McGrath RentCorp's (MGRC) CEO Dennis Kakures on Q2 2016 Results - Earnings Call Transcript

| About: McGrath RentCorp (MGRC)

McGrath RentCorp (NASDAQ:MGRC)

Q2 2016 Earnings Conference Call

August 3, 2016 5:00 PM ET

Executives

Keith Pratt - Senior Vice President and Chief Financial Officer

Dennis Kakures - President and Chief Executive Officer

Analysts

Scott Schneeberger - Oppenheimer & Co.

Sean Egan - KeyBanc Capital Markets

Operator

Welcome to the McGrath RentCorp Second Quarter 2016 Conference Call. At this time, all conference participants are in a listen-only mode to reduce background noise, but later we'll be conducting a question-and-answer session. [Operator Instructions] This conference is being recorded today, Tuesday, August 2, 2016.

Now, I would like to turn the conference over to Keith Pratt.

Keith Pratt

Thank you, Viz. Good afternoon and thank you for joining us on today's call. We are here to discuss McGrath RentCorp second quarter 2016 results, which were reported today after the market closed. Joining me on the call is Dennis Kakures, President and CEO.

In addition to the press release issued today, the Company also filed with the SEC the earnings release on Form 8-K and the Form 10-Q for the quarter. Please note that this call will be available for telephonic replay for up to seven days following the call by dialing 1-855-859-2056 for domestic callers and 1-404-537-3406 for international callers. The passcode for the call replay is 44678868. This call is also being broadcast live via the Internet and will be available for replay purposes in the Investor Relations section of the Company's website at mgrc.com.

Before getting started, let me remind everyone that the matters we will be discussing today that are not truly historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, including statements regarding the Company's expectations, beliefs, intentions or strategies regarding the future. All forward-looking statements are based upon information currently available to the Company and the Company assumes no obligation to update any such forward-looking statements.

Forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from those projected. These and other risks relating to the Company's business are set forth in the documents filed with the Securities and Exchange Commission, including the Company's most recent Form 10-K.

With these formalities out of the way, I will turn to our review of the financial results. For the second quarter 2016, total revenues increased 7% to $103.1 million from $96 million for the same period in 2015. Net income increased 7% to $9.1 million from $8.5 million and earnings per diluted share increased 19% to $0.38 from $0.32.

Reviewing the second quarter results for the Company's Mobile Modular division compared to the second quarter of 2015, total revenues increased $7.6 million or 18% to $49.7 million due to higher rental, rental related services and sales revenues.

Gross profit on rents increased $3 million or 24% to $15.2 million. Rental revenues increased $4 million or 14%, and rental margins increased to 48% from 44% as depreciation as a percentage of rents was flat at 17% and other direct costs as a percentage of rents decreased to 36% from 39%.

Selling and administrative expenses increased 9% to $12.3 million, primarily as a result of increased salaries and employee benefit costs and higher allocated corporate expenses. The higher gross profit on rental, rental related services and sales revenues partly offset by higher selling and administrative expenses resulted in an increase in operating income of $3 million or 57% to $8.3 million.

Finally, average modular rental equipment for the quarter was $718 million, an increase of $62 million. Equipment additions supported growth across all regions and our Portable Storage business. Average utilization for the second quarter increased to 75.8% from 74.4%.

Turning next to the second quarter results for the Company's TRS-RenTelco division compared to the second quarter of 2015, total revenues were flat at $27.9 with higher sales revenues offset by lower rental revenues.

Gross profit on rents decreased $0.4 million or 4% to $7.9 million. Rental revenues decreased $1.6 million or 7%, and rental margins increased to 39% from 38% as depreciation as a percentage of rents decreased to 44% from 47% and other direct costs as a percentage of rents increased to 17% from 15%.

Selling and administrative expenses increased 1% to $5.5 million. The higher gross profit on sales revenues partly offset by lower gross profit on rental revenues and higher selling and administrative expenses resulted in a 1% increase in operating income to $6 million. Finally, average electronics rental equipment at original cost for the quarter was $255 million, a decrease of $14 million. Average utilization for the quarter was flat at 59.5%.

Turning next to the second quarter results for the Company's Adler Tanks division compared to the second quarter of 2015, total revenues decreased $2.6 million or 11% to $21.5 million, primarily due to lower rental and sales revenues, partly offset by higher rental related services revenues.

Gross profit on rents decreased $2.9 million or 25% to $8.7 million. Rental revenues decreased $2.9 million or 16%, and rental margins decreased to 59% from 65% as depreciation as a percentage of rents increased to 27% from 22% and other direct costs as a percentage of rents increased to 14% from 12%.

Selling and administrative expenses were flat at 6.9%. The lower gross profit on rental revenues partly offset by higher gross profit on rental related services and sales revenues resulted in a decrease in operating income of $2.2 million or 41% to $3.2 million.

Finally, average rental equipment for the quarter was $308 million, an increase of $5 million. Average utilization for the second quarter decreased from 60.6% to 49.4%.

On a consolidated basis, interest expense for the second quarter 2016 increased $0.6 million or 27% to $3 million from the same period in 2015 due to the Company's higher average debt levels and higher average interest rates. The second quarter provision for income taxes was based on an effective tax rate of 39.5% in 2016 and 2015.

Next, I'd like to review our 2016 cash flows. For the six months ended June 30, 2016, highlights in our cash flows included; net cash provided by operating activities was $73.2 million, an increase of $8 million compared to 2015. The increase was primarily attributable to an income tax refund received, partly offset by an increase in prepaid expenses and other assets and other balance sheet changes.. We invested $45.7 million for rental equipment purchases compared to $71.2 million for the same period in 2015 consistent with a more selective deployment of capital on new rental assets.

Property, plant and equipment purchases increased $2.9 million to $8.7 million in 2016. Net borrowings decreased $18.2 million from $381.3 million at the end of 2015 to $363.1 million at the end of the second quarter 2016. Dividend payments to shareholders were $12.3 million. At quarter end, the Company had capacity to borrow an additional $208.7 million under its lines of credit and the ratio of funded debt to the last 12 months' actual adjusted EBITDA was 2.2 to 1.

For 2016, second quarter adjusted EBITDA increased $0.6 million or 2% to $36.1 million compared to the same period in 2015, with consolidated adjusted EBITDA margin at 38% in 2016 compared to 40% in 2015. Our definition of adjusted EBITDA and a reconciliation of adjusted EBITDA to net income are included in our press release for the quarter.

Turning next to 2016 financial outlook, the Company reconfirms its expectation that total Company operating profit, adjusted EBITDA and earnings per diluted share will be comparable to 2015.

Now, I would like to turn the call over to Dennis.

Dennis Kakures

Thank you, Keith. Now let's take a closer look at each rental business for the second quarter. Modular division-wide rental revenues for the quarter increased $4 million, or 14%, to $31.6 million from a year ago. This is the 13th consecutive year-over-year quarterly rental revenue increase for our Modular division.

During the second quarter, we experienced a 21% reduction in division-wide year-over-year first month's rental revenue bookings for Modular buildings. However, this is primarily due to a very strong comparative second quarter in 2015 and deliberate effort to be more selective on which commercial rental opportunities we elect to book and to commit valuable production line space.

Modular division average rental equipment utilization based on original acquisition cost for the quarter increased to 75.8% compared to 74.4% a year ago. This is the highest second quarter Modular division average utilization level since the second quarter of 2008.

Modular division income from operations or EBIT for the quarter increased to $8.3 million, or by 57%, from a year ago. Gross margin on rental revenues increased to 48% for the quarter from 44% last year, driven 14% higher rental revenues was only 5% and 11% higher building preparation costs and depreciation expense respectively.

EBIT margin increased to 17% for the quarter compared to 13% in 2015, chiefly driven by improved rental metrics, including higher gross profit on rental related services, and lower SG&A costs as a percentage of rental revenues, partially offset by slightly lower gross margin on equipment sales.

Now let me take a moment to update everyone on our Portable Storage business. Mobile Modular Portable Storage continued to make good progress during the first quarter in building its customer following, increasing booking in rental revenue from a year ago. First month's rent booking levels and rental revenues for the second quarter grew by 20% and 22% respectively from the same period a year ago. We are working hard to make each of our portable storage operating geographies increasingly successful. We are on track towards building a meaningful sized storage container rental business with attractive operating metrics.

Now let me turn our attention to TRS-RenTelco and their results. Rental revenues for TRS-RenTelco, our electronics division, declined by $1.6 million for the quarter, or by 7%, to $20.3 million from a year ago. The year-over-year reduction in rental revenues was driven primarily by lower communication test equipment business activity and continue and highly competitive environment. In fact, communication and general purpose test equipment rental revenues declined by approximately 12% and 3% respectively for the compared to the same period a year ago.

Average equipment utilization was flat at 59.5% compared to the same period in 2015. Average rental rates declined for the quarter to 4.45% from 4.56% for the second quarter of 2015, primarily due to the business activity mix shift from communication to general-purpose test equipment as well as a highly competitive communication test equipment marketplace.

Despite the 7% decrease in topline rental revenues for the quarter. EBIT increase slightly to $6 million or 1% from $5.9 million a year-ago. The reduction in rental revenue was offset by lower rental equipment depreciation and higher gross profit on equipment sales compared to a year ago.

Our electronics management and sales teams are continued to do an excellent job in a softer test equipment rental environment in selling lower utilized rental equipment to reduce depreciation expense as well as holding costs down in other operating areas. In fact, these efforts have resulted in deprecation is a percentage of rental revenues decline to 44% for the quarter compared to 47% a year-ago.

Now let's turn our attention to Adler Tank Rentals and their results. Rental revenues at Adler Tank Rentals, our liquid and solid containment tank and box division, declined by $2.9 million for the quarter, or 16%, to $14.8 million from a year ago. Average utilization and total original cost of rental equipment were 49.4% and $308 million respectively for the second quarter of 2016 compared to 60.6% and $303 million a year-ago and 50.3% and $308 million for the first quarter of 2016.

Second quarter average equipment on rent declined to $152 million from $183 million a year-ago, and from $155 million for the first quarter of 2016. Average monthly rental rates were fairly flat year-over-year. However, this was due to the change in the mix of utilized rental assets with lower rental rate tank assets decreasing and higher rental rate box inventory increasing. Without the decrease in utilization of tank assets, overall rental rates would have been lower year-over-year.

The reduction in utilization from a year ago and continuing downward pressure on pricing especially for tank rental assets are directly related to lower crude oil prices and the significant decline in wellhead related drilling and completions activity. Upstream oil and natural gas rental revenue declined from 19% of total Adler rental revenues in the second quarter of 2015 to 11% for the same period in 2016. These dynamics have put increasing downward pressure on 21K multi-purpose tank utilization and rental rates in upstream, midstream and downstream energy sectors as well as in other market verticals.

EBIT for the quarter decreased $2.2 million, or 41%, to $3.2 million from a year ago. The higher percentage decrease in EBIT at 41% as compared to rental revenues at 16% was primarily a result of higher equipment depreciation and SG&A expenses as a percentage of rental revenues of 27% and 46% respectively from 22% and 39% a year ago. We remain very cautious in our outlook for our liquid and solid containment rental business for the foreseeable future as market forces drive a material reset of both the oil and natural gas industries.

Now for a few closing comments. We entered 2016 with many unknowns and forecasting challenges regarding the crude oil and natural gas industries' evolving structural changes and their near-term impact to our liquid and solid containment rental business. Our first six months results for 2016 Adler Tank Rentals are reflective of just how challenging an environment we are facing.

However, business by business we continue to focus on what we have control over towards improving return on invested capital or ROIC. For Modular we are increasingly selective on what commercial opportunities we book in order to optimize our building preparation production capacity as well as raising rental rates across our different market verticals. Both in support of increasing profitability per rental transaction.

For electronics, a soft market conditions continue we are proactively selling underutilized test equipment in order to reduce depreciation as a percentage of rental revenues and to maximize cash proceeds from each rental assets.

For Tanks and Boxes we are closely examining economics of different types of rental transaction based on equipment type rental rates, term and other variables in order to optimize our selling and equipment preparation resources and driving greater profitability per dollar of rental revenue.

And portable storage we are focused on building critical match and longer-term rental streams per transaction geographies in order to create better rental economics per touch and movement of equipment. Overall for the Company, our focus is to deploy less capital and more selectively for new rental assets over the next two years until we see sustainable higher ROIC levels.

And now Keith and I welcome your questions.

Question-and-Answer Session

Operator

Our first question comes from the line of Scott Schneeberger with Oppenheimer. Your line is now open.

Scott Schneeberger

Thanks. Hi, guys, afternoon.

Keith Pratt

Hi, Scott.

Dennis Kakures

Hi, Scott.

Scott Schneeberger

So, Modular. Dennis can we touch on as we're coming into an election season, the bond and any updates you have about how that's working and perhaps anything else on the ballot coming up that may be relevant to you modular opportunity post November? Thanks.

Dennis Kakures

Well, the bond measure that Scott is referring to is in California. It’s approximately a $9 billion school facilities bond measure. So, last one was passed in November of 2006, so it's been a decade. The original funds for that 2006 bond measure expired around 2011, 2012 and those bonds were vital towards doing the various modernization construction work in California schools.

So, latest update is that it has broad support from both constituents as well as in the legislature and major school industry groups. So we feel very good about the opportunity for passage on the November ballot, it requires 50% percent plus one, so and historically close to 85% or 90% of these types of facility bond measures for education K through 12 in California have been successful on a statewide basis. So we fully expect at this juncture for that to pass.

The other bill or item that is positive for California and its current got favorable electorate opinions on it, is that is to extend the tax increase that this Proposition 30 that was put in place a few years ago to get California kind of a booster rocket out of the great recession in it proved to be very important towards that. And the governor is looking at extending that that's really a tax really on higher income individuals for the most part and that also is being received very favorably by the electorate in terms of initial poll, initial and layer poll. So those are responses to your question there Scott.

Scott Schneeberger

Great, thanks Dennis. Just curious in switching over to the tank business, continued pressure unsurprisingly just given commodity prices, anything you can do, really on the press release you mentioned you're going to manage what you can control. Any thoughts outside the box otherwise with regard to weathering the storm or we’ve just waited to see coming out on the other side also when the commodity prices ultimately go up again. Is there anything really that can be done in the near-term perhaps shipping geography, leading geographies perhaps, is there any thoughts on that front? Thanks.

Dennis Kakures

Yes. The work that we've done Scott in that arena really centers around, although we think it's most important is transactional pricing and those type of opportunities you take on versus those types of opportunities you don't. We owned this business seven years now we got a wealth of data, we've been data mining that in and really slicing and dicing that data. We weren’t actually a great deal about different types of transactions what we should be doing more of, what we should be doing less off and what we should not do it at all.

So I would say there's no silver bullets right now to be able to change number significantly. However we have choices on transactions that is within our control. And we're going to work that in a very meaningful way that's going to make a very significant difference over the long run. And in the meantime the other piece of that is obviously we want to be able to be more successful in market verticals that have a much more stable base of business.

That is left “price of oil” or price of natural gas driven and we've done a good –we've done well at really trying to start developing those markets, our national accounts sales team has made good progress and so it's a lot of a little, but as long as we are directionally correct in the areas that we think will make a big difference. Then I'm happy with that. And again, I realize that may not be a quick solution, but I think it's the correct one for the long-term.

Scott Schneeberger

All right, thanks. Just one more for me and then kind of rounding out the segment. If you look at TRS-RenTelco, is there, what's the view on industry consolidation, right now, it seems like it has consolidated a good bid. Do you see that going any farther than where it is now, is that something that could actually happen from a regulatory standpoint? Do you view yourself an aggregator, would you consider yourself a potential target. It sounds like you're managing that business as well as you can control given a bit of a tough environment. So just kind of a curious, any out of the box on that one? Thanks Dennis.

Dennis Kakures

Well, first of all we love our electronics rental business. We have one of the two primary leadership positions in North America and we fully extend to continue growing that business and to the extent there's been consolidation or there is consolidation that is on the horizon here that we think over time that helps us if we eliminate competitors or perhaps the companies aren't as strong as it might otherwise be or less focused.

So we're fully committed to that business and I would expect that business to continue in a strong leadership role in the Americas into the future and hopefully we're continue to grow market share and doing some very attractive things with our profitability metrics.

By the way, I want to make a general comment to our folks at TRS-RenTelco that you have done a masterful job of running that business in a soft market. And I really want to acknowledge everybody on the call today for the good work you've done and the good work you'll continue to do. Thank you.

Scott Schneeberger

Great. Thanks, Dennis and thanks for hearing the questions.

Operator

Our next question comes from the line of Sean Egan with KeyBanc. Your line is now open.

Sean Egan

Hey, good evening. Can you hear me guys?

Dennis Kakures

Yes.

Keith Pratt

Hi, Sean.

Sean Egan

Great. I just want to start off asking about any update you have on your focus on ROIC I know you had mentioned at last call. Where there any findings that it could drive near-term improvements or is this more of a long-term initiative and the results would certainly be longer-term.

Keith Pratt

Sure, it's a journey and we are working hard on it and I think as we've indicated in the last call, a lot of emphasis on where we want to deploy assets around the business, new opportunities, making sure we've got the right assessment of the return opportunity from any new equipment purchases. And then even more substantially for the fleet we already own, really being selective by the transactions we pursue and really being thoughtful about the opportunities for better pricing and that applies all across the business.

So the work is ongoing, if you count the way the metric, our ROIC was up slightlyQ2 to Q2 and also for the first six months of this year over the first six months of last year, but the numbers are low relative to what we've achieved with the business in the past and our goal is to move those numbers higher over time. But it's an ongoing journey. There's not going to be any special silver bullet that will trigger a higher level of performance rapidly, but we have a lot of attention across our divisions on this topic and we're working together to move the needle.

Sean Egan

Great. And just a follow-up to you had just alluded to being more selective in the business that you pursue. I was curious specifically looking at mobile modular, you mentioned you were more selective, utilization was up. Is it just kind of a rising tide that has allowed you to become more selective within mobile modular. I mean, can you kind of put some color and maybe some specific examples around that?

Dennis Kakures

Well, I'd be happy to. When you look at our production capacity in our inventory centers, it's finite. We have X amount of production capacity and it's very important that we're selecting as wisely as we can to those transactions that can provide us the greatest return on invested capital as we look at those dynamics.

So for example we have choices all the time to take on let's say shorter term, non-residential construction contracts, they maybe six months, eight months, 12 months. Typically a contractor very much a price shopper and we can probably get all the business to one of that type. However, when we take on let's say that type of transaction, we may be foregoing a longer-term higher price. Project in not only in the commercial space but on education.

And in education in particular it produces generally a much longer rental stream or rental annuity for us and we’ve in our work that keep mention a moment ago about looking at individual transactions. We've done a lot of good homework as to what butters our bread now, what do we get our highest margins over time and it certainly is, we known this for some time in the classroom rentals, but it’s longer-term commercial rentals.

So if we're going to test something, we're trying to touch it to be able to get an optimal term and transaction out of it. So, yes the economy is good both in the commercial sector as well as in education and remember too we’ve got a bond measure in California that will be on the ballot in November. Some of our efforts have been trying to pre-prep and prepare enough classroom buildings to be able to meet that demand that we anticipate.

So we will walk away from certain business today that would go on rent in the next month or two to be able to have enough classrooms, be able to capture business in the quarters ahead. We think that’s ultimately a better decision. So those are just some examples there when we look at really trying to optimize, what opportunity we take on and which ones we do less up or don't do it all.

Scott Schneeberger

Great. Thank you for that. And then one last one for me, you mentioned that you are looking at other downstream verticals for applications within Adler I was curious if you could give us any color on, maybe, what some of those other verticals would be that had a more recurring and stable revenue stream?

Dennis Kakures

Well, I think you know at the end of the day when you look at the industrial complex in the U.S. there's a lot of waste generation and there’s a lot of consistent need for products within plants et cetera. So that's certainly is an area of focus for us.

Scott Schneeberger

Okay, great. Thanks so much.

Operator

Our next question comes from the line of Marc Riddick with Sidoti & Company. Your line is now open.

Marc Riddick

Hi, good evening everyone.

Keith Pratt

Hi, Marc.

Marc Riddick

I wanted to see if you could share some information regarding some of the other areas geographically and maybe what you're seeing there, especially on the education side. And if there is any leading indicators to give you an idea that education might be picking up in some areas outside of California?

Dennis Kakures

Well, as most investors know we're in the California, Texas, Florida and Mid-Atlantic educational markets. And I would say as a whole all of those markets are doing well. I think that's a fair assessment at this juncture. California probably going forward due to the sharp decline we experienced in the great recession has the greatest opportunity to add materially to the company’s return on invested capital and profitability.

So we're very excited about that and obviously a lot of the comments that preceded so this question support that our preparation of classroom buildings are focused on this bond measure in November passing and so on. But we actually like our position that we've created in the educational verticals in all the states that we operate in and quite frankly again just to emphasize they're all in a relatively healthy state.

Marc Riddick

Thanks, Dennis. Thank you for that. On the Mobile Modular storage, I wanted to sort of touch on the strength on the rental revenue booking that - was in excess of 20%. I wanted to get a sense of maybe where if there are any particular industries or verticals that were stronger than others and is that a function of sort of the regional expansion that's kind of follows the footprint of the existing business, and then I have a follow-up with that.

Keith Pratt

Yes. I see Marc, just to be clear on Dennis’s comments on the rental bookings for modular is they were down 21% in the second quarter of 2016 compared to portable storage.

Dennis Kakures

You're speaking about portable storage?

Marc Riddick

Yes. I was talking about portable storage.

Keith Pratt

I’m sorry. Okay.

Marc Riddick

That’s okay.

Dennis Kakures

So I would say that there's not any particular vertical. I think we're doing well across the board and I wouldn’t point to anything more significant than this. It's a matter - it takes time to build critical mass. And as you are in a market it takes time to develop your base of business and you layer on top of that and you keep layering on the top and X amount of those rentals are longer-term and you're getting that benefit of that average rental term going longer and longer over time.

If you're doing all the right things and working in all the right verticals. So I think it's much more about just that pick and shovel work every day about trying to build critical mass and trying to pursue those longer-term rental opportunities.

Marc Riddick

And is it fair to say that you mentioned the operating metrics being attractive. Is it fair to say that you view this is something as being a potential driver of the ROIC goals that would been previously laid out?

Dennis Kakures

Absolutely and I think that longer-term rental transaction fits right in that alley there, when you look at the fact that if somebody contracts for eight months to rent a product and with no extra effort or energy if you're able to turn that into a 15-month rental or 16 need of having that. Well then in effect from your original analysis you've got seven months’ worth of rental income and really you're only cost against other depreciation and interest et cetera which you are going to carry anyway. So most of that rental revenue will go to the pretax line, so term is a wonderful thing in impacting ROIC positively.

Marc Riddick

Okay. And as far as our leverage levels, they were about the same as last quarter. I was wondering if there was any particular, I think you were fairly comfortable with kind of where you were, if I recall, but I was wondering if there are any particular cycles maybe for the year-end or for 12 months out as far as looking at leverage levels. Thank you.

Keith Pratt

Yes. Leverage at the end of June at 2.2, very comfortable with that, our loan confidence led us go up as high as 2.75. If you look through the balance of the year, I would expect debt levels to be comparable at the end of the third quarter to what we saw at the end of the second quarter and then the potential to drop slightly by year end if the business plays out as we expect. So from a leverage point of view, I would think we'll be in the same neighborhood that we are today and we're very comfortable with that.

Marc Riddick

Okay. Great. Thank you very much.

Dennis Kakures

Thank you.

Operator

And that concludes today's question-and-answer session. I'd like to turn the call back to management for any further remarks.

Dennis Kakures

Well, I’d like to thank everybody for joining us this afternoon. We appreciate your continued support and we'll look forward to speaking with you again on our upcoming Q3 call in late October or early November. Thank you all.

Operator

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone 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!