Integer Holdings' (ITGR) CEO Thomas J. Hook On Q2 2016 Results - Earnings Call Transcript

| About: Integer Holdings (ITGR)

Integer Holdings Corporation (NYSE:ITGR)

Q2 2016 Earnings Conference Call

July 28, 2016 5:00 p.m. ET

Executives

Tony Borowicz - VP Business Development and IR Director

Thomas J. Hook - President and CEO

Michael Dinkins - EVP and CFO

Analysts

Matt Mishan - KeyBanc

Charles Haff - Craig-Hallum

Jim Sidoti - Sidoti & Co.

Operator

Welcome everyone to the Second Quarter 2016 Integer Conference Call.

Before we begin, let me remind you that this presentation and today's press release contains forward-looking statements that involve a number of risks and uncertainties. These risks and uncertainties are described in the Company's 10-K for fiscal year 2015 and in the 10-Q for the fiscal quarter ended July 1, 2016, and in the other filings with the SEC. These statements are based upon Integer's current expectations and actual results could differ materially from those statements. The Company assumes no obligations to update forward-looking information included in this conference call to reflect change of functions, the occurrence of the unanticipated events, or changes in the future operating results, financial conditions or prospects, except as required by law.

During this call the Company will include a discussion of both GAAP and non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found in today's earnings press release. I would now like to turn the call over to today's host, Vice President, Business Development, and Director of Investor Relations, Tony Borowicz.

Tony Borowicz

Thank you, Charlotte. Hello everyone and thank you for joining us today on our second quarter 2016 earnings call. With us on the call today are Thomas J. Hook, President and Chief Executive Officer, and Michael Dinkins, Executive Vice President and Chief Financial Officer.

As we have done in the past, we're including slide visuals to accompany this presentation, which can be accessed currently on our website at integer.net.

In terms of the agenda for this call, Tom will provide some opening remarks, then comment on the strategic initiatives, and Michael Dinkins will provide a financial review and comment on our updated guidance.

Now let me turn the call over to Tom.

Thomas J. Hook

Thanks, Tony, and good afternoon to everyone.

In the last few quarterly conference calls, we discussed the headwinds affecting our business over the past nine months. To reiterate, the two primary factors that have impacted our business in the current year are a 37% decline in our non-medical revenues due to the downturn in the energy market and an 18% decline in our cardiac rhythm management revenues due to reduced shipments in a limited number of existing CRM customer programs. Both of these factors were greater than we previously estimated.

Therefore, we are lowering our guidance for the remainder of the year. We now anticipate a quarterly sales rate to be in the range of $350 million to $360 million, which is flat to last year but up sequentially from the first half of 2016. We continue to proactively implement various cost reduction plans to mitigate the effect of our revenue decline. We are on track with our integration activities and have accelerated synergy plan savings, a focus on improved cash flow through aggressively implementing working capital actions will drive paying down our debt obligations.

It's important to note that we will not compromise our R&D and program investments. We are expanding a pipeline of development opportunities in the neuro-stimulation, structural heart, neurovascular, peripheral vascular markets. This will generate future revenues over the longer-run timeframe. We remain confident that we will successfully execute the growth plans we have established and deliver against our vision to enhance the lives of patients worldwide by being our customer's partner of choice for innovative medical technologies and services.

On Slide 7 we outline actions to address the revenue challenges. We are disappointed with the slower-than-expected recovery in our CRM and non-medical sales has continued to impact results. To mitigate the effect of these challenges, we are aggressively implementing multiple actions.

First, we have deployed a Company-wide cost reduction initiative to normalize spending in accordance with our lower revenue baseline. Second, we are accelerating our integration and synergy plans. We now expect synergies in the current year to exceed $30 million. I will elaborate on this point later in the presentation. Third, we are actively reducing working capital to improve our cash conversion cycle through a reduction of inventory levels and a more effective vendor payment terms. These actions are expected to generate significant incremental cash flow in 2016 and beyond.

Both the working capital improvement actions and cost reduction plans are 100% within our control. As we have historically demonstrated, we will move aggressively but prudently to lower spending in accordance with our baseline sales run rate.

We expect quarterly second half baseline revenue to be in the range of $350 million to $360 million or approximately $1.4 billion on an annualized run rate basis. The drivers influencing this growth are, first, an overall sales in Q2 2016 of 5%, sequentially up from the previous quarter. Year-over-year CRM sales are down 18% year to date. However, CRM sales leveled in the quarter as the impact from the discrete customer programs have lessened. These impacts were driven by both internal and external delays and product launches, customer clinical market share challenges, customer-lowering inventory levels, and order disruption due to acquisition-related influences in the medical technology markets.

The combination of these factors are responsible for 4% of our 8% decline in total revenues. It is difficult to assess what order flow will be aligned with the market. However, our data analysis and research illustrates that many of these CRM discrete programs have already run their course.

Second, for the non-medical business, Electrochem sales had declined 37% compared to last year. This is responsible for 2% of our overall 8% decline in revenues compared to the second quarter of last year. We cannot determine when we're covering the energy market will occur, however, our energy customers are publicly signaling that a slow recovery is on the horizon.

Finally, we will continue to strengthen our customer relationships. Since the close of the Lake Region Medical acquisition, I have personally visited with all of our major customers. I gained a better appreciation of each customer's strategic direction, demand plans, and the important role Integer will play in supporting their growth objectives. Overall our feedback and our continued partnership is positive.

The successful integration of Greatbatch and Lake Region Medical is a key building block to achieve our growth objectives. The integration is going extremely well. The cultures of the companies are highly complementary, which has allowed for a smooth assimilation of the businesses. As mentioned earlier, from a synergy standpoint, we are exceeding the target established at the time of the acquisition. We have already recorded $13 million in cost synergies for the first half of this year and expect to surpass our initial target of $25 million by yearend. We now target to achieve in excess of $30 million in savings in 2016.

The pace of the integration activity remained strong and we continue to accomplish the milestones on or ahead of schedule. Most of the synergies we have already achieved were generated through organizational redundancies. Currently we are implementing lean productivity initiatives across numerous facilities and are focusing on reducing both direct and indirect spend through supplier negotiations and vendor consolidation.

Upcoming critical milestones include consolidating our IT systems, harmonizing employee benefit plans, and implementing process improvements in our sales and operating planning process. We are extensively evaluating the optimization of our manufacturing footprint and establishing centers of excellence around the globe. We continue to advance these plans and intend to communicate our manufacturing optimization strategy by the end of 2016. Based on the extensive work already completed, we are in a position to significantly increase the initial $60 million synergy target for 2018. While the manufacturing optimization initiatives will extend well beyond 2018, we have developed a clear line of sight into the savings we'd be able to accomplish.

No specific revenue synergy targets were originally provided. However, we have already begun to see the impact that the expanded manufacturing development capabilities can generate. We are in the process of finalizing a significant post-merger revenue synergy with a major customer for an advanced surgical product. We expect to begin shipments of this product in the second quarter of 2017. At full run rate, this program is expected to generate over $11 million in incremental annual revenue. We are targeting additional product wins and similar-sized deals in the next 12 to 18 months.

Longer term, we have multiple development programs underway across all of our main product categories. These programs, which will take three to four years to develop and obtain FDA approval, are examples of how our expanded research and development capabilities will drive growth over the longer term. We'll continue to invest in R&D to drive robust product pipeline of future growth opportunities.

Stepping back to look at the broader picture, Integer is now a large medical device outsource manufacturer in the world. We have the size, scale, we have the product offering and development capabilities across cardiac rhythm management, neuro, vascular, orthopedics and advanced surgical markets to comprehensively engage our customers. The merger with Lake Region Medical strengthened this competitive position by extending our presence in major med-tech markets and extending our presence with our blue chip customer base. It is increasing our capabilities in attractive growth markets such as neuro-stimulation, structural heart, neurovascular and peripheral vascular. It is greatly increasing our R&D and full medical device capabilities, allowing us to accelerate time required to bring new products to the market. And it's creating a highly scalable manufacturing platform and establishing global supply chain leadership.

Given our unique position in the marketplace, you can see why I am optimistic about our growth prospects. With the combined capabilities Integer now has in place, we are in the position to advance the funnel of sales opportunities to drive sequential growth from our current revenue base.

Further, I believe the med-tech OEM merger and acquisition activity will also benefit us over the longer term. Our strategy to create a highly scalable global medical device outsource manufacturing footprint with diverse capabilities to provide a full spectrum of products aligns perfectly with the expanding needs that these larger OEM companies require. We have the leadership team in place to execute this strategy, which will allow us to deepen our customer partnerships and deliver on our growth objectives.

I will now turn the call over to Michael Dinkins to discuss our 2016 guidance and provide further details on our quarterly performance.

Michael Dinkins

Thank you, Tom. Good afternoon everyone.

I'm on Slide 12. And as you can see, we are not a run rate business. We work our customers on an ongoing basis to understand our near-term revenue expectations. From quarter to quarter we may have variation that does not indicate changes on the market. Overall our revenues are down for the reasons Tom outlined, select programs with CRM customers and the decline in the energy markets.

If you turn to Slide 13, during this period of revenue decline, we have focused on reducing our costs, and as Tom indicated, we have deployed a companywide cost reduction initiative to normalize our spending with our lower revenue baseline, and we have accelerated our integration and synergy plans. In addition, we are actively reducing working capital via inventory reduction plans and changes to vendor payment terms. All of these changes maintain our adjusted EBITDA margin at 20%.

Slide 14 outlines the success we have made in maintaining our gross margins. We are very focused on cash flow, and our ability to pay down debt, and we know that we cannot have a decline in gross margin and achieve this objective. At a later time, please read the footnotes of this slide. Although our reported margins a 200-basis-point improvement, they are closer to being flat because we need to adjust out the negative impact in 2014 and 2015 of a one-time amortization for inventory step-up as a result of the Lake Region acquisition. The key point is that we are focused on cash flow, and we know we have to maintain our margins and bring down our working capital to achieve the leverage we want to get to.

Turning to Slide 15. Cash flow provided by operating activities for the second quarter of 2016 were approximately $4 million and capital expenditures were approximately $12 million. Cash flow from operations during the second quarter 2016 were negatively impacted by approximately $14 million of consolidation, IT-related litigation, acquisition and integration-related expenses, which are predominantly cash expenditure. And there were $37 million of interest payments on debt. During the second quarter 2016, we also paid $7.3 million on our outstanding term loans and our cash balance decreased $17.5 million.

When we turn to Page 16, we believe we are in good shape when it comes to our capital structure, because we do not have any debt that matures until 2020 and we have hedged the Term Loan A through 2020 to eliminate the variable interest risk. We will continue to monitor whether it makes sense to hedge to Term Loan B which has a 1% LIBOR floor. And we hope to be in a position when the senior note call provision ends in 2018 to refinance our debt at a better rate.

Our projected operational performance, even at the bottom end of our revenue range, is strong enough to meet our debt-related obligations and loan covenants. As we have mentioned several times on this call, we are focused on improving working capital, so we can pay down debt and deleverage our balance sheet over the next couple of years down to the 3x, to the 3.5x.

I'll now turn our attention to the guidance section. We are very aware of the fact that we have missed guidance over the last few quarters. Forecasting the performance of our CRM revenues, with the changes that were happening, has proved to be difficult. These ongoing programs are now at a point where we believe we have better insight, working with our customers to understand our future revenue projections. Obviously our revenues will always be tied to the success of our customers' products in the marketplace.

So why specifically did we lower our guidance? There are three main reasons.

First, the reduced orders primarily from the discrete CRM customer programs accounted for $26 million of the decrease. This reduction was not fully appreciated when we established our initial guidance at the beginning of the year.

Second, reduced orders from a single major CRM customer accounted for an additional adjustment. Third, the larger-than-expected decrease from the weakness in the energy market accounted for an additional $12 million. With the balance of the adjustment coming from slightly lower platinum prices, which is a pass-through, and customer selling prices.

Again, we have spent a lot of time working with our customers and our operations team to understand each of the customer programs that has driven our variance, so that we can more accurately provide guidance.

Let's turn our attention to the update guidance on Slide 19. We expect sales for the remainder of 2016 to be in the range of $350 million to $360 million per quarter, essentially flat to last year and an increase of approximately 4% compared to the average quarter sales for the first half of this year.

For 2016 we expect to achieve approximately $30 million in synergies, which exceeds our $25 million annual synergies target. We expect to significantly exceed our $60 million annual run rate synergy target for 2018.

On Slide 20 we have some select additional data so that you can more accurately model our cash flow. There are three changes from what we have provided in the past. One, we expect to generate $25 million to $50 million more from working capital initiatives. Two, our cash tax payment of $8 million is down from our previous guidance of $10 million. And three, stock compensation is down to $9 million from the previous guidance of $14 million.

I will now turn the call over to Tom for a few final words before we take your questions.

Thomas J. Hook

In summary, though we are not pleased with our performance over the past year, we believe the factors that had been plaguing our cardiac rhythm management and non-medical businesses are mitigating. And while it'll take some time for these categories to recover in earnest, we believe this revenue base is stabilizing.

We continue to proactively implement various cost reduction plans to mitigate these top-line effects. We will progressively improve cash flow by aggressively implementing working capital actions and the pay-down of our debt obligations. We will not compromise research and development programs. We are driving a pipeline of development opportunities in the neuro-stimulation, structural heart, neurovascular, and peripheral vascular markets. This will drive future revenues over the longer run timeframe.

We remain confident that we will successfully execute the growth plans we established and deliver against our vision to enhance the lives of patients worldwide by being our customers' partner of choice for innovative medical technologies and services.

Now I'll turn the call back over to the moderator to facilitate the question-and-answer session.

Question-and-Answer Session

Operator

[Operator Instructions]

Our first question comes from the line of Matt Mishan from KeyBanc. Your line is now open.

Matt Mishan - KeyBanc

Hey. Good afternoon and thank you for taking my questions.

Michael Dinkins

Good afternoon.

Matt Mishan - KeyBanc

I think at one of your slides you mentioned that there were some internal and external delays involved in some product launches. I just want - would you go over what the internal delays were?

Thomas J. Hook

Yeah. We -- they're related specifically to a project vineyard [ph] in which we're moving our Beaver 10 [ph] production operations to a new plant in Mexico, and specifically in those what we call power solutions or portable medical product lines. Our validation activities have run behind schedule and that has generated some customer backlog which we could not ship to in the second quarter as that missed its milestone. So those internal delays will result in shipments in the second half of the year. That's the principal internal delay that we've seen on a large project and program that we generated a revenue drag for in the second quarter.

Matt Mishan - KeyBanc

Okay, that's helpful. And then you mentioned one major customer and then you also mentioned like discrete customer CRM program. How are you defining what discrete customer CRM programs are? Just curious what the difference is between the one major customer and then those customer CRM programs.

Thomas J. Hook

I think each customer has a series of programs that we work with them on. If they specifically identify a program that is changing, which is usually a push-out in the timing of the launch of that program, then we identify that as a discrete program. If a customer in general decides to, because of their downstream business, either clinical market share or inventory level, overall decides to adjust their purchases from us, we just -- we don't call that a discrete program, we just call that an adjustment from a market share perspective.

Matt Mishan - KeyBanc

Okay, got it.

Thomas J. Hook

We're very reliant on the customer giving us that information and we don't always get that information. So we don't always have the ability to define the general adjustments, but the specific program ones, we do.

Matt Mishan - KeyBanc

Okay. And then just bigger picture in CRM. You typically have like customer A, B and D in CRM. And I think in previous years you'd see customer A or customer B lose market share and then A and D would pick it up, and it wouldn't necessarily impact you because you have share with all of them. What's necessarily changed in your relationships with maybe the customers that are gaining share? You're not winning with them as well.

Thomas J. Hook

It's an excellent question. As you know, strategically, five or six years ago, we put a lot of resources on focusing on a higher-growth market, neuro-stimulation, so, while we continue to invest heavily in the cardiac rhythm management area and actually have increased that investment with the Lake Region Medical acquisition, we have actually pushed forward our research and development in neuro-stimulation, which is growing but from a smaller base, but it's growing at a much higher growth rate.

The second factor is our mix across CRM customers is definitely different. We have five primary CRM customers, three majors and the two European players, in which we partner with broadly. But our mix with some customers is much greater than the others. And the project investments we're making is more concentrated along specific customers than others. And that creates a disparity from kind of historical run rates that, Matt, you've been able to draw upon, say, five, six years ago, when we were broadly investing an all-platforms across the board, and it's just more modulated now so that we can be more dedicated towards pursuing neuro-stimulation opportunities.

Matt Mishan - KeyBanc

Right. Thank you very much.

Operator

Thank you. Our next question comes from the line of Charles Haff from Craig-Hallum. Your line is now open.

Charles Haff - Craig-Hallum

Hi. Thanks for taking my questions. I had a question for you regarding some of the new business opportunities. You mentioned in the second quarter 2017 you expect to have a new surgical product that you're shipping. And you said that other deals are coming of similar size. How long does it take to kind of incubate an order like that, like the one that you referenced, the $11 million order? How long have you been working that? And just trying to understand in terms of your R&D investment what the lag may be in some of these other new revenues that could be hitting.

Thomas J. Hook

Certainly, Charles. Well, first and foremost, our traditional legacy Greatbatch methodology for generating growth was to do product development and qualification in cooperation with customers for new products over a three to four-year timeframe. And that is a continued long-term driver [ph]. However, since the merger of Lake Region and Greatbatch together, we have been able to capitalize on the combined capabilities to address a whole other funnel of opportunities that has never presented to legacy Greatbatch before. And that is really a set of opportunities in which there's existing customer programs and manufacturing sometimes which one of the legacy companies was qualified to produce, and then it's holistically outsourced in project fashion as an entire product line to Integer.

So the opportunities we pursued has really only been pursued since the acquisition has closed, really the beginning of 2016, so, within a relatively short period of time, about four quarters, we're able to generate revenue, because the products already have FDA approval, and they can be transferred because we have the production capability and space available to do it within Integer today, we can curtail much of the product development and regulatory timeframe and accelerate those products into production and enhance our revenue streams.

So it's a new growth avenue for us as a company but it's one that legacy Lake Region proved to be successful historically. It's just a mechanism that we've never had before. But given the ability to generate revenue on a much faster basis than organic product development, we're pretty encouraged at being able to leverage that as a tool in 2017 and 2018 in particular.

Charles Haff - Craig-Hallum

Okay. So that new revenue should be hitting about a year from now. And if the timeframe is about four quarters now, would you expect to be able to have other updates in the next couple of quarters with other new product wins, new revenue synergies here? Or is that too optimistic?

Thomas J. Hook

We expect both, Charles. We expected that you would want updates on the progress of the highlight opportunities we just eliminated and we also would expect that, as we gain other opportunities, we will communicate them on a quarterly conference call basis as well to underscore the effectiveness of this as a growth engine for us into the future. And it's not rocket science. It's - this is what's driving the entire medical device outsourcing industry. We have to be competitive with other medical device outsourced partners of the OEMs. And if we perform for them in terms of execution on the project times hitting their value points and keeping our quality and reliability in world-class level, we'll win our fair share of these and be able to capitalize them on growth.

We've just historically as legacy Greatbatch have never used these before. So we will comit to giving you updates on this project as well as other ones as we win them.

Charles Haff - Craig-Hallum

Okay. And then another question regarding the consolidating the IT platforms. Mike, we know as investors that this usually red flags. We've seen lots of failures when large organizations merge their IT structures together. Can you give us a little background and maybe a little comfort in how you're approaching consolidating these IT platforms?

Michael Dinkins

Yeah. One of the advantages that we have with legacy Greatbatch and legacy Lake Region is that we were both on Oracle. We were on different versions of Oracle. But this upgrade is a matter of moving Oracle to Oracle. So for our manufacturing facilities, and we're moving up to the most recent version, for our manufacturing facilities, virtually no change.

So in the process of us accepting and shifting and moving orders and labels and so forth, it just does have an impact. And because the two businesses are on the same platform, and I've done many of integrations before, this one is not going to be very difficult at all. There is a small portion of Lake Region that is on an older system, a JD Edwards system. We'll convert that next year. But the vast majority of the revenue will be converted first quarter 2017 and is not a major change because it's Oracle to Oracle.

Charles Haff - Craig-Hallum

Okay. Thank you. And then last question I had was regarding seasonality in the CRM business. I think historically fourth quarter for your business has been a stronger quarter. Because of the changes that you're seeing in your CRM business in the last few quarters, are you expecting a break from that traditional seasonality in the fourth quarter? Or can you just give us a little more color around that? Thank you.

Thomas J. Hook

Yeah. [Inaudible] cardiac rhythm management customers, we've obviously seen a substantial reduction in the first half, but it levelized in the second quarter. And our projections would be, is that -- is we would see that stability into the second half of the year. I don't pretend to be able to predict the cardiac rhythm management market seasonality right now given the level of changes, and also that obviously one of our significant customers is going to be going through an acquisition event. So we're being very cautious with what our plans are in this area given those realities, so that we don't overstep and get ahead of ourselves. So it's just a very unusual period of time with those clinical market acquisitions in these transition stages and large platforms launching. So we're just going to plan conservatively and call it flat.

Charles Haff - Craig-Hallum

Okay. Thanks for taking my questions.

Operator

Thank you. [Operator Instructions]

Our next question comes from the line of Jim Sidoti from Sidoti & Co. Your line is now open.

Jim Sidoti - Sidoti & Co.

Good afternoon. Can you hear me?

Thomas J. Hook

Yes, Jim.

Michael Dinkins

Yes, we can.

Jim Sidoti - Sidoti & Co.

You gave a lot of detail on the guidance and you stressed that you are all about improving working capital. Can you give us some guidance on where you think free cash will be, free cash flow?

Michael Dinkins

We do think that the free cash flow will still be, taking out the impact of the Nuvectra transaction, the free cash flow will still be in the range of $120 million, $150 million.

Jim Sidoti - Sidoti & Co.

Okay. And you had to lower guidance on the CRM business several times over the past year. What gives you confidence that you've got it this time?

Thomas J. Hook

I think for cardiac rhythm management is we have very closely engaged all the customers to get a much deeper understanding. We traditionally have [inaudible] for customer pulls, and it is somewhat opaque to us to understand their inventory positions of components, finished goods and sales projections, but due to the fact that we missed on multiple occasions predicting what that demand is, out of necessity we've had to engage in a much more deeper conversation with our customers to plan appropriately, apply more aggressive risk factors, so that we don't keep underestimating, and trying to put ourselves in a position of having to achieve something that is beyond our customers' requirements.

The second factor ends up being is, with only six months left in the year, a fairly sizable portion of the remainder of the year has already been triggered from a purchasing standpoint. We have much better visibility for the balance of the year.

So as you know, there's - one of our significant customers as a company going through the - an acquisition event here is we're being very cautious. We are conservative so that we don't overestimate their demands during a period of time, which is going to be a big change for them as a company.

So, going into 2017, we have a lot more analysis to do to look at the long-term trends. We got a very good idea what programs we're qualified in so we understand the long-term revenue drivers. But it's very hard to understand the timing of those program launches, which could be frustrating in providing revenue guidance, because we're very dependent on our customers' FDA and CE Mark approval milestones to be able to generate revenue out of that.

So for the rest of 2016, we've got pretty good visibility and we're being conservative, but for 2017 we're really not prepared really to talk to it yet until we get a lot more analysis done.

Jim Sidoti - Sidoti & Co.

But you do expect that sales in that one particular customer should come back once the acquisition is closed and things get back to normal there, or, I mean, is that reasonable?

Thomas J. Hook

I think we would expect to see that given the abilities of the combined organizations together, and also the current product portfolio that is launching through our current customer, but is -- we're going to wait till the demand pulls through and shows in our actual results before we get bullish on it.

Jim Sidoti - Sidoti & Co.

Okay. Thank you.

Operator

Thank you. And that concludes today's question-and-answer session. I'd like to turn the call back over to Tony Borowicz for any closing remarks.

Tony Borowicz

I'd like to remind everyone that you can access the audio and the slide visuals on our website at integer.net and they'll be accessible for the next 30 days.

As always, thank you for your continued support and interest in Integer.

Thomas J. Hook

Thank you.

Michael Dinkins

Thank you.

Operator

Thank you for your participation. That concludes today's conference call. Have a great day.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!