Dassault Systemes' CEO Discusses Q2 2012 Results (Afternoon Call) - Earnings Call Transcript

| About: Dassault Systemes (DASTY)
This article is now exclusive for PRO subscribers.

Dassault Systemes S.A. (OTCPK:DASTY) Q2 2012 Earnings Call July 26, 2012 9:00 AM ET

Executives

François Bordonado – IR

Bernard Charlès – President and CEO

Thibault de Tersant – SVP and CFO

Analysts

Josep Bori – BNP Paribas

Jack Hazman

Michael Briest – UBS

Operator

Thank you for standing by and welcome to the Dassault Systemes 2012 second quarter financial results call. At this time our participants are in a listen-only mode. A short overview will be given followed by a question-and-answer session.

(Operator Instructions)

I must advice you that this conference is being recorded today. I would now like to hand the conference over to Francois-Jose Bordonado, Investor Relations. Please go ahead.

Francois-Jose Bordonado

Thank you. Thank you for joining Bernard Charles, CEO and Thibault de Tersant, CFO, for our 2012 second quarter conference call. We held our presentation in Paris earlier today and have placed the presentation on our website.

Two brief reminders. First, Dassault Systemes financial results are prepared in accordance with IFRS. We have provided supplemental non-IFRS financial information, which is explained in the IFRS and non-IFRS reconciliation table included in our earnings press release. And second, some of the comments we will make on this call will contain forward-looking statements which could differ materially from actual results. Please refer to our risk factors in today’s press release and in our 2011 Document de reference.

Let me turn the call over to Bernard Charles.

Bernard Charles

Thank you for joining us here on the webcast held earlier in Paris. As you read from our earnings release, the second quarter had a very good business dynamic. We saw it across all our major brands, regionally within our difference sales channels and by the diversity of industries.

Today I would like to discuss our performance, share with you some of the dynamics of our brands and wins, provide some color behind our advertising campaign for Dassault Systemes the 3DEXPERIENCE company and underscore the opportunities we see arising from the acquisition of Gemcom and our new, 12th industry, natural resources. So, let me begin.

Dassault Systemes delivered a strong quarter of growth. We expanded our customer relationships and entered into new ones leading to software revenue growth of 11% in constant currencies. Our investment in growing our sales channels capacity, particularly in indirect sales, are delivering results. Moreover, we are deepening our industry expertise in all our sales channels. This will bring significant additional value to us over time with the industry solution orientation we have taken.

Improving the management of our businesses and efficiency of our organization has enabled us to translate the revenue growth into operating leverage resulting in an increase in our operating margin of 120 basis points. In combination, we were able to grow our earnings per share by 19%. Importantly, while delivering growth I believe, we have also strengthened our resiliency.

Since unveiling our 3DEXPERIENCE strategy on February 9, 2012, I spent a good of time meeting with our customers and sales partners. I see a growing level of interest in our 3DEXPERIENCE platform and I see growing enthusiasm among our sales partners as they perceive the potential value our industry solutions experiences can bring to customers.

We are supporting the launch of 3DEXPERIENCE with global events as well as with advertising, which you may have read or viewed. We advanced our dream of sustainable innovation for products, nature and life with the completion of the Gemcom acquisition in early July. We are now working with the natural resources industry under our new GEOVIA brand.

And finally, with our updated financial objectives for 2012, we are now approaching a new threshold of EUR2 billion in annual revenues. We reached the first billion in 2006 after 25 years. If we meet our objective this year, we will reach our second billion in 2012 after six years.

Looking at our results by product line, CATIA had a very good new business dynamic in the quarter with customers expanding their V5 usage, enriching their seed profile and role adopting the V6 portfolio at a number of large accounts progressively. The activity resulted in a double digit-digit new licenses revenue growth and double-digit growth in rental licensing.

SOLIDWORKS had a good quarter all around. Seed growth, new licenses revenue and recurring revenue. SOLIDWORKS has grown its channel capacity during the year to keep up with the opportunity in front of it, moving the world to 3D. So we are well positioned in the 3D modeling quadrant.

Moving the compass to virtual and reality, our simulation software SIMULIA, had the best results in our major brands. SIMULIA had a very good quarter performing well in all geographic regions thanks to its finite element analysis and multi-physics capabilities. It also made nice progress in the quarter with its simulation lifecycle management software application set, the SLM applications.

One SIMULIA customer example is Honda, who is using SIMULIA for optimizing in early design phases, nonlinear simulations, vibration noise and design iteration automation.

ENOVIA is the key driver key driver of our industry diversification. We had a number of wins this quarter, with revenue ramps in the future periods. It also had a nice increase in rental activity. During the quarter we had a number of new V6 transactions with companies in aerospace and defense, high tech, energy, life sciences, consumer packaged goods and retail industry.

We also had repeated business with V6 customers including Renault, Jaguar Land Rover, Alstom, LG Electronics among others. V6 represented about 19% of the PLM new licenses revenue in the second quarter. In addition, a good portion of service revenue is V6 related. As you know, V6 is the architecture of the 3DEXPERIENCE platform introduction.

In our presentation on our website, I encourage you to look at the examples of our V6 work with companies such as Snecma of the Safran group selecting DELMIA V6 applications on top of the 3DEXPERIENCE platform on Fujitsu Network Communication selection selecting ENOVIA V6 applications, again using the same common platform.

We had a very nice multi-brand win in Korea this quarter with Posco, the leading steel producer in that country who selected the V6 architecture and platform, if you know the application DELMIA, SIMULIA and 3DVIA applications. Posco sees the benefits of 3DEXPERIENCE platform to support their growth strategy and accelerate the development of new plants while using less resources on being more respectful of the environment.

In the second quarter we launched a global corporate advertising campaign, something we have really never done before. But we think now it’s the right time to support our new strategy, to support our ambitious growth plan and to support our face channel as we work with more industry than at any moment in our history. We want companies and prospective partners to know who we are, the 3DEXPERIENCE company and why we believe asking if we is so vital for innovation in every industry.

As we have discussed, one of the three elements of our dream is sustainable innovation for nature to able to model and simulate the planet by mastering geophysics. We are beginning our effort around nature with the creation of a new brand GEOVIA with the acquisition of Gemcom, the leader – the global leader in mining industry software solutions. And with our decision to target the new industry, natural resources comprising the mining sector as well as water supply, oil and gas and other related sectors. So there is a new opportunity for growth for GEOVIA.

First, in Gemcom’s current industry focus of mining. Second, in expansion to these other sectors of the natural resources industry and third, in the value of modeling and simulation of nature in connection with our existing core industries.

With respect to Gemcom’s team, it is really an amazing feat. We have been working together for a relatively short period of time and yet everyone understands each other so well. So welcome to Rick, Rick Moignard who is now heading up GEOVIA and to all the talented teams from Gemcom around the world whom I visited recently in Australia.

Let me turn the call now to Thibault.

Thibault de Tersant

Good afternoon and good morning to all. My comments today are based upon our non-IFRS financial results. In our press release tables you can find the reconciliation of our non-IFRS to IFRS data. For revenue, the IFRS and non-IFRS figures are essentially identical for the 2012 and 2011 second quarter and first half. As a reminder, revenue growth rates are stated in constant currencies.

We had a very good second quarter of new business activity across our four largest brands, SIMULIA, CATIA, ENOVIA and SOLIDWORKS. New business came from a number of industries including aerospace, energy, hi-tech, industrial equipment, life sciences and transportation and mobility. Excluding currency effects, sales in the quarter came in about EUR8 million higher than our expectations. The outperformance came from recurring revenue.

While the details of the second quarter are not identical compared to the first quarter, the revenue growth rates are – for the second quarter, software revenue was at 11% compared to 10% for the first half and total revenue increased 10% for both periods. And the growth is all organic. Double digit, top line growth in the second quarter translated into double-digit earnings per share growth, with non-IFRS EPS higher by 19%.

Turning to our outlook, in large measure, the revenue changes related to perimeter expansion as we add Gemcom and divest a business partner activity and to currency to reflect exchange rate evolutions. The smallest portion relates to a revenue upgrade. As I think, we have been accurate in our assessment of customer activity.

Now let me share a few details. The best feel for new business activity in the quarter is reflected in new licenses, revenue growth of 9% in combination with rental revenue growth of over 20%. Just a reminder again that all revenue related growth figures are in constant currency. We had strong recurring revenue results this quarter with recurring revenue higher by 11%, driven by rental licensing with CATIA, ENOVIA and SIMULIA. In addition, about three points of the recurring revenue growth related to maintenance renewal activity from the first quarter for which the purchased orders were processed in the second quarter.

So a portion of the recurring revenue would not be carried forward. Maintenance renewals remained very healthy and in fact, among the highest that I recall. Turning to regional review, our strongest performance came from Europe thanks to broad-based strength across brands and a good dynamic in a number of regional markets within Europe including our largest Germany, well supported by Nordics and France among others.

In Asia, we saw a continued good growth in Korea and improvement in Japan. Activity was also good in a number of other regional markets. In China, growth rate moderated in comparison to the first quarter reflecting some seasonality. And in India there was a slowdown, which may be related to a broader economic issue.

In the Americas, professional sales channel reserves were solid and results in our value solutions channel are improving. In total, recurring revenue growth was in line. New licensing activity was lower than anticipated reflecting sales cycle extensions with some of our direct customers. There may be some deals postponed due to less confidence in the macro environment. We will have to see. We are working to capture the large opportunity we see in the America.

Services growth moderated from first quarter growth rate of 11% to 6% as we completed some projects and as other V6 engagements move ahead, but we are not yet at the recognition gate. We saw an improvement in our gross margin to 5.1% compared to a negative1.2% in the first quarter. And the service margin this quarter represents a significant progression compared to the year ago period of course.

Looking at operating expenses, excluding currency effects and the advertising campaign which commenced in the second quarter, the increase in operating expenses largely tracked average headcount growth, which was higher by 4.5% in comparison to the year-ago period. As I gave the heads up, last quarter we have about a EUR14 million increase in marketing and sales related to our global advertising campaign around 3DEXPERIENCE in the second quarter.

As I will review when we get to our financial objectives, we have higher taxes in 2012 due to regulatory changes recently implemented affecting us at the operating expense line related to social charges and some local taxes, as well as at the income tax line.

Turning now to a review of our cash flow and evolution of our net financial position, let me share a few key points. Cash flow from operations was up 27% in the quarter to EUR188 million. We benefited principally from higher earnings and a very positive evolution of working capital of EUR77 million thanks to the work done on improving accounts receivable collections.

During the quarter, we repurchased shares for a total cost of EUR72 million and we paid cash dividends in the total amount of EUR87 million. Let me remind you that shareholders saw a 30% increase in the dividend level this year and 52% over the last two years. DSOs were at 77 days, seasonally lower than Q1 and similar to the year-ago period. Unearned revenue totaled EUR579 million, an increase of 18% since the start of the year.

Turning to our outlook for the year, first, we are increasing revenue to reflect EUR13 million of revenue improvement coming from the second quarter and also an improved view of the third quarter. Second, we are updating for currency. Third, we are adding Gemcom, following the completion of the acquisition in early July and we are reflecting the divestiture of Transcat, our business partner operations in Germany.

Gemcom’s contribution to revenue this year is expected to be above EUR35 million and for earnings, it should be accretive by about EUR0.06. With respect to earnings, we have an additional component and that is taxes. We anticipate a higher level of taxation, which is impacting us at two levels; operating expenses, with an increase in social charges and some local taxes and at the income tax level related to higher local taxes and income tax.

For the full year 2012, the change in tax policies impacts us by about EUR7 million. So looking at our third quarter, our revenue objective is for a growth of about 8% to 10% in constant currencies and earnings per share growth of 1% to 6%. Let me remind you that a portion of the recurring software revenue in the second quarter would not carry forward as it was essentially catch-up on first quarter maintenance renewals being processed for essentially 3 points.

For the full year, we are anticipating the following. Our revenue growth objective in constant currencies is now 8% to 9% increasing by one percentage point at the mid-point. From a reported revenue perspective, we are adding EUR80 million to revenue with EUR42 million of currency, EUR13 million for activity and a net of EUR25 million perimeter effect. So we move to a reported revenue range of essentially EUR2 billion or between EUR1.990 billion to EUR2.010 billion for 2012.

Based upon revenue and expense evolution, the non-IFRS operating margin should land near 31%. We are moving up our non-IFRS EPS objective by EUR0.10 to a range of EUR3.20 to EUR3.30. This represents 10% to 13% growth. We have a bridge in our presentation but let me summarize briefly. The EPs benefits total EUR0.15 with about EUR0.09 from currency, EUR0.01 from higher activity, EUR0.05 of perimeter, net and then we take away EUR0.05 for changing tax requirements.

Our updated view of the non-IFRS effective tax rate for 2012 is about 34% increasing from 33%. To help you, I would assume a share count of 125.5 million. Our outlook is based upon a US Dollar exchange rate of 1.30 to the Euro for the third quarter and year and for the Japanese Yen, an exchange rate of ¥110/EUR1 for the third quarter and ¥307/EUR1 for the year.

Let me now turn the call back to Bernard.

Bernard Charles

Thank you, Thibault. As I think we have demonstrated today, Dassault Systemes delivered a strong second quarter and first half. For both periods, revenue increased double-digits and so did operating income, net income and earnings per share. Thibault reviewed with you that we have increased confidence in our third quarter outlook, and we have reconfirmed that confidence, even increasing slightly our revenue objectives. However, we remain cautious Vis-a-Vis the fourth quarter, taking to account the volatility of the economical environment globally.

You can see that we are building on our growth drivers for the mid-term by expanding our addressable market, the nature with Gemcom acquisition and the creation of GEOVIA brand. Working together with our talented and experienced colleagues from Gemcom, we plan to leverage our technology and know-how for our mining customers, additional sectors in the natural resource industry as well as to create new industry focused solutions for our core industry benefiting from geophysics.

More broadly, we are deepening our industry expertise across all sales channels and in research and development. Our industry solution experience rollout is underway. We are on the move to better articulate the strategic value we bring to our customers addressing what they value the most in their respective industries.

Our 3DEXPERIENCE platform is connecting the dots. It’s our own platform to help our customers move from PLM to engineered business experience. Finally, we are optimistic that in 2012 we may approach or cross a new a horizon, EUR2 billion in annual revenues and with our 3DEXPERIENCE platform, raising strong client interest, we are encouraged by the possible timeline of reaching the next revenue milestone. We hope you share our confidence.

With that, Thibault and I would be happy to take any questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session.

(Operator Instructions)

Your first question comes from the line of Josep Bori of BNP Paribus please go ahead.

Josep Bori – BNP Paribas

Hi and good afternoon guys. Thanks for taking my questions. I just have two quick ones if I may. The first one is, now that you have closed the Gemcom acquisition, could you provide maybe a little bit of color on what are the product integration plans with the rest of these offerings. Presumably you will start with just the ENOVIA integration. But what else is in the pipeline in that regard? And if it’s a two years journey or how long will it take? How should we think about R&D increases in H2 and potentially in 2013? And then the second one is just out of curiosity but I remember in Q1, I believe one of your large US competitors had some issues with some issues with a large deal that they had lost and obviously there was this, the lack for competition in the market. And is that something that you’ve won and was part of your Q2 results or is this still an opportunity out there in the market. Thank you.

Thibault de Tersant

Thank you Josep. Gemcom acquisition, the – the very first – first of all, what is the portfolio in Gemcom in brief? We have Surpac, great tool for modeling and simulation of mining. Minex for coal mining. We have GEMS and we have InSite which is really planning and scheduling. Those are very, very dedicated, specialized applications. They are very powerful, we met end-users that loved those applications, they can do the job with it. And you know they are working in an environment with amazing expense, CapEx, operating cost and they need to better simulate plans to reduce risk.

It is clear that those large firms, very large groups have been using these applications to address – point very valuable point solutions. But they are all hoping to get global collaborative sharing of knowledge and processes across the different mine sites that they exploit. So relevant in your question so that the connection on the use of the expense platform to create the collaborative environment is one of the first priority, it is a kind of obtuse one and I think this will be done rather quickly.

There are also a lot of connections with SIMULIA as well as connection with DELMIA for logistic planning. So we can at least do better than if we were in a different company by connecting short-term those key applications and of course progressively all these applications that are based on the priorities that Rick and his team will set up.

We’ll use and exploit the full power of the 3DEXPERIENCE platform. The obvious requirement we can address and in fact at the Mine Expo 2012 which is going to be sometime around end of September – a huge event, we will be presenting already, the evolutions of our solutions with the team. Into the last bit I will not be so explicit to name but it’s clear that we are unraveling the domino effect which is going the other way around. The famous effect that was mentioned three years ago or four by our competitor is really going the wrong way for them.

We are signing deals but it is too early to announce them. As you know more and more customers are now highly sensitive to not even speak about the fact that they have adopted the basics because they could consider it is a competitive advantage but I think the dynamic today is a very positive one and I hope my answer is sufficiently clear for the remark you did on the last deal slip.

Josep Bori – BNP Paribas

Okay. Thank you very much.

Bernard Charles

Welcome. Next question please.

Operator

Your next question comes from the line of (inaudible). Please ask your question.

Jack Hazman (ph)

Hi this is Jack Hazman (ph) for (J.) we have a few questions. First being, at the analysts meeting last month, the company highlighted the fourth coming industry solutions for your 12 markets. Could you comment on the availability in coming quarters of the various solutions and the investments you may need to make in services to support that effort?

Bernard Charles

As I mentioned in this call, the industry solution rollout is on the move. We will have about I think 10 or 15 industry solutions – 12 industry solutions this year. Which are extremely—well received by customers in the different industries because it’s really a business, a new business engineering approach of their business. So it’s underway. In fact it even simplifies for the implementation, the cost of service and system integration because we connect the rows and we connect the dots. So for example to be very concrete, in industrial equipment which is one key sector we have an industry solution called Single Source of Speed.

So, one could say how does this – how this is related to what Dassault Systemes has been doing? Design, production or? Single source of Speed is the answer for those players. When they have a request from a customer to evaluate quickly they provide an answer to thunder and win the case in terms of flexible equipment that they want to provide to their clients.

On their current feedback, the current research, practical results that we have as we have put this in operation in a few customers are astonishing in terms of business performance on KPIs, key performance indicator. There is a lot to say. We are doing things on smart mobility, safe smart and connected. When you say safe smart of EVs or the vehicle is very different from designing but in white. We do know we are the best in doing that but now we can do safe smart also for those business processes.

So 12 this year, the rollout plan will continue next year and we are touching the most important sensitive domains so far our market. I believe it’s a value for the partners. They have all adopted it and we believe the Vs channel is going to be probably the very first to adopt in full speed those solutions.

Jack Hazman

Okay and at the analysts meeting you spoke as well of expanding your channel or partner network. Could you be a little more specific?

Bernard Charles

This is going extremely well. The stellar channel first half is the value solution channel. They have outperformed their phase plan. They have outperformed the expansion of their capacity. We will not communicate so much about the capacity because we believe it is sensitive. And we believe it is so strategic that I think the only thing that counts is the result. But they have outperformed and we believe they will outperform again because if this machine is really up and running and it’s a very efficient one.

To give you an idea however of a number without giving you all the numbers, we added I think 52 or 54 people if I recall well, significant partners around the globe for value solution because they all like to ramp up with industry solution experience.

Jack Hazman

And what has been the adoption or revenue impact of the new V5, V6 inter operability you introduced in the R2012X release.

Bernard Charles

As a matter of fact, there’s various inside those. – 6 is really the continuous evolution of the Version 5 portfolio where we insert V6 technology, we do technology insertion and we will continue this product development all out under V5 because this company Dassault Systemes is not a company doing software updates. We don’t build our business model on software updates. We build our business model on application portfolio and application portfolio coverage.

S o we will continue for many years to develop the Version 5—6 application line because step by step the roadmap to the expense perform is going to be on the go. It is going to be done as a de facto evolution and you noticed that at the Thibault mentioned this morning and today, the V6 native adoption in new sectors for an industry solution in new sectors are really from the new diversification sectors because in these sectors they are ready to go directly to the next generation architecture. So this evolution is not a connector, this evolution is the full content of the Version 5 which is extremely competitive today and customer loves it, there is no reason to stop but only to extend.

Jack Hazman

Okay, does the company still expect to introduce the new V6 version of SOLIDWORKS in early 2013?

Bernard Charles

Yes indeed.

Jack Hazman

And finally could you comment on any plans you may have for offering a service after sales or service lifecycle solution?

Bernard Charles

We have already customers who have been using our ENOVIA application set to do so on doing customization themselves. And so basically, they have beat up the whole own application set to use to deliver those capabilities. We don’t know yet if we will use what they offer us to reuse and sell around the world because many of them wants us to rollout these solutions on the market. Still to be defined, it probably will be defined later this year. I should notice however that there is one thing we are doing in a completely different way maybe you have heard about it so I want to connect this to that point. We are now providing extremely innovative spare part management systems which are based on completely revolutionary platform using EXALEAD which has proven to provide amazing results that are very different from traditional implementation of spare parts systems potential available or proximities to talk about it. Jay? Next question?

Next question please.

Operator

Your next question comes from the line of Michael Briest of UBS. Please ask your question.

Michael Briest – UBS

Great. Thank you and good afternoon. In terms of the acquisition appetite you still have. I seem to recall that at the time you announced Gemcom that there was still a relatively full pipeline. Is there any chance that anything else could close this year do you think? And then on the sales and marketing initiatives, obviously you are spending quite a lot and it’s affecting the margins, both Q2 and the second half. Should we think in 2013 that those costs will disappear and in principle the margin could step up on the back of that?

Then Thibault if you could just maybe say how much do you think Gemcom will contribute in Q3 and similarly the disposal affecting Q3, I know you’ve given it for the full year which is obviously helpful but just the Q3 effect. And then just finally on the shift to rental, is this something that is tied into the V6 trend? Is it something to do with the way you are licensing that? So as adoption increases it will increase or is this something that is left by customers and their economic concerns or it indeed led by your sales force in the way you are comping them. A lot of questions but thanks a lot.

Bernard Charles

On the acquisition I wish I could say something but I don’t think it’s appropriate. We – the strategy is very well described. We want to do social industry experience on social – on industry solution experience for e ach of the 12 industries we serve only if we have a meaningful, relevant, good teams, excellent technology that can complement the solutions, we will do it in a careful, innovative but also a precise way. That’s the only thing I think I can say at this point in time. Of course Thibault when you take over you can add anything you want.

Under marketing aspect, don’t expect that we will slow down the investment. We believe that this is very essential for the future. And as a matter of a fact we believe that it is very core to the move form application solution – application selling to industry solution selling because we are at the point in time where we can really articulate, not the capabilities of our applications, this we know how to well, but the business value.

The feedback we got from CEOs level about people calling us to say, could you come and visit us and tell us what you can offer from me is just astonishing. It has never happened before. We believe we can look at this investment on build the business model which is relevant. It is a new Dassault system from that perspective but I think the time has come to make sure we can elevate the level of awareness. We are not there yet. We have elevate the level of visibility but we need to elevate the level of awareness because there are so many companies who just don’t know what we can offer them.

On the cost of selling, the selling is costly too. If you can simplify the sales and improve the sales performance, at the end of the day the deal can be justifies. Thibault, on the Q3 effect for Gemcom and then the rental question.

Thibault de Tersant

Sure, the Gemcom effect in Q3. Well the total is 35%, its EUR35 million. And so for second half approximately slightly more than EUR15 million, very close to EUR15 million in Q3. And from Transcat it’s a EUR4 million in Q3.

Bernard Charles

The spin off?

Thibault de Tersant

The spinoff of Transcat, the negative on the revenue. The shift to rental – actually, it’s not more relative to Version 6 than to Version 5. We have many Version 5 implementations going up, growing under rental. I think there are two reasons. The first reason is one you mentioned Michael. We have modified sales people compensation in 2012 such that for the sales rep, the compensation is exactly the same. If he sells the license or if it’s installed as a rental license.

And before the model was favoring a little bit the sales of licenses. And I think the second reason is that for our business partners, rental is much more palatable today because their financial situation is better and so for that better they can afford to offer rental license and they like – when they have been able to do it, the recurring nature of them.

Michael Briest – UBS

Thank you very much.

Bernard Charles

Welcome Michael. Next question?

Operator

(Operator Instructions)

Bernard Charles

Okay. So I think we are at the end of this call, thank you very much for all of you joining and thank you for joining this morning, we had a nice audience in Paris and thank you for being – for your interest in Dassault Systemes and of course as always we can stay in touch and you can call us if you need more information. Everything is published on 3ds.com. Please spend time on the site because it’s more and more structured to explain what are the solutions, what are the values and more will come. Thank you very much and for those of you taking some summer vacation, good vacation. So to you for the third quarter.

Operator

Yes that concludes our conference for today. Thank you for participating you may all now disconnect.

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!