I.D. Systems' (IDSY) CEO Ken Ehrman on Q2 2016 Results - Earnings Call Transcript

| About: I.D. Systems, (IDSY)

I.D. Systems, Inc. (NASDAQ:IDSY)

Q2 2016 Earnings Conference Call

August 4, 2016, 04:45 PM ET

Executives

Ken Ehrman - Chief Executive Officer

Ned Mavrommatis - Chief Financial Officer

Norm Ellis - Chief Operating Officer

Chris Wolfe - Chief Product Officer

Analysts

Morris Ajzenman - Griffin Securities

William Gibson - ROTH Capital

Dan Weston - WestCap Management

Jason Revland - Blueprint Capital Management

Operator

Good afternoon. Welcome to I.D. Systems' Second Quarter 2016 Conference Call. My name is Skylar, and I will be your operator for today's call. Joining us for today's presentation is the company's CEO, Ken Ehrman; CFO, Ned Mavrommatis; and COO, Norm Ellis; and recently appointed, CPO, Chris Wolfe. Following the remarks, we will open up the call for your questions.

Before we begin the call, I would like to provide I.D. Systems' Safe Harbor statement that includes cautions regarding forward-looking statements made during this call. During the call, there will be forward-looking statements made regarding future events, including I.D. Systems' future financial performance. All statements other than present and historical facts which include any statements regarding the company's plans for future operations, anticipated future financial position, anticipated results of operation, business strategy, competitive position, company's expectations regarding opportunities for growth, demand for the company's product offering, and other industry trends are considered forward-looking statements. Such statements include, but are not limited to the company's financial expectations for 2016 and beyond.

All such forward-looking statements imply the presence of skills, uncertainties, and contingencies, many of which are beyond the company's control. The company's actual results, performance, or achievements may differ materially from those projected or assumed in any forward-looking statements. Factors that could cause actual results to differ materially could include, amongst others, SEC filings, overall economic and business conditions, demand for our products and services, competitive factors, emergence of new technologies and the company's cash position. The company does not intend to undertake any duty to update any forward-looking statements to reflect future events or circumstances.

I would like to remind everyone that this call will be recorded and made available for replay via a link available in the Investor Relations section of the company's Web site at www.id-systems.com.

Now, I would like to turn the call over to I.D. Systems' CEO, Mr. Ken Ehrman. Sir, please proceed.

Ken Ehrman

Welcome everyone, and thank you for joining us today. After the market closed, we issued our results for the second quarter ended June 30, 2016, in a press release, a copy of which is available in the Investors section of our website. Although our topline results for Q2 could have been stronger, we continue to make progress executing on key operational initiatives. These initiatives allowed us to deploy our solution more efficiently and cost effectively than ever before, which helped drive a substantial improvement in our gross margins. While the quarterly improvement of key metrics is encouraging, we believe that it's prudent to evaluate our business and progress on a longer-term basis.

The success of our execution on our key initiatives is most evident when looking at the year-over-year improvement in our results for the first six months. This was highlighted by the 23% increase in gross profit dollars, 21% decrease in operating expenses, and nearly $5 million improvement in net loss. This modest growth we experienced in our VMS segment during Q2 was driven by larger orders from Ford and Procter & Gamble. These wins exemplify the effectiveness of our direct sales strategy we implemented last year, how we focus our penetrating new existing enterprise customers. Our strategy of focusing on our top 40 key customers like Procter & Gamble and Ford, is paying off but at a slower pace than we originally anticipated. However, our meetings with these larger customers are no longer focused on product issues, but rather enabling them to expand their operations with our best-in-class solutions.

As the number of orders from our key customers increase from quarter to quarter and more key customers buy from quarter to quarter, we believe our revenue will accelerate accordingly. From an operational perspective we completed several important engineering investments and projects in Q2. This includes our next-generation hardware platform the next-generation daughterboard [ph], our new web-based vehicle management solution and TAM user software, and the first LTE-based rental car solution for Avis rental car. We ultimately expect these investments to help accelerate our revenue in the coming quarters. We're also continuing to see success in the chassis and intermodal container tracking market. Against very tough competition, we won several key accounts with our patented hardware and analytics technology.

I am particularly proud of our successful completion of these initiatives as they speak volumes to our deep product in engineering capabilities. In fact, an important contributor to our recent success has been the consulting efforts of Chris Wolfe, who has been advising our team for the last six months. Based on the invaluable contributions Chris has made in a relatively short period, it became clear he was the missing piece to complete and solidify our executive management team. Along that line, we announced last week Chris' appointment to the new position of Chief Product Officer. Chris has a tremendous resume including serving as the President of Qualcomm’s Wireless Business Solutions division. In this role, he successfully launched the company's TrailerTRACS product, Qualcomm's first major wireless product launch since the rollout of its flagship product, Omnitracs.

As our new Chief Product Officer, Chris will report directly to Norm and will be responsible for all product-related initiatives including product development, assessment, and management. Chris brings a deep understanding of the industry and what it takes to make a great product and generate growing revenues. We will continue to look to him to ensure that we not only deliver the most scalable and high-quality solutions of today, but that we future proof our products for tomorrow. With his appointment, I am confident in saying that we now have the most experienced management team in the industrial internet of things space.

As many of you know, Norm and I have focused over the last couple of quarters on stabilizing and improving our new VAC4 product. Now with Chris' appointment, Norm and I can dedicate more time and resources to our strategic sales initiatives that can accelerate our growth. This is a critical shift in our focus from product quality to sales growth. I.D. Systems now has the most scalable and high-quality solutions in the market today backed by a Chief Product Officer with a 20-year record building, implementing, and selling paradigm-changing technology solutions. This is a proven and winning combination.

With that I'd like to turn the call over to our CFO, Ned Mavrommatis, who will walk us through the financial details for the second quarter, then Norm Ellis, our COO will provide an update on our products, channel partnerships, and customer pipeline. Afterwards, I will return to discuss the execution of our strategy, key initiatives, and outlook for 2016. Ned?

Ned Mavrommatis

Thank you, Ken and good afternoon everyone. Turning to our financial results for the second quarter ended June 30, 2016.

Our revenue decreased 10% to $8.9 million from $9.9 million in the same year ago period. The year-over-year decline was primarily due to $762,000 decrease in rental fleet management revenue, of which $750,000 was related to one-time project development fees for our program with Avis. The decrease in revenue in Q2 2016 was partially offset by a 5% increase in VMS revenue.

Our recurring revenue decreased 9% to $4.3 million from $4.7 million in the same period a year ago. The decline was primarily attributable to a decrease in TAM recurring revenue related to customer contracts renewing at lower rates. On a percentage basis, recurring revenue accounted for 49% of our total revenue compared to 48% in Q2 last year.

Our gross margin increased 1,150 basis points to 53.1% from 41.6% in the same period a year ago, the improvement was primarily due to the improved efficiency of our VAC4 installation, Analytics software, and the online training processes we implemented in Q4, as well as customer signing long-term, higher-margin service contracts.

Shifting gears to our expenses, our selling, general, and administrative expenses decreased 19% to $5 million from $6.2 million in the same year-ago period. The improvement was driven by headcount reductions and other cost cutting measures we implemented in the second half of 2015. It is important to note that during the second quarter of this year, our foreign subsidiaries incurred foreign currency translation losses of approximately $200,000 on their U.S. denominated intercompany loans from I.D. Systems. Excluding this charge, our SG&A expenses were flat compared to the first quarter of this year.

Our R&D expenses were $1.2 million, compared to $1.1 million in Q2 of last year. The slight increase was primarily due to an increase in materials purchased for new product development and testing. Our total operating expenses for the second quarter of 2016 were $6.2 million, down 15% from $7.3 million in the same year-ago period. We plan to continue to optimize our cost structure by further reducing operating expenses, thereby lowering our non-GAAP revenue breakeven level.

Our GAAP net loss improved significantly to $1.5 million or $0.12 per basic and diluted share from a loss of $3.1 million or $0.25 per basic and diluted share in Q2 of last year. And finally, excluding stock based compensation, depreciation, and amortization, as well non-recurring items, our non-GAAP net loss totaled $815,000 or $0.06 per basic and diluted share. This was a significant improvement from a non-GAAP net loss of $2.6 million or $0.21 per basic and diluted share in Q2 last year. For more details on non-GAAP net income, please see the reconciliation to GAAP terms included in the supplementary tables of our earnings release.

Turning to our balance sheet, at quarter end, we have $6.1 million in cash, cash equivalents, and marketable securities which was flat from the end of the prior quarter. It is also important to point out that our cash used in operating activities for the six months of the year was $17,000, down significantly from $7.1 million during the same period last year. And finally, at the end of our second quarter, we had not drawn down on our $7.5 million credit facility that we’ve established last December. Our cash position and credit facility provide us with enough capital and flexibility to execute on our near-term and long-term growth plan.

This completes my financial summary. For more detailed analysis of our financial results, please reference our Form 10-Q which we plan to file by August 15. Norm?

Norm Ellis

Thank you, Ned and good afternoon everyone. The technical enhancements we made to VAC4, our next-generation VMS product, along with our new scalable implementation process were key drivers in our ability to secure orders from enterprise customers during Q2. These necessary improvements have allowed us to further penetrate key blue chip customers like Ford and Procter & Gamble. Both organizations recognize the tremendous value solution provides to enhance productivity and create a safer working environment for their employees.

In the case of Ford, they installed our flagship PowerFleet, our newly purchased industrial trucks at three manufacturing facilities in Europe. The orders were comprised of VAC4 units, PowerFleet’s next-generation on-vehicle device. The quality and reliability of the VAC4, as well as the technological advancements over the previous generation hardware continue to improve our customers operations. We are encouraged with the progress we are making to transition valued customers like Ford to our next-generation hardware.

Also during Q2 we reached a two-year global maintenance agreement with Procter & Gamble that covers upto 2,300 industrial trucks, and more than 30 sites worldwide.

We look forward to supporting Procter & Gamble growth further adoption of our technology to improve safety in their global distribution centers. Our standing track record with established blue-chip companies like Procter & Gamble and Ford have acted as a valuable reference account and blueprints secured new enterprise plans. One of these wins was with General Motors, late last year. Since our engagement, we have been systematically deploying power fleet in their U.S. fleet of industrial trucks. I am encouraged to report that during the second quarter, we successfully installed an additional 300 units of our technology on GM's truck. We are working to build on this momentum and anticipate additional orders from GM in the second half of this year.

Turning to our transportation asset management business; while our segment revenue was down year-over-year due to customer terminations of old systems the quarter was highlighted by a major win with North American chassis rule cooperative. This new customer deployed our VeriWise chassis management solutions on 270 chassis in NACPC’s fleet. Our solution gives NACPC visibility into a location and status of their assets allowing leased chassis to be kept in the proper lanes for their customers. VeriWise chassis also provides valuable data and insight to increase asset utilization and ensure chassis fleets are sized appropriately to meet customer demand.

Additionally, tracking improves billing accuracy giving chassis pool operators the hard data needed to resolve billing disputes, a common industry challenge. All these and all these benefits give NACPC an advantage in serving our customers. We also deployed 1,500 intermodal container tracking units for the global transportation and logistics provider. Both are new products in new markets and demonstrate our technology leadership position in this highly competitive market.

Shifting gears to our fleet rental management segment, as Ken mentioned during the second quarter we completed the necessary engineering work related to our program with Avis, as many of you know, we have invested significantly in our relation with Avis over the last couple of years, and I think some of our most talented resources for the project. Result is a product that we believe exceeds Avis requirement. Martinez in active negotiations with Avis and expect their decision by the end of the summer.

We remain optimistic about our position because of the unmatched quality of the product and the products proven ability to deliver financial and operational competitive advantages.

I'd like to turn the call back over to, Ken.

Ken Ehrman

Thank you, Norm. While our top run top line results for the second quarter were disappointing. It's best to evaluate our progress on a longer term basis.

Our execution on the key initiatives that we discussed earlier that have improved our financial performance are clearly evident when you compare the results from the first half of this year to last. This is highlighted by the dramatic improvement in our gross profit operating expenses and profitability measures. To put some numbers behind it our gross profit increased to 23%. Operating expenses decreased to 21% and we reduced our net loss by nearly $5 million.

As you can see our improving financial results continue to generate strong returns from our strategic 2.0 investments. Looking ahead, we are committed to achieving non GAAP profitability for the year 2016. This milestone will be achieved by further optimizing our cost structure and capitalizing on our expanding pipeline and driving growth in the second half of the year. Our success will be measured by our key accounts and more of them, ordering more of our solutions as the year progresses. As that happens, we will definitely be able to leverage our fixed cost structure and generate the profits that we've all been waiting to achieve.

We now have the right team, product infrastructure and plan to build ID Systems into leading provider of wireless solutions for the industrial Internet of Things. To be sure there is definitely more work ahead, but we believe we are in a strong position to capitalize on the market opportunities available for us.

With that we're ready to open a call for questions. Operator, please provide the appropriate instructions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question will come from Morris Ajzenman from Griffin Securities. Please proceed.

Morris Ajzenman

Hi guys. What is the sort of right with revenue number there which is obviously disappointing -- last year in the second quarter you had $9.9 million revenue which was a big decline from previous quarter run rates. And if you adjust for the three quarter million dollars, one time item which not one time item but the decline in rental fleet management revenue. You still have a kind of about 3% year over year in revenue into the second quarter, which puts your revenue run rate probably to the lowest level in several years going forward in any quarter. I clearly understand the initiatives you are involved in and clearly understand these all takes time, [I am fortunate to] step back. Can you give us any sort of visibility I know it has been difficult in the past? When can we expect better traction -- we're running at $10 million to $11 million per quarter unless we will step back and on the top line. How does the outlook look -- I mean is this something that might take a couple of years or couple of quarters as far as the top line is concerned?

Ken Ehrman

Let me answer that. So, what we're focused on right now because we have limited cast on the balance sheet is trying to be profitable that's our focus we have the customers, we have the product, and we just completed the most important key initiatives that we needed to get done in order to drive that profitability. So for the next few quarters we're going to really be focusing on trying to you know as we did in Q1 which was the first quarter roughly 10 years that we achieve profitability, we're going to -- we should get back to profitability in Q3 and Q4 we certainly expect to because, just having two key accounts buying is not what we foresee for Q3 and Q4. So as those key accounts start buying again which we do anticipate will happen through the remainder of the year. The numbers should definitely grow and much more significantly than they've ever been able to do in the past because we can actually deliver on them.

Morris Ajzenman

I'm not sure exactly what that means for its top line, while we see -- I don't want to put words in your mouth, but we will see the revenues $10 million to $11 million run rate, better/ worse, how does it play out over the next couple of quarters based on what you just outlined for us.

Ken Ehrman

Well, we should certainly be able to get back to kind of the Q1 levels in Q3 but then we would expect that to grow greater than that in Q4 again. But for the year over committing to is still overall slightly profitable.

Morris Ajzenman

One last thing, Avis, you’re active negotiation, expect some sort of decision by the end of summer. Do they need anything else from you, do you have to provide them anything further as far as any software upgrades or anything, is there anything that you need to provide them that will have to have you go back to drawing board. How was that at this point?

Ken Ehrman

We believe that the product we've given them satisfies their requirements to move to the next level which is why we're saying we're actively negotiating the next step. There will probably be ongoing improvements for the product just like any technology but because we design the product to allow for wireless upgrading capabilities as the years progress they will continue to add more and more functionality. So the bottom line is we have given them at this point what they need to validate that our solution will meet their baseline requirements, and then it's onward and upward from there hopefully.

Morris Ajzenman

Then just to follow-up on that. Last quarter you talked about potentially getting a decision from them, so three months have passed was there anything else they came back and asked of you during that point in time or should negotiations going on over the past three months.

Ken Ehrman

Now from the last fall to this call we were continuing to work on the device and the functionality. We've been delivered it they've done tests, they've been testing it. We've then expanded the makes and models that it will work on and that's what they're testing now and as we get through that phase concurrently with the negotiation phase there will be a next step that we intend to agree with them on -- certainly while the intention is to get it agreed upon by the end of the summer and we're on track for that.

Morris Ajzenman

And the end of this summer is to tap the 21.

Ken Ehrman

I believe so.

Morris Ajzenman

Okay, thank you.

Operator

Our next question comes from William Gibson with ROTH Capital Partners. Please proceed.

William Gibson

I would like to see where we are on the TAM recurring revenue decline I understand the renewals that lower prices. But how did the next three quarters match up to the second quarter in terms of contracts coming up for renewal?

Ned Mavrommatis

Hey Bill, this is Ned. On a positive note, late last year and the beginning of this year we signed renewals with some of our largest customers, so we believe going forward the recurring revenue should grow from here we don't expect a decline because of the renewals because it is already all hit in the second quarter.

William Gibson

Good. Another question on the auto rentals, how are conversations going with companies besides Avis?

Ned Mavrommatis

We are obviously in discussions with the major three rental car companies. They were clearly furthest along with Avis. So that and they're -- they've been our partner as well as shareholder for the longest time. But the others are certainly interested and I can't really comment beyond that.

William Gibson

Okay. And just one last question if I could, could you give us little more color on exactly what the web based VMS and TAM user software products are?

Norm Ellis

We used the technology that was AS400 based and used a technology called Citrix to allow the customers to access the data that was inside the database for their specific accounts. And we've now moved into a complete web environment where we have the latest web tools, which give us great flexibility to do dashboards and to do additional mapping and other types of visual recognition for the customer that just really doesn't - isn’t promoted as well in the AS400 Citrix model that also allows for a lot better connectivity for the customer from any kind of device essentially that has a web browser like [indiscernible] whether it’s an iPad, phone, and of course certainly your desktop. so the flexibility that it gives our customers, the tools that it allows us to use to display the information and to promote the efficiencies and productivity enhancements that the customer is getting are greatly improved when you go to that web environment and the feedback that we've gotten from the customers that are [indiscernible] around 25 customers on it [indiscernible] right now [indiscernible] business, and a very positive feedback; they loved the user experience. And we're very excited, we’re promoting it more on the BMS side now I think we’ll get the same reaction from those customers as well.

William Gibson

Good. Appreciate it. Thank you.

Operator

The next question will come from Dan Weston with WestCap Management. Your line is now open.

Dan Weston

Hi, thanks very much guys, most have been answered. Maybe a couple of points of clarity on some of the other partner relationships you have specifically with Raymond and Toyota. Is there any color you can give us on how those are progressing? And on Toyota, both their new sales and aftermarket, and on Raymond, just in general, have their revenues declined versus let's say last quarter?

Norm Ellis

I'll be glad to address that. This is Norm. At both places - we'll start -- let's just start with Raymond. From a revenue standpoint it's fairly similar. We had a very strong one with Raymond several quarters ago, with a very large customer, joint customer that we had, that was promoting a lot of that. It's got much more stable now, although it's not as high as it used to be but they just in the last week or two started testing VAC4. And we're very excited about that, the installation improvements we've made, the reliability of the product is much, much better than we've ever had on the VMS side. So we really believe that Raymond as they get through their testing over the next several weeks, maybe a couple months, will begin to find new ways for us to be a stronger partner and it's really tied to the product and how well it will work for them and we've improved some interfaces that we have that tie back into their back office and their databases that they share with their customers, we've made some improvements in that as well, that's also being tested. So Raymond looks like it will have a possibility and an opportunity to improve in the second half of the year.

Toyota, is another very interesting situation; we haven't seen the growth that we would have liked with Toyota, and for the couple of different reasons the product has worked well so that hasn’t been the reason, but getting out to the dealers and getting the dealer principals that are privately owned and operated for the most part as part the Toyota strategy has been a little more challenging. And Toyota had it stepped up as well on their side to put some additional resources in place that would allow them at the corporate level to engage with the dealer network. That is happened; they’ve added several people to the program over the last 60 days, we're very excited about getting some momentum as they can interact with us and go out to the dealer network and really get the dealers more engaged in the selling process and then the support process that are necessary. We think we're ready on the support side with the tools we put on the web from training and things like that and I think they believe that as well. Now with these additional resources I would hope that we can begin to get some momentum building with Toyota. So I hope that answers your question.

Ken Ehrman

Yeah, we did get two key accounts through Toyota which was MillerCoors and Unilever. So we are adding some names through that relationship and those two key accounts are telling us they plan on buying more, so the concept is working, our ability to execute is working, Toyota is happy with our performance. So like the other key accounts that are going to drive the revenue growth as we move from 2 to 5 to 10 to 20 buying on a quarterly basis, the revenue is going to accelerate to where we've all wanted it to get to for the last 20 years frankly.

Dan Weston

Understood, thanks for the extra clarification there, Ken. And finally, just to close the loop on Avis, it sounds like it's kind of getting real close to crunch time here and I applaud your efforts on getting them a finished product that they can use. You know on their on their call they were seeming pretty bullish on their new initiative I guess they're calling Avis Now. It was the first time I heard that phrase and I'm wondering if you could talk a little bit about or if you can how you foresee ID Systems playing in this this Avis Now initiative.

Ken Ehrman

Sure. Avis Now is definitely the initiative that we are contributing to, that we're participating in, and what we are providing is a platform that they can install in any car, have it once installed it allows the customer to show up at a rental facility, unlock the car, get in their rental without having to see a person really, completely automated as well as automate the return process, allow them to put the keys back in the car and lock it, so basically an end-to-end complete automation of the rental process supported by our technology platform. So we’ve put a lot of time into it. Obviously we had something in the past that was radio frequency based. They wanted us to move to a cellular solution. They wanted all the messages encrypted with the most sophisticated encryption technologies that exist today. We've done that and now we really have the first LTE based solution in the market for automating [indiscernible] return of cars.

So we are very enthusiastic about that key account and that investment and you know if you look at Q2, almost 11% of our expenses were focused on Avis. So if you pull that out we're pretty close to profitability but instead of doing that we're focused on associating some revenue with those expenses, and we expect that revenue to materialize when they place the orders that we’re anticipating up by the end of the summer.

Dan Weston

That's good color, Ken, much appreciated and good luck.

Ken Ehrman

Thank you.

Operator

[Operator instructions] Our next question will come from the line of Jason Revland with Blueprint Capital Management. Your line is now open.

Jason Revland

Thanks for taking the call. The question is about Avis's decision and I'm wondering if you're aware of any other competitors that they're also evaluating, so when they make a decision if they don't choose you who would they choose, if they didn't choose you?

Ken Ehrman

I really don't feel comfortable commenting on that because I don't think it's appropriate to answer that question unfortunately but I will say that as far as we're concerned, We've been a great partner for them; we've installed our system already on 30,000 cars as everyone knows. We've executed and delivered on everything they've asked and so it's basically been a win-win relationship and we expect that to continue because we were able to complete the development phase of this new Avis Now solution and you know, look anything can happen but it’d be very difficult to foresee them moving in a different direction in light of all the work that's been put into it over the – [indiscernible] frankly, nearly 15 years.

Jason Revland

Thanks. That's how I see it as well, firstly given their equity ownership which if they do select you then they win on the equity investment which equates to an effective discount for them, if you think about it that way? The second question I have is the Avis Now app is live and as I understand it's available in select some set of airports. I believe 50 or so airports, and I believe they are only available on GM cars and I'm going to make the assumption that it's the OnStar technology that's enabling Avis Now. Currently I view that as sort of a beta test for the Avis Now, so if they do fleet-wise full roll out, it sounds like they're going to be ready for it from end of summer. What would be unit volume expectations be on your part as far as them going fleet wide, one-third, one-third, one-third of your next three years, how do you see that growing now?

Ken Ehrman

Well, it's going -- the way their system works is they buy new cars roughly every year to year and a half. So it's really going to be a function of the cars that they buy and having the hardware available to match their in fleeting, which is a term they use, requirements. So it will essentially be they'll tell us which makes and models they are buying and when, and our ability to deliver on that which will hopefully be better than we've ever had because the addition of Chris Wolfe, assuming we can execute on their in fleeting needs then it'll be as quick – basically, it will be as quickly as we can provide it, if that makes sense.

Jason Revland

Just to clarify then, you would be expecting unit volumes in new car purchases not retrofit your existing [indiscernible].

Ken Ehrman

Yes.

Jason Revland

Okay. Great, thanks for taking the questions.

Operator

At this time this concludes our question-and-answer session. I'd now like to turn to come back after to Mr. Ken Ehrman for closing remarks.

Ken Ehrman

Thank you everyone. What I'd like to leave you with is the fact that it's taken roughly two years instead of one to get where we want to be from an execution and delivery side. In Q2 we prove we're [indiscernible] those investments we made were paying off; you saw that in the financials. And now as the key account [indiscernible] quarter 5 to 10 to 20, buying additional plants on a quarter-end by quarter-out basis, we should truly be able to finally see that revenue acceleration. And I look forward to presenting and talking about that on future calls. So thank you, everyone. And we look forward to keeping you apprised of our progress.

Operator

Thank you for your participation in today's conference. This concludes the program. 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!