China XD Plastics Company Limited
Q4 2015 Earnings Call Transcript

Published: 15 Mar 2016

[Operator:]

Welcome to the annual 2015 China XD Plastics Company Limited earnings conference call. [Operator Instructions] I would now like to hand the call over to your first speaker today, [ph] Vicki. Please go ahead, Vicki.

[Unidentified Company Representative:]

Thank you, operator. Thank you all for joining us for the China XD Plastics fourth quarter and fiscal yearend 2015 financial results conference call. Joining me on the call today are Mr. Jie Han, Chairman and CEO; Mr. Qingwei Ma, Chief Operating Officer; Mr. Taylor Zhang, Chief Financial Officer; Mr. Junjie Ma, Chief Technology Officer and General Manager of Dubai Subsidiary; Mr. Shi Young, General Manager of Sichuan Subsidiary; and Mr. Lou Jintai, General Manager of the Heilongjiang Subsidiary. Earlier today, China XD Plastics issued a press release announcing the fourth quarter and fiscal yearend 2015 results. Before management's presentation, I would like to refer to the Safe Harbor statements in connection with today's conference call and remind our listeners that management's prepared remarks during the call may contain forward-looking statements, which are subject to the risks and uncertainties that management may make additional forward looking statements in response to your questions. All statements other than statements of historical fact contained are forward-looking statements, including but not limited to the company's growth potential in international markets, the effectiveness and profitability of the company's product diversification, the impact of company's product mix shift to more advanced products and related pricing policies, the volatility of the company's operating results and the financial condition, the company's projections of performance in 2016 and other risks detailed in the company's filings with the SEC and available on its website at www.sec.gov. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about the company and the industry. The company therefore claims the protection of the Safe Harbor for forward-looking statements that is contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today and we refer you to a more detailed discussion for the risks and uncertainties in the company's filings with the Securities and Exchange Commission. In addition, any projection as to the company's future performance represents management's estimate as of today, March 15, 2016. China XD Plastics assumes no obligation to update these projections in the future as market conditions change. To supplement the financial results presented in accordance with the U.S. GAAP, management will make reference to earnings before interest expenses, income taxes, depreciation and amortization, which we refer to as EBITDA. EBITDA is a non-GAAP financial measure reconciled from the net income, which the company believes to provide meaningful additional information to better understand its operating performance. A table reconciling net income to EBITDA can be found on the earnings press release issued earlier today. I would now like to turn the call over to our Chairman and Chief Executive Officer, Mr. Han. Mr. Han will speak in Chinese and I will translate his opening remarks into English. Mr. Han, please go ahead.

[Jie Han:]

Thank you, Vicki, and thank you all for joining us today. We are pleased to have met our revised revenue and net income guidance for 2015, issued in the third quarter of last year due to reasonably strong customer demand in the fourth quarter for our products. However, challenging macroeconomic conditions in China has impede the growth of the domestic automotive market, which stalled our record of steady growth for the first time last year. Despite the challenging operating conditions, our domestic market experienced a 1.0% decrease in sales volume and a 1.4% decrease in the average selling price of our products in fiscal 2015 as compared to fiscal 2014. In addition, we experienced a decrease in our operating metrics, primarily due to the lower 7.2% sales contribution from sales overseas compared to this customer's 12.6% sales contribution in fiscal 2014. With the slowing domestic economy, vehicle sales in China grew by only 4.7% in 2015, the slowest rate in 25 years. And both the automotive and automotive parts industries in China have experienced pricing pressure beginning in 2015. In order to stimulate the auto industry, in September 2015, the Chinese government implemented an incentive policy, granting 50% reduction in sales tax for eligible purchases of vehicles with engine sizes of 1.6 liters and lower. This helped spur the recovery of vehicle sales in China in the fourth quarter of 2015, and it reflect in our better sequential results as well as in an improved year-over-year gross profit margin. Although, macroeconomic growth in China has decelerated overall, there are regions in China that are still exhibiting strong growth. In that sense, our expansion to Southwest China was very strategic, as economy is continuing to experience sales growth in the region, ahead of levels in many other regions of China. We have seen numerous multinational companies from all over the world establish presence, given the growth opportunity in the area. As for our company, Southwest China is becoming a major hub of automobile and advanced manufacturing, and it is an ideal location for our business, as it will enable us to service high-end manufacturers locally. Our expansion plans in Sichuan consisting of new production facilities will increase our total production capacity by 300,000 metric tons. In 2016, we expect 60,000 metric tons of production capacity online from our Sichuan plant. Our new facility in Dubai is strategically situated as a gateway to the Middle East and Europe. Phase 1 of our Dubai plant was completed last year with plant capacity capable of producing 2,500 metric tons of high-end products and the production is continuing to ramp to reach optimal utilization. Phase 2 of Dubai, which will produce 14,000 metric tons of additional capacity. It's currently under construction and is expected to start producing at the beginning of 2017. In terms of our financial guidance, the company projects revenue for fiscal 2016 to range between $1.0 billion and $1.1 billion. And net income to range between $100 million to $110 million. This is based on the anticipation of a steady recovery throughout the Chinese automotive supply chain and a stabilization of crude oil pricing and its impact on polymer composite materials in 2016. This forecast also assumes contributions from both the new Sichuan plant, which will start production in the second half of 2016. It also assumes the average exchange rate of the U.S. dollar to RMB at RMB6.5. The financial guidance reflects the company's preliminary view of its business outlook for the fiscal 2016 and is subject to the revision based on changing market conditions at any time. I'm pleased to have seen our business stabilize in the fourth quarter as seen by a slight upturn in customer demand. We are optimistic about our outlook for 2016, as we bring new capacity online to serve new customers in Asia, Europe and Middle East. We are excited about our growth prospects and believe that our new production capacity, technological edge and improved market positioning will enable us to substantially grow revenues and market share in the years ahead. With that, I will now turn the call over to Taylor Zhang, our CFO, to walk you through our financials. Taylor?

[Taylor Zhang:]

Thank you, Mr. Han, and thank you everyone for joining the call today. Before I review the numbers, let me remind you that all figures I discuss are for this reporting period, the fourth quarter of 2015, unless I state otherwise. Additionally, any year-over-year comparison is to the fourth quarter of 2014 and any sequential comparisons to the third quarter of 2015. So let's go over our first number results. Revenues in the fourth quarter of 2015 was $272.8 million, a decrease of 11.2% year-over-year, but was up 14.1% sequentially. The year-over-year decrease was primarily due to a 7.9% decrease in the average RMB selling price, which was offset slightly by a 0.2% increase in sales volume. Sales volume was up 17.9% on a sequential basis. Premium products, mainly, PA6, PA66, POM, PPO, PLA and plastic alloys accounted for 81.1% of total revenues in the fourth quarter of 2015 compared to 75.8% in the prior-year period. Gross profit in the fourth quarter was $52 million, down 10.5% year-over-year, but up 77.5% sequentially. Turning to margins. Gross margin was slightly up to 19.1% compared to 18.9% in the fourth quarter of 2014, but substantially improved from 12.3% in the third quarter of 2015. The year-over-year gain was primarily due to product mix shift with a higher margin contribution from premium products. G&A expenses were $6.5 million or 2.4% of revenues in the fourth quarter of 2015 compared to $6.8 million or 2.2% of revenue in the same period last year. R&D spending was $2.8 million in the fourth quarter of 2015 or 1% of sales, up from $2.4 million or 0.8% of sales in the fourth quarter of 2014. We continue to recalibrate our R&D programs in the quarter in response to changing market conditions to focus on more products for advanced industrialized applications, augmenting our auto sector focus to include other sectors such as ships, aviation, high-speed rail, 3D printing materials, biodegradable plastics, medical-grade materials, food packaging and other sectors. As of fiscal yearend 2015, our number of ongoing R&D projects was 144 compared to 96 as of fiscal yearend 2014. Operating income was $42.3 million or 15.5% of sales as compared to operating income of $48.6 million or 15.8% of sales in the same period of 2014. Operating income was down 13% over the prior-year period, but up 144.5% sequentially. The year-over-year decrease was primarily due to the lower gross profits and higher G&A and R&D expenses. Net interest expense was $9.3 million in the fourth quarter of 2015 compared to net interest expense of $8 million in the same period of last year. This was primarily due to a decrease of $1.1 million in interest income, due to the decreased average deposit balance that receive interest at lower rates in fourth quarter relative to the year-ago quarter, an increase of interest expense of $0.3 million. Income tax expense was $6.4 million in the fourth quarter of 2015, representing an effective income tax rate of 19.2% compared to 4.5% in the fourth quarter of last year. The increase in the effective income tax rate was mainly due to the lower sales contribution from our Dubai operation, an income tax exempt subsidiary in the fourth quarter of 2015 compared to the same period of last year. Net income was $26.8 million in the fourth quarter of 2015, a decrease of 25.1% compared to $35.8 million in the same of period of 2014, but up 346.7% on a sequential basis. Basic and diluted earnings per share were $0.41 compared to $0.54 per share in the fourth quarter of 2014. EBITDA was $51.2 million in the fourth quarter of 2015, a decrease of 4.8% compared to $53.8 million in the same period of the prior year, but up 19.3% on a sequential basis. Now, let's take a look at our full year financial results. Revenues were $999.2 million, a decrease of 10% from $1.1 billion in fiscal 2014. The year-over-year decrease was primarily due to 2.7% decrease in sales and volume and 5.5% decrease in the average RMB selling price of our products. Premium products accounted for 79.1% of the total revenues in fiscal 2015 compared to 75.1% in the prior year. Sales to overseas market accounted for 7.2% of total revenues in fiscal 2015 compared to 12.6% in the prior year. Gross profit for fiscal 2015 was $181.4 million, a decrease of 18.4% from $222.4 million in the fiscal 2014. Gross margin was 18.2% compared to 20% in fiscal year 2014, primarily due to pricing pressure resulting from the slowdown of our industry in China and a lower margin contribution from overseas sales. The average RMB selling price of our products decreased 5.5% for fiscal 2015 as compared to that of fiscal 2014. G&A expenses were $23.8 million or 2.4% revenues, an increase of 15.5% as compared to $20.6 million or 1.9% of revenues in fiscal 2014. This increase is primarily due to the increase of $1.1 million of corporate events related expenses, $0.7 million of travel expenses in connection with our business expansion, $0.4 million of fixed assets depreciation, $0.7 million of other miscellaneous expenses and $0.3 million of payroll and welfare expenses. R&D expenses for the year were $21.1 million or 2.1% of total revenues compared to $29.4 million or 2.6% of total revenues in fiscal 2014. As discussed previously, we recalibrated our R&D programs in fiscal 2015 in response to changing market dynamics. In 2015, the company successfully launched 40 new auto manufacturers certified products, which increased this number to 361 for the year. Operating income for fiscal 2015 was $135 million or 13.1% of revenues, a decrease of 21.4% form operating income of $171.7 million or 15.4% of revenues in prior fiscal year, due to lower gross profits and higher G&A and selling expenses, which were partially offset by lower R&D expenses. Net interest expense was $34.5 million compared to net interest expense of $30.5 million in fiscal 2014. This was primarily due to an increase of $1.8 million in interest expense, resulting from issuance of senior notes in 2014; and decrease of $2.8 million in interest income, due to the decreased average deposit balance that received interest at slightly lower rates in fiscal 2015 compared to 2014. Income tax expenses were $18.2 million in fiscal 2015, representing an effective income tax rate of 17.9% compared to 13.1% in fiscal 2014. The increase of effective income tax rate was primarily due to less profit generated by our income tax exempted subsidiary, our Dubai sub, in 2015 compared to that of 2014. Net income was $83.7 million in fiscal 2015 compared to $120.7 million in fiscal 2014, a decrease of 30.7%. Basic and diluted earnings per share were $1.27 in fiscal 2015 compared to basic and diluted earnings per share of $1.85 in fiscal 2014. EBITDA for fiscal 2015 was $172.2 million, a decrease of 15.4% from EBITDA of $203.5 million in the prior fiscal year. Now, let's turn to the balance sheet. Our balance sheet remained strong, even as we continue our business expansion. As of December 31, 2015, the company had $119.9 in cash and cash equivalents and $237.6 million in time deposits with commercial banks. This represents increase of 37.7% due to cash flow provided by operating activities and an increase of short-term and long-term bank loans of $117.8 million to meet our capital expenditures requirements, partially offset by the purchase of and prepayments of property, plant and equipment. Also our inventories increased by 18% in fiscal 2015, due to increased purchase of raw material, because of the lower purchase price of raw materials and our niche to ship products to customer in farther locations, such as Southwest China, South and Central China. The increase in deferred income was due to $62 million government grants from authorities in Sichuan Province in connection with the construction of our fourth production base in Sichuan Province. Accounts payable and bills payable increased by 48.8%, as a result of more purchases made by the company, because we purchased more in 2015 to take advantage of the lower purchase price of the raw materials and the company's strategy to stock up inventory. As of December 31, 2015, notes payable was $145.6 million relating to the 11.75% guaranteed senior notes due in 2019, net of discount and issuance cost. Now, before we open the call to your questions, I would like to note that for any questions directed to the management in China, I will translate both of their questions and their answers. If you want to ask a question in Chinese, please also ask it in English for the benefits of our other listeners. With that, we will now open the call to your questions. Operator?

[Operator:]

[Operator Instructions] Your first question comes from the line of Matthew Larson, Morgan Stanley.

[Matthew Larson:]

I've got a question or two for you, I guess, for you Taylor. I have a question about the South Korean customer that was slow in paying in the third or fourth quarter, and you stated that you thought you would be able to collect the outstanding balance. Can you discuss that please and tell us the status of that relationship for 2016?

[Taylor Zhang:]

So as in updates, and also as we disclosed in our 10-K and -- so basically by the end of last year 2015, we have collected all the outstanding accounts receivable from the customer. Basically, we followed our protocol and procedure, after the customer fulfill their obligation of the outstanding balance, we have started supplying to them, although, currently at a slower rates, but we think that's prudent thing to do.

[Matthew Larson:]

You did say that overseas sales declined from roughly 12% to 7% in change. Was that due to that customer or was there other reasons why your sales overseas did not grow?

[Taylor Zhang:]

That's the primary reason, as we after the prolonged collection periods pass our standard collection policy, we stop supplying to them since in the first quarter, so that's the basic reason for that.

[Matthew Larson:]

And then just a couple of other quick questions. You've had some significant capital expenditures over the last couple of years to build out your capacity and that should be coming to an end in the next year or so. Can you give us projections for your CapEx for 2016 and then compare that to -- and also for 2017, any ideas there?

[Taylor Zhang:]

Sure, Matthew. Basically in 2016, the majority of the remaining CapEx will occur. So we anticipate the total CapEx is going to be around $170 million, of which about $55 million will be in China for Sichuan and our R&D facilities. And the remaining will be mostly for our overseas capacity expansion.

[Matthew Larson:]

In Dubai?

[Taylor Zhang:]

Dubai. Yes.

[Matthew Larson:]

And then once that's completed, do you expect to pull back on CapEx and then we could see a huge benefit from that investment as cash on revenues come in?

[Taylor Zhang:]

So after 2015, pretty much, the majority of the CapEx will be concluded. We don't have further plan beyond that. And as we've demonstrated in the past, we have our operation in Heilongjiang, a very steady stable cash flow provider. So we do think after the CapEx is over, we'll have a lot of flexibility and financial resource in addition to benefits from increased production capacity both in Sichuan and also from our Dubai operation.

[Matthew Larson:]

And just one last question. And then I believe you have some debt coming due in 2017. So it sounds like you'll be in a good position to address that since your capital expenditure program should be completed by then? Can you address that?

[Taylor Zhang:]

Yes, in 2017, basically our -- so the notes is due in 2019, both for our onshore debts. As you probably see, we've been shifting from short-term to long-term loan, basically to implement financial stability. So the end of last year was a transition period because certain long-term loans were reclassified into short-term loan, as the maturity became less than a year, but our strategies remain the same basically to have longer debts, to have the financial stability.

[Matthew Larson:]

Well, listen, it sounds like everything is on track. It's been a long haul for shareholders, but it looks as if your strategy is going to pay off in the next couple of years. So I look forward to being a shareholder and good luck. Thanks a lot, Taylor.

[Taylor Zhang:]

Sure. Thank you, Matthew.

[Operator:]

Your next question comes from the line of Jason Cooper, Stuyvesant Capital Management.

[Jason Cooper:]

Taylor, I was wondering, it looks like your capacity in Dubai, I think at the last meeting you had anticipated 18,700 tons of capacity and now you're guiding for 40,000 tons. Could you comment on that?

[Taylor Zhang:]

Yes, sure Jason, that's a very good question. There is majorly two reasons for that. Number one is we have received some feedbacks from the Dubai local authority, basically according to their regulation, we cannot place as many equipments as we initially designed, so that's reason number one. And secondly, we also have some internal adjustments to the product mix to be offered from Dubai. So the portion of 3D printing materials was increased due to our belief of the market potential and also the pricing margin consideration. So that's why the capacity for Phase 1 was adjusted.

[Jason Cooper:]

And I guess, with respect to do buy, do you have any leads for additional clients besides for your South Korean client?

[Taylor Zhang:]

Yes. We have been looking for several new prospects for over a year, including new customers in South Korea, in Europe, Germany and Russia. So I think in this year, we feel confident we're going to receive orders from the new customers that we've been working with.

[Jason Cooper:]

And have you had any success in purchasing that 2019 loan on European market or anything. It seems that with the interest expense there and the movements in renminbi might be sensible to try out pre-pay some of this before it's called for your call options?

[Taylor Zhang:]

Jason, we are not in a liberty to discuss any open market transaction, so apology for that.

[Operator:]

Your next question comes from the line of Peter Siris.

[Peter Siris:]

I have a couple of questions. First of all, can you talk about what your plans are for 3D printing? Where the market opportunity is for 3D printing? I mean, it's a really interesting technology, but I'm curious to see where the opportunities are and how do you think they could be?

[Taylor Zhang:]

Let me translate your question and I am going to have my team in china to answer. The answer comes from our COO, Junjie Ma. So Peter, we are very excited about the opportunity in 3D printing materials. As you probably know, there had been over two years since we have started our efforts and decision in 3D printing material. So the R&D stage has passed, so we have started to offer our products in the marketplace. Although, currently the sales contribution is very small, we do believe there is great potential in the marketplace for us both in China and abroad.

[Peter Siris:]

In what areas? In the same businesses or in different business? In the same markets, in automotive and things or are you looking at different industries?

[Taylor Zhang:]

Hi, Peter. So basically, we have developed 3D printing materials both in filaments and powder forms. So there is basically two major category. Number one, obviously, is our traditional auto application and this benefits tremendously to our end-customer in terms of their prototype designing, which can not only save our cost, but also shorten their design and prototyping timeframe. So that's a value-added service to increase our customer royalty. And that's for auto application. Beyond auto, there is a number of different industry, for example, a lot of consumer and customizable products; medical-grade application for hospitals; and also, in museum, some designing for museum; and also the designing models for universities. So we've been working and supply to all of these areas already.

[Peter Siris:]

The next question I have is I see that your inventories are very high, and you said you were taking advantage of good prices, but you also have a lot of debt outstanding. And I'm curious what the strategy is with -- what the savings are with adding to your inventory at this point?

[Taylor Zhang:]

So the inventory, as everybody probably can agree, the oil price is something no one can perfectly predict. But for managing our company's operation perspective, we do saw the lower price by the end of last year, was not only we think the price was in deep low, but also as we mentioned before, we do have needs to ship products to farther location. So in hindsight, right now, we think we will benefit from this kind of arbitrage practice, as we locked in the lower input price from first quarter of purchase raw materials. And at the current raw material price level, we can definitely see some benefits on the margin side.

[Peter Siris:]

So in other words, if oil prices stay where they are now or go up slightly, it could be upside in your earnings?

[Taylor Zhang:]

That's right.

[Peter Siris:]

Okay. I have one more question, which is, this will be the end of your CapEx this year, when are we really going to start to see a ramp up in sales from Sichuan?

[Taylor Zhang:]

For Sichuan, as we mentioned in the press release this year, we will offer production capacity of approximately 60,000 metric tons. And we do believe we will be able to produce in full steam in the second half of this year, so we're going to see very to 50,000 production from Sichuan this year.

[Peter Siris:]

And next year?

[Taylor Zhang:]

Next year, all the capacity will be coming online, and we have been cultivating the markets not only in Sichuan and South West, but also Central China, South China and Eastern China for quite a long time and the number of customers in those regions have been increasing very nicely. So we do believe beyond 2017, we're going to be able to offer our customer in those regions with products produced locally to further benefit them.

[Peter Siris:]

So as we look to 2017, we should see, in 2017, very strong increases in sales and free cash flow, is that correct?

[Taylor Zhang:]

Yes, that's our assumption.

[Operator:]

Your next question comes from the line of Nicholas Chen, Nomura.

[Nicholas Chen:]

Taylor, I had a couple of questions. First one is regarding the CapEx. I mean, can you affirm like the $117 million is the cash CapEx or the CapEx that you're going to capitalize in 2016? And also, by end of the 2015, how much of capitalized CapEx is still payable that you have to settle in upcoming year?

[Taylor Zhang:]

Nicholas, the figure is cash CapEx. And for 2016, there is a very insignificant amount of CapEx to be capitalized.

[Nicholas Chen:]

So it will be part of the accruing expenses or payables, right?

[Taylor Zhang:]

Yes.

[Nicholas Chen:]

And also, what is the current inventory cycles you kind of want to keep, given the raw material price has been quite volatile in the first 12 months?

[Taylor Zhang:]

Our current inventory cycle is probably little above our historical norm, at about around 80 days, but I think as the production from Sichuan takes in, which will offer us capability to produce locally, we think could be inventory cycle will normalize later this year.

[Nicholas Chen:]

And lastly, can you elaborate more on the kind of competition landscape in China, such as like a new supplies coming on stream from Kingfa and the major competitors? And what is the implication of the pricing in 2016?

[Taylor Zhang:]

Nicolas, let me translate your question to my team in China and I think they can offer better answer on that. I know you understand Chinese, but just for the benefits of listeners, I'll translate Mr. Han's answer for your question. So basically the top three players in our industry in China are Kingfa, us and Pret. We have very different focuses with different product offering. For example, Kingfa is known for consumer appliances and raw material trading, they are pretty big size in those operations. And Pret is slightly better resemble us, but in much smaller scale with narrow concentration of fewer auto manufacturing. So firstly, as you know, auto is our core business and will remain so in the near future. However, we have already done the live work in diversifying into other application, as we mentioned before, for example, high-speed rail, aviation, ships, 3D printing material, biodegradable material, medical-grade application, food packaging, et cetera. So we believe there will definitely be certain pricing pressure in some application, but because we have different concentration and different core competencies, so we think overall, we are not concerned about competition, as we strategically already laid out our development plan and diversified our business overtime. And lastly, one data point Mr. Han mentioned is the top three players in China has only less than 30% of market share in China. So there is a lot of room to grow for each one with different focus and concentration.

[Operator:]

Your next question comes from the line of Stella Wang, Fitch Ratings.

[Stella Wang:]

Taylor, I have a question regarding FAW Group. I know this is company's largest customer. And I am wondering, what's the revenue contribution for 2015? And I noticed FAW Group did not do well in 2015 due to it's not very competitive products and internal restructuring. So could you provide more information on that? And also, do you think, it will continue to have pressure on company's performance going forward?

[Taylor Zhang:]

Let me translate your question and my team in china will put back answer. So your first question is our revenue from FAW. So for 2015, it was approximately a little over 40%, that's our revenue contribution indirectly from FAW. As for the, FAW, for example, their personal change and also their internal structure, we think it was a good intention from the government to make FAW more efficient and a healthy environment in the business world. We don't think the change will affect our business, because number one, FAW is still a strong brand name and we have been a long-term partners with FAW for many years, and we made our name in the industry and proved ourselves to FAW as a good partner. So last year was indeed a rough year, FAW has a historical low year since Audi model was first introduced in China. However, in Q4 last year, we have noticed FAW has implemented several initiatives including, introducing new models, making pricing adjustments to make their models more attractive and also enhance their customer service experience. So those are well perceived in their marketplace. So we think FAW will continue to be a major player in the auto industry and we can leverage our relationship with them going forward.

[Stella Wang:]

I have one more question. Could you provide the latest unused banking facilities for company?

[Taylor Zhang:]

There should be disclosure in our 10-K filed today, and I think I can reference that. If you need the IPO figure, I can send you email as well.

[Operator:]

There are no further questions at this time. Mr. Taylor Zhang, please continue. End of Q&A

[Unidentified Company Representative:]

On behalf of China XD Plastics, we want to thank you for your interest and participation in this call. If you would like to speak with us further, please call either myself or Taylor in XD's New York office and our IR firm, Grayling. The contact numbers for all of us are listed at the end of the press release. Operator?

[Operator:]

That does conclude our conference for today. Thank you for participating. You may all now disconnect.