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Executives

David Tacelli – President, Chief Executive Officer

Mark Gallenberger – Vice President, Chief Financial Officer

Analysts

Vernon Essi – Needham & Co.

Patrick Ho – Stifel, Nicolaus

Christian Schwab – Craig-Hellum Capital

David Dooley – Steelhead Securities

Tom Diffely – D.A. Davidson

LTX-Credence Corporation (LTXC) Q3 2011 Earnings Call May 25, 2011 10:00 AM ET

Operator

Good morning and welcome to LTX-Credence Corporation’s Third Quarter Analyst Conference Call. During the presentation, all participants will be in a listen-only mode. After the presentation we will conduct a question and answer session, and at that time if you have a question please press star then one on your touchtone telephone. At the request of LTX-Credence, this conference call is being recorded.

Speakers for today’s call will be David Tacelli, Chief Executive Officer and President, and Mark Gallenberger, Vice President and Chief Financial Officer. At this time, I would like to turn the conference over to Mr. Mark Gallenberger. Sir, you may begin.

Mark Gallenberger

Thank you, Ali. Welcome to LTX-Credence Corporation’s Third Quarter Fiscal Year 2011 conference call for the period ended April 30, 2011. Joining me on today’s call is Dave Tacelli, CEO and President. After my introductory comments, Dave will discuss the Company’s performance for the third fiscal quarter and discuss the business outlook; then I will provide further detail on the Company’s financial performance for the third quarter as well provide guidance for the fourth quarter of fiscal year 2011. We will take your questions after our prepared remarks.

A replay of this call will be made available through June 24 by dialing 800-642-1687 and the pass code is 63925313; or you can visit our website at www.ltxc.com. As a reminder, the only authorized spokespeople for the Company are Dave Tacelli, Rich Yerganian and myself.

Now for our Safe Harbor statement. During the course of this conference call, we may make projections or other forward-looking statements regarding LTX-Credence’s business outlook or the future financial performance of the Company. We wish to caution you that these statements, such as projected revenues, net income, earnings per share, operating expenses, gross margin, cash flow, non-GAAP measures, and breakeven targets are only predictions and that actual events or results may differ materially. The guidance provided during this call represents the Company’s estimates as of this day and the Company assumes no obligation to update this guidance. Please refer to our Safe Harbor statement in our earnings release for more information on important factors that could cause actual results to differ.

Now onto the call. Dave?

David Tacelli

Thank you, Mark, and good morning everyone. On today’s call, my comments will focus on the progress we’ve made in gaining share in our target market segments of SOC test space as well as how we see the business environment for the remainder of the calendar year. With the continued strong performance of the business model during the third fiscal quarter, our Company remains focused on driving top line growth through market share gains.

As a reminder, there are three key components to our corporate strategy: focus on high-growth market segments within the SOC test market and strive for market leadership in each one; fund a strong pipeline of differentiated cost-optimized products designed with innovative technology; and continuously improve on a business model that has been designed for our cyclical industry.

Product revenues bounced back in the third fiscal quarter, growing approximately 16% over Q2, driven by a rebound in the RFPA power management and application-specific market segments. In particular, PAx, one of our new products introduced in our second quarter, experienced a sharp ramp in demand and we expect this trend to continue. The primary business drivers were handsets and other consumer products, including tablets and Smartphones.

The business model once again delivered above expectations. While revenue was at the midpoint of our guidance, EPS was above the high end of the range. Our balance sheet was further strengthened by a combination of better than expected cash generation from operations and the receipt of the $15 million break-up fee from Verigy.

We are seeing a growing SOC market with particular strength in five key segments we target. Our fourth quarter guidance, a 7 to 14% increase in revenues from last quarter, reflects this strength. We have focused our business development efforts on five key segments: microcontrollers, power management, RFPAs and front-end modules, data converters, and application-specific integrated circuits.

There are several key attributes of these particular market segments. First, they represent fast-growing markets on a unit basis with chip volume expansion as the key driver for demand in test equipment. Second, because there is a mix of analog, digital, power and RF technologies, this provides the opportunity to deliver truly differentiated test solutions. And third, system sales into these targeted markets can deliver strong gross margins relative to the more commoditized digital test segments. Our ability to grow the top line of the Company by focusing on specific market segments will come from both existing customer expansion and our ability to win share away from our primary competitor.

During the quarter, we had success at our existing accounts as well as new customer where we are displacing the incumbent supplier. These new wins were in several of our target market segments and are directly the result of our ability to deliver significantly differentiated low-cost test solutions.

As for those new customer wins, we do not expect to see significant revenues for the next couple of quarters as they ramp into volume production. We do expect to see meaningful revenue contributions from these customers later in the calendar year. With these wins and several others currently in the sales pipeline, we see the incremental business driven by these customers as the key to achieving to our market growth objectives.

Our goal is to increase our market share by 50% over the next three years. This growth would drive an additional $100 million in annual revenue for the Company, generating over $50 million in net income.

Starting with this conference call, each quarter I will focus on one or two of our target markets and provide a more detailed review of those business segments, how are solutions are differentiated from the competition, and the business outlook for those markets. This quarter, I will talk about the RFPA and automotive market segments.

First, a closer look at the RFPA market. Unit volume for these devices is expected to grow at a compound annual rate of 15% through 2015. The two main drivers contributing to this are Smartphones and tablets. For every Smartphone or tablet, the combination of RFPA and front-end modules accounts for 7 ICs. This is a high volume, cost sensitive market with some challenging test requirements. Each device must be tested to ensure its proper performance relative to the type of modulated signal it is intended to amplify. A bad device can lead to poor signal quality, leading to dropped calls. The key is being able to make these measurements with high accuracy and high throughput, always focusing on the cost sensitivity of this market.

We are the number one supplier of commercial test equipment for testing RFPAs and front-end modules. We are the leader because we’ve architected an RF test system that is fast, extremely accurate, and provides the lowest cost for this high volume market. We have designed specific capabilities in our system that provide distinct advantages for testing this class of device.

Our differentiator in the market is more than just our products. It’s our deep staff of RF test experts that design the innovative solutions and our application teams that implement them with customers. Those teams constantly challenge themselves to bring the best solutions to market, including the development of test techniques used for testing key metrics more accurately and in one-tenth the time than our closest competitor.

When you combine our leading test technology with a highly skilled applications team and a system architected to be the low cost, high volume solution for this segment, you should be in a market leadership position – and we are. But we aren’t standing still either. Our recent introduction of the PAx tested is an example of how we continue to lead the way. PAx has had a very strong early adoption by several customers and we are already in volume production with the product.

The second market segment I’d like to review is the automotive market, which is more of an end driver because within the automotive space you have all device technologies represented, such as power, microcontroller, and application-specific products. Including all devices targeted for the automotive industry, semiconductor unit volumes are expected to rise from 79 billion units shipped in 2010 to 109 billion units in 2015.

There are two dynamics fueling this growth: an expected rise in auto sales as well as continued trend of expanding semiconductor content inside the automobile. Today on average, a car contains $320 worth of semiconductor content. This number is expected to double over the next several years.

One of the key characteristics for a successful test solution in the automotive market includes the capability to achieve very accurate, very consistent test results at a level much more stringent than levels used for devices in other consumer markets. For example, you can imagine the testing of a device used to control anti-lock braking system of an automobile is going to be tested much more rigorously and over various temperature extremes compared to other consumer devices; but like any other semiconductor market, cost of test is still a key consideration.

There are many different types of semiconductor devices that go into automobiles, from tire pressure sensors to engine control devices to infotainment to radar systems. It is important for a vendor to have a broad range of instruments and test knowledge. While all three of our tester platforms – diamond, ASL, and X-series – test automotive devices, the X-series is the most popular test platform because it offers the most diverse set of analog, digital and RF instruments. Some of our customers use the X-series to test automotive application-specific devices because of the necessary combination of digital test technology, complex mix signal, and specialized power instruments. Other customers take advantage of the precision measurement capability of our DCTM that can source and measure extremely small signals with better accuracy than any competing high volume test solution; while other customers use the RF test capability of the X-series to test a wide range of radar, sensor or other wireless devices.

In total, the automotive space accounted for 30% of our product revenues during the first three quarters of fiscal 2011 compared to just over 20% in the prior fiscal year. In addition to our existing automotive business, we are continuing to win new customers, adding three in the last quarter alone. We think that 30% of product revenues driven by the automotive market is sustainable given expected share gains and our continuing expansion in electronic content in cars.

Before I had the call over to Mark for a detailed review of the Company financials, I want to spend a few minutes commenting on the business cycle. With the tragic events in Japan, a common question for us has been what, if any, effects have you seen on your business? While we are concerned and with the people of Japan a speedy recovery from the recent disaster, we are fortunate that to date we have not experienced any material impact on our business.

Moving to the overall business cycle, we do believe we are still in the midst of a multi-year positive business environment. As we saw in our second fiscal quarter, we don’t believe that every quarter will be up and to the right; but customer outlook remains bullish, and while we can only see three months ahead with good visibility, we are encouraged the overall business environment remains healthy. We expect SOC revenues for the industry to be roughly flat over 2010, but with our focus on the fastest growing markets in SOC and our ability to increase our market share, a flat year for the industry should be a growth year for us.

In closing, our primary objective is to grow the top line of the Company by focusing on specific segments of SOC tests. This has already started to show up in our P&L as we compare ourselves to the growth profile of our nearest competitor. As always, we will deliver this top line growth while maintaining strong financial performance that our investors have come to expect from us.

I’d like to now turn the call over to Mark for his detailed comments on the quarter and fiscal year. Mark?

Mark Gallenberger

Thanks, Dave. Revenue for the quarter was $58.7 million, an increase of 12% compared to the prior quarter revenue of 52.5 million. Gross margin was 62.2%, which exceeded the plan of 59% due to favorable product mix and a benefit of approximately $1.5 million from the sale of previously written off inventory. R&D spending was 13.3 million, which is slightly higher from the prior quarter of 12.9. SG&A was $11.8 million, which is down from the prior quarter due to decrease in merger-related expenses. Amortization of purchased intangible assets was $1.5 million.

Net income for the quarter was $23.6 million or $0.47 per diluted share on a GAAP basis. Excluding amortization, merger-related fees and expenses, and the restructuring charge, our non-GAAP net income for the quarter was 12.3 million or $0.24 per diluted share. Included in the $0.24 non-GAAP EPS is a $0.03 benefit from the sale of the previously written-off inventory. Our EBITDA for the quarter was 15.6 million or 27% of revenue. This calculation excludes stock-based compensation expense of $868,000 and the $1.9 million of merger-related expenses.

Next, I’ll provide a breakdown of revenue for the quarter. Seventy percent of revenue came from IDMs while 30% came from subcontract test and fabless companies. Eighty-one percent of revenue was for product while 19% was for service. For the quarter, we had five customers. Each represent greater than 10% of revenue, a first for the Company as we continue to diversify and build our customer base. We also expect to have three or four greater than 10% customers in the current quarter.

Now onto the balance sheet. We ended the quarter with gross cash of approximately $148 million and net cash of approximately $147 million. Net cash increased approximately $22 million due to strong cash flow from operations and the receipt of the merger-related break-up fee. We finished the quarter with trade accounts receivable of $41.9 million. DSO increased slightly to 64 days from 63 days in the prior quarter. Inventory was 21.3 million, which is up $1.9 million from the prior quarter.

Net capital expenditures during the quarter were $1.6 million while depreciation expense was 2.8 million. We ended the quarter with accounts payable of 15.8 million and stockholders equity of $227 million.

Now, guidance for Q4 is as follows: we expect revenue to be in the range of 63 to $67 million and non-GAAP earnings per share to be in the range of $0.25 to $0.29, assuming 50.5 million fully diluted shares outstanding. The non-GAAP earnings guidance excludes amortization of purchased intangible assets of $1.5 million. We also expect gross margin to be approximately 60% and for EBITDA to be approximately 27% of revenue.

In summary, our primary objective of growing the top line is starting to bear fruit by having a more diverse customer base and through our continued success of expanding within existing accounts. Our focused market approach has enabled this revenue growth while at the same time our business model is delivering significant profit leverage.

This concludes our prepared remarks, and at this time we will take your questions.

Question and Answer Session

Operator

Again ladies and gentlemen, if you have a question, please press star then one on your touchtone telephone. Our first question comes from Vernon Essi of Needham & Company. Please go ahead.

Vernon Essi – Needham & Co.

Thank you very much. Nice results here. Wondering if you could, Mark, just go a little more into the gross margin. Despite the 1.5 million sort of gain, if you will, on the write-down of the inventory, your gross margin is coming in better, I think, thank your historical trajectory. Is there anything else working behind the scenes that could continue to sort of be a tailwind to this trend, or should we expect this to revert to the mean going forward?

Mark Gallenberger

Yeah, great question, Vernon. If you sort of adjust for that benefit, you probably add around 60% gross margin for the quarter, which clearly is still above our target business model. A lot of that additional benefit was also driven by what I would define as a higher than normal revenue mix of upgrades that tend to carry higher margins than our actual tester sales. And so I would expect to see sort of a regression. There is nothing that I could say today that says that we’ve got a permanently improved gross margin profile, but I think a lot of it is really driven by a more favorable product mix that we saw on the upgrade side.

Vernon Essi – Needham & Co.

Okay, and a housekeeping question for you, Mark. I know you talked a little bit about cash flow, but what was the actual cash flow from operations for the quarter?

Mark Gallenberger

Cash flow from operations – don’t have that number in front of me, but I believe it was about 22, $23 million. That also included that $15 million break-up fee.

Vernon Essi – Needham & Co.

Right, right. Okay, and then just sort of a macro question for you, Dave. On the overall market going into the summer season, can you give us an idea with your dialogue for customers, how you expect the rest of the year sort of directionally to look? Do you think we’re going to go through sort of slow patch this summer and then see things pick back up in the second half? It seems to be kind of the thought process from the device side. Or do you feel some of the markets you were talking about earlier are just going to keep, if you will, plugging away through the sequential patterns through the rest of the year?

David Tacelli

What I can see over the next three months, Vern, is we’ll see a continued uptick, and that’s represented in our guidance. What I can’t make a prediction of right now is with the amount of new customer wins that we have under our belt and what we think we will gain over the next three months, how fast those devices will get into production, because even if there is a little bit of a pause, we may continue to accelerate through the back end of the year.

Vernon Essi – Needham & Co.

Okay. And then is there any specific area that could—I guess, you may not see demand currently, but with dialogue with customer you feel there could be pent-up opportunities towards the end of the year, that orders may pick up in some other market segments?

David Tacelli

Don’t see anything specific right now. I mean, we’re in constant contact with customers, myself and the team; so I don’t see anything that’s going to surprise us.

Vernon Essi – Needham & Co.

Okay. All right, thank you very much.

Operator

Our next question comes from Patrick Ho, Stifel Nicolaus. Please go ahead.

Patrick Ho – Stifel, Nicolaus

Thanks a lot. Congrats, guys, on a nice quarter. On a going forward basis, what market segments do you expect to be the drivers in the July quarter? Do you expect the same markets that gave you strength in April to be the same ones, or do you see a different mix?

David Tacelli

Patrick, I think we’ll see pretty much the same markets as we saw in the last quarter. If there was one additional market where I would think we’ll see additional upside, it could be microcontrollers.

Patrick Ho – Stifel, Nicolaus

Great, that’s helpful. Dave, you guys have a very broad customer base and a lot of IDMs that tend to have multiple products or multiple devices in their own product portfolio where you serve different segments within those large IDMs. In terms of the shear winds that you discussed today, can you give a little color whether those are coming from that existing customer base and into new devices, or are they coming from what I would say new customers that you haven’t had before.

David Tacelli

Yes, both. Both.

Patrick Ho – Stifel, Nicolaus

Okay. Is it one more than the other, or is it a mix of both of them?

David Tacelli

I think the level of effort that we’ve put into expanding our base along with the level of effort we’ve put into what we term here as gaining long-term market share, which is customers we haven’t dealt with our divisions we haven’t dealt with, is pretty equal, Patrick. I don’t see it either way being overly strong. I think it’s equally distributed between both.

Patrick Ho – Stifel, Nicolaus

Right. And maybe a final question for Mark – with the net cash growing over the last several quarters and cash flow generation being strong and likely to be strong on a going forward basis, any changes to your capital allocation strategy? And also, maybe what are some of the priorities on a going forward basis?

Mark Gallenberger

Yeah, that’s a great question because we have added significant amounts to the cash balance. If you look at the last 12 months, it’s probably been about in excess of $70 million EBITDA, so we’ve really added to the cash coffers. In terms of the current plans right now, we obviously want to continue to grow the business and keep investing the cash in the business that obviously is through the R&D product line, as well as look at opportunistic opportunities that may be external to the Company. Nothing specific at this time to talk about; but there’s always those types of technology investments that could pay off, similar to what we did several years ago with our StepTech investment. So those really are the priorities right now for the Company.

David Tacelli

Patrick, the one thing that I would add is you asked the question about existing customers versus new customers. When you add a new customer, there’s a level of additional support. That support comes either in the form of people or consigned capital, and we’re looking to invest in all of those opportunities to make sure that we maximize the time frame in which we can capitalize on those.

Patrick Ho – Stifel, Nicolaus

Great, that’s helpful. Thanks a lot, guys.

Operator

Our next question comes from Christina Schwab of Craig-Hellum Capital. Please go ahead.

Christian Schwab – Craig-Hellum Capital

Thank you. Good quarter. As far as the market share gains that you guys highlighted, are you seeing those share gains versus your largest competitor, or are you seeing some opportunities coming from the most recent announced merger in this space?

David Tacelli

Christian, what I would say is we’re seeing the majority against our number one competitor, but I don’t want to leave the other guys out as well. We are seeing new opportunities from a wide range of competitors, but our number one competitor has been the bulk of it.

Christian Schwab – Craig-Hellum Capital

Great. And then your comment regarding a flat tam and some back-of-the-envelope math looking at trailing numbers and potential for back-end acceleration, if the tam was kind of flat and your share gain goes up modestly, is it safe to assume revenues kind of in the October-January time frame targeted between 67 and 72 million a quarter? Is that fair?

Mark Gallenberger

If you make the assumption that the overall market is where it is today, then the math works out that way.

Christian Schwab – Craig-Hellum Capital

Perfect. No other questions. Thanks.

Operator

Our next question comes from David Dooley of Steelhead. Please go ahead.

David Dooley – Steelhead Securities

Yes, good morning and nice quarter. I was wondering, is the PAx tester the power amplifier tester?

David Tacelli

That is correct, Dave.

David Dooley – Steelhead Securities

Okay, with that tester, you talked about testing front-end modules. Does that mean that you test both the power amplifier and the filter?

David Tacelli

That’s correct.

David Dooley – Steelhead Securities

Do you usually test those separately or together?

David Tacelli

Separately.

David Dooley – Steelhead Securities

Okay. And what sort of—I think you threw out something in your prepared remarks about your cost advantage or your throughput advantage with this tester. Could you just highlight what you think that is at this point? Obviously, you have big market share here so you have to have some sort of advantage.

David Tacelli

Well, let me give you two One is pretty simple – the tester was designed from a cost-to-build standpoint to really compete not only in the automated test space but also the rack-and-stack space, and we talked about that on the last conference call. But more specifically, one of the things that I mentioned – and now we’ll get a little bit technical – was a test that’s normally done for power amplifiers called EVM, or Error Vector Magnitude, and that test, what it does is it quantifies the performance of either a transmitter or a receiver. And because of the test techniques that have been used and designed here by the group of technologists, we’re able to do that in about a tenth of the time of a normal competitive solution that’s in the marketplace today. And when you’re thinking about high volume on these devices, that really spells significant cost of test reductions. So there’s the design of the product from a cost-of-goods standpoint, and then there’s techniques like EVM testing, which we have done a very, very good job of driving the cost of test down.

David Dooley – Steelhead Securities

So when you kind of think about the whole spectrum of test technologies you need to provide for these guys, this EVM is where you’re definitely differentiating yourself.

David Tacelli

Correct.

David Dooley – Steelhead Securities

Okay. And what is the—you talked about the new customer wins that you’re excited about. Could you just highlight—you know, let’s just say over the next two quarters, which segments that you’re most excited about the new customer wins in?

David Tacelli

Over the next couple of quarters, you’ll see—for us, we’d see automotive being one of those. We won, as I mentioned in the prepared remarks, three new customers last quarter; and beyond that, the microcontroller space. Those would be a couple that I would highlight.

David Dooley – Steelhead Securities

All right, thank you very much.

Operator

Again ladies and gentlemen, if you have a question at this time, please press star then one on your touchtone telephone. Our next question comes from Tom Diffely of D.A. Davidson. Please go ahead.

Tom Diffely – D.A. Davidson

Yeah, good morning. First, I guess, following up on the earlier question on the balance sheet. Sounds like you’re going to reinvest in the business, which is great; but is there a point when you get above 200 million or something where you’re going to look to give some money back to the shareholders with a share repurchase or something along those lines?

David Tacelli

Yeah, Tom, we clearly don’t want to be viewed as hoarders of cash, and so if we get to that point and when we get to that point, we certainly would have those discussions with our Board to really determine what’s the best method and approach of getting the right value back to shareholders. That obviously would be share repurchases or dividends or performance-type dividends. It is a cyclical business that we’re in, so we have to have a lot of due diligence and some more homework done before we make any of those types of decisions. But clearly the most important thing for us right now is to keep reinvesting in the business and keep this momentum going as it relates to growing the top line.

Tom Diffely – D.A. Davidson

Okay. And then from a gross margin point of view, you said that the mix drove some of the upside. Did I understand correctly – it was the upgrade modules that were the better margin? And I was just wondering, from a product line point of view, are all your products fairly equally profitable, or there are certain products that have higher or lower margins?

David Tacelli

Yeah, obviously not everything is treated equally between ASL, X-series and the diamond product, they’re all within a fairly tight range in terms of its average margins across the board. So it’s not like we get significantly diluted with any given product line if the product mix is skewed in one area. So you’re not going to see huge swings as it relates to that.

When you look at product upgrades across all those product lines, there is typically a distinct benefit that you get from upgrade material, and you always get some upgrades in any given quarter. In this quarter, we saw that there was a higher percentage than we normally target and model, and that’s what really drove that significant increase above the target model.

Tom Diffely – D.A. Davidson

Okay. I guess with the target model at 59, you can’t really argue with your 600 basis point lead over your competitors. So when you look at the RFPA market, you talked about your biggest competitor there; but it’s my understanding there’s still a lot of internal testers. How is the progress going to converting some of these internal testers to external testers?

David Tacelli

We have active campaigns going at what I’d call the big users of internal equipment or rack-and-stack equipment. I think it’s a long process because you are not only competing with the internal group, you’re also having to show significant value above that. I do believe we will make some gains, but I think it’s a long road – probably in the 12 to 24 month range.

Tom Diffely – D.A. Davidson

Do you have a feel for how big the merchant market is versus the overall market?

David Tacelli

Oh, boy. If you think of the overall market, I think we’ve got some slides that show that in one of our presentations that’s on our website. If you looked at the RFPA module market, it’s probably double.

Tom Diffely – D.A. Davidson

Okay, so a lot of long-term leverage to go there, too.

David Tacelli

Right.

Tom Diffely – D.A. Davidson

Okay. And then when you look at some of those recent customer wins, how do you think that impacts your share today versus once the current wins get factored into your revenue lines?

David Tacelli

You know, we’ve set an objective, Tom, to look over a three-year window because at any snapshot point in time, we could win customers but their products take a little bit longer to get into production. I wouldn’t even put a quantifiable number on it in the short term, but I think I’m very comfortable saying over a three-year window, we expect a 50% growth in our share.

Tom Diffely – D.A. Davidson

Okay. And then finally, you talked about a 70/30 split with IDMs versus subcons. How do you think the market split is between those two groups?

David Tacelli

You know, I don’t have any exact numbers for you, Tom, but my sense is that it’s going to be a little bit heavier with the subcontract test with some of our competitors. So I think we’re a little bit more IDM-heavy versus our competition or the industry average. If I had to hazard a guess, I would say it’s more along the lines of maybe closer to 50/50. If you recall, prior to the merger with LTX and Credence, LTX standalone was more in the 85 to 80% range, and so we’ve been able to diversify that customer base and capture more of the Asian subcontract test marketplace.

Tom Diffely – D.A. Davidson

Okay. So it’s really through Spyrock (phon) still that you’re addressing that market?

David Tacelli

That’s the primary driver for us, correct.

Tom Diffely – D.A. Davidson

All right, thank you.

Operator

We do have a follow-up question from David Dooley of Steelhead. Please go ahead.

David Dooley – Steelhead Securities

My question has already been asked and answered. Thank you.

Operator

I am showing no further questions at this time and would like to turn the call back over to Mr. Mark Gallenberger for any closing remarks.

Mark Gallenberger

Okay, well thank you very much for your time today. Rich Yerganian is actually presenting today at the B. Riley conference, and then next week there will be two conferences that we will be presenting at, one in Minneapolis and then one in New York City. Thank you very much. Have a good day.

Operator

Ladies and gentlemen, this does conclude today’s conference. You may all disconnect and have a wonderful day.

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