New Oriental Education & Technology Group Inc. (NYSE:EDU)
Q4 2016 Results Earnings Conference Call
July 20, 2016, 08:00 AM ET
Sisi Zhao - Director of Investor Relations
Stephen Yang - Chief Financial Officer
Zoe Zhao - Credit Suisse
Alvin Jiang - Deutsche Bank
Natalie Wu - CICC
Tian Hou - T.H. Capital
Wendy Huang - Macquarie
Mariana Kou - CLSA
Claire Cao - Morgan Stanley
Good evening and thank you for standing by for New Oriental’s Fourth Quarter and Fiscal Year 2016 Earnings Conference Call. At this time, all participants are in a listen-only mode. After management’s prepared remarks, there will be a question-and-answer session. Today’s conference is being recorded. If you have any objections, you may disconnect at this time.
I would now like to turn the meeting over to your host today, Ms. Sisi Zhao. Please go ahead, Ma’am.
Thank you. Hello everyone and welcome to New Oriental’s fourth quarter and fiscal year 2016 earnings conference call. Our financial results for the periods were released earlier today and are available on the Company’s website as well as on Newswire services. Today you will hear from Stephen Yang, Chief Financial Officer. After his prepared remarks, Stephen will be available to answer your questions.
Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995.
Forward-looking statements involve inherent risks and uncertainties. As such, our results may be materially different from the views expressed today. A number of potential risks and uncertainties are outlined in our public filings with the SEC. New Oriental does not undertake any obligation to update any forward-looking statements except as required under applicable law.
As a reminder, this conference is being recorded. In addition, a webcast of this conference call will be available on New Oriental’s Investor Relations website at investor.neworiental.org.
I will now turn the call over to Mr. Yang. Stephen, please go ahead.
Thank you, Sisi. Hello everyone, and thank you for joining us on the call. I am pleased to report another quarter of solid results. Net revenues in fiscal year 2016 increased to more than 18% to almost $1.5 billion with operating income up 29.5% and student enrollments up 25.8%.
Throughout the fiscal year we opened six new schools in new cities and added a net of 18 learning centers in the existing cities. In total, we added approximately 71,000 square meters of classroom area extending capacity by 7%.
At the same time, utilization rates consistently improved by 2% to 8% to around 19% during the fiscal year. In short, business has been quite positive trajectory, our strategies are working and our investments are bearing fruit allowing us to lay down important foundation for ongoing expansion and growth, particularly in areas of our O2O efforts.
More specifically, our O2O Interactive Education System is now being used across all key business lines, teachers and students in all of 55 existing cities across our school networks are using our new POP Kids and U-Can Visible Progress Teaching system and the feedback we are getting is very strong. Also, we also launched the O2O system for our overseas test prep business, such as IELTS, TOEFL and SAT programs, in some of the large cities in China. The market feedback has been very positive in that area as well and will continue to improve our O2O products and services.
In terms of the performance for the fourth fiscal quarter as mentioned before, this time of the year as part of our peak season for K-12 business which last through the second half of our fiscal year. And we performed quite well during this peak period this year. Fourth quarter net revenues exceeded the high ends of our initial expectations increasing 20.1% to $394.9 million with operating income up 61.1% and student enrollment up 32.5%.
POP Kids recorded a fourth quarter revenue increase of 42%, enrollment growth of 65%. This is an exciting increase from a year ago when the revamped program was just starting to dig up. Led by the strong momentum of POP Kids and the U-Can, K-12 business is poised for future growth.
Turning to pricing, program blended ASP slightly decreased by about 9% over-over-year, on an apples-to-apples basis, which is GAAP revenue divided by the total teaching hours. Hourly blended ASP is flat year-over-year to provide a breakdown of the hourly branded ASP, please note that U-Can declined about 4%, Pop Kids increased about 3% and oversea test prep program increased about 4% over year-over-year.
The decrease of program [ph] blend ASP growth is mainly due to the shifting of revenue mix from the oversea test prep business with higher ASP to the Kids [indiscernible] business. Also in the second half of the fourth quarter we saw huge increase of enrollments for U-Can POP Kids summer classes whose ASP is much lower than our normal class in the spring semester after summer last quarter in terms of the total teaching hours.
In addition, a slowdown of VIP business also contributes to the reduction of prep program blend ASP. On a final note, this growth rate will calculate in U.S. terms, so the ASP growth was negatively impact by the RMB devaluation for about 5%. We are very encouraged by the consistent improvement of margin and we presently expect that to continue going forward.
For the fiscal year, operating margin increased by 110 bps to 13.4% which is a little bit higher than our initial expectations. For the fourth quarter, operating margin went up by 240 bps to 9.4% from a year ago. This is a tangible proof of our commitment to enhancing operational efficiency and we will continue to focus on this in the fiscal year 2017.
Now let me give you a detailed update on our performance across individual business lines. Our revenue driver K-12 all subjects after-school tutoring business, achieved gross revenue growth of about 31% year-over-year for the fourth quarter, driven by exceptionally high enrollment growth of about 49% year-over-year.
For the whole fiscal year, K-12 had a revenue increase of about 32% supported by enrollment growth of over 39%. Breaking it down, the U-Can middle school and high school all-subjects after-school tutoring business reported a gross revenue increase of about 28% for the fourth quarter and 30% for the fiscal year.
Student enrollments grew approximately 37% year-over-year for the quarter and 35% for the fiscal year. Our Pop Kids program again delivered outstanding results with gross revenue up significantly by about 42% for the fourth quarter and 35% for the fiscal year.
Enrollments went up about 65% for the quarter and 46% for the fiscal year. Our overseas test preps and consulting business together reported a revenue growth of about 10% year-over-year for the fourth quarter and 8% for the fiscal year. Finally, VIP personalized classes business reported revenue growth of about 3% year-over-year for the fourth quarter and 14% for the fiscal year.
Next, I will provide some updates on the progress we have continued to make with our important optimized market strategy. As a reminder, we have been focusing progressively on the [indiscernible] and positive balance between top line and bottom line growth we are investing in the build-out our O2O integrated education system. We are confident that this strategy is working and is enabling us to perform very well.
With respect to our core offline business, in the fourth quarter we opened two new schools in the cities of Yangzhou and Jinzhou, and added 19 learning centers and expanded certain existing ones. This led to a fourth quarter at approximately 44,600 square meters of classroom area.
For fiscal year 2016, we opened six new schools and added a net of 18 learning centers bringing our total number of learning centers to 748. We also expanded certain existing learning centers, thereby adding 71,000 square meters of classroom area for the full year.
As for our online business, we invested $18 million in the fourth quarter and $54 million in total for the fiscal year to improve and maintain our O2O integrated education ecosystem. Most of the investments were reported under G&A expenses. We have been devoted to this online business since 2014 and our hard works have been rewarded with increase in customer retention and the addition of new customers. We fully believe this is transforming our business.
Before I go into the details, just a quick recap of three levels of our online platform. The first level also the core of our online system is an O2O Two-Way Interactive Education System across all of our business lines. The second level is our pure online learning platform and supplementary online education products enter the New Oriental brand. The third level of our ecosystem is the New Oriental to take minority shareholdings in online education companies that complements our own online education offerings.
Starting with O2O Two-Way Interactive Education System, we aim to expand New Oriental traditional offline classroom teaching offerings to all online educational services. This is also an important factor that sets us apart from other key players in the markets. With advanced O2O product services, we are poised to gain more market share and improve brand recognition going forward.
U-Can Visible Progress Teaching system, our Interactive Education System has been successfully rolled out across all 55 existing cities in our nationwide school network and this expansion drove positive performance.
POP Kids English program [indiscernible] has also gradually expanded the coverage to 53 cities 7 in the fiscal year from just 38 cities a year ago. The O2O system for the domestic test prep program was being used in five cities by the end of the fiscal year.
And since its launch in the second quarter, the Interactive Education System for oversea test prep program including IELTS, TOEFL and SAT courses will slow out in three cities by the end of the fiscal year.
For the second level of our online education ecosystem, we have seen consistent growth in our pure online learning platform and other supplementary online education products. In the fourth quarter, Koolearn.com generated net revenue of $12.8 million up 42% year-over-year. The number of paid users increased about 18% year-over-year. The number of cumulative registered users has reached 13.5 million.
koo.cn, our own online broadcast open platform for both New Oriental and third party teachers achieved over 827,000 [ph] 200 registrations in the fourth quarter. "DONUT" a series of game-based mobile learning apps for children recorded over 41.3 million downloads by quarter end.
Le Ci, an English language vocabulary training app for mobile phones and tablets app recorded about 4.3 million users at quarter end
For the third level of our online education ecosystem, we invest in selected online education companies with a minority stake and we continue to look for new opportunities that will not only complete our own offerings but also facilitate our O2O integration.
Now, let me walk you through the other key financial details for the fourth quarter specifically. Operating costs and expenses for the fourth quarter were $361.5 million, representing a 18.2% increase year-over-year. Non- GAAP operating costs and expenses for the quarter which exclude share based compensation expenses were $357.9 million, a 18.9% increase year-over-year.
Cost of revenues increased by 18.9% year-over-year to $163.4 million primarily due to increase in teachers’ compensation for more teaching hours.
Selling and marketing expenses increased by 11.4% year-over-year to $59.4 million, primarily due to increase in brand promotion expenses and selling marketing staffs’ compensation.
General and administrative expenses for the quarter increased by 20.5% year-over-year to $138.7 million. Non-GAAP general and administrative expenses which excludes share based compensation expenses were $135.1 million, a 22.4% increase year-over-year, primarily due to increase in R&D expenses and human resources expenses related to the developments of O2O integration.
Total share based compensation expenses which will allocates relates operating costs and expenses decreased by 22.7% to $3.6 million in the fourth fiscal quarter. Operating income for the quarter was $37.1 million, a significant [ph] 61.1% increase compared to $23.0 million in the same period of prior fiscal year.
Non-GAAP income from operations for the quarter was $40.7 million, or 46.9% increase compared to non-GAAP income from operations of $27.7 million in the same period of prior fiscal year.
Operating margins for the quarter was 9.4% compared to 7.0% in the same period of prior fiscal year. Non-GAAP operating margin which excludes share-based compensation expenses for the quarter was 10.3% compared to 8.4% in the same period in the prior fiscal year.
Net income attributable to New Oriental for the quarter was $42.0 million representing a 17.6% increase from the same period in the prior fiscal year.
Capital expenditures for the quarter were $15.4 million and this was primarily attributable to the opening of 35 new learning centers and renovations of existing learning centers.
Turning to the balance sheets, differed revenue balance which is cash collects from registered students for courses and recognized proportionally as revenue as the instructions delivered, at the end of the fourth quarter were $646.9 million, an increase of 29.1% as compared to $501.2 million at the end of the fourth quarter of fiscal year 2015.
Before we move into Q&A session, I'd like talk about our overall outlook and priorities for fiscal year 2017, and then our specific revenue expectations for the fourth fiscal quarter.
Looking ahead to fiscal year 2017 we're planning to continue to focus on optimized market strategy and build down success we have achieved through this approach. The initiatives are working, so we are confident that by continuing to rule them out, we should drive additional progress and success to give more specifics, first, we will continue to expand our offline business.
We plan to add 30 to 40 new learning centers for K-12 business in existing cities, and we also plan to enter one or two new cities where we identify as market with the most business opportunities.
Second, we will continue to invest in our auto integration and initiatives in online education offerings, in particular we will focus on product refinement and maintenance.
We will continue to make investments but we believe that total spending will begin to stabilize this year compared to the huge annual incremental increase over the last two fiscal years.
Third, we will continue to have a top priority on improving utilization of facilities, and controlling costs across organization to drive continued margin expansion. We believe that by executing all of these things we'll be in very positive position over both the near and long term.
In terms of the first quarter of the new fiscal year, we expect total net revenues to be in the range of $508.9 million to $527.3 million, representing year-over-year growth in the range of 11% to 15%.
If not including the impact from the recent RMB depreciation to project revenue growth rate, we'll be in the range of 18% to 22% for the first quarter of fiscal year 2017.
Also we talked about the tax reform during the previous conference call. So, I wanted to provide an update on this. The good news is that starting in May, 2016, the value-add tax, VAT that applies to New Oriental's major training and tutoring business lines will be 3%, rather than the 6% we anticipated.
As we have being paying 3% business tax previously, this means the new tax reform won't cost extra tax burden and we therefore expect no material impact our top line or bottom line for fiscal year 2017 from this.
Lastly, as we do normally, I must mention that this expectations reflect New Oriental's current and preliminary view, which subject to change.
At this point I'll take your questions. Operator, please open the call for this. Thank you.
Thank you, sir. [Operator Instructions] Your first question comes from the line of Zoe Zhao from Credit Suisse. Please ask your question.
Hi, management. Thank you for taking my question. I have two questions. One is we've seen very strong K-12 enrolment growth for the past quarter, and then how if the growth rate of enrolment in June and July excluding promotion trending currently?
And the second question is what is the retention like for the summer promotion so far? And do we see more aggressive than expected the sense from the so called players who also started to do promotion this quarter? Thank you.
Okay. Thank you, Zoe. I think for the K-12 business, yeah, we had very strong student enrolment in last year and also I think the good trend is continuing, even in the June and the first half of the July we're seeing the very strong student enrolment growth for K-12 business.
And in terms of the summer promotion classes, I think we had very strong number. I think it is better than we expected. And till now we got – we got the 200,000 student enrolment so far. And I don't have the retention rate for the autumn semester till now, but based on my forecast I believe we will get 50% to 70% retention rates for those students who enrols in the low price summer classes. Is that clear?
I just want to clarify on the retention rate. Do we measure this by headcounts or enrolments, like course enrolments?
I think enrolments.
Right. And then could you give us more color about the very strong enrolment growth excluding promotion in June and July. Are we talking about like similar ballpark number as in like 30% to 40% for June and July? Or do we see a higher base effect for the next quarter, given the relatively soft guidance?
Zoe, you know when we announced – when we reported student enrollment, we don't count the low price student enrollment.
Yes. Understood, yes.
If take out the low price classes in the first half -- the first quarter we'll still see the student enrollment growth somewhere at 25% to 30%.
Okay. Thank you.
Thank you. Your next question comes from the line of Alvin Jiang from Deutsche Bank. Please ask your question.
Hi. Thank you, management for taking my question. I have a quick question on the expansion plan in fiscal year 2017. We can see our peer company are really started, accelerated expansion into new cities. Do you think New Oriental will also accelerate expansion again? Is they're impacting to our operating margin going forward, because we can see – we have strong margin improvement in recent quarters, so I'm not sure how we look at this expansion and the margin in FY 2017? Thank you.
Okay. So, thanks, Alvin. In terms of the expansion plan, you know, we added 24 learning centers in the whole year of fiscal year 2016 and we open six new schools in five new cities in this year. And we expect to step into one or two, maybe three new cities in the coming New Year, and we plan to open 30 to 40 new learning centers in fiscal year 2017.
So compared to the total learning centers we have now, you know, it’s a 748, it's just like a 5% to 7% expansion percentage. So our – you know, anyway what I mean this, our student enrolment growth, what is the volume growth in the coming year we expect to be in the range of like say, 15%, but the student enrolment will be like say, 25%. But volume growth will be at 15% growth. So, you will see the very strong same-store sales continuously in the fiscal year 2017.
So based on the 30, 40 new learning centers we plan to build in fiscal 2017. It will not attract the margin, on contrary I think the operating margin in the fiscal year 2017 will be slightly go up because of the more leverage of the business. Yes, that's our plan, the expansion plan.
Okay. Thank you.
Okay. Thanks Alvin.
Thank you. Your next question comes from the line of Fan Liu from Goldman Sachs. Please ask your question.
Thank for taking my questions. This is Jason [Indiscernible] asking on behalf of Fan Liu. Can the management share with us what's the utilization rate target by the end of fiscal year 2017? And also you mentioned about the strong model in your conference previously. Would you elaborate on that and how does it compare to our opponent TAL's model? Thank you.
Okay. Thanks, Jason. In terms of the utilization rates, you know, at the end of the year the fiscal year 2016, we got the utilization rates at about 19%, which means compared to last year we were 200 or 300 bps up and in fiscal year 2017 we hope we got the utilization rate by 20% or 21%, because its very easy to calculate. If our revenue grows by 20% RMB term and we just expand 7% of new cost areas, so it will drive the utilization rates up.
And your second question is about the structure – you know, we're still in the process of the piloting the program and we just pilot the program in several cities since this year. So I think it's too early to say that what are the results or the impact for the business. But I think I will pull this question to maybe three or six months when we ran the business for several months our [Indiscernible] in more detail.
Okay. Thank you.
Thank you. Your next question comes from the line of Natalie Wu from CICC. Please ask your question.
Hi. Good evening Stephen and Sisi. Thanks for taking my questions. I've got two questions for you actually. The first one is you mentioned that you've got 200,000 enrolment for your summer promotion, right? So just wondering what the percentage comes from Beijing? And can you update us which cities you only started the summer promotions plan since this year compared with last year. This is my first question. And the second one is regarding your guidance, can you give us some quick on each business lines forecasted growth say, POP Kids, U-Can, Oversea's English Prep, Domestic English Prep etcetera? Thank you.
Okay. Your first question is about the summer promotion classes. We've got 200,000 student enrolments for the summer promotion classes. And I think 50% that means 100,000 student enrolments belongs to Beijing. And you know we have around 30 cities to do the summer promotion. So the other let's say, the other cities except Beijing occupied another 50%.
And your second question is for breakdown for the Q1 revenue guidance. You know typically we don't guide the revenue growth by business line, but in general I can share with you the some information as below, the K-12 business will grow by more than 30 – less than 30% to 40% in the Q1. And for the oversea test prep, I think it should be, let's the 10% in RMB term. What I'm saying is only RMB term, because I don't know the exchange rate.
And the pure online 30% to 40% and also the add [ph] English and domestic test prep I think this will go down by 5%, this is a breakdown of the Q1 guidance.
Great. So, just further clarification, we have mentioned this like 50% of enrolments of your summer promotion coming from 13 cities. So, you mean that the net add cities this year is like 13 or total will increase?
30. Last year we only did this only in Beijing, but this year we spread out to 30 cities.
Great. What about the subjects? Do you also expand the subjects?
You know this year in Beijing the summer promotion classes are for all three subjects, Math, Chinese and English and also in Shanghai three subjects. But for the cities outside Beijing and Shanghai all the other cities only have the summer promotion class or math only.
Great. Thank you. Very helpful.
Thank you. Your next question comes from the line of Tian Hou from T.H. Capital. Please ask your question.
Yes. Stephen and Sisi, good evening. So, I have question regarding the seasonality so as you guys exclude the weight away from English oversea test preparation to K-12, it seems like the seasonally that has been changed, but normally Q1 is a strongest quarter and however in this year or almost last year we didn't seen like a Q1 is still strongest quarter? So would you please elaborate the new norm of your seasonality? That's the number one question.
The second question is related to your subject. English is your strong foothold and I wonder in U-Can program how are going to plan your rapidly growing your other subject? That's two questions.
Okay. Thanks, Tian. I think it’s a good question, the seasonality question. New Oriental business has changed a lot in the last three, four years. And the K-12 business is the key gross driver. And so the Q1 of the summer classes is not the strongest season. What I mean, you know, Q1 is not the peak season for K-12 business. So, if the Q3 and Q4 will be a big season for K-12 business.
So if you recall the growth rate in individual quarters in fiscal 2016, in the Q1 of fiscal 2016 we got 16.4% and the second quarter, 18%, third quarter, 21% and fourth quarter almost 20% to 21%. So that means the Q1 should be the lowest season for the revenue growth, because the different business line, this is my answer to your first question.
And your second question is about the subjects, you know within the U-Can, the middle school high school business, the English is only account for one-third of the total revenue. And the non-English subjects, the other eight subjects grow faster than the English thus going forward. So going forward you will see the higher growth rate for non-English subject, that's my answer. Is it clear?
Yes. Thank you.
Okay. Thanks, Tian.
Thank you. Your next question comes from the line of Wendy Huang from Macquarie. Please ask your question.
Thank you. My first question is about your cost strategy. So what kind of price increase or extension that we should expect for the FY 2017 across the different segments? And also the last quarter's non-GAAP operating margin was round about 10%. So, in cost periods you have been able to recover your margins. Where shall we seeing your long term non-GAAP operating margins to stay with provision extension and also recoveries?
Okay. In term of pricing, you know within fiscal year 2016 we use the difference applies strategy compared to year before last year. June – last June fiscal year 2016 we rollout our new O2O product especially for K-12 business. So we just want to take more market share. We just allow locals who have to increase the price by only 5% on our basis.
But going forward what I mean in fiscal year 2017, I think we believe, we will use a little bit more aggressive pricing when it matters. Regarding the ASP for the K-12 business will increase by 5% to 8% in RMB term. And for the oversea test preps, we dominate the market, so in fiscal year 2017 we still increase the price by around 8% in RMP term.
And for another one, for the oversea – for the domestic test preps and English we increase price by 5% to 8%. We are in fiscal year 2017. And this is my answer for first question. What is – okay the margin.
Okay. You know, last year the fiscal year 2015 the op margin was 12.3%, this year we got 110 base up and our target for op margins is to get 17%, 18% in next three or four years. And if you recall the earnings call four quarters ago – our op margin will keep last in fiscal year 2016 then as a result we 110 base up. So next year few just on guide the op margin will slightly up. That's it.
Okay. I have just one housekeeping question on the headcount, so what was total headcount and also the number of features as of May and also what kind of percentage increase shall we expect for the FY 2017? Thank you.
Headcounts, you know, as you know end of May the total headcount is 36000 employees and the teachers is around 19,000. And based on our budget I think total headcount of next year will increase by 5% to 10%. This is a budget.
Okay. Thank you very much.
Thank you. The next question comes from the line of Mariana Kou from CLSA. Please ask your question.
Hi. Good evening management. Thanks for taking the question. I just have two quick questions. I think on the overseas test prep you mentioned the plan that ASP up slightly, could you actually help us understand a bit of the bottom view of this business in terms of total revenue, how we trending, I guess that would imply some comments on the volume? That's my first question.
And the second question is just update on housekeeping as well. Lastly quarter I think there is jump in tax rate, could you actually share bit more color in terms of your tax outlook in the next 12 months? Thanks.
Okay. For the oversea test prep pricing, you know, going forward I think we will increase the price by 8% to 9% in RMP term year-over-year. And the student enrolment growth we'll keep flat. So we will get 8% to 10% revenue growth in RMB term for oversea test prep courses. And for the ETR this year the fiscal year 2016 our ETR is 14% and next year I think the ETR will be somewhere at 14.5%, because based on the tax structure some companies will lose the tax preference in the next year. So the tax rate will fairly move up, plus they were 14.5% or somewhere at 14% to 15%.
Okay. So, we should just kind of think it by on a more full-year basis because you just look at Q4 year-on-year, I think there was quite significant increase in the effective tax rate, but I think we should just focus on --?
Yes. There still be. Yes.
Thank you. The next question comes from the line of Claire Cao from Morgan Stanley. Please ask your question.
Good evening Stephen and Sisi and thanks for taking my questions. Just want to follow-up on the RMB 50 [ph] course. so I'm wondering what's the percentage of those course enrolment were contributed by English subjects and considering that the current enrolment number is pretty impressive at 200,000, I'm wondering how should we think about margin impact in the coming fiscal first quarter? Thanks.
Okay. There are lot of questions for the summer promotion classes. And I think, yeah, we gather 200,000 student enrolments for summer promotion classes and I think we'll get the 50% to 70% retention rate afterwards. So I think we will get 2% to 3% extra revenue growth from the summer class, what I mean, on the yearly basis. And in terms of the margin I think we will get negative impact for operating margin slightly in Q1 because the price is little low and we have to pay the teachers salary. But I think it will have a little bit positive impact for op margin for the whole year because of the potential higher retention rates. Is it clear first question?
Yes. Thanks. Then how about the enrolment contribution from English subject?
Ultimately what I mean, the English enrolment within the U-Can were all the business line.
Sorry, I mean for the low price courses this summer?
So, I don't have the numbers.
We don't disclose by subject details for the promotion numbers, but actually it should be come from all subjects and cities outside Beijing and Shanghai the promotion is mainly for math.
Yes. So English subject, it should be below 30% or 25%.Most of the class are the [indiscernible] class
Okay, thanks very helpful.
Okay. Thank you.
Thank you. Ladies and gentlemen, we are now approaching to the end of the conference call. I will now turn the call over to New Oriental’s CFO, Mr. Stephen Yang for his closing remarks. Please go ahead sir.
Again, thank you for joining us today. If you have any further questions, please do not hesitate to contact me or any of our investor relations representatives. Thank you.
Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you all for participating. You may all disconnect the lines now.
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