Marrone Bio Innovations' (MBII) CEO Pam Marrone on Q2 2016 Results - Earnings Call Transcript

| About: Marrone Bio (MBII)

Marrone Bio Innovations, Inc. (NASDAQ:MBII)

Q2 2016 Earnings Conference Call

August 09, 2016, 04:30 PM ET

Executives

Linda Moore - General Counsel

Pam Marrone - CEO

Jim Boyd - CFO

Analysts

Sameer Joshi - Rodman & Renshaw

Laurence Alexander - Jefferies

Robert Smith - Center for Performance Investing

Operator

Good day and welcome to the Marrone Bio Innovations’ Second Quarter 2016 Earnings Conference Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Linda Moore, General Counsel. Please go ahead.

Linda Moore

Good afternoon everyone and thank you for joining our call.

Before beginning, I would like to remind you that this conference call may contain statements regarding management's expectations, hopes, beliefs, intentions, or strategies regarding the future as well as projections, forecasts, or other characterizations of future events or circumstances.

Such statements are based on management's current expectations and beliefs concerning future developments and their potential effects on the company. There can be no assurance that future developments affecting the company will be those that management has anticipated. Such statements involve a number of risks and uncertainties, some of which are beyond management's control or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these statements.

Important factors that could cause differences are contained in the reports filed by the company with the Securities and Exchange Commission, including the Form 10-K that the company has filed on March 30, 2016 and our Form-10-Q to be filed for the second quarter of 2016, under the heading Risk Factors and elsewhere and in our earnings release posted on the company's Web site. Should one or more of these risks or uncertainties materialize or should any of management's assumptions prove incorrect, actual results may vary in material respects from those discussed today.

Additionally, the company will be making reference to certain non-GAAP financial measures on this call. The reconciliation of these non-GAAP measures to the most directly comparable GAAP measures can be found in the company's earnings press release published today, which is posted on the company's Investor Relations site.

Any guidance that management may offer in this conference call represents a point-in-time estimate. The company expressly disclaims any obligation to revise or update any guidance or other forward-looking statements to reflect events or circumstances that may arise after the date of this call. After our remarks, we will answer your questions.

I would also call your attention to a supplemental presentation we have posted to our Web site that provides some detail on each of our products. Along with that information, we've included product field trial and demo results and links to customer testimonials.

Now, I will turn the call over to our Chief Executive Officer, Pam Marrone. Pam?

Pam Marrone

Thank you, Linda. Good afternoon and thank you to everyone for joining us. With me today is Jim Boyd, our Chief Financial Officer; and as you just heard, Linda Moore, our General Counsel.

We are excited to report our results for the second quarter. This is our third consecutive quarter of strong revenue growth, improved gross margins, significant expense reduction, and solid execution against key operational objectives and milestones.

Demand for our suite of pest management and plant health solutions has been strong, despite a generally soft market for agricultural products. We've increased our sales to conventional growers. Our products, when used alongside synthetic chemical products, provide the grower short-term economic returns associated with better yield, quality, and exportability. Importantly, our products also provide the grower with a longer-term economic benefit. Our products mitigate the development of pest and disease resistance to synthetic chemicals.

This is an increasingly critical and global problem in agriculture. We are also more focused in our sales and marketing to organic growers, a high margin segment that has few options especially in our strongest category, pesticides and fungicides. Organic is a business where even a modest increase in yields and/or quality can make a material difference to grower profitability.

Since we last talked, we have continued to expand our addressable market. We have obtained regulatory approvals for new regions, for new products, and for expanded labels and are continuing new partnerships also to grow our opportunities. I also want to recognize the tactical contributions of our sales, marketing, and technical services organizations. Our team is the strongest we've ever had and is simultaneously creating and capturing demand.

As we have talked about these in the last few quarters, our primary goal has been to leverage the investments and restructuring of the past two years to increase revenues and drive operational efficiency. We have done exactly that. In addition to top line growth, the financial benefits of our 2014 and 2015 restructuring efforts are driving improved financial performance. As anticipated, our investigation and restatement costs are ending. Our R&D efforts are now focused on high return projects. Our corporate and administrative operations are more efficient and more capable. We are increasingly turning our attention to capturing the scale and related benefits that our vertical model has been designed to create.

I'd like to review a few financial highlights from our second quarter results that show our progress. We grew GAAP revenues by 50% over last year to $5 million in the second quarter. We grew product shipments by 68% to $4.2 million from $2.5 million in the last year’s second quarter. Our net use of cash in the second quarter was only $4.1 million versus $10.2 million in the same quarter last year and compared to $10 million in the first quarter of this year. We've obtained a waiver on cash restrictions that created $15 million of new availability.

Our optimism and excitement are building as we look forward to the second half of the year and beyond. We believe market demand for our products will stay strong even in the face of a generally soft agricultural market. Our confidence comes from solid trends towards increased adoption rates, treated acres, and pounds on the ground as well as significant growth in our addressable market size.

Our hard work and insightful focus are producing tangible results; our teams in each area of the business are dedicated and energized. During the quarter, we were also pleased to reach agreement to settle the pending class action, the cost of which is expected to be covered entirely by our insurance. This removes one of the last distractions from our plan to the future.

Our morale and our culture are strengthening every day. While they can't be quantified, these things have a real and significant impact on our results. Beyond the good string of quarterly results and our general forward momentum, our confidence also comes from our progress on the list of key operational objectives. We have achieved nearly all of our operational objectives that we talked about when we began the year. By the time of our first quarter investor call, we had already launched our new Regalia formulation, made the first commercial sales of Majestene. You should take a look at the field data in the supplemental presentation, it's really exciting.

MBI-110 was submitted to the EPA, when used with Regalia, the two fungicides addressed both Powdery and Downy mildew. This really strengthens our product portfolio. We added Bio-Tam 2.0 to our portfolio, our biofungicide for difficult-to-control diseases in trees and vines and other crops.

This product addition also bolsters our fungicide portfolio. We partnered for seed treatment with Goundwork BioAg. We are approved for grant funding through the U.S. EPA Great Lakes Restoration Initiative for open water treatments of Zequanox, and we had a continued revitalization of our sales and marketing and technical services organizations.

We have achieved four more increasingly important objectives as of today's call. First in June, we announced EPA approval for Grandevo WDG. This is a new dry granule formulation of one of our insecticides. It is a water dispersible granule that mixes easily in spray tanks. This greatly improves the handling and ease of use for growers reinforcing their return on investment with this key product. Although it has only been available for a little over a month, Grandevo WDG has received a very positive response in deed from existing and new customers.

Second, also in June, we signed our first row Crop distribution deal. We are excited about our partnership with Koch Agronomic Services for distribution of Regalia Rx and Regalia Max, our biofungicide for row crops in the U.S. and in Canada. Third, we made excellent gains in international expansion with Canada and Mexico, two large and important markets. In Canada, we received an approval for Regalia Rx for use on wheat and soybeans, this fills [ph] the opportunity for our partnership with Koch.

Also in Canada, we received approval for the use of Regalia for home and garden applications, which is a good branding opportunity outside of the trade particularly given the bans and restrictions on most synthetic chemical products for home and garden uses for several provinces in Canada. In Mexico, we also received registration for our Grandevo and Venerate insecticides for a wide variety of vegetables and varied crops.

We are now working hard to expand the approval to Citrus as both 2015 and 2016 field trial data from Mexico found both products to be effective against Asian citrus psyllid, a vector for citrus screening disease. These approvals in Mexico are another major market opportunity for MBI.

Finally, just this morning, we announced the seed treatment partnership with Albaugh, a global leader in the category. This is our second seed treatment deal this year and we're excited to build our presence in the market. We'll be contributing one of our microbial pesticide products for seed treatment applications on all crops in the U.S. and Canada. This is a valuable product with both insecticidal and nematicidal properties and are hopeful this will catalyze a strong collaborative partnership between Marrone and Albaugh.

Of the long list of operational objectives we've discussed at the beginning of the year, we only have one we're still working on finding a partner for distributions of Zequanox. Having moved quickly through our list, we expect to prioritize and communicate our next set of major operational objectives to you shortly.

In general, we are going to continue to be intently focused on two things. The first is growth; domestic growth, international growth, growth of existing products, growth with new products, and growth we create through partnerships. Second, but certainly no less important is cash and cash flow. We have made progress in a lot of these key areas, and Jim will detail in just a moment and that work is continuing. We know how critical it is.

We believe we have options to address our capital needs and continued good execution is the key to preserving and expanding those options. This is an important company with important products. We have a uniquely compelling business model oriented towards fast growing segments of the agricultural market. We have proprietary and very valuable technology with a strong portfolio of intellectual properties. We have leveraged these strengths to drive expansion in our addressable market and growth in our revenues.

We believe we are positioned to drive real value to our shareholders, to our industry, and to a global community of customers. The industry needs our products and our technologies. We are dedicated to serving our customers well and there are clear economic and sustainability benefits from adopting our technology.

I would now like to turn the call over to Jim to go through the numbers and to provide additional detail on our financial performance and our manufacturing. Jim?

Jim Boyd

Thank you, Pam. And good afternoon everyone. I'd like to walk you through our second quarter results. Our GAAP revenue in the second quarter is $5 million, up 50% as compared to $3.4 million in the second quarter of last year. This revenue number does not include deferred revenues not yet recognized from customers on the sell-through revenue recognition method versus the sell-in method. Please note that while we use the sell-through method for certain customers, our standard terms of sale do not include any return or inventory rights other than normal warranty claims.

As we did last quarter, we are also providing information on product shipments, a non-GAAP measure of sales that includes the net change in deferred revenues in the period, in order to illustrate the value of our product shipment volumes in our -- in a given period and provide additional insight into our business performance.

In the second quarter, we grew product shipments by 68% to $4.2 million as compared to $2.5 million in the second quarter of last year. In addition, during the first half of 2016, we grew our product shipments to $8.1 million up 72% as compared to $4.7 million in the first half of 2015.

Now returning to GAAP reporting, our gross margin in the quarter increased to 38.2%. This is a record level of growth reported gross margin. It compares very favorably against 15% in the first quarter of this year and against 10.8% in the second quarter of last year. Strong margins this quarter are the result of improved revenues, favorable product mix, improved efficiency realized at our manufacturing plant and a benefit from the sale of $331,000 of inventory that was previously written down. We were very pleased to see unabsorbed manufacturing cost from idle capacity during the quarter drop to $146,000 from $638,000 in the second quarter of 2015.

For the first six months of the year, our gross margin increased to 30.2% from 7.8% in the first six months of 2015. Unabsorbed manufacturing cost from idle capacity during the first six months of 2016 were $368,000 greatly improved from approximately $1.2 million during the first six months of 2015. Our team at the Michigan plant continues to perform extremely well and is one of the reasons we are having such good success on margin improvement.

SG&A expense in the second quarter was $4.5 million down from $7.4 million last year. This reflects a number of positive factors. In this year's second quarter, we incurred approximately $500,000 in legal accounting and audit related fees versus approximately $3.2 million for the same period last year. Lower headcount and lower stock-based compensation in the quarter enabled an additional savings of $400,000 versus last year.

For the first six months of 2016, SG&A expenses came in at $10 million versus $15.3 million in the first half of 2015. R&D expenses in the second quarter of 2016 were $2.3 million at the same level as the first quarter and about one-third lower than $3.3 million in the second quarter of last year.

Turning to the balance sheet, inventory at the end of the second quarter was $8 million, we consider this level of inventory to be appropriate for the -- to support our growing sales. At the end of the second quarter, our balance sheet had cash, cash equivalents and restricted cash of $24.2 million. This is $4.1 million lower than last quarter's total of $28.2 million, hand in cash this quarter includes cash and cash equivalents of $21.2 million, short-term restricted cash of $1.4 million and long-term restricted cash of $1.6 million. Our dramatically reduced cash burn during the second quarter is due to several factors.

First, gross profit was up $1.5 million compared to last quarter. Second, our $1.6 million semiannual interest payment was not paid this quarter that will be paid in the third quarter. Third, in the first quarter, we paid out $1.75 million non-reoccurring settlement with the SEC. Fourth, this quarter we received $1.4 million of additional cash payments from strategic partners.

Finally, we reduced non-recurring expenses and saw benefits from our 2014 and 2015 restructurings. We announced during the quarter, we received a waiver of a covenant on our term loan and moved $15 million of restricted cash and a short-term cash and cash equivalents.

Thank you. And we will now take questions.

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] We'll take our first question from Sameer Joshi with Rodman & Renshaw.

Sameer Joshi

Hey guys, how are you?

Pam Marrone

Hi.

Jim Boyd

Hi.

Sameer Joshi

So, the first question is about the gross margins. Are there -- what extent is it affected by the one-time benefits that you got and what should we expect going forward for the rest of the quarters of this year?

Jim Boyd

Well, there were some benefits from one-time changes during the quarter, but I think that margins were basically in-line with our own expectations for the quarter and we expect to see continued margin improvements from yield improvements of the micro and from additional efficiencies in our manufacturing plant.

Sameer Joshi

Okay. So those efficiencies and improvements will basically outpace any effects, obviously effects of these one-time benefits?

Jim Boyd

Yes, definitely.

Sameer Joshi

And in terms of quantifying to the extent you may, what are the expected annual revenues from these agreements like the Koch agreement and Isagro agreement, have you talked about that and like what is the timeline of actually realizing revenues from these opportunities?

Jim Boyd

Well, we're not going to speculate on our sort of internal plans and talk about what our expectations are from these partnerships. We do believe there are significant partnerships and they're definitely going to contribute in future years to deliver for the company.

Sameer Joshi

And in terms of revenues is it like in the 100s of 1000s per year or is it 10s of millions of dollars per year from these adjusted range?

Pam Marrone

I mean we're excited by these partnerships -- they're important partnerships to MBI, but I really can't give you any magnitude of the revenues.

Jim Boyd

Well, I think we can say we're expecting larger than --

Pam Marrone

I'm going to say larger than a few 100,000 yes.

Sameer Joshi

Okay. Just wanted to get an idea of the scope and the size of this. Yes?

Jim Boyd

We really don't want to speculate. It's really also part of the future of the strategic partners themselves what their plans are. We've obviously discussed them with them and have some ideas and some expectations, but it's very hard to give any future projections.

Sameer Joshi

Okay, fair enough. In terms of product development and getting approvals, I think one of the last calls you had mentioned field trials in Brazil in addition to Mexico, I see the Mexico registration, what's the progress in Brazil?

Pam Marrone

We have trials. We're still running trials there. We have some completed, but based on the timing of the data, some of that data will come in probably soon in the next few months. And so as we gather those trials, we'll submit the field trails, we have to submit field trails to the regulatory authorities before we can get approval, so we'll submit those trials to the authorities. So we're still working on it.

Sameer Joshi

Okay. And same question for Venerate and Europe.

Pam Marrone

So Grandevo was waiting approval in Europe and that's moving along and then Venerate, we are working on the preparing the package that would be required for submission.

Sameer Joshi

Okay. Yes, I guess you submitted the MBI-110 for EPA approval, is that right?

Pam Marrone

We did and they have a timeline from when they tell you when they think they're going to get approval and it's in the latter half of next year.

Sameer Joshi

Okay. So stepping back meaning it's great progress of 50% improvement of revenues last quarter, over the next two quarters, do you expect this pace to stay or do you expect the revenue levels to be similar for the next two quarters and I know there is seasonality involved but, so just could give us high level understanding of revenues expected?

Pam Marrone

Well, we believe with three quarters of strong growth in a row. We believe we have strong momentum in our revenues which comes from product adoption, increased crop segments -- the new crop segments, new pest usages and new geographic regions and that momentum -- we intend to continue that momentum. And I'll draw your attention to the product shipments number in addition to the GAAP revenue.

Operator

And we'll take our next question from Laurence Alexander [Jefferies]. [Operator Instructions]

Laurence Alexander

Good afternoon. So just to clarify, are you selling Grandevo into the corn market in the back half of this year?

Jim Boyd

Koch is selling.

Pam Marrone

No, no that's Regalia, Grandevo…

Laurence Alexander

Okay. So, more broadly can you speak about the cadence of sales into the row crop markets as to how much of this in the back half of this year and how much is going to show up next year?

Pam Marrone

Yes. So any deals we've done or distributor agreements we've done this year is after the main five season. We have lots of trials and demos in the field in season now. So the typical row crop buying season does tend to be in the fourth quarter. So assuming that there is --

Jim Boyd

Good results.

Pam Marrone

Good results -- as continued good results then that would happen in that part of the year.

Laurence Alexander

And then…

Pam Marrone

Grandevo is well -- I didn't say which product it was that's part of the deal and I won't comment for competitive reason, I'll just leave that.

Laurence Alexander

Your [indiscernible], never mind.

Pam Marrone

Leave it alone, I'll just leave it alone.

Laurence Alexander

And then, can you also just sort of give us a sketch of how your products in the field trials are doing against other biologicals, where clearly the level of rhetoric we are seeing from other firms sort of has ratcheted up. Can you give any sense of what you're seeing in the actual data?

Pam Marrone

I heard a major company give the estimate of their yield bump and Regalia exceeded that. So we have now going into our fourth year of Regalia data and what they do is they -- you line-up all the trials, they're called piano charts, and you line-up all the trials and you get a win-rate and an average increase in bushels and Regalia stacks up, if not exceeds the ones [indiscernible] out there.

Jim Boyd

Question more broader based with [indiscernible] Majestene and Grandevo and other.

Pam Marrone

Yes. Well, right now, if you add in Majestene and Grandevo for corn rootworm and nematicidal usages I would agree that -- I would add that too that that stacks up too in terms of yield increases to at least just good or better than anything that we've seen out there so, in terms of data, yes.

Laurence Alexander

And as you've been discussing value capture with potential customers. I mean, I think one of the thorny aspects from the outside has been just how this industry possibly is pricing for this new more effective applications. We're hearing from other companies’ niche products, fruits, vegetables, [trees] [ph], possibly being 15 to 30 million kind of [indiscernible] sales kind of run rate, but row crops anywhere you're seeing much larger numbers, 75 million to 200 million. How do you -- how are those discussions going on or how much of a still credibility issue does the industry have around that…?

Pam Marrone

It's always interesting with the fixation on row crop. Yes, it is big but certainly low value and with the -- and certainly difficult right now, with low commodity prices. If you add up all of the pesticide usage, especially crops, fruits, nuts and vegetables or [indiscernible] and add it and compare it to the row crop market, the value of the pesticide market is just as big. Now, albeit, there is more crops and more fragmentation, so the actual dollar opportunity is no less big than the row crop market for specialty crops.

Laurence Alexander

Okay. Thank you.

Operator

[Operator Instructions] And we'll go to Robert Smith with Center for Performance Investing.

Robert Smith

Hi, good afternoon. Thanks for taking my questions.

Pam Marrone

Hi.

Robert Smith

Hi, there. Do existing product lines have a CAGR possibility of 60% or over for the next several years?

Pam Marrone

Well…

Jim Boyd

I think we believe that.

Pam Marrone

We believe that.

Robert Smith

Well, that's all I'm asking.

Pam Marrone

You asked, if we believed it, we believe it.

Robert Smith

All right. Good enough. That's a good beginning. How about -- do you have a breakthrough product that you're trying to bring to market or have somewhere in the…?

Pam Marrone

Yes, we do. And you asked the right question, that's the question, I'd love to answer because herbicides, we're one of the only companies that's focusing, biologically, that's focusing on herbicides. And we've been working hard on bringing another herbicide to market and it's called O&O. And our R&D has been making tremendous progress it's not been an easy technical challenge, but my hats off to Amit and team for what they've done in a very short period of time to get this product moved along.

So in the marketplace, you got two markets, you've got the organic markets where consumers are demanding more organic, but there is not enough acres to meet the demand and one of the biggest reasons is because of the difficulty in cost of weed control. [Indiscernible] are focusing on. And then, the second market is, well, the weed, sub-weeds like Palmer amaranth, Palmer pigweed is resistant to [indiscernible] chemical and the resistance to weed -- weed resistance continues to expand and this particular product is very good on these types of weeds.

Jim Boyd

You ought to mention Majestene too.

Pam Marrone

Well, Majestene, of course, well, Majestene so that was coming. But Majestene filled an unmet need in the marketplace because of the restrictions on chemicals -- chemical nematicide, this just left a hole in the nematicide market and Majestene we're very bullish on because not only does it increase plant health and yields, but it actually kills the nematodes, reduces nematode populations. So that's another breakthrough product which we are very bullish on, yes, thank you, Jim.

Robert Smith

So Pam you said that the -- that you are working on and have made considerable strides. Where along the continuum is, what's left to be done?

Pam Marrone

We're doing toxicology - because we've changed the processes and since we did some early toxic studies on it, and since we have changed the processes, improved the yield and made a better product, we're rerunning the required EPA tox studies. So that's the gating item right now. And after those tox studies are done, which takes a few months then we will be pulling together the dossier and submitting it.

Robert Smith

To be followed by what steps?

Pam Marrone

Waiting approval takes about, well 12 to 18 months, and then, while we're waiting for approval, we will be continuing to work on what we call the [art of use] [ph] and that means perfecting which weeds -- figuring out which weed it works best on and combinations with chemicals. We see this in the conventional market raising the resistance, the weed resistance, by doing a cocktail of chemical pesticides and then you can get better control than the chemical alone. And so really perfecting how the products would be used is what we do while we're waiting for the EPA approval.

Robert Smith

Thank you.

Jim Boyd

We could also mention there might be an opportunity to apply for an emergency use.

Pam Marrone

Yes. I mean the need for this is so strong. We've got a lot of grower groups who would love to get it out on the market earlier and get an emergency use. And we'll certainly apply for that yet assuming our -- the technical team R&D gets it to where we need it in time.

Robert Smith

And would this product be partnered or is part of an existing partnership?

Pam Marrone

Not yet. So there is partnership -- partnership possibilities in the row crop market because that's -- our strategy is to partner row crops so we could see doing partnerships with a herbicide company to partner this with their herbicide to improve performance where weeds have developed resistance.

Robert Smith

Pam, you made some deals with some really big companies. Can you give us any further color on the partnerships themselves, are they the minimums or I mean these companies obviously have a marketing muscle?

Pam Marrone

Well, they are - we can't give you any details because the agreements are confidential. But we're certainly excited about the partnerships because they do have marketing muscle, both groups have strong sales forces in these markets.

Robert Smith

And your products for mussels you said you didn't have a -- you haven't made a partnership yet, what are you looking for?

Pam Marrone

We're looking for someone who already has treatments in power plants who can explore or other industrial plants who can expand our reach because we have so many incoming inquiries about Zequanox because the mussels continue to spread. And there is a lot of sensitive treatments where it spreads they can't use chlorine or other chemicals because of the permitting issues with chlorine it’s not environmentally sustainable, so they're not getting the permit. So therefore, we have opportunity there. Well, that's the low hanging fruit so to speak. And then beyond that though there is a lot of other industrial and plant -- power plants and other [indiscernible] treatments. We are -- we with our little team just don't have the ability to access that, so we're looking for a partner who can take us bigger into that.

Robert Smith

That’s the Holy Grail of the chlorine replacement?

Pam Marrone

Eventually, yes. In the last earnings call, we messaged that we had quite a significant R&D team and MMM, our plant in Michigan, made a significant reduction in cost of goods on Zequanox and there is still opportunity to drive the cost down using increased yields of the microbe to get even closer to the cost of chlorine, so ultimately that's our goal.

Robert Smith

And how far are you, any multiples or…?

Pam Marrone

I know -- I'm not going to speculate on that, but we've made good progress, let's put it that way.

Robert Smith

Okay. All right. Thanks so much and good luck going forward.

Pam Marrone

Thank you.

Operator

[Operator Instructions] And with no further questions at this time we'll turn the call back over to Pam Marrone for any additional or closing. One moment, we do have a question from Robert Smith for Center for Performance Investing.

Robert Smith

Final one, Pam. So do you have any -- [indiscernible] bringing a partner for Zequanox by year end, or is it something that's going to take a longer period of time?

Pam Marrone

Well, we haven't given a timeframe. We haven't given any timeframe when we put that as a goal. We haven't actually said what the timeframe would be, so, I'm not going to speculate.

Robert Smith

Are you in any kind of discussions?

Pam Marrone

We are in active discussions, yes. We are in active discussions with partners at this moment.

Robert Smith

Okay. Thanks so much. Thank you.

Operator

[Operator Instructions] And with no further questions, we'll turn it back to Pam Marrone for any additional or closing remarks.

Pam Marrone

Thank you for joining us today. To recap, we have achieved three quarters in a row of strong product shipment growth. Over 20 points of gross margin improvement, dramatic reduction in our operating expenses, improved cash usage and executed on key operational objectives, new partnerships and international expansion. We believe we are on a strong path forward. I hope that you share in our growing confidence. Thank you, again, and we look forward to sharing more as we continue to execute on our goal. Thank you.

Operator

And that does conclude today's conference. Thank you for your participation. And you may now disconnect.

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