TeleCommunication Systems CEO Discusses Q2 Results - Earnings Call Transcript

TeleCommunication Systems, Inc. (NASDAQ:TSYS)

Q2 2012 Earnings Call

July 26, 2012 05:00 pm ET


Maurice Tose - Chief Executive Officer and President Board Chairman

Bruce White - Senior Vice President, General Counsel and Corporate Secretary

Tom Brandt - Senior Vice President and Chief Financial Officer Member, Board of Directors


Scott Sutherland - Wedbush Securities

Mark Jordan - Noble Financial

Mike Latimore - Northland Capital


Welcome to the TeleCommunication Systems, Inc Second Quarter 2012 Earnings Conference Call. During today's presentation, all parties will be a listen-only mode. Following the presentation, the conference will be opened for questions. (Operator Instructions). This conference is being recorded today, Thursday, July 26th of 2012.

I would now like to turn the conference over to our host, Mr. Maurice Tose, Chairman and CEO. Please go ahead sir.

Maurice Tose

Good evening. Thank you for joining us to discuss TeleCommunication Systems' second quarter 2012 results. With me are Tom Brandt, our CFO; and Bruce White, our General Counsel.

Before proceeding, Bruce will advise listeners as to cautions with regard to the content of this call and following our presentation, we'll open the lines for Q&A. Bruce.

Bruce White

Thank you, Maurice. Some of the statements you will hear during this call are forward-looking within the meaning of federal securities laws. Some but not all of these statements include language such as believes, expects or anticipates and you should listen to these statements with the knowledge that actual results may differ materially from the forward-looking statements. For example without limitation risks or statements about 2012 outlook, visibility and specific revenue expectations, our principal growth platforms, market opportunities and the timing of possible contracts and anticipate of funding and demand for our products and services are all forward-looking. The risk factors that could cause the results to differ maybe found in our SEC filings, including Forms 10-K and 10-Q. We encourage all investors to read these documents.

Also, during this call, we may refer to measures of income that are not computed in accordance with generally accepted accounting principles. To the extent we refer to non-GAAP data, we have provided a reconciliation in our press release and on our website. Maurice?

Maurice Tose

Thank you, Bruce. Our second quarter 2012 earnings release was issued about 4:15 today, and a full text copy of our press release has been distributed via e-mail and is also available on our website.

We are pleased to report growth in second quarter revenue driven by total comp solutions for federal government customers and commercial 9-1-1 services for network operators and state and local governments.

We continue to see increasing federal needs for our C4ISR secure communication solutions and skilled field support for continuous mission-critical service. Our government business has a robust pipeline of high value contract opportunities, of which several award notices are expected in the second half of this year.

As I indicated in our press release, TCS is now a company with depth of expert technical resources for secure, highly reliable wireless communication. We have nearly 500 SATCOM and network security professionals and about 400 cellular infrastructure and application engineers and specialist, and more than 200 personnel engaged in the network technology that enables public safety communications. These are scarce and valuable resources for enabling secure and reliable communications for government and enterprise. An example is the emerging opportunity into many facets of secure cellular and the efforts of these engineers are expanding our proprietary intellectual property.

On July 6th, we announced the acquisition of microDATA GIS, a leading next-generation 9-1-1, or next-gen provider. We believe that state and local governments are in the early innings of upgrading their existing 9-1-1 systems from circuit switch to IP-based networks, internet protocol-based networks.

The SEC has predicted total non-recurring next-gen spending of $1.2 billion over 10 years, and an additional $1.5 billion for in fact recurring connectivity posting in operation and maintenance expenses. microDATA's next-gen 9-1-1 roadmap compliments TCS. In addition to complementing TCS's emergency services, internet protocol network or ESInet products, microDATA brings TCS products for customer premise equipment, or CPE, which includes computer aided dispatch integration dashboards, call management products and call handling software and geographic information systems software. Together with TCS's technology, scale and leadership serving the public safety community, we expect to be a formidable competitor in the rapidly growing next-gen 9-1-1 market.

Turning now to highlights of the second quarter, our Government segment's revenue was up $20 million, or 38% compared to the same quarter of last year, including a $22 million increase in pass-through contract revenues.

Government segment first half revenue was $130.3 million, up 38% growth over first half 2011, while gross profit was $25.8 million, up 7%. Government services revenue for the quarter was $33 million, up 2% from a year ago and contributed $8.4 million of gross profit, down from $11 million last year due to pricing compression on some contracts.

TCS was recently awarded a Multi-Million Dollar subcontract to provide managed network service in support of telemedicine applications. Our federal civilian pipeline has grown to over $170 million with growth in IT professional services network integration and in-building wireless solutions.

Our in-building wireless solutions deployed at Walter Reed National Military Medical facilities, Aberdeen Proving Grounds and U.S. hospital at Fort Belvoir, enhanced telemedicine capabilities for the doctors and nurses providing critical, real-time medial information.

Incremental funding of $8 million was received in Q2 to provide integrated, global logistic support for U.S. Marine Corps wireless point-to-point linked solutions in theater, and in mid-July we were awarded an $11 million contract for additional technical assistance on this contract. This growth is a testament to the value of our mature field support and technical training personnel provide.

In Q2, we also received $8 million of managed network services orders for renewals and enhancements with period of performance of up to 12 months. Second quarter systems' revenue was $41 million, nearly double the second quarter of 2011, due mainly to the aforementioned pass through under TCS's world-wide satellite systems contract. We expect about $30 million of pass-through revenue in Q3.

The quarter's $4 million gross profit from government systems was up 64% from the second quarter of 2011. We fully expect to capitalize on unfunded options over the next 12 months, especially on two major programs in SNAP in the Marine Corps wireless point-to-point link programs and we have a pipeline that includes hundreds of possible systems over the next two to three years.

Our Space & Component Technology division is engaged in the U.S. [program] in addition to revenue from Japan, China, South Korea, Brazil and Russia. TCS solid state drives are currently in active evaluation for more than 20 different programs covering a range of tank, aircraft, UAV systems' applications.

We continue to track over 30 major contract opportunities over the next five years, with multi-billion dollar contract ceiling value. Proposals for 13 of the 30 have been submitted, including prime contract bids for DHS Enterprise acquisition gate way for leading-edge solutions, or EAGLE II, custom SATCOM solutions or CS II and global tactical advanced communication systems and support services, or GTACS.

In addition to prime bids, nine subcontract opportunities are awaiting award. Based on the latest schedules, we expect that CS II will be awarded in the latter part of the current quarter and then EAGLE II and GTACS, will be awarded by the end of the year.

In June, TCS included for the first time for Washington Technology magazine's list of the top-100 government IT contractors in the United States. We intend to steadily climb the top 100 list as our sales pipeline is harvested.

Turning to commercial segment highlights, we generated $41 million in revenue from our location-based and messaging technology during the quarter, which yielded $22 million of gross profit.

Our safety and security group provides cellular E9-1-1, voice-over-IP E9-1-1 services and next-generation 9-1-1, or next-gen 9-1-1 to public safety entities across the country. Next generation 9-1-1enable delivery of data such as photos and videos in addition to location to public safety answering points at the time of a 9-1-1 call.

As I mentioned at the beginning of this call, the microDATA acquisition, expand TCS's next-gen 9-1-1 product suit and adds strong carrier channels, which include AT&T and CenturyLink, two of the three largest U.S. local exchange carriers in addition to Cincinnati bill, thus substantially enhancing TCS's prospects for leadership in this high growth market.

TCS's pre-microDATA next-gen 9-1-1 deployments are progressing on schedule. In late 2012, we expect the TCS deployment in Iowa to be the first state with next-gen 9-1-1 implementation in the nation.

The microDATA customer base includes multiple, additional state and local customers as well as a growing federal military presence. In wireless, E9-1-1, we continue to invest to enhance our voice-over-LTE deployments, cellular mobile alerts and our text-to-9-1-1 solutions.

In April, TCS was awarded a multi-year contract as Verizon Wireless is fully managed service provider for national wide SMS to 9-1-1, the first and only nationwide contract for service to-date. In Q2, our billable voice-over-IP, E9-1-1 subscriber count grew almost $400,000, and we signed a multi-year contract with voice-over-IP [provider].

Two major trends have emerged that are disrupting the wireless applications business. First, mobile device manufacturers over the top service providers and chipset companies have become a critical part of the application ecosystem by bundling four applications, such as messaging and location applications as part of their consumer and enterprise offering.

Second, carriers are focused on building their mobile broadband markets more than on their branded applications, which has allowed large access by subscribers to applications through channels other than carriers.

TCS is focusing a dedicated team on these new target customers in addition to carrier business. Our first victory is the sale of a bundled package of navigation and content with a top brand, global handset provider. This is a multi-million dollar, multi-year contract completed earlier this week.

The details of this contract will be communicated in conjunction with our new partner customer in addition or in accordance with their product announcement timetable. We expect at least one more such contract in the second half of 2012. These partnerships generally take time to close, but evolve into valuable long-term relationships.

In response to large navigation customers, in response to a large navigation customer's change in market change in marketing approach announced earlier in the quarter, we have made adjustments to resource deployments in spending as we continue to innovate.

We launched TCS navigation version 8, both the iPhone and Android platforms at the end of the second quarter. The new features in this release include integration of 3D models and landmarks during navigation routes. Visual and audible notifications for driving at over posted speed limits and streamline traffic announcements.

Our navigation solution has been adapted to multiple markets in Latin America, and is becoming deeply integrated with carrier networks. It was soft launch by Telefonica in Argentina in Q1 and in Mexico in Q2. Both countries have scheduled a full launch in Q3 with prominent placement on their websites, app store fronts and SMS campaigns.

In Q2 2012, TCS family locator continue to growth with the launch of a 30-day free trial pricing with the U.S. tier 1 customer. Early indication show a high conversion rate resulting in month-over-month subscriber growth. Promotional activities for Workforce Locator, including a 60-day free trial have also resulted in month-over-month subscriber growth.

Last month at the Telematics Detroit conference in Michigan, TCS has showcased innovative navigation, which included HTML 5, web navigation and all in the reality solutions. TCS's advanced navigation is a core component of the QNX CAR 2 platform, winner of CNET, best of Best of CES 2012 award in the Car Tech. category.

TCS is well positioned to partner with the automotive industry to provide a global solution. Continued consolidation in the LBS platform business in 2012, including the sale of an Openwave sale of its LBS assets has created opportunities to expand our customer base.

TCS has been able to transition several operators to TCS's hosted TV or positioning determining entity platform ensuring no service interruptions for their wireless subscribers. TCS also closed a multi-year agree with cricket communications for cloud based aggregation of location data.

We help carrier customer monetize their LBS assets by making location available on demand to third-parties across a wide variety of verticals while maintaining appropriate privacy protections. TCS technology is now broadcast CMS emergency alerts for national weather service.

Also, during the quarter, TCS three additional operators to our hosted customer base CMS. We continue to earn software customization and maintenance revenue from our text messaging license business and foresee continued wide use of text messaging service for 3G and 4G networks for years to come.

We are integrating our experience in government, secure communications and commercial wireless infrastructure to address that bring your own device trend. We currently offer secure location in messaging productions, which we positioned for government customers and through our commercial sales channels, including wireless network operators with widely recognized network security brands. We are address enhanced Multifactor Authentication and in-device encryption for delivery in 2013, and presenting our cyber security specialist for contract services. In

Q2, the company filed 21 U.S. patent applications, seven provisional U.S. applications and three foreign patent applications and was issued 19 new U.S. patents bringing the total now to 234 issue patents worldwide with more than 300 worldwide applications pending.

Evaluating the strength and the forcibility of each patent is tedious and time consuming, but our mining efforts are well underway. Augment our internal resources, we have contracted with several partners on arrangements involving specific patents and group of patent and we continue building new relationships with firms who have specific expertise in our technology areas with the objective of having multiple initiatives running simultaneously.

Current actions include, licensing, pursuit of patent, sales and enforcement initiatives as well as defense against claims.

In April, we engaged ThinkFire to work with TCS in the analysis is location based services intellectual property portfolio consisting of 81 issue U.S. patents and 135 pending U.S. patent application.

We have nearly completed all the LBS intellectual property to its associated TCS products. Posting of the IP to products maps to TCS's website for constructive notice under the 2011 America in VSAT, and identifying the highest value intellectual property monetization opportunities.

We have plans to do similar work for several other components of our intellectual property portfolio and our soliciting and reviewing offers from industry participants, and we now expect our arrangement announced last quarter for inter-carrier messaging IP to generate revenue beginning in 2013.

The company's portfolio is diverse, and we continue to partition it into appropriately sized subsets, around technologies and specific patent claims, so that we can pick the most advantageous combination of monetization partner.

Now, Tom will provide some updated color on our financial position and outlook.

Tom Brandt

The details of the second quarter results are included in the press release and maybe viewed in context by the model spreadsheet posted on the company's website.

At June 30, 2012, the company had about $95 million total liquidity, including $33 million of borrowing ability under our bank credit line and more than $61million of cash equivalents and marketable securities.

The July 6, amendment to our senior credit facilities added about another $5 million of liquidity after funding the $20 million initial payment from microDATA. The new credit facility has an effective interest rate about 0.5% lower than the prior term law, or 4% on our term debt.

With that financing GE Capital Bank and Silicon Valley Bank, and M&T Bank as lenders under TCS credit facility. Funds were generated by the company in the second quarter of 2012 from $8 million and 23 million decrease in working capital, while cash uses were $7 million of net principle payments on bank borrowings and lease payments, $7 million of capital expenditures, including software development and $4 million earn-out payment related to 2009, and then $3 million for cash interest and cash taxes.

The June 30, 2012, our funded backlog was $344 million, and we ended the quarter with $816 million of unfunded customer option. We expect to recognize about $238 million of the $304 million in backlog during the coming 12 months. Our methodology for computing backlog on our subscriber and other businesses as described in our press release in SEC filing.

During the quarter, we booked $126 million pre-tax impairment charge, $112 million after income-tax accounting. Writing down the long-lived and intangible associated with our 2009 of Networks In Motion.

Now, the company's borrowing covenants were affected by this non-cash charge. For 2012, we now expect total company revenue of between $475 million and $495 million, reflecting the incremental contributions from microDATA and based on current assumptions as to contract renewals and expansion.

We continue to expect significant government segment growth, some which will come from lower margin pass-through system sales in the third quarter. We currently see flat year-over-year commercial segment revenue.

Management has updated full year guidance for EBITDA in the range of $47 million to $51 million. The modeling non-cash charge just in 2012 should be about $35 million in addition to the $126 million second quarter impairment charge.

We expect cash interest, net of other and expense of about $7 million. Cash tax payments of about $1 million and an accounting non-cash tax benefit of about $12 million. We expect that adjusted net income for the full year 2012 will be in the $18 million to $23 million, or $0.32 to $0.39 using 50 million shares.

We expect full year 2012 investment in companywide capital expenditures, including capitalized software development to be between $27 million and $30 million. We're continuing to invest for next-gen 9-1-1 to secure applications and update the commercial application sold on a revenue share basis as well as other initiatives to enhance our deliverables for high growth market opportunities.

At this time, I'll turn the call the call back over to Maurice.

Maurice Tose

After all these details about our operations, I know that our investors want to know what is the company going to do about its stock price. Over the past 25 years, we have built the business that brings a unique cohort of skilled wireless technology professionals, cyber security specialists, C4ISR, wireless carrier relationships and proprietary intellectual property.

Our management team has evolved and matured. While we have run the business with divisions and segments leaders are increasingly collaboration to meet the needs the data operators in both, government and commercial markets.

We believe that these collaborations will produce incremental value. The company's investor relations materials, illustrate that some of the company's asset parts greatly exceed the market value of our capital. However, analysts have directed attention to debt maturing in 2014.

Management is very aware that our runway is finite and that our operational tactics must factor in our capital structure. Please be assured that we are doing so. TCS initiatives to reduce our dependence on wireless carriers to monetize our LBS application began many quarters ago and we responded to the April navigation deal change by adjusting our spending and intensifying these efforts.

We firmly believe, our scale and relationships among federal, public safety and commercial network operators constitute a unique business opportunity and we are committed to communicating and realizing the value of the business.

We thank you for your time and support. We'd now like to open the call to any questions. Operator?

Question-and-Answer Session


(Operator Instructions). Our first question comes from the line of Scott Sutherland with Wedbush Securities.

Scott Sutherland - Wedbush Securities

First, looking to your guidance, given that you've done $0.08 in the first of the year, can you talk about that dynamics? Obviously you had revenue growth and leverage, but what's going to drive the increase in the back half of the year for EPS guidance? Obviously you are returning to year-over-year growth. If you hit it, that'd be great.

Tom Brandt

Scott, it's fundamentally driven by the timing of deliveries under government contracts and contributions from the public safety business, and so modest enhancement in the other parts of the company, but we've got a good visibility, the vast majority what's in there now. We've also talked about how federal is back-end loaded. In this case, we know where the money is going to come from.

Scott Sutherland - Wedbush Securities

...gross margin profile the products in government in the back-half. I know the gross margins will be lumpy. Should we be seeing margin improvements in the gross margin?

Tom Brandt

I remember the big pass through slugger business effects for Q2 and Q3, so Q3 will look a lot more like Q2, Q4 should be closer to normal.

Scott Sutherland - Wedbush Securities

Looking at your cash, financial flexibility. I know you (Inaudible, Maurice? You look at M&A, is there something implies. Obviously, your past acquisition maybe customer investors are surprised given the tightness.

Maurice Tose

As we said, in doing acquisitions, we look at should cost and the alternative if we did not engage. The microDATA acquisition strengthens a part of the business that has recurring revenue and long-term contract deals with very high barriers to entry, as well as the microDATA acquisition brought with it two of the three largest legs in the U.S. legs in the U.S. and very robust pipeline and a very robust booking of business. To include, what's near and dear to us are longstanding relationship and understanding of the federal government, which again microDATA has through their channel partners relationships with, specifically beginning with the navy.

The microDATA was for us viewed as a very important one and once in which if we did not do, there are others that greatly desired to have microDATA as part of their business base, so the long-term yield or net from this, we believe is in fact well worth what we had to do to acquire it. The discussions we have with microDATA have been ongoing for some time. This was not something that had just come about.

Scott Sutherland - Wedbush Securities

Two more quick questions. First, Tom, if you include microDATA, there's slight edges up in revenue and EBITDA and thus down in the GPS is all microDATA related, so you to kept your guidance stale?

Maurice Tose

Not absolutely sure I understand the question.

Scott Sutherland - Wedbush Securities

The microDATA acquisition is that is a change in your guidance all related to microDATA?

Maurice Tose

It's certainly the dominant element.

Scott Sutherland - Wedbush Securities

The last question is, how you look at Networks In Motion and the navigation services. Is the best strategy to kind of shift, selling to the different types of players as others you might be looking strategically at that asset?

Maurice Tose

As I said in the remarks, our focused had been for some time, and looking at alternative over the top, strategic players, branded players and others that view location and navigation and API for third party developers etcetera that we view those as important to have. We began discussions long ago with folks that can give us access to the market that the carriers could not.

And in part as we announced the press release as I proceed with the call, we recently signed a deal with a global manufacturer to provide the depth and breadth of those resources to be part of what's embedded. Those discussions began more than two years ago, so it is a process that take time, but our strategy is to go to all of those players that desire those sets of applications and interfaces as part of their core architecture.

Scott Sutherland - Wedbush Securities

What's the profitability of the navigation services now?

Maurice Tose

We don't break it out, but it was less than it was, but it's making a contribution.


(Operator Instructions).

Our next question comes from the line of Shyam Patil with Raymond James. Please go ahead.

Unidentified Analyst

Hi. This is (Inaudible) filling in for Shyam. I just had two questions. The first one is, where you guys are at in terms of your patent monetization.

Tom Brandt

Well, Maurice included in his remarks some blow-by-blow as to the steps that are being lead our core focused professional who is branched out other partners to work with us on different subsets of the portfolio, so we certainly a sense of urgency to be able to deliver some dollar news, but work today has largely been focused on passing what we've got and picking the right partners to go after monetization in the right manner. Beyond what Maurice shared there isn't much more detail that I'm going to add.

Unidentified Analyst

All right. Then my second question is, what was the free cash flow for the quarter, excluding capitalized software?

Tom Brandt


Unidentified Analyst

We can take our EBITDA, overall CapEx. We don't really differentiate anymore between hard asset CapEx and capitalized software? You can call me back and I'll get you the breakdown.

Unidentified Analyst

Maybe I have one more question then, what are some of the key government contract that we should be focused on?

Bruce White

Government contract is focused on that we currently or ones that we are pursuing and something both of those…

Unidentified Analyst

The ones you are pursuing?

Bruce White

Again, as I caught in the prepared remarks there is CS II, Eagle II and Geatech. And, CS II again as I have previously stated we expected. There will be awards in the current quarter and the other two we expect by year's end.

We continue to receive monetization and further penetration into customer via our worldwide satellite system's contract and we believe that that will continue to be an important vehicle for us for a sometime to come yet.


(Operator Instructions). Our next question comes from the line of Mark Jordan with Noble Financial. Please go ahead.

Mark Jordan - Noble Financial

Have you released what your expected revenue for [data] is for the second half?

Tom Brandt

We didn't break it out, mark and you mentioned that your absolute revenues structure had been negatively impacted by some price compression. Do you have a sense of, has that pricing pressure run its course sort of the sequential growth trend that had been seen here to re-emerge.

Maurice Tose

Yes. One of the things before Tom answer that, we continue to give a little more color with question of Raymond James, another government to watch should have highlighted is our Geatech, which is a contract on which cyber security for the demand of defense. I think it was a five-year 50 million or there about procurement.

That's a very important contract for our reach into the federal government with I believe that training course is about 24 weeks long, so it's a very intensive training effort to train the next-generation of military cyber warriors. In addition to some smaller custom size classes there is a very structure training course but the students when completing college credit hours. Tom?

Tom Brandt

Yes. Mark to your question about pricing on government services. We had some adjustments that kicked in the fourth quarter of 2011, so the run rate of average margin that you see in the first quarter of this year is what we can expect for the balance of the year based on the mix.

Mark Jordan - Noble Financial

Could you talk a little bit about your market strategy obviously your next-generation 9-1-1 marketplace has high opportunity what incremental do you need to add, or are you going to depend heavily on your channel partners, AT&T, Century and Cincinnati Bell. It's quite friendly market. It's all the above.

Tom Brandt

In addition microDATA pre- microDATA we were primarily doing a direct sales strategy that wasn't either successful, so we will combine that with the other channels. As I mentioned, in fact microDATA through one of its channel partners has exposure into the Department of Defense, and places that are near and dear to us to be begin with the navy.

I guess most of our step-back may have not been as crisply articulated is what we've been saying here for a number of years. Maybe as many as 10 that ultimately the things we do for the commercial world will be wanted, desired, needed in our federal installed base and the federal government in general that the federal government is the largest enterprise on the planet. Again, I believe we started saying that about 10 years ago, and now it is starting to come to fruition.

In addition to our security products and enhancement, next-generation 9-1-1 is desired, needed within the federal government, so we bring depth and understanding of that customer having serve them for nearly 25 years.

Mark Jordan - Noble Financial

Okay. Final question for me. You mentioned that over the next couple of years the opportunity for sales of hundreds of trouble based units. Could you tell us sort of an average ASP of the total unit would be?

Tom Brandt

Mark, but right now. We got a competitor there, and we've got a not very happy competitor there that has pretty much owned this space and we are displacing them, and we are successfully displacing them.

Having already sold a good number of systems, at this juncture, we're in a pretty good position and it's probably Lip Sync ships and best that we reserve that for some time. Our systems have been in theater being tested side-by-side against the competitors, integrated with the competitors and we believe we are in a pretty good position. Again, we have a very, very robust pipeline of hundreds of systems that we are in pursuit of.

Mark Jordan - Noble Financial

Could you tell me what you think your competitors system sell-through?

Maurice Tose

I'll say it is significantly more. That's part of the value proposition is that ours is transportable, much easier set up, maintained, throughput, distance and a cost benefit that is meaningful.


Thank you. Our final question comes from the line of Mike Latimore with Northland Capital. Please go ahead.

Mike Latimore - Northland Capital

Could you give us just a rough percent growth rate for your 9-1-1 business today? Kind of the organic growth you've been seeing in the last quarter too?

Tom Brandt

I guess overall in the mid-single digits year-over-year percentage growth.

Mike Latimore - Northland Capital

Great. Then the microDATA acquisition. Are you going to run that revenue through service or assistance.

Tom Brandt

It's going to be a mix, Mike, because there's non-recurring business and SEC caused this doubt customer premise equipment, deployment opportunities and the initial engineering and installation of ESInet component, so it's a mix and it's not going to be the same every quarter, which is one of those this. That's best answer I can give you.

Mike Latimore - Northland Capital

I think you said earlier, but what is the interest rate you are paying on the new debt?

Tom Brandt

4% based on the current formula for the term loan.


Thank you. There are no further questions in the queue. I would now like to turn the conference back over to our host for closing remarks.

Maurice Tose

This concludes our second quarter 2012 investor call, and we look forward to speaking with you again to discuss our third quarter 2012 results.


Ladies and gentlemen, that concludes the TeleCommunication Systems, Inc second quarter of 2012 earnings conference call. We'd like to thank you for your participation. You may now disconnect.

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