Car Services' (EHIC) CEO Ray Ruiping Zhang on Q3 2016 Results - Earnings Call Transcript

| About: eHi Car (EHIC)

eHi Car Services Limited (NYSE:EHIC)

Q3 2016 Earnings Conference Call

November 16, 2016 8:00 AM ET

Executives

Brandi Piacente – Investor Relations-The Piacente Group, Inc.

Ray Zhang – Founder, Chairman and Chief Executive Officer

Colin Sung – Chief Financial Officer

Analysts

Justin Kwok – Goldman Sachs

Leon Chik – JPMorgan

Bing Kou – Bing Tai Capital

Operator

Good day and welcome to the eHi Car Services' Third Quarter 2016 Earnings Conference Call and Webcast. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to, Brandi Piacente. Please go ahead.

Brandi Piacente

Hello, everyone, and welcome to eHi Car Services’ third quarter 2016 earnings conference call. The Company’s results were issued via Newswire services earlier today and are posted online. You can download a copy of the earnings press release or sign up for the Company’s distribution list by visiting the IR section of its website at ir.ehi.com.cn.

Leading today's call is Mr. Ray Zhang, eHi's Founder, Chairman, and Chief Executive Officer, who will provide operational highlights and updates on the Company's business strategy; Mr. Colin Sung, eHi's Chief Financial Officer will then review the Company's third quarter 2016 financial results.

Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the Company's results may differ material – may be materially different from the views expressed today. Further information regarding these risks and other uncertainties are included in the Company’s prospectus as filed with the U.S. Securities and Exchange Commission. The Company does not assume any obligation to update any forward-looking statements except as required under applicable law.

Please also note that eHi’s earnings press release and this conference call include discussions of un-audited GAAP financial information, as well as un-audited non-GAAP financial measures. eHi’s press release contains a reconciliation of the un-audited non-GAAP measures to the un-audited most directly comparable GAAP measures.

I will now turn the call over to eHi's Chairman and Chief Executive Officer, Mr. Ray Zhang. Please go ahead.

Ray Zhang

Hello, everyone. Thank you for joining us. Our strategy of focusing on both expansion and operating leverage continue to pay off during the third quarter, delivering both strong top-line growth and a significant improvement in bottom line profitability. The third quarter is seasonally strong with a high volume of domestic leisure travel during the summer and the mid-autumn festival in September. We successfully captured rising demand from China’s domestic tourism, as well as business-related travel.

Our net revenues increased by 47.8% year-over-year, fueled by 54.4% year-over-year revenue growth in car rental and a 26.5% year-over-year revenue growth in car services. We also achieved a bottom line profitability of RMB22.3 million during the third quarter, a significant 270% increase over the same period a year ago.

During the quarter, we continued gaining market share by further driving our strategy of a free and geographical expansion. Our total average available fee size increased by 46.5% year-over-year to 41,742 vehicles in the third quarter of 2016, up from 28,499 vehicles in third quarter of 2015.

As of September 30, 2016 our period-end fleet size reached 48,934 vehicles. Despite a substantial growth in fleet size we had a solid RevPAC of RMB152 for the total fleet in the third quarter of 2016, increasing from the third quarter 2015 level of RMB115. We also maintained our industry-leading utilization rate at the 71.9% for rental fee in the third quarter of 2016. Demonstrating our ability to manage sizable and healthy growth. Meanwhile total number of our directly operating cities has increased to 213 in China.

As we predicted, China’s car rentals and services industry has undergone a rapid transformation in the last few years. Leisure and business travel trends are both changing. Many Chinese nowadays prefer to travel as individuals or with immediate family and close friends rather than in large group of organized tours. They also prefer to package different transportation options and design their travel plans themselves. Self-drive and [mobile options] are becoming more popular and are better suited to travelers on the go lifestyles.

eHi is at the forefront of these market trends, meeting customers evolving travel needs, improving the user travel experience and capturing growing market opportunities. These trends are behind three key areas of focus during third quarter, expanding and diversifying our footprint leading in customer centric services and innovating in mobile and internet.

First, we increased the first store rental fleet and expanded our nationwide network. Both of which positioned us to benefit from these growing domestic travel, and transportation demand trends and to drive ongoing improvement in our long-term performance.

As of September 30, 2016, we directly operated a network of 2,801 service locations, including 378 stores and 2,423 pick-up, drop-off points in 213 cities.

At the end of the third quarter, we had increased our period-end rental fleet per store to 120 vehicles compared to 87 rental vehicles per store one year ago. In addition, approximately 15% of our service locations are located in airports and railway stations, which provide a great convenience and flexibility for our customers who diversify their transportation plan.

Second, we further our leadership position in the market for customer-centric services, these services include car pickup and return in different cities and 24/7 open stores. In the third quarter we also started to offer free door-to-door delivery services in major cities, taking advantage of our well positioned pick-up drop-off points in our directly operated business model. We are able to provide door-to-door delivery services more conveniently and cost efficiently than our competitor with strict quality control and a strong backups from our service locations nearby. These value-added services, not only help us attract new customers, but also enhance experience of our existing customers, providing more choices and a flexibility for their travel plan.

Third, we strengthen our mobile and Internet platform. We continue to leverage our mobile and Internet platforms to capture and address customers’ evolving needs. In the third quarter 79% of the total car rental reservations were made through mobile devices and we recorded nearly 4.8 million mobile downloads. Mobile app reservations combined with website reservations accounted for 94% of our third quarter car rental reservations.

Last but not least, I would like to briefly comment on the recent government regulations issued for China’s online car hailing industry. Following the announcement of a nationwide guideline, in October and in November 2016, many major cities in China released localized drop policies. These localized policies include more details on the requirements of drivers and operating vehicles. For example, several cities now require vehicles to have local license plates, to meet higher standards and to register as commercial vehicles. Many require drivers with local city residency.

All these combined to establish higher entry barriers for private drivers and vehicles. We believe eHi is very well-positioned, shouldn't these localized policies be implemented in the near future. Because of our foot point and our focus on operating fundamentals, we see potential to further innovate and drive our leadership in the cost services industry, either directly or through partnerships or to benefit our traveling customers.

As noted in our last conference call, we also believe these regulations will support a healthier and a more organized development of the industry. As a leading car rentals and car services company in China, our overall strategy has not changed, we are firmly committed to our expansion plan and our growth initiatives.

Looking ahead, our goal remains to build on the strength of our one-stop comprehensive business model. Our established brand reputation, high quality services, nationwide service network and advance the proprietary technology platform. All come together into positioning us uniquely well to be able to capture the growing demand for car rentals and car services in China.

With that I would now turn to the call over to our Chief Financial Officer, Colin Sung, who will discuss our financial results. Colin, please go ahead.

Colin Sung

Thank you, Ray, and hello, everyone. We are pleased to report strong third quarter results with net revenues increase by 47.8% year-over-year, while recording 269.5% bottom-line growth from the prior-year period. Notably, our continued focus on operating leverage and cost control measures contributed to broad-based margin improvement.

In the third quarter, our gross margin and non-GAAP adjusted EBITDA margin, reached record-high of 28.5% and 45.4% respectively. And by seasonal feather, Ray mentioned, our strong results also benefit from the economy of scale and increased total fleet RevPAC, as we improve our customer mix, as well as vehicle model mix. Our financial discipline is well-established and we remain committed to prudent expansion and a balanced approach between growth and profitability.

I will now go over third quarter operating and financial results in more details. For the third quarter of 2016, our key operational metrics were as follows: for the car rental segment, average available fleet size for car rental, increased by 49.7% year-over-year to 39,227 vehicles, up from 26,200 vehicles for the third quarter of 2015.

RevPAC for car rentals increased to RMB129, up from RMB125 for the third quarter of 2015. Fleet utilization rate for car rental was 71.9% compared with 73.8% for the third quarter of 2015.

For the car service segment, average available fleet size for the car service increased by 9.4% year-over-year to 2,515 vehicles, up from 2,299 vehicles for the third quarter of 2015. RevPAC for car service increased to RMB509 up from RMB440 for the third quarter of 2015. As a result, total average available fleet size increased by 46.5% year-over-year to 41,742 vehicles, up from 28,499 vehicles for the third quarter of 2015. Total fleet RevPAC increased to RMB152 from RMB150 for the third quarter of 2015.

Now let me walk through our third quarter 2016 financial results. Net revenue were RMB582.1 million or US$87.3 million, up 47.8% year-over-year attributable to increase in net revenue from both car rental and car services. Net revenue from car rental were RMB464.3 million or US$69.6 million, up 54.4% year-over-year, primarily driven by the growing average available fleet size for car rental in response to customer demand. Net revenues from car services were RMB117.8 million or US$17.7 million, up 26.5% year-over-year, primarily driven by the increased car service RevPAC as we provide services to more business clients.

Cost of revenue or vehicle operating expenses were RMB416.4 million or US$62.4 million, up 37.1% year-over-year, primarily driven by increased depreciation and the labor related costs.

In the third quarter of 2016, 486 used vehicles were disposed off, and 358 used vehicles were under sales contract pending title transfer. The company recognized a disposal loss of RMB0.3 million or US$0.04 million [ph], in aggregate for these 844 vehicles.

In addition, a disposal gain of RMB700,000 million or US$100,000, which were unrecognized in the previous quarters, was recognized in the third quarter of 2016 as a result of the completion of title transfer during such period. The disposal loss and gains were both recognized as adjustment to the vehicle-related depreciation expenses as part of the cost of revenues.

Gross profit was RMB165.7 million or US$24.8 million, up 83.9% year-over-year. Gross profit margin reached record high of 28.5%, compared with 22.9% for the third quarter of 2015. Gross profit margin improvement was primarily due to certain cost controls, primarily vehicle insurance, and/or to a lesser extent, in vehicle repair and maintenance, as well as labor costs, in connection with enhanced economy of scale and operating efficiency.

Selling and marketing expenses were RMB28.5 million or US$4.3 million, up 81.8% year-over-year, primarily due to increased channel marketing and promotional fee as the Company expanding, branding and channel promotion activities during such period.

General and administrative expenses were RMB63.1 million or US$9.5 million, up 38.6% year-over-year, primarily due to increased employee-related costs including salaries and welfare expenses as a result of increased headcount, as well as a foreign exchange loss in the third quarter of 2016, compared with foreign exchange gain in the third quarter of 2015.

Profit from operations were RMB77 million or US$11.5 million, up 124.2% year-over-year.

Interest expense were RMB55.7 million or US$8.3 million, up 79.5% year-over-year, primarily attributable to the interest expenses associated with the Company's senior unsecured notes of US$200 million due 2018.

Net income was RMB22.3 million or US$3.3 million, up 269.5% from RMB6 million for the third quarter of 2015. Net income margin for the third quarter of 2016 was 3.8%, compared with 1.5% for the third quarter of 2015.

Basic and diluted earnings per ADS for the third quarter of 2016 were RMB0.32 or US$0.05 each, compared with basic and diluted earnings ADS of RMB0.09 or US$0.01 each for the third quarter of 2015.

Non-GAAP adjusted EBIT was RMB80.6 million, or US$12.1 million, up 97.4% year-over-year. Non-GAAP adjusted EBIT margin was 13.8%, compared with 10.4% for the third quarter of 2015. Non-GAAP adjusted EBITDA was RMB264.5 million or $39.7 million, up 60% year-over-year. Non-GAAP adjusted EBITDA margin reached record high of 45.4%, compared with 42% for the third quarter of 2015. As of September 30, 2016, the company has cash, cash equivalents and the restricted cash balance of RMB1.5 billion or US$223.7 million.

Before turning to guidance, I like to spend few minutes discussing recent development. On August 30, 2016, we entered into a US$150 million syndicated loan facility agreement further enhancing our financial resources. The loan facility agreement includes an initial facility of US$110 million and a green-shoe facility of US$40 million.

The loan facility has a three-year term and will be repaid in installment. The interest margin is priced at 350 basis points per annum over LIBOR. Deutsche Bank AG, Singapore Branch, is acting as original mandated lead arranger for the loan facilities. We had fully drawn down the US$150 million facility as of September 27, 2016, and used part of the proceeds for repaying certain existing indebtedness with high interest rates. The remaining proceeds will be used for funding capital expenditure and other general corporate purposes of the company.

Turning to guidance, we estimate that net revenue for the full-year of 2016 will range from RMB2.1 billion to RMB2.2 billion. The total period-end fleet size will reach approximately 57,000 vehicles as of December 31, 2016. The outlook reflects the Company’s current and preliminary review which maybe subject to change.

Looking ahead, our vision remains unchanged and we look forward to a healthy revenue growth and a steady margin expansion.

This concludes our prepared remarks. We will now open the call to question. Operator, please go ahead.

Question-and-Answer Session

Operator

We will now begin the question-and-answer session. [Operator Instructions] We will now begin the question-and-answer session. The first question comes from Justin Kwok of Goldman Sachs. Please go ahead.

Ray Zhang

Hi Justin.

Justin Kwok

Hi, hello Ray and Colin. Good evening. Thank you for taking the questions. Congrats on another quarter of good profitability.

Ray Zhang

Thank you.

Justin Kwok

I think I have a question for Ray and another question for Colin. May I will just shoot a question outside.

To Ray, in your remarks you actually mentioned that after the recent limitation of the car hailing rules and all these traffic rules, you believe that there was actually a lot more further that the company will do be it directly or be it through partnership into looking at these car hailing segments. I just want to see what we’re looking at from the investor point of view and looking at your company, would they expect this stream of success to become substantial in the near term or you assume it’s very early stage of the story.

The other question for Colin is I think that you mentioned the balanced approach for growth and profitability as the key strategy that you are upholding in [indiscernible] expansion. If you look at the currently situation where the RevPar is pretty stable and your margin is on the rise do you think you can actually grow faster in terms of fleet expansion, or do you think that is more a limit being the market availability or the demand pick up, or the utilization rather than the profitability at the moment that is putting a hurdle or putting a limit on the pace of your growth? Thank you.

Ray Zhang

Okay, hi Justin this is Ray. For your first question regarding the new regulation, how will that impact industry and whether or not we’ll benefit from it? As I said in my remarks the answer is we believe so that we will benefit from the new regulation. First of all, that will help to make the industry more organized and operate equally instead of in great area for the past few years.

And the requirement of operating vehicles and the license plates, the local license plates and the local residency, majority of our sales all the vehicles that we have a proper license plates already. So the compliance to the new regulations to us is not going to incur any additional cost. So that’s something that we will benefit from.

And in terms of the other opportunities from this new regulation is that the existing major car hailing companies in order to compliant – in compliance with new regulation that they have to incur more cost and pay tax, therefore their total cost structure and look at the cost based will be higher in which we have always been on compliance with the laws and regulations.

So for us it would not be additional cost increase therefore the cost in compliance added to those car hailing companies will pass on to their customers, meaning the end-users will pay higher fares. And therefore we will benefit from a higher price car hailing service and for our corporate customers, as well as we can take some advantage from the leisure customer or consumer.

So those are areas, I think that we will benefit from this new regulations and comparing to the era that in great area there was no regulations and everybody is – I wouldn’t say that we operate [indiscernible]. And it’s a fashion, but I think that the cost is basically lower in a time period that there was no legal new regulation for this industry.

I will pass it on through Colin.

Colin Sung

So just I think your question is asking what is my guidance for the next year. I guess that’s what you tried to drive into. So at the current stage, we already provided the full guidance for this year 2016. And then we will give a further guidance when we ramp up the full 2016.

As we said before and I’ll continue saying that the growth and profitability is our main focus, as far as the opportunity either with strategic certain partnership, as well as the expansion at the current level, both for the domestic leisure traveler as well business traveler. And also in addition, what Ray just mentioned about the regulatory environment for car hailing also prevent us a potentially future growth, which we’re not typing today yet.

So as far as the growth expansion, I think those area will be under the guidance of the growth as probability as our measurement. So at the current level we will reach more than probably if a little bit more aggressive part of more over 57,000 vehicles by end of this year and then relatively speaking, next Chinese New Year will be a little bit earlier than usual. And then we are looking at the overall growth of the market or the demand. We are very – feel strongly, company’s growth is on the right track.

Justin Kwok

All right. Thank you.

Operator

The next question comes from Leon Chik of JPMorgan. Please go ahead.

Ray Zhang

Hi, Leon.

Colin Sung

Hi, Leon.

Leon Chik

Yes, hi, Ray, Colin, yes. While you guys are continuing to grow even though there were tough market that’s good. Can I just confirm your rental rates are self-drive only, is it around RMB197 million? I'm just dividing it by the utilization.

Ray Zhang

It wasn’t just driving that. What’s…

Colin Sung

ADR…

Leon Chik

The rental rates self-drive only – I mean, what it should be, I mean, I’m just dividing your RevPAR by your 76.7 [ph].

Colin Sung

I think I know maybe I want to make a clarification. In the current press release and also going forward we will not give any guidance, I mean, any disclosure for ADR, because I think that number would kind of spring many times, is not really ADR or saved by definition rate. So we are only providing RevPAC.

Leon Chik

Okay. Well, can I confirm – when you say your fleet utilization is RMB72 million, that includes like the show first service at RMD100 million or does that not include the show first service [ph] ?

Colin Sung

Those are the pure self-drive.

Leon Chik

Pure self-drive, okay.

Colin Sung

That’s correct.

Leon Chik

All right, then I guess I can figure it out. Okay, right. Secondly, your 57,000 by year-end that includes all the vehicles including the idle ones, right, looks like everything.

Colin Sung

That’s, correct.

Ray Zhang

That’s, correct. Any vehicle we own on balance sheet.

Leon Chik

Yes, okay. Can I get the – do you have quarter-end vehicles, you just gave an average but exact quarter-end…

Colin Sung

Quarter-end vehicle yes we – yes I do. The fleet size earnings is 48,933 that’s for the total of fleet size ending September 30, 2016.

Leon Chik

Okay. Including the – I suppose roughly 2,700 car service?

Colin Sung

Roughly 3,025 for car services.

Leon Chik

3,025 were serviced that in the 48,933 right?

Colin Sung

That’s correct.

Leon Chik

Okay.

Colin Sung

And that the remaining is 45,990 is our rental fleet.

Leon Chik

All right. So, assuming do you get 57,000, that’s like kind of 19,000 gross from last year, something like that? I mean it’s not going to be that big. I mean, are you giving us 2017 number for fleet or not?

Colin Sung

Once we wrap up the 2006 report, company we’ll give – giving the company’s reach and probability last quarter already in addition to that company also constantly give you certain guidance relevant to the probability level, as well.

Leon Chik

Okay, right. So CapEx this year did you give that number, are you giving that number total CapEx for the full year?

Colin Sung

No, we didn’t give the CapEx number.

Ray Zhang

No we didn’t.

Leon Chik

You didn’t.

Ray Zhang

We only give vehicle no.

Leon Chik

Okay, then all right. So can we see self-drive 100,000 for the self-drive and – 150, 160 for chauffeur?

Ray Zhang

Probably self-drive is a little bit less now giving the favorable market was from the manufacture side. But on an average I would say on the planned average 110 that’s on the planned average right now.

Leon Chik

Right, I see. And you have 120 vehicles for outlet now right?

Ray Zhang

121 to be exact if you want to get that numbers.

Leon Chik

Okay. Did you give an outlet number, I guess I can divide it but do you have an outlet number?

Ray Zhang

Yes, we do we have 370 store cover 20, 30 city right now. And then total store…

Leon Chik

There is almost no growth right, you are growing that – you haven’t grown that Q3 2017 is pretty much same as last quarter and same of last year right?

Ray Zhang

I given you outlines for that one, so Leon.

Leon Chik

Okay, okay fine. Do you have this like a free, like a delivery to the home thing or you don’t have that?

Ray Zhang

Yes, we do.

Colin Sung

Yes, we do.

Leon Chik

Is it free or is not free?

Colin Sung

Free.

Leon Chik

All free, okay. Right I guess assuming it doesn’t cost you much because you got idle staff, is it pretty safe to say?

Ray Zhang

No because our network, the service network for each city that the cost of a service person from our existing stores to the customer door-to-door service usually will pick at the nearest, the closest service location. So for us…

Leon Chik

Okay, and I would – okay. I mean, is this a big number is it like half of sales or a 10% or is it like a small number or big number?

Ray Zhang

It’s a small number.

Colin Sung

So immaterial small number.

Leon Chik

Immaterial number, okay, good. Ray I think that, my main question, I’ll just drop back into the queue. Thanks.

Ray Zhang

Okay. Thank you.

Colin Sung

Okay. Thank you, Leon.

Operator

[Operator Instructions] The next question comes from Bing Kou of Bing Tai Capital. Please go ahead.

Ray Zhang

Hey, [indiscernible].

Bing Kou

Hi, Colin, Hi, Ray. Thank you for taking my questions, I’ve got a very quick question. I just want to do some sort of comparison between your results today and the results being announced by a major competitor yesterday. So I’ve got two interesting comparisons. One is on the RevPac trend side. So obviously, eHi has outperformed the major competitor for two consecutive quarters on the RevPac trend. So last quarter you guys were up on the car rental side, they were like flattish and the quarter before you guys were margining down, they were down like close to 3%, so any reason behind these two consecutive quarters of RevPac trend outperformance? So that’s my first question?

The second thing actually is on the maintenance expense side, because Colin just mentioned in the remarks saying that one of the reasons, why GP margin saw some improvement for the past quarter was due to savings on the maintenance cost side. But we are seeing a different trend for major competitors. So they’re seeing mounting maintenance expense pressure. So I will just try to understand like what was the reason behind the different situation, the two companies are facing on the maintenance cost side? Thanks.

Ray Zhang

I’ll answer your last question regarding maintenance. I think as we disclosed previously the company since late 2014 continue for the last few years. So the vehicle we’re acquiring is for a certain buyback program either with manufacturer or dealership. So those fleet we are short, the lifecycle of those vehicle. So in terms the newer the fleet chances are less for maintenance. And in addition vehicle maintenance itself, we have our own in-house facility to maintain. I think that also our competitor mentioned. But another thing is come to play in the maintenance itself is also the fleet, the usage itself. And then keep in mind our major competitor they have a quite substantial number vehicle using for car hailing services.

And those mileage for the usage tends to be three or four times our rental fleet. So I mean, again [indiscernible] that calculation by just by commonsense, tearing it, when you have your fleet at 20% or 30% providing for a B2C car hailing services, I would say that maintenance dependency should be higher than the less usage vehicle, right in certain cases. Because even the duration of the rental fleet for our case is around two to three days average usage, but the mileage driven is quite different than car hailing. With the car hailing vehicle tendency is to be on the road 16 hours to 20 hours per day, the mileage itself could be piled up very relatively quickly. And then also depends on the certain vehicle the mix of model, those maintenance account varied from vehicle to vehicle.

So again, we cannot speak for them, why the reason they are highest but I only can speak to our self, or our maintenance as well as our vehicle purchasing, our disposal, as well as our maintain the discipline on certain maintenance, as well as repair services. That’s the last – the second question you asked.

The first question you asked was regarding the RevPAC. Again, I cannot speak for our competitor because since last year I’ve been looking certain observation their story kind of keep changing from quarter-to-quarter or the strategy of focus, is a little bit different every quarter. Our is already consistent and consistent looking our service level, maintaining our utilization and then with the newer vehicle, little bit different mix of vehicle as that one thing to put it in the same purchasing price at the busiest level, you probably get a little better vehicle than the previous amount of the purchasing price. So in terms of newer vehicles, and then user experiences, and then better servicing, I would say certain pricing would demonstrate.

So again, the pricing bridge between the other side I don’t know. For us I only can speak on our side.

Colin Sung

I just want to add with regard to the RevPAC, our short-term car rental revenue growth at 54% in third quarter versus the other side of 19% if we calculate it correctly. And so we are at almost more than 2.5 times the industry average. And so the revenue growth will trickle down to the revenue for car. So that’s, I think, is pretty easy to understand.

With regards to the maintenance cost, I think, our average fleet age is probably younger therefore the cost of maintenance of the vehicle for the younger fleet is probably less than older fleet.

Bing Kou

Yes, got it. Thanks Ray, thanks Colin. Thank you.

Ray Zhang

All right.

Operator

This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

Brandi Piacente

Thank you, once again for joining us today. If you have further questions, please feel free to contact eHi’s Investor Relation or any of us at The Piacente Group. Thank you very much.

Ray Zhang

Thank you.

Colin Sung

Thank you. Thank you everyone.

Ray Zhang

Bye-bye.

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!