Intersil's (ISIL) CEO Necip Sayiner on Q1 2016 Results - Earnings Call Transcript

| About: Intersil Corporation (ISIL)

Intersil Corporation (NASDAQ:ISIL)

Q1 2016 Earnings Conference Call

April 26, 2016, 04:30 PM ET

Executives

Shannon Pleasant - Vice President of Corporate Communications

Necip Sayiner - President and Chief Executive Officer

Richard D. Crowley - Senior Vice President and Chief Financial Officer

Analysts

Tore Svanberg - Stifel, Nicolaus & Co., Inc.

John Pitzer - Credit Suisse Group.

Ross Seymore - Deutsche Bank

Betsy Van Hees - Wedbush Securities

Operator

Good day ladies and gentleman and welcome to the Intersil’s First Quarter Earnings Conference call. At this time, all participants are in a listen only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to introduce your host for today’s conference Ms. Shannon Pleasant, Vice President of Corporate Communications. Ma’am you may begin.

Shannon Pleasant

Thank you. Good afternoon and thank you for joining us today. I’m here with Necip Sayiner, Intersil’s President and Chief Executive Officer and Rick Crowley, Intersil’s Chief Financial Officer.

We will discuss our financial performance and provide a summary of our outlook. After our prepared comments, we will have a Q&A session. Our earnings press release and the accompanying financial tables are available on the Investor Relations section of our website at ir.intersil.com. This call is also being webcasted and a replay will be able through May 11.

Please note that the comments made during this conference call may contain forward-looking statements subject to risks and uncertainties that could cause our actual results to vary. These risk factors are discussed in detail in our filings with the Securities and Exchange Commission. Also, the non-GAAP financial measurements that are discussed today are not intended to replace the presentation of Intersil’s GAAP financial results. We are providing this information because it may enable investors to perform meaningful comparisons of operating results and more clearly highlight the results of core ongoing operations. Non-GAAP financial measures referenced during today’s call can be found in the reconciliation of GAAP to non-GAAP results provided in today’s earnings press release.

I will now turn the call over to Intersil’s President and CEO, Necip Sayiner.

Necip Sayiner

Thanks, Shannon and hello everyone. First quarter results reflect a solid start to the year that we were anticipating with consistent performance across the board. Revenue of $129.3 million was up 2.1% sequentially much better than seasonal norms. Gross margin increased sequentially, operating expenses remains well managed and for the eleventh quarter in a row, we achieved 20% operating income.

Design interaction is the key metric in accessing the health of our revenue in pipeline and our prospects for long-term growth. Q1 did not disappoint with the number of design wins up 30% for the company. Demand trends have also be improving particularly encouraging as the robust demand we’re observing for I&I product as we enter Q2.

I’ll provide more detail on the business after Rick reviews the financial result. Rick.

Richard D. Crowley

Thank you, Necip. First I’ll summarize the GAAP results. First quarter GAAP gross margin was 58.8% a 120 basis points sequential increase. Total first quarter operating expenses increased on a sequential basis to $60.8 million with R&D investment of $33.7 million and SG&A expense of $23.5 million. GAAP operating income increased year-over-year but declined slightly on a sequential basis to $15.2 million or 11.8% of revenue.

The Q1 GAAP tax rate was 20.2% resulting in net income of $11.8 million and earnings per share of $0.09. On a non-GAAP basis, first quarter gross margin of 59.1% increased by 130 basis points sequentially. This was ahead of our expectations driven by a favorable mix in C&C strong automotive performance and lower manufacturing variances.

90-days ago, we stated that we expected Q4 would be the low point for our utilization and that has proven to be the case. With Q2 mix favoring our I&I business, we expect to see further sequential improvement in gross margin. Operating expenses were up as anticipated to $50.6 million but were still below year-ago levels.

R&D activity increased driving investments to $30.6 million in Q1. SG&A expense declined to $20 million. We expect operating expenses to be up again seasonally in Q2 due to our annual raised cycle as well as an increase in new product development cost and some non-recurring expenses related to technology development and sales training.

We believe operating expense in the second half of 2016 will be relatively stable to Q2 levels. Q1 non-GAAP operating income increased sequentially to $25.8 million or 20% of revenue. The first quarter non-GAAP effective tax rate was 16.2%, non-GAAP net income was $21.2 million, in Q1 resulting a non-GAAP earnings per share of $0.15. We expect our non-GAAP tax rate will remain in the 16% range in Q2, and non-GAAP share count will be about 141 million shares.

Turning to the balance sheet, quarter ended cash equivalents increased once again to $254 million. Account receivable balances increased by $6 million sequentially and day sales outstanding were consistent with historical averages. On-hand inventory level declined for the fourth consecutive quarter ending at $64 million or 110-days.

Q1 free cash flow remains solid and we returned $16 million to shareholders through our high yielding dividend. In summary, Q1 was a very solid quarter, with improvements in the demand environment and strong operational execution, contributing to an encouraging start to the year. Necip.

Necip Sayiner

Thank you Rick. Let's start with our C&C business, which achieved year-over-year growth for the second consecutive quarter. Revenue of $47.1 million was up over 8% compared to Q1 2015. C&C represented 36% of company revenue down 1% sequentially much better than what is typical of a seasonal first quarter. Computing revenue declined as expected in Q1 with seasonal trends some of the offset by the transition to Skylake.

Skylake adaption has muted the impact of decline in [indiscernible] because of higher ASPs, but the transition has been slower than what we have experienced in previous generations. The mix of Skylake did increase during the first quarter, but only modestly and the ramp continues at a very measured pace into Q2. We believe this will result in flattish computing revenue in the second quarter.

On the consumer side, business is on-track with ramps in new model platforms accelerating during the first quarter. New product revenue is being driven by leading tablets and common and smartphone wins. Securing these design wins in the presence of large incumbents demonstrate Intersil’s unique capability and growing relationships in the mobile market.

We are focused on opportunities where we are highly differentiated and customers value to performance we provide. We target targets to expand multiple product generations with limited integration threats. For example, we recently announced the first USB-C compliance charger capable of supporting buck and boost mode one to three cells lithium Ion batteries in ultra books, tablets and power banks.

The single-chip solution replaces traditional to two chip charger solutions, extends battery life and reduces customer bill of material cost by up to 40%. In the near-term we expect to see some digestion from the strong Q4 and Q1 ramps, with resumption of growth in the second half of 2016. Taking all of the Q2 dynamics into consideration, we expect C&C to be down low single-digit sequentially.

I&I revenue grew 4% sequentially, at the high end of our expectations, comprising 64% of company sales and reversing declined that persisted over the last year. While it's still premature to declare the I&I end market is healthy, given demand is still below year-ago levels. The pace of recovery is better than what we had anticipated 90-days ago.

The biggest success story with I&I was a automotive in Q1 which was up 28% year-over-year. Q1 automotive revenue was another record increasing to 14% of company revenue. We have been focused on building our automotive power portfolio to increase our content for vehicle. You can see evidence of that in our new product introductions.

Recently, we introduced new automotive boost controllers to support all the amplifier, start stop system and head lamp LEDs. They support wide input and output ranges and deliver greater than 95% efficiency. Numerous on chip protection features keep the power supply safe under all start up conditions.

We also introduced a new pin compatible buck regulator family for infotainment head unit and ADAS application that address the low requirements of single, dual and quad core processors. This enables part makers to deploy a single footprint for entry level to luxury car model. Highly reliable and efficient these solutions offer customers a compiling value proposition.

Historically with video decoders alone, Intersil’s content per vehicle has been about $4 to $5 with additional power content in the infotainment console and the cabin the dollar content more than doubled. For hybrid electric vehicles, where we can provide multi cell balancing as well, the content sets up yet again. As you can see the automotive business is going to continue to be a very strong element of our long-term growth story.

In Q2, we expect that continued demand for our video decoders in rear view cameras combined with growing opportunities in China and Korea in particular will contribute to further strength. I&I power, which was 19% of company revenue was also up sequentially for both infrastructure in industrial application.

I’m pleased with the progress we are making in expanding our portfolio, particularly with controller. For example, we recently introduce new hybrid controller that are based on our hi-performance analog control loop but also incorporates supports for additional interface.

They are able to deliver better performance in a smaller footprints than competing solutions while offering customers some easier design flow. Our strategy in I&I power has been to intersect key technology transitions to increase our share. One such transition is the adoption of digital power conversion in data sets where Intersil is one of very few companies has able to help customer rallied measureable power savings. This includes both 12 volt and the latest 48 volt configurations where we have meaningful design winds in both types of platforms.

Our content is increasing as well, we offer both single and multi phase controllers for core and point of load tower as well as new companion smart power savings. Together, this increases our content as much as five volt in several platform that are slated to start shifting early in 2017. Moving on to industrial analog, which represented 21% of company revenue, we saw sequential improvement here as well. Growth contributed to both higher utilization and higher margin, I&I mix support gross margin expansion during the quarter. This is a business that much closely follows the macro demand environment, so we view the sequential growth as a good sign of improving health in the long cycle market. We expect our industrial analog business to continuously improve in the second quarter.

And lastly, aerospace was 10% of revenue in Q1 and down sequentially, which is not a typical of the somewhat lumpy business. We expect new wins in aerospace to take off in Q2 and contribute to a return a sequential growth. Given the positive dynamics we’ve discussed, we expect all of the I&I sub category automotive, power, analog and aerospace to be up sequentially in Q2. In total, I&I is expected to be up, mid to high single-digit.

We’re feeling good about our business, given better end-market dynamic and an increasing proportion of new business driving revenue growth. For the second quarter, we expect revenue in the range of $130 million to $136 million. Based on a more favorable product mix, we believe gross margin will increase by 50 to 75 basis points sequentially.

Non-GAAP operating expenses are expected to be in the range of $52 million to $63 million. We anticipate GAAP earnings of $0.08 to $0.10 per share. Earnings per share on a non-GAAP basis excluding amortization and stock compensation are expected to be $0.15 to $0.17.

With that, we’ll take your questions.

Shannon Pleasant

Thank you Necip. We would now like to open the call for your questions. Operator please review the Q&A instructions for the call participants..

Question-and-Answer Session

Operator

[Operator instruction] and our first question comes from the line of Tore Svanberg with Stifel, your line is now open.

Tore Svanberg

Yes thank you and congratulations on the results. I guess first of all Necip, could you talk a little bit about your relative visibility going into Q2, it does sound like the I&I is going to be up sequentially, but just sort of from a backlog coverage perspective, how do you feel about visibility going into the June quarter?

Necip Sayiner

We have closed the first quarter with a book-to-bill just over one, we have had a pretty stable bookings so far quarter-to-date. We looked at the channel inventory and it remains lean with no noticeable changes from the year-end. We are seeing orders come in pretty broadly across all our segments. So far, everything is pointing to a reasonably good sequential growth for our I&I business in Q2.

Tore Svanberg

Alright good and you talked about design wins being up 30% that actually is a good proxy for the growth that to come. Would those items be broad based across all of the separate business units and does any of that give you confidence but maybe your C&C business could experience some growth in the second half of the year?

Necip Sayiner

Yes, there are two dimensions to the design win traction, I would like to elaborate on. One is on the C&C side, these are generally proliferation of our product into the customers we have already won, our products are being designed into more models and/or some of the newer products with higher content and functionality are being designed into follow-on generations.

By and large however, the large increase in the number of design wins driven by the broad based business coming from I&I side. You will see this thing power, we see this in our analog business, we see a lot of strength in our automotive business both for video decoders and power products. So I think above all beyond the large increase in design wins, I'm most pleased with the breath of the design wins we are registering.

Tore Svanberg

Sounds good. Just one last question on the automotive business, so it just continued to increases as a percent of revenue and it sounds like you have to little bit of an inflection point going on right now with dollar content doubling. But then obviously once we get to more of the power, the battery part of that content, when exactly should we expect that to be an inflection point for the company? Are you already starting to see that now or is that sort of more to come down the road?

Necip Sayiner

The so called BMS revenue is in very early stages at this point, this is with our multiple cell balancing products. The ultra power business is approximately a quarter of the business now that’s much more diverse in terms of the stock at both and infotainment console and cabin.

We have still an inflection point in this business to look forward to with 2018 model years, this will come in video decoders as well as power and as well as multi cell balancing. So we haven’t really seen the full benefit of this inflection due to new product investments yet.

Tore Svanberg

Sounds good. Very nice quarter. thank you.

Richard D. Crowley

Thank you Tore.

Operator

And our next question comes from the line of [indiscernible]. Your line is now open.

Unidentified Analyst

Thanks guys, really looking to ask a question. Maybe just finishing upon the visibility question, after you said after some digestion on the consumer products here in second quarter and then on the computing also talking about a bit of a pick up after the second quarter. I guess what is giving you some comfort that those markets that are going to be a little softer here in Q2 are likely to improve in the back half?

Necip Sayiner

We have had a very strong ramp at the end of 2015 into Q1 with some notable platforms ramping for product announcement for the end of the quarter. it isn’t a unusual for our customers or the supply chain to order quite a bit ahead of that product launch, so we have seen a really very meaningful quantities in Q1 exceeding our expectations. So we’ll see in the early part of Q2 and special a little bit of digestion of that launch.

Second half for those platform always tented to be meaningfully stronger and based on the forecasts we've seen from our customers this looks to be the case this year. There are some additional proliferation of products inside those customers I alluded will also start kicking in, in the second half of this year. So for us at this stage with the new products coming, this is really much more of share gain story than relying on the strength solemnly of the end-markets.

Unidentified Analyst

And on the computing side, you talked about that ramp of Skylake being a bit slower than expected. I guess one, to what do you attribute that and two, does that give you any comfort that this transition where you are picking up some market share and fee increase in dollar content has some legs that might last you well in 2017?

Necip Sayiner

Yes. In sense of units, the expectations we had coming into the quarter, Q1 was not that far off in terms of actual, but the mix was different, we’ve seen less Skylake than we anticipated. There are some very specific platforms that are going to ramp in the second half the power product with some large customers, so that should certainly increase the mix of Skylake our computing business. Perhaps the silver lining in the slow adoption of Skylake that is what you are alluding to that increase in content growth will certainly have legs into the end of this year into next.

Unidentified Analyst

But then lastly Rick, [indiscernible] a bit lighter here in Q2 and then maybe if it picks up in the second half, I guess how do those moving parts impact gross margins through the remainder of the year?

Richard D. Crowley

As we said in the call in January, we expected our gross margin improvements for this year to be we closely tied to I&I recovery. If you recall we went through pretty big inventory depletion and lower demand in I&I in the second half of last year. In Q1 I&I demand improved, so the demand and the inventory have come back more into balance. So looking forward, we guided up 50 to 75 basis points most of that is mixed related, because I think now the inventory is more in line with demand and manufacture variances is expected to become a smaller factor and a leaving mix stream of the biggest piece. So for rest of the year it’s really the same thing as I&I demands moves and it should help and improve that should continues to help our gross margin going forward.

Unidentified Analyst

Alright, thanks guys. Good luck.

Operator

And our next question comes from the line of John Pitzer with Credit Suisse. Your line is now open.

Unidentified Analyst

Hi thanks for taking my question, this is [indiscernible] on for John. I had a question regarding to your data centre business. So last quarter you noted some design wins with hyper scale data center provides. I was wondering how this business was tracking, if you could provide us a bit more color, what you think is a sustainable long-term growth rate and may be at this could rival on the successful growth you see in your auto segment?

Necip Sayiner

Well the design we alluded to are moving forward and that we continue to support our customers through their pre production bills. This will create production when Intel’s next gens Skylake server processors hits currency expected at the very end of this year or early 2017. So this is certainly moving on-track with all the engagements we've been able to secure.

As I allotted for in my prepared remarks this is a rather sizeable, addressable market for us with 10 million plus units of servers shipped every year and our content ranging from 30 to 50 even higher depending on the configuration or the number of processors on the server board this is a $0.5 billion opportunity for us for the product set. I think for our first generation offering our share is likely going to be rather modest, but for that kind of addressable market, I think it would be a measureable improvements in revenues for our infrastructure business [indiscernible].

Unidentified Analyst

Great thanks and as my follow-up I guess, you noted some improvements in I&I segment, I was wondering if you could give any color on how that business on particularly auto performed by geography and how that factors into your longer terms outlook?

Necip Sayiner

Okay. Well in general in Q1 all regions were up, albeit modestly lead by North America, when I look at the Q2 North America and Asia Pac will be up significantly driving that sequential growth. The product line segmentation in I&I is across the board, we’ve touched on automotive seeing a lot of strength, it will be another record quarter in Q2.

We've seen a little bit of recovery in China out the e-deployments and we’re levered to that was some of our power product, we will see a meaningful start of ramp or a sizable project in our millero business in Q2 and there is also just the seasonal strength in industrial contributing. So it’s pretty broad sequential improvement both in terms of product lines and geography.

Unidentified Analyst

Alright thank you.

Necip Sayiner

You are welcome.

Operator

And our next question comes from the line of Craig Ellis with B. Riley. Your line is now open.

Craig Ellis

Thanks for taking the question and nice job on the first quarter guys. Necip my first question is just a longer term question on the nature of the consumer business, can you just either quantitatively or qualitatively characterize the degree to which your OEM and platform penetration is broadening as you look at where you were a year ago, where you are now and what the design in sports have for where would be around the year from now?

Necip Sayiner

Sure, I’ll give it a thought. We have been expecting some of these new revenue for a while now, the engagement on some of these platforms date back almost two-years, so I think they have come a long way and secure in not only this generation of targets with some of these customers but also the follow-on generations for 2017 already. With some of other new initiatives on handsets, I'm pleased to see that the proliferation of our product inside some of those customers. We've had a few customers where we've had success in China that we reported on last year, their success in their marketplace had been mix.

But some who have been successful in increasing their share and have a global footprints those customers have chosen to put more of our products on their new platform. So that is certainly helping, so those two combined really a contributed to a record revenue for the new products in Q1 and notwithstanding the digestion we are talking about in Q2 I expect that project to continue.

Craig Ellis

And do you see other meaningful new customers coming into your mix based on the design wins that you have or as you look at the back half of the year-end and were you would be in the next year with the follow-on platform engagement? Is it the current set that you would have?

Necip Sayiner

So thus far what we feel secure, in terms of having most the design winds, large majority of that revenue are going to be driven with existing customer, just on more platforms and or more content. There is addiction of design wins to broaden the customer base, but I would have to say majority of the revenue is driven by the larger platform wins.

Craig Ellis

Okay. Thank you and then the follow-up question is when an immediate term question. The business showed nice C&C year -on-year growth this year, again it’s looks like industrial and infrastructure could be on its way in another couple of quarters and that’s really the question, as you look at the business and recognizing we’re in a muddled macro with a cyclical industry. Can you characterize your confidence that the two primary segments will be back to year-on-year growth this year and what with the risk that are out there be that it wouldn’t get back to year-on-year growth? Thank you.

Necip Sayiner

On the C&C side the first task will show certainly year-on-year growth and the revenue was on C&C was pretty flat throughout the year, last year so as with the second half ramps we are alluding to, I think it's almost a foregone conclusions to suggest that we will see year-on-year growth for C&C. On I&I side, we were not that sure about the pace of recovery when we reported 90-days ago.

90-days in into the year the pace is a little ahead of our expectations, sequentially improvements in Q2 a little ahead of what we would have projected. And its breadth and the lean count inventories gives us some confidence that this is a sustainable recovery and if you know we don’t see any big impact on a global basis to the macro, there is a good chance that I&I can also show year-on-year growth when all set and done.

Craig Ellis

Thank you Necip.

Necip Sayiner

Thank you Craig.

Operator

[Operator Instructions] And our next question comes from the line of Ross Seymore with Deutsche Bank. Your line is now open.

Ross Seymore

Hi guys thanks for letting me ask the questions. Its similar sort of question to Craig just asked, if I look back I guess in the last year, year and a half somewhere in the low to mid 90s was where your I&I segment had peaked out. can you talk a little bit about what the drop has been caused by, by the sub segments within that and anything that would preclude you from returning to that kind of mid to - or low to mid 90s range?

Necip Sayiner

Yes so that’s very similar to the way we look at this. If you look at 2013 the I&I business was about $85 million run rate, at 2014 was a up bit $90 million that was the good year for some of our end markets, in 2015 it went back to about an $85 million run rate and now we are somewhere in the $85 million to $90 million range. So I think the best way to look at this in my opinion is the observation that, unlike the C&C business, where in I&I we don’t really have the benefit of new product revenues yet.

The level of revenue has largely followed the ups and downs of the macro. It went up in 2014 in a good year, it came down in 2015 it was the more challenging year and now we are seeing some signs of stabilization and recovery with improvement. So I think until we start delivering on new product revenue on I&I that will remain the case I’m optimistic that with the new product slated to generate revenue for us beginning of 2017 will start disconnecting from in a positive from the ups and downs of macro in I&I, but that's been the past three years history of I&I revenue.

Ross Seymore

Great that’s very helpful. I guess switching over Rick one for you on the margin side of things, if what you are talking about with the kind of seasonality plus company specific growth in C&C in the back half of the year does occur. Is it fair to say that that places some pressure on the gross margin in the back half of the year versus the first half of the year and maybe another way to look at it is? How would you think about the year-over-year gross margin trajectory given what you guys think it's going to happen in revenue mix the back half of the year?

Richard D. Crowley

I think the C&C anticipated growth will not be as much as of a headwind as you might be thinking. Some of the quality of these design wins that are ramping that have ramped and will continue to have good margins for us. Of course computing the sense of that grows with Skylake both seasonally and Skylake ramp, a little bit of headwinds, but overall volume of revenue at its solid margins will help. So I would anticipate that we should be able to show solid year-over-year comparisons in second half of the year in gross margins.

Ross Seymore

Great and I guess if I can just sneak in one last one quickly, I think there was the [indiscernible] case, can you give us an update on I think it’s a legal finding with the jury today. I know you guys have reserved against that to a certain extent, but any update on today's news will be helpful?

Necip Sayiner

Sure, after the jury verdict over a year-ago both the plaintiff and so the defense filed notions with the court. So this order today is really the judge’s ruling that sets an notion of process to the court’s final judgment. The amounts are in line with our accrued liabilities, so pretty much as we anticipated a year-ago, we fell that claims are without basis and we will appeal a ruling and that process will take 12-months to 18-month after the final judgment comes down which to be relatively shortly.

Ross Seymore

Great. Thank you.

Operator

And our final question comes from the line of Betsy Van Hees with Wedbush Securities. Your line is now open.

Betsy Van Hees

Good after noon and thanks for taking my question. Congratulations on the solid quarter, I believe we could talk a little bit about seasonality trend. So it looks like we've got a couple of headwinds in the computing consumer business in Q2. I might have heard that you talk about what we would expect for a broader seasonal trends in Q3 in both the I&I business given that your business has changed so much from what it was a year-ago today?

Necip Sayiner

Hi Betsy historically the I&I business was about flat Q2 to Q3 and there was some level of decline into Q4, I don’t expect this to be very different this year, one potential difference could be in our analog business where we see a second half decline over the first half. But since we are coming out of a pretty weak period past few quarters and this business is the recovery mode, we may not see that set down in or analog business in the second half that could be one pleasant surprise.

On the C&C side, typically the third quarter shows a notable improvement in revenues and again while we don’t have great visibility into the demand of our customers or there end-customers based on what we are seeing from there polls on and forecasts you know we should see a repeat performance this year.

Betsy Van Hees

And then can we potentially given the witness Skylake in Q1 and looks like to be in maybe Q2 as well may be sort of a snapback in the Q3 timeframe on top of what we are going to see in the computing business or is that just too hard to tell at this point in time?

Necip Sayiner

I think it is beyond our visibility. That can certainly happen and I think almost optimistic case, but so far the pace of adoption has been slower than prior transitions. So we would plan on a more modest update, but what you are pointing out a certainly possible.

Betsy Van Hees

And then my last question has to deal with inventory level, since the computing business did track in line with your temptations, but mix with different, is that any concerned given that you have had historically problems with inventories and how to do digestion. But there is any inventory issues or that you have the right mix not only in the computing business, but also in consumer and I&I so that the inventory that’s sitting out there is going to be [indiscernible] for you and we don’t have any repeat of unfortunate last year?

Necip Sayiner

Well the channel inventory was well within historically norms for us, while we've seen some uptick in channel inventory, it was on the C&C side and primarily associated with the ramp that we were alluding to that our distributors was supporting. So some of that we know has already sold though and we are being very careful particularly with our distributors in Taiwan in managing their inventory in the computing segment and thus far I think we’ve been able to maintain it within acceptable norms.

Betsy Van Hees

Thanks so much for taking my questions. And once again congratulations on a really great quarter.

Necip Sayiner

Thank you Betsy.

Operator

Thank you and that is all the time we have for question. I will now like to turn the call back over to Shannon Pleasant.

Shannon Pleasant

Thank you for joining us. This now concludes today call.

Operator

Ladies and gentleman thank you for your participation in today conference. This does concludes today’s program. You may now disconnect. Everyone have a great day.

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