ENGlobal Corporation Q1 2008 Earnings Call Transcript

| About: ENGlobal Corporation (ENG)
This article is now exclusive for PRO subscribers.

ENGlobal Corporation (NASDAQ:ENG) Q1 2008 Earnings Call May 5, 2008 11:00 AM ET

Executives

Natalie Hairston - Vice President, Investor Relations & Chief Governance Officer

William A. Coskey - Chairman of the Board & Chief Executive Officer

Robert W. Raiford - Chief Financial Officer & Treasurer

Analysts

Richard Wesolowski – Sidoti & Company

Craig Bell – Sanders Morris Harris

Richard C. Nelson - Jesup & Lamont

JD Paget - Boston Company

Megan Bissell – ASG Partners

Operator

Greetings and welcome to the ENGlobal Corporation first quarter 2008 earnings results conference call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Natalie Hairston, Vice President, Investor Relations and Chief Governance Officer for ENGlobal Corporation. Thank you Ms. Hairston, you may now begin.

Natalie Hairston

Thank you operator. Good morning everyone and thank you for joining us today. With me on the call are Bill Coskey, Chairman and Chief Executive Officer of ENGlobal and Bob Raiford, Chief Financial Officer and Treasurer. In a moment I will turn the call over to Bill Coskey who will highlight management’s perspective on our financial results for the quarter ended March 31, 2008. Bob Raiford will then review other financial points of interests for the quarter and in particular there are topics that relate to our balance sheet and cash flow.

Before we begin, I would like to remind everyone that some of the information discussed on this call would contain forward-looking statements that involve risks and uncertainty. These statements are based on current expectations. Actual results may differ materially from those set forth in such statements. Additional information concerning factors that may cause actual results to differ is contained in the Risk Factor section of our previously filed Form 10-K and 10-Q. All of those filings are available on the Inventor Relations page of ENGlobal’s website at in englobal.com. Our filings with the SEC are also available on the SEC’s website at sec.gov.

In addition, non-GAAP measures maybe referenced during this conference call. EBITDA is provided for informational purposes only and is not a measure of financial performance under GAAP. EBITDA does not represent and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure for determining operating performance or liquidity calculated in accordance with GAAP.

After our opening remarks we will have a question-and-answer session. In order to give as many callers as possible the chance to ask a question, please limit yourself to one question and then one follow-up if necessary and now I would like to introduce our Chairman and Chief Executive Officer, Mr. Coskey. Go ahead Bill.

William Coskey

Thank you Natalie and good morning everyone. On behalf of ENGlobal’s management I am proud to have this opportunity to discuss our solid start to 2008 and also decide that our company has made good progress for meeting the goals we previously established for this year.

Now let me briefly review those financial goals. First, our expectations for organic revenue growth is in the 15% range. Second, we have generically said that we would like to see net income growing around twice that fast, which implies the target for earnings growth of approximately 30% and finally, over the last several years ENGlobal has been successful at increasing operating margins and the company has stated a goal of reaching the 8% operating margin level for this full year.

As a matter of housekeeping and unless stated otherwise the financial comparison made today will be to compare the first quarter of 2008 to those from the first quarter of 2007. Let's start with a review of earnings. The $0.15 in quarterly diluted earnings reported this morning compares favorably to $0.12 from last year. Also the fact that our net income for the quarter increased 27% to approximately $4 million means that we are roughly inline with our earnings growth target for the full year.

Another encouraging trend is when we made our $0.15. What we saw it was steady maximum profit improvement during the first quarter. It isn’t that unusual for our first and last quarters of the year to be a little slower than what we see during the middle of the year.

The start to 2008 certainly served as a good example, because we produced about 20% of our total earnings for the quarter in January, about 35% in February and about 45% in March. I’m not necessarily projecting a continuation of this upward trend in the future months; only that our company typically performs on small to mid-sized projects and also knows the lag at the beginning of each year.

Our EBITDA for this quarter was $8.2 million, which compares to $6.6 million last year and to $27.8 million for the full year of 2007. We also had non-cash stock compensation expense for this quarter of $387,000 which compares to $233,000 last year. Return to the top line results, the company exceeded its target in the first quarter, growing revenue 20% to a record of $98 million and it is important to note that all of the traditional revenue can be attributed to non-acquisitions related activities. We have several other metrics and measure activity in our business, one of these is Bi-weekly billable hours, which increased on average from 174,000 to 208,000 which not surprisingly matched our revenue growth of 20%.

Another plus is that we added a 150 people to our staff in the first quarter and we are now at 2,600 strong. This statistic was some what surprising because in the last call I had projected to increase our staff by 200 to 250 for the full year, but we have largely come a long way in this regard and hopefully we will figure that my original projection is too conservative. Utilization of our personnel resources continues to be strong and is slightly above the 90% level inclusive of overhead personnel and this is an approximate level that we have maintained since 2004.

The fact with our consolidated gross profit margin was down deserves some discussion. On a consolidated basis there was 14.7% this quarter, down from 16.3% last year and also lower than our gross profit margin of 15.9% for the full-year 2007. We did reallocate $300,000 of SG&A expense above the line into direct cost, which negatively impacted gross profit margin by about two-tenths of a percentage point. So, this really didn’t move the needle that much. The primary reason for the decrease in gross profit margin was related to a shift in our revenue mix quarter-over-quarter mainly as a result of lower margin Inspection revenue in our Construction group that more than doubled.

Regarding SG&A expense it decreased 2.2 percentage points to 7.3% this quarter, from 9.5% in the prior year period. The company’s SG&A expense for the first quarter of 2008 was $7.2 million a decrease of more than $500,000 in the first quarter of 2007. As I have said previously around $300,000 of this decrease was due to our reallocation into direct costs. I would like to reiterate that ENGlobal’s philosophy is to manage our ongoing SG&A expense exclusive of any acquisitions and absolute dollar terms, as opposed to managing such overhead as a percentage of revenue and our target here for SG&A extends to $30 million per year or $7.5 million per quarter.

ENGlobal’s consolidated operating margins for the full year 2007 was 6.3% and I am proud to report that our operating margin for the first quarter of this year increased to 7.4%, but the obvious question is how is ENGlobal going to continue to raise profit margins going forward? As you probably know we have reported detailed financial information on four operating segments; engineering, construction, automation and Land and expect to release our 10-Q with detailed segment information in the next couple of days.

Our Engineering business, which is 53% of our consolidated revenue, continues to be by far our biggest profit maker and increased its operating profitability by over 2 percentage points this quarter compared to last year. Conversely, our other three businesses that represent the balance of our revenue and that are investing more in growth, like anywhere between 8 to 12 percentage points behind engineering and operating profitability.

There was a long discussion that could be had about each business, mostly with reason I could give for optimism based on recent project awards, but the mission is very clear; much of the company’s incremental success going forward will depend on raising the profitability of its three non-engineering businesses. I actually consider it somewhat of a positive from global that we had a good quarter and still have so much room for improvement.

Speaking of internal growth, I am proud to say that the company has landed five new significant projects this quarter, with each operating segment being the lead and landing at least one of these. Without going into a lot of specifics these words have come from three refiners, one petrochemical operator and one pipeline operator. Without a doubt, the most exciting thing I see in our company currently of the spirit of co-operation and cross selling amongst our four groups.

In simple terms amidst of the new work, we are now landing more than one of our four businesses will be working together. Regarding the South Louisiana Ethanol project that was terminated late last year, this quarter we have had numerous conversations with the owners and also their lender as through efforts being undertaken to complete the project. Activity is good regarding potential offset agreement and equity partners.

We at ENGlobal have introduced potential equity partners to the owner’s and will await the outcome of those discussions for a few more weeks before taking legal action in order to recoup the amount through your own. In terms of external growth it is my goal to add about 10% acquisition growth through our business over the next year, which means around $40 million in incremental revenue. If we can achieve this level of external growth and meet our internal target then overall ENGlobal would be about a 25% lower.

These acquisitions will most likely come in two or three separate transactions and it is expected that each would be accretive and increase our margins. We have already reached an agreement in principle with the first of these; a $10 million automation related professional services firm, which we hope to be able to close in the second quarter.

Thank you for your time this morning. I will now turn the call over to Bob Raiford, our CFO. Bob?

Robert Raiford

Thanks Bill. Good morning everyone. A lot of these specific details of our first quarter results were disclosed in our press release this morning, but I would like to highlight some selected items as Bill noted. Unless, otherwise stated the financial comparisons all will make would be to compare first quarter 2008 results to those of first quarter 2007. Operations generated approximately $400,000 in net cash during the first quarter compared with net cash used for operation of $4.9 million during the same period in 2007.

An unfavorable change in working capital during the periods, negatively impacted cash flows from operating activities. The primary impacts were the results of an increase in trade receivables, in particular the timing and processing unbilled receivables as a result of our growth and activity with new plans and a decrease in accounts payable primarily due to approximately $2 million in scheduled vendor and subcontractor payments related to the ethanol project terminated at the end the third quarter of 2007.

An additional $2 million in similar payments related to the ethanol projects are scheduled to be made during the second quarter, which we expect will fully satisfy our current cash commitments to that project. Long-term debt, net of current portion increased 5.5%, approximately $1.6 million from $29.3 million as of December 31, 2007 to $30.9 million at the end of the first quarter this year. However, as percentage of stockholders equities, long-term debt decreased to 51.3% from 52.5% for the same days.

The increase in long-term debt was primarily related to a $1.9 million increase, in our line of credit supporting our growth and the timing difference between meeting short-term, what I would say favorable obligations and collections of associated trade receivables. Total liquidity, which includes cash plus availability under our credit facility, was $22.1 million and $22.8 million for the first quarter 2008 and 2007 respectively. The outstanding balance of our $50 million amount of credit at the end of the first quarter was $29.7 million with the remaining borrowings available of $20.1 million.

We have one outstanding letter of credit issued in November of 2007 for $247,000 to cover deductibles under our interest policy period expiring September 30, 2008. Our average day sales outstanding was 62 days for the first quarter compared to 71 days for the comparable three months period in 2007 and 61 days for the 12 months period ended December 31, 2007. Our targeted goal -- our targeted DSO days remains in the mid 50’s and we believe this targeted goal is still achievable.

We have invested approximately $445,000 in capital assets during the first quarter compared to the prior year quarter investment of approximately $574,000. We do not expect immaterial change in the level of capital investment during each of the remaining quarters of the year. Our effective tax rate for the first quarter was 39.9% compared to the rate of 36.6% during the first quarter of last year and a rate 39.7% for the year ended December 31, 2007.

The tax provision increased by approximately $220,000 during the first quarter of 2008 compared to a similar provision of last year’s first quarter tax rate. The current estimated tax rate for 2008, annualizing the impact of both Federal and our current State tax mix fueled the average of approximately 40%.

Thank you for your time this morning. I will now return the call over to the Operator.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question this morning is coming from the line of Rich Wesolowski with Sidoti & Co. Please, proceed with your questions, sir.

Richard Wesolowski – Sidoti & Company

The headcount was very reassuring; can you contrast the increase that you had in the first quarter with the flattish type numbers that we’ve seen in the second half of ’07. Was this the renewed effort? Was it just the chance of employees that were available? Was it tied to your backlog and when work was available etc?

William Coskey

I think it’s mostly -- I think it’s two times. I think it’s the terminated ethanol project we saw a little decrease in headcount coming after that late last year and its monthly just staffing to meet our increased backlog going into 2008 and again a lot of this increase in personnel came from our pipeline inspection Rick, which is within our construction group -- construction business and so that’s where a lot of the people were added.

Richard Wesolowski – Sidoti & Co.

Are you adding any engineers?

William Coskey

Yes, we are. In fact I can tell you that all of our four groups are in a hiring mode; we are adding engineers and I think we will continue to see an increase in the staffing throughout the year, I just can really project. I would sense 200 or 250 for the full-year and hope I am conservative.

Richard Wesolowski – Sidoti & Co.

Okay. How much -- you mentioned that inspection revenue was up over a 100%; how much was the inspection revenue in the quarter?

William Coskey

About $26 million, $27 million.

Richard Wesolowski – Sidoti & Co.

For the quarter?

William Coskey

It was about 13 I guess, it doubled I think.

Richard Wesolowski – Sidoti & Co.

So, it is 13 in the March ‘08 quarter?

William Coskey

Yes.

Richard Wesolowski – Sidoti & Co.

Okay. Inspection business has always been quoted as a stable mid-teens type of gross margins, so I’m a little confused as to why a revenue mix heavily weighted towards inspection -- even if it was a 100% inspection would take the construction gross margin down to 8% or so?

William Coskey

In terms of gross margin -- in terms it’s probably lower than mid-teens. I think it’s probably in the low-teens and that’s just -- it is what it is and we are going to do everything we can to get the margins up there but right now we’re probably in the low-teens for that.

Richard Wesolowski – Sidoti & Co.

Okay, so I would imagine that the other half of the construction business has margins that are -- there must be a good deal below that to get the margin to where that was in the March quarter, absent a one time project effects or anything that we’re not seeing?

William Coskey

Well Rich, we have two halves to our construction business. We have a group that manages capital projects and manages turnaround and that’s the higher margin side and then we have the inspection side which has been the lower margin side and Bob could you report any gross margins figures for each of those or.

Robert Raiford

I would say our Inspection group is probably in the 5% to 6% range.

Richard Wesolowski – Sidoti & Co.

Inspection gets 5% to 6% margin?

Robert Raiford

Yes.

Richard Wesolowski – Sidoti & Co.

Okay. That makes a check out; and finally are you willing to say how much you pay even in the approximate terms for the agreement principle for $10 million in automation revenue?

William Coskey

How much revenue will…

Richard Wesolowski – Sidoti & Co.

No, how much are you buying the company for?

William Coskey

No, what we can tell you that in the past we have said we don’t pay our wages multiples and are limited by about five timings trailing EBITDA and smaller firm -- larger firms go for higher multiples and the smaller firms really contemplate my end to go for -- we feel like we can afford a top five times trailing EBITDA range.

Richard Wesolowski – Sidoti & Co.

Would you think that you’d need to either expand the credit facility or issue any equity to add the $40 million in incremental revenue in the next year?

William Coskey

I don’t think so, no. I don’t -- the way we would accomplish it, I will think not.

Richard Wesolowski – Sidoti & Co.

Great. Thank you.

Robert Raiford

Hey, Rich.

Richard Wesolowski – Sidoti & Co.

Yes.

Robert Raiford

Before I let you go, I guess want to clear up the question on the inspection revenue. I guess the $13 million was I guess the change quarter-to-quarter and our expectation for the first quarter did a well over $23 million.

Richard Wesolowski – Sidoti & Co.

So, the construction segment is basically inspection. I mean as it was -- you did $26 million in revenue, and if $23 million of it was inspection that’s the lion’s share?

Robert Raiford

That’s correct.

Richard Wesolowski – Sidoti & Co.

Okay, great. Thank you.

William Coskey

For the balance of the year we expect to the project management part to grow then, based on recent projects we have launched.

Operator

Our next question is coming from the line of Craig Bell with Sanders Morris Harris. Please proceed with your question.

Craig Bell – Sanders Morris Harris

Yes. Good morning. Just had a couple of questions for you in terms of some of the segment revenue, specifically looking at engineering, it certainly had nice profitability in the quarter, but in terms of growth compared to the first quarter of last year it was pretty subdues; just wondering is there anything going on there that I should be concerned about or just why was that growth level so low compared to the other segments?

William Coskey

I think to some extend in our Engineering Group the limited available of resource, but I can tell you we just started an internal initiative in Denver to start an operation there and the -- our key portion which I think can really jump start that operation for us in Denver, so we would look to that to provide some growth and we have always said we would like to have engineering operations on the West Coast and in the North East and then in the Midwest, those would probably come through acquisition, but I think this internal initiative in Denver will provide some growth, but really I am seeing our engineer group to be a slower growth operation but they have done a good job in improving margins. Really the other three groups we expect to be faster growers.

Craig Bell – Sanders Morris Harris

Okay and then going back to the inspection revenue in the quarter what kind of your outlook for the remainder of the year they’re in terms of growth. I mean are we going to -- do you think that you are going to continue to see very high levels of growth as we progress through the year or is that something that you are going to -- things are going to slow down?

William Coskey

I expect it to slow down. In the construction group, like I said I expect our growth to come from the higher margin project management side, in construction management side and I think further gains in the inspections side from here will be limited.

Craig Bell – Sanders Morris Harris

Okay and then last question for you on your utilization rate; you are reporting that at 92%. That kind of seems like it’s really pushing the boundaries of how high you could get it. I mean that -- it seems that you indicate that you guys must be just running full speed right now. Is that an accurate assessment?

William Coskey

Well we have got a big focus on the utilization keeping our variable overhead low and I think we have always been honest with people in saying there is not too many gains from here in improving utilization to higher levels. I think we are running in about full speed.

Operator

Our next question is coming from the line of Rich Nelson, with Jesup & Lamont. Please proceed with your question.

Richard C. Nelson - Jesup & Lamont

Most of my questions have been answered. I do have one or two small items. I noticed at your interest expense came down a fair amount, is that due to the fed really rationing down short-term rates?

Robert Raiford

Yeah primary to the reduction in rates. We have seen a little bit of -- a little bit of reduction in our average outstanding; our line of credit, but primarily it’s due to the rate reduction.

Richard C. Nelson - Jesup & Lamont

Okay and looking at your deprecation rate, I’m estimating about $1.1 million for the quarter; is that about right?

William Coskey

Yes.

Operator

Our next question is coming from the line of JD Paget, with Boston Company. Please proceed with your question.

JD Paget - Boston Company

Yeah. Hi, guys; just wanted to clarify one thing that Rich was asking about. Within the construction, the inspection business I’m a little confused there. It sounds like the margin right now is a little bit lower and overtime you’d expect that to be double-digits is that right?

William Coskey

I think its a little low right now. We are going to take action to rise the margin level of that inspection business and if they are a construction it is a big percentage of that group. Remember the results from a company we bought back in I think like 2004 called Stephen Inspection Company and when we bought them they had about 130 or a 140 pipeline inspectors out in the field and I haven’t really heard in the last week or two, but lately we have had maybe 600 or more inspectors on the field. So that’s in fact along the growth in pipeline and construction activity that group is really growing but we need to look for a way to improve margins in that group and that’s something that will be a focus for us.

JD Paget - The Boston Company

So your hope is that that could be a team type gross margin for you?

William Coskey

Well, I think it needs to be. I think it’s about minimum acceptable.

JD Paget - The Boston Company

What do you think it takes to get there?

William Coskey

I think it’s passing on more cost to the plant, so giving plants to understand the nature of the market place and our cost structure and costs more to hire good people and we just need to pass that through.

JD Paget - The Boston Company

And is that -- have margins always been in that range? Or have they come down recently as maybe costs have escalated and you haven’t pushed this hard to price through?

Robert Raiford

I think you are right. I think, margins have been historically higher, but some of the -- increase the cost and employee cost and the current expenses of -- and were in the process I guess trying to renegotiate those rates in pass those on to the customers.

JD Paget - The Boston Company

Okay.

William Coskey

We see a little bit of the same thing in our land group. We’d lost maybe 2 percentage points of profit margin there over the last year just incurring higher cost and having quite got around in passing those through the customers yet and so we just to need to attend to that?

JD Paget - The Boston Company

Okay and just the whole of pipeline from Alaska; when do you think some of that work gets put out a bit; some of the front end of that?

William Coskey

I wish I can answer that JD; I don’t know. I can develop that and get back to you but I don’t have any time table for the…

Operator

Our next question is coming from the line of Megan Bissell with ASG Partners. Please proceed with you question.

Megan Bissell – ASG Partners

I wanted to just -- last quarter you guys offered us greater transparency with this revenue and operating income for the four divisions and obviously we welcome that transparency, but here we are just six weeks later and now you are giving us a gross profit margin percentage rather than EBIT. Can you just kind of walk us through the thought process driving that change? I mean what -- why change it up and what’s happened over the last six weeks to more of that?

William Coskey

I guess. Can you repeat your question? I guess I am not sure I am following you Megan.

Megan Bissell – ASG Partners

Okay in the last -- in the fourth quarter earnings press release you gave us revenue and EBIT or Operating income for each of the four division right and this quarter you are giving us a gross profit margin percentage rather than that operating income or EBIT number? And so you are kind of shifting up what data you’re actually giving us besides the revenues; what profitability metrics you are giving us and I am trying to understand why the shift from giving us EBIT to giving us a gross profit margin?

Robert Raiford

The information will be in our 10Q. yeah, I guess it will be in our Q while we looked at in the earnings release. I’m, not sure, I guess I am just trying to see what the markets looking for. I guess that’s something we can probably change as a feature to include that.

Megan Bissell – ASG Partners

It makes it difficult for us to kind of look over where our expectations where when we are getting different numbers in the press releases each time, that’s the only problem. Bill in the press release and I think you answered this sort of in the beginning, but you can just highlight a little bit more. You mentioned that the results deliver on most of the goals that you’ve established for ’08 and that bags the question what goals are still to be met. Obviously the operating income margin at 8% one of them, but what else has to still to be met?

Robert Raiford

No, that’s the primary one. I would say when we used the word most because we hadn’t quite got enough of that 8% level that we still target.

Megan Bissell – ASG Partners

Okay

William Coskey

That’s it. We would like to get this 10% of acquisition growth over the next year and that’s something we have yet -- there’s all something yet to do and those are the two things we have to do.

Operator

Our next question is a follow up from the line of Craig Bell. Please proceed with your question sir.

Craig Bell – Sanders Morris Harris

Yes, I had a question on what kind of your -- what’s the environment for billing rates. Are you still seeing the trend upwards in that area?

William Coskey

I don’t think we are seeing quite as rapid a trend up as we did maybe last year throughout the first. Throughout the last year I think maybe we’ve reached a level it might kind of be considered a comfort zone and I think to further engage here will be harder.

Craig Bell – Sanders Morris Harris

Okay.

William Coskey

I think we have already come a long way on our billing rate structure as evidence by the two point gain in our engineering group, so that’s just my observation.

Craig Bell – Sanders Morris Harris

Alright.

Robert Raiford

Craig - Craig you asked earlier; I guess talking about the inspection group and the land group that Bill alluded to on the cost side, those are pretty much the day rates and fixed bill rates as opposed to cost reimbursable on billings that we have in our engineering groups to…

Craig Bell – Sanders Morris Harris

Okay.

Robert Raiford

I mean those are locked in over contract. It takes a while to go back and renegotiate those day rates and fixed bill rates.

Craig Bell – Sanders Morris Harris

Right.

William Coskey

In fact what you’re asking, right now our averaged multiplier is in the company, average effective multiplier is at probably at 1.9, maybe a little higher and so you’re asking can we take it as 2.0 or 2.1 and I think the answer is yes, I don’t think those gains are going to be harder than most you have today.

Craig Bell – Sanders Morris Harris

Okay and then lastly and you mentioned this in the press releases and then in your prepared remarks on the steady months-to-month improved that you saw in Q1; have you seen the similar kind of improvements so far hear in Q2?

Robert Raiford

I would -- our hope would be that we could probably maintain the March level of our business and we kind of run it for a while with the level of performance we saw in March, but we are seeing continued good performance this quarter, yes.

Craig Bell – Sanders Morris Harris

Okay.

William Coskey

About like we saw late in the first quarter; that’s a good way too.

Operator

Our next question is also follow-up on line of Rich Wesolowski with Sidoti & Company.

Rich Wesolowki - Sidoti & Company

My follow-up is answered. Thanks a lot.

Operator

(Operator Instructions) Gentlemen there are no further questions at this time, I would like to turn the floor back over to you for closing comments.

Natalie Hairston

Thank you Operator. Hello again everyone. I'll be able to answer any follow-up questions this afternoon or you can always e-mail me directly at ir@englobal.com. Thank you for being on the call today and thank you as always for your continued support of ENGlobal.

Operator

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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!