiniti.

Shebly Seyrafi - FBN Securities

Your public segment, I think some investors are concerned about your high exposure to that vertical. Did you see 48% of revenue or 41%?

Jim Wheat

I think 48%.

Shebly Seyrafi - FBN Securities

So that would imply it was down meaningfully in the March quarter, I think down 43% sequentially. Can you talk about what you're seeing in the public segment? Is that just volatility? Do you think that the U.S. government, which was one of your 10% customers is going to start spending more? And talk about your exposure to the local side, and how that might impact your outlook.

Jim Wheat

I wouldn't read too much into the quarter-to-quarter fluctuation. At the national level, we would expect year-over-year to grow our federal business. Certainly, there is a lot in the press about datacenter consolidation in the government space, but I would also highlight that the storage and compute needs are increasing.

We also, last quarter had some very nice ICE Cube wins within the federal space, in fact four of them. So even though they are a datacenter consolidation, the need for compute and storage is increasing. There is also an increase of interact and new siloed datacenters, particularly around modular solutions. And to also balance that there has been news about new $1 billion datacenters being built within the government space.

So at the national level, we're anticipating growing our federal business year-over-year. We are doing nice business within the DoD and the Intelligence Community, National Laboratories, National Tech Centers, as well as universities associated with NSF funding. So when you bring that all together, we will grow year-over-year in the federal states.


Our next question comes from line of Rajesh Ghai from ThinkEquity.

Rajesh Ghai - ThinkEquity

Just wanted to follow up on the last question on the federal side. How dependent are you on the passage of the federal bill? If the bill passes, how does your outlook change? Do you see a new fed? Is there a possibility of it impacting your fourth quarter?

Mark Barrenechea

We'll just start with the numbers. As Jim and I said, we're very comfortable with our guidance range right now of $600 million to $625 million. And the revenue target feels more like the midpoint of the range right now. So we factored everything in that we can see and to be able to hit that guidance range.

In terms of the government, we are taking share from other individuals within the government space. Our product offerings of UV, of Rackable dedupe, COPAN, other solutions, this is a growing opportunity for us even if the available market is flat to slightly up. So that's why we feel very comfortable that we can grow our federal business year-over-year. For competing better, we have better products in the marketplace, and while delivering some of the larger OEMs.

There is no doubt that the budget is top of everybody's mind. It is very hard for me to predict that. But based on what we see, we feel good with our guidance range for the year, and we should grow the business year-over-year.

Rajesh Ghai - ThinkEquity

And as far as the Altix UV line of products, you announced a partnership with Microsoft for Windows. Do you see any positive impact of that this quarter, and are you factoring anything in the upcoming quarter?

Mark Barrenechea

I look at maybe a little longer term to FY '12. We are certainly factoring into our view of 15% to 20% growth for FY '12, growing UV and growing UV by deploying more Windows in SQL Server. So I would say it has minimal impact here in FY '11, but certainly greater impact in FY '12. Helps support the 15% to 20% growth rate.

Rajesh Ghai - ThinkEquity

And my last question was regarding COPAN. Strong performance there, and you mentioned gaining share. Who are you displacing and how big a market do you see for COPAN in fiscal '12?

Mark Barrenechea

As Jim said, we are not breaking out the specifics of our storage line, kind of three major components. But we are competing against EMC and HP, primarily with COPAN. Our opportunity is really to integrate this into big data opportunities, but not necessarily just go after standalone active archive solution.

So we think, standalone, we are certainly very competitive; begin to integrate our Filesystem, our hierarchical management software with ArcFiniti we think will be that extra boost for us in FY '12.


Our next question is a follow up from Brian Freed.

Brian Freed - Wunderlich Securities

Couple of quick follow-ups. If you look at the product line specifically, you mentioned a number of product cycles that are ticking in here. Particularly within the HPC segment, can you talk a little bit about the relative strength of each of your products? Would it be safe to describe Altix as still the workhorse of the product cycle there? And could you also address what you are seeing as opportunities in other product lines as well as a GPU-based platform?

Mark Barrenechea

Certainly UV remains highly differentiated in the marketplace, Brain, mainly towards data-intensive applications. Second, one of our growth opportunities there is to get out of the scientific community and move more into the commercial space. So as we look out at the coming quarters and years, it's growing our commercial sector sort of above average growth rates with UV.

Altix ICE which our InfiniBand product had primarily been a mid-market solution. And as we transition to the Romley platform, we have been designing to step up to a much larger scale for InfiniBand. We are delivering upwards to a Petaflop today within one product cycle 20x'ing that upto 20 petaflops.

So Altix ICE today is sort of focused at the mid-market and our next cycle is going to allow us to compete very, very well at the higher end of the market. We're just going to open up hundreds of millions of dollars worth of RFPs for us to go compete against.

In terms of GPUs, our view is that the market is relatively flat for GPUs. And certainly folks add accelerators to x-86 platform. You can add GPUs to ICE; you can add GPUs to UVs.

We are paying a lot of attention to Intel's future platform called Knights, which is an x-86 platform. So you don't have to change your code to get all that scale.

So UV in summary remains sort of the lead product for data-intensive, and well-differentiated. Our next cycle for ICE is going to allow us to step up to compete much more broadly for many more RFPs at the large end of the market.

Brian Freed - Wunderlich Securities

And then my final question from kind of a technology and competitive environment perspective. While you guys have focused on the technical computing market historically, Itanium's a pretty well distributed SMP architecture that looks to be losing industry support at least from an application standpoint. Do you see opportunities to pick up more traditional business applications on a shared memory x-86 system over time, or is that not something you are aggressively pursuing right now?

Mark Barrenechea

It's something we are not aggressively pursuing. We are very squarely focused in technical computing. And there are plenty of opportunities for us, as you can see by the market size, the growth rate, the pace at which we are growing within the segment before we start looking at deploying SAP transactional systems. So those Itanium systems that are running technical computing platforms we are certainly very interested in.

Now that Microsoft has announced the support for Itanium, Oracle has announced the support for Itanium. But those Itanium platforms have been technical computing, we are very interested in.


Our next question comes from the line of Bill Smith from William Smith & Company.

Bill Smith - William Smith & Company

Could you comment on your sales portion, how you see that developing with this kind of growth in front of you? Do you expect it more to be a direct type sales or indirect sales channel? Can you comment on that a little bit?

Mark Barrenechea

If we look out into FY '12, we still have great opportunity to simply fill coverage debts. And being about 1600 employees today on a global basis, there are still geographies we don't cover direct that we'd like to cover direct. So as we build our FY '12, one of our biggest opportunities is simply to compete more in geographies where we don't have a direct presence.

Now there are Tier 2 and Tier 3 presences that we'd like to have and we'll cover those in direct. Now, we don't have an interest of building a sales force per se in Chile or Argentina, but there is demand there. We'll cover that more in direct and through partners. But there are certain cities and geographies where we would like to have strategic a direct presence. And we will grow our sales force next year to cover that.

Bill Smith - William Smith & Company

And where do you think that would go? Where is it today and where do you think that might be say, 12 months from now in terms of the direct sales force?

Mark Barrenechea

One of the things we don't do Bill is go down to specific headcount numbers. But maybe on a percent basis we might be looking to expand the sales force 5% to 10% next year.


I show no further questions in the queue and would like to turn the conference back to Mr. Jason Golz for closing remarks.

Jason Golz

We'd like to remind everybody that we will be at the JMP Conference next week in San Francisco on May 10, and also at the Baird Growth Stock Conference on May 11 in Chicago and we invite you to join us. And we hope to see you there. Thanks for your participation.


Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program and you may now disconnect at this time.

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