MICT, Inc.
Q3 2015 Earnings Call Transcript

Published: 18 Nov 2015

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Micronet Enertec Third Quarter 2015 Results Conference Call. All participants are at present in listen-only mode. Following management’s formal presentation, instructions will be given for the question-and-answer session. As a reminder, this conference is being recorded. I will now hand the call over to John Nesbett of IMS. John, please go ahead.

[John Nesbett:]

Good morning. And thank you for calling in to review Micronet Enertec’s third quarter 2015 results. Management will provide an overview of the results followed by a question-and-answer session. Importantly, there is a slide presentation which management will use during the overview. The presentation can be found on the Investor Relations section of the company website under Events and Presentations. You may also access a PDF copy of the presentation by clicking the link in the company’s press release regarding these financial results issued this morning and then clicking a second link labeled November 18 Presentation. Callers accessing the PDF copy of the presentation will need to manually scroll through the slides as management goes through the presentation. I will now take a brief moment to read a Safe Harbor statement. During the course of this call, management will make express and implied forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. federal securities laws. These forward-looking statements include but are not limited to those statements regarding our future growth and revenues, increased volumes and demand in the markets in which we operate, the roll-out of our new All-In-One wireless platforms, our ability to penetrate the local fleet vertical market, our ability to diversify and expand our customer base, continue demand in our Defense and Aerospace business, our ability to meet the needs of our existing customers, market interest and acceptance of our products, our future revenues and profitability, the introduction of new products and our ability to provide our solution to different applications, the timing of pending U.S. federal rule-making, its implementation and the impact of the proposed rules on our business and our future, New York City Taxi and Limousine Commission's Vision Zero Vehicle Safety Technology Pilot program and its potential, our new Mobile Command & Control Centers and their ability to drive the future growth of our A&D business, the competitive advantage of our A317 product and the status of our Carrier Certification including the one with AT&T. Such forward-looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results and performance to differ materially from those projected. Forward-looking statements contained in this presentation are subject to other risks and uncertainties, including those discussed in the Risk Factors section and elsewhere in the company’s annual report on Form 10-K for the year ended December 31, 2014, filed with the SEC. Please note the date of this conference call is November 18, 2015, and any forward-looking statements that management makes today are based on the assumptions that are -- on assumptions that are reasonable as of that date. Except as otherwise required by the law, the company is under no obligation to and expressly disclaims any obligation to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. During the call, in addition to the GAAP financial measures, management will discuss non-GAAP financial measure as defined by the SEC Reg. G, including non-GAAP net loss income. These non-GAAP measures exclude both share-based compensation expenses, the amortization of intangible assets, as well as additional items. These non-GAAP measures are not intended to be considered in isolation from, a substitute for or superior to our GAAP results, and we encourage you to consider all measures when analyzing Micronet Enertec’s performance. A reconciliation of these non-GAAP measures to the applicable GAAP measures is included in today’s press release regarding our quarterly results and can also be found in the Investor Relations section of the website at micronet-enertec.com\ir. The slides containing the first quarter reconciliation can also be found in the Investor Relations section of our website. On the call this morning, we have David Lucatz, Chairman, President and Chief Executive Officer; Eyal Leibovitz, Chief Financial Officer; and Shai Lustgarten, CEO of Micronet Limited. And again, as a reminder, management will be referring to a slide presentation that can be access via the Investor Relations section of the company’s site or the linked in the press release. With that, I will now turn the call over to David, who will begin the presentation on slide four. Go ahead, David.

[David Lucatz:]

Thank you, John, and good morning, everyone. Q3 marks the completion of the transition period and our results for Q4 are already showing significant progress with anticipated strong growth in Q4 and growth in profitability in ’16. Our newly developed state-of-the-art product offering, including our All-In-One platform combined with the consolidation of operation in Salt Lake City positioned Micronet our MRM division as a vendor of choice for many new customers and diversified applications. We enjoy significant unpredicted interest from the marketplace that resulted into a stronger backlog and exciting new business initiatives. As a result, after the consolidation of operation we improved efficiency which positions us well for enhanced profitability. Following a major effort our Aerospace and Defense division recently won a breakthrough project for Mobile Command & Control Centers, a system that should become a growth engine for Enertec into next two to three fiscal years. Both sectors are well set for a successful 2016. We will start with slide four, during the third quarter we began to see marketplace momentum building around our full connectivity All-In-One wireless platform for the MRM market and we are very excited about the reception that the new products have received. While not reflected in the third quarter results, the effort of our U.S.-based sales team have resulted in a substantial increase in backlog from the start of the quarter and we are currently have a robust product pipeline. The slight revenue decline in MRM business in the quarter is not completed unexpected as it takes time for our customers to evaluate and adapt the system for transition. They don’t order the new product one day and install them the next. As we said on previous calls, our solutions are well-suited for a broad variety of MRM applications, particularly in the growing local fleet market. As that market prepares for compliance to the Electronic Logging Device or the ELD mandate, which we will discuss in further detail later in the call. In general, the MRM vertical represent substantial opportunities for our technology as our state-of-the-art technology has accessibility to meet the need of the broad base of MRM customers. We continue to see healthy diversification in our customer base with a majority of the new sales coming from new customers. This is a great progress from our customer profile last year when our revenue growth was priority for one customer. The significant decline in the revenue for the quarter is attributed to Aerospace business as a result of the shift in the Aerospace and Defense orders to the fourth quarter. This will be back to normal in the fourth quarter and given our current backlog and order pipeline, we anticipate delivering more than 60% sequential revenue growth and positive EBITDA in the fourth quarter. We continue the implementation of mergering the U.S. Israeli facility and we are proud to say that our plan to move the majority of the business to our Salt Lake City facility is almost completed. As a result, we are faced focus on controlling costs and during the quarter thus focus resulted in an 11% decline in the R&D costs compared to third quarter of last year and 32% decline in R&D costs sequentially. Likewise, the G&A expenses declined 33% as compared to last year third quarter. Slide five, following the close of the quarter we announced some exciting partnership and product development that I would like to highlight briefly. In the MRM segment, we announced our partnership with MiX Telematics to provide our TREQ 317 rugged Android tablet for use with the MiX Rovi in-cab display, which we’ve developed as a solution to compile with the ELD mandate. MiX is a great partner for our technology particularly as the market begins to feel a greater sense of urgency to book ELD solutions in play. Additionally, the MRM division, we have selected as one of only a few companies chosen to participate in the New York City’s Taxi & Limousine Commission Vision Zero Vehicle Safety Technology Pilot program. The pilot program test technology that promotes safer driving with the goal of putting an end to traffic-related risk in New York City, we think the potentially life saving initiative and we are proud to be part of it. Finally, in our Defense segment, we recently announced a $1.85 million order from Multinational Aerospace Contractor for the development and production of Mobile Command & Control Centers to be used in rugged terrains for the control and monitoring of advanced aerospace systems. We have alongside expertise in providing business control technology and given the continue world threat of missiles attack, we believe that will be breakthrough product with the potential to drive revenue growth in the Aerospace business. With slide six, I’d like to remind you of the long-term trend that are beneficial to our business. As I discussed previously, the local fleet vertical which represents the majority of our MRM revenue is expected to grow significantly over the next several years. We believe that we created the state-of-the-art all-inclusive solution that capitalize on this growth and legislative change. The demand for our Aerospace and Defense critical missile defense systems continue to provide a consistent stream of business that remains a key component of our core offering. Additionally, we are excited about our new Mobile Command & Control Centers which we believe is based on preliminary customer interest will drive the future growth of our Aerospace and Defense business. Slide seven, the next slide illustrates our revenue breakdown for the quarter. I mentioned at the beginning of the call, revenue was down compared to the third quarter of last year and down slightly on a sequential basis. The decline is primarily related to the shift in the Aerospace and Defense order for the fourth quarter. Sales in the MRM segment decreased 53% compared to the prior year period. It will take some time for customers to evaluate and begin the completion of the new technology but given the fact that in 2015, we sold already over 8000 unit and we have additional 8000 units orders already filed, we’re optimistic about the potential opportunity for our 317 program. The Aerospace and Defense segment came in at $1.8 million, a significant decrease compared to the third quarter last year as a result of shift in the Aerospace and Defense order to the fourth quarter. Hence, we see the fourth quarter into Aerospace and Defense return to growth and profitability. We continue to see solid demand from our customers in critical missile and aerospace solution. On slide eight, we illustrated the benefit of our next generation product line. Android A-317 is a great true product for us in the industry and during the quarter we saw very strong interest from the marketplace. The new product is rugged and salable and it’s performed our offering into a wholly connected solution, offer capability such as 4G, LTE, Bluetooth and Wi-Fi applications to provide total connectivity. Our public mix expensive the black boxes and additional installation are necessary by packaging the driver interface, operational and connectivity feature and android operation system into one similar cost effect system for the fleet management and several other mobile logistic enterprise mix. In our view, it is the most competitive solution in the marketplace. And our strong initial order and customer feedback reaffirm the effectiveness and growth opportunity this product represents. Slide nine gives you an overview of our roll out of our new full connectivity product line. R&D for the new product line is complete. Although we have a capability to continue to refine and adapt the product going forward in order to customize for each customer’s need and keep the technology as current as possible. We are currently in the next phase of carrier certification. It is important for this product launch that we are certified as wireless carriers. And as we reported last year, the Verizon certification is complete. AT&T is currently evaluating the product and we hope to receive certification soon. Innovation, we are in discussion with all the other carriers to move along certification. We are seeking strong order activity from customer who have tested end product and adapted to meet further need. We have been aggressively marketing our new product to existing and new customers and we’ve seen significant backlog grow since the start of the third quarter. With our strong order pipeline, we expect to see more than 60% sequential revenue growth in the fourth quarter. I will now turn the call over to Eyal for the financial review.

[Eyal Leibovitz:]

Thank you, David and hi everyone. Revenue in the third quarter decreased compared to the same quarter last year and decreased slightly compared to the third quarter of 2015. Gross margin was 20%, as compared to 25%. Overall revenue and gross margin in the quarter were in excess as we ramped up our MRM product line from the development to sales and by shift in Aerospace deliveries to the fourth quarter as David mentioned earlier. On an absolute dollar basis, R&D was down for the quarter as we completed the development phase of our new all-in-one platform. We expect the continued decline in R&D expenses and general and administrative expenses as sales grow. Sales and marketing expenses and general and administrative expenses decreased on a dollar basis as compared to the same quarter last year. Now turning to the nine month results, revenue decreased to $17 million compared to $24 million in the prior year period. Lower sales reflect transition stage between the new production introduction and the roll-out. Gross margin declined slightly to 28% as compared to 29% in the same quarter last year. R&D and general and administrative expenses came down on a dollar basis but increased slightly as a percentage of sales. Slide 11. On slide 11, you will see that on the non-GAAP basis, our third quarter loss increased to $1 million compared to $214,000 in the third quarter last year. For the first nine months of 2015, we recorded $1.7 million loss compared to loss of $1 million in the prior year period. Slide 12. Turning to slide 12, you can see that our balance sheet remains strong with $10.7 million in cash and cash equivalents, $13.1 million working capital, and $17 million in shareholders equity. We feel confident in the health of the balance sheet going forward. I will now turn back the call to David.

[David Lucatz:]

Thank you, Eyal. On slide 13, you’ll find the ELD mandate opportunities. As we discussed before, this mandate represent tremendous growth potential for our company. I’d like to briefly update you on the mandate timeline. In July 2012, the U.S. Congress passed legislation requiring that drivers log their hours in ELDs instead of paper log books. The legislation originally required the Federal Motor Carrier Safety Administration, or FMCSA, to adopt rules implementing these requirements by September 2015. That timing has been delayed slightly and we now expect the mandate to be published sometime before the end of 2015. Importantly the number of ELD-equipped trucks is expected to increase for 0.5 million today to approximately $2.6 million. We’re waiting with our customers prepared for the law’s pending enforcement, and we are confident that our comprehensive solutions are among the most competitive in the market. I will now turn the call over to question. Operator?

[Operator:]

Thank you. [Operator Instructions] The first question is from Mike Vermut of Newland Capital. Please go ahead.

[Mike Vermut:]

Hi gentlemen. How are you?

[David Lucatz:]

Very good. Thank you.

[Mike Vermut:]

Started to create a framework, you have no analyst coverage out there. So in China, you sit here and kind of if you could paint a picture for us looking into your backlog, maybe looking at some new customer wins or those you are talking to in the industry whether it’s the -- some of the large providers out there. What kind of growth should we be thinking about in the ‘16, ‘17, ‘18 with this huge ELD mandate coming out there. The win is possibly in the Defense segment and then following up on the topline growth. What kind of margin should we be heading and maybe then some EBITDA margins. Just a rough framework, there is nothing out there for us to go off of and so if you can kind of paint that picture for us, I think it would make it easier.

[David Lucatz:]

Thank you. It’s David here. I’ll separate the question into two sub-questions. One I’ll start with the margin. As we said in the previous call, we aimed to go to margin on average of 35%. As a mater of fact, we are pretty close also today. The margins that you see today is really bias because of amortization and some content issues. But if you stick to them which is more predictable in terms of margin, the MRM division is around 17% today. So, we are pretty closer to 35%. And the reason we had little less is because we use a new product and it sometime take lower margins until you get the right margin. So back to your question, especially on MRM, we believe it would be 35% and above. As to the Aerospace division, it’s hard to predict because it’s a project oriented company and it really depends on the nature of the project. So, of course, we aim and we try to get to higher margin but sometimes it really depends on the nature of product. And by the way, it also characterized by a timing issue as you can see from the results in this quarter because the major reason for the difference in the result is this quarter is the shifting of the Aerospace order into fourth quarter. So basically back to your question in terms of margins, in the MRM, we aim to be 35% and above. On the average, it clearly depends on the effect of Aerospace but we have good reason to believe that the project will get better margin in the future. As for growth, of course, we will not give a precise number but we strongly believe that we see continued growth of the company. This year is a little different. It’s a transition year, especially since we move majority of the business to the U.S. and it takes time, and also it takes the costs and the revenue. But from what we see today, 2016 going to be a stronger year and 2017 the same.

[Mike Vermut:]

Is there a framework as to your thinking 20% growth, 30% growth, 40% growth? This mandate is obviously a big driver for the business. And you are right in the middle of that growth trajectory. What should we think? Is there a framework we can start thinking about?

[David Lucatz:]

I cannot frame -- if we get and when we get the ELD mandate, it’s going to affect the number drastically. So, I don’t think there is anything today to give a projection about the growth, okay. It’s going to be a strong growth for sure. It’s going to be affected by the ELD for sure and we strongly believe and we are very optimistic to our ability to take major part of this ELD and to grow the company in the next two years significantly. Shai, if you want to add something at this time?

[Shai Lustgarten:]

Hi, Michael.

[Mike Vermut:]

Hi.

[Shai Lustgarten:]

So basically, if you look at what we did this year and going back to the portion of your question discussed in the penetration to new customers, this was a significant change in the company, which is much more stable today. 70% of our growth and revenue today come from 10 major customers. It shows the continued penetration of our credits and yields, roadmap that we laid on our tables to the R&D team in the beginning of 2015 and striving exports in all the products that we said in All-In-One. The context of the All-In-One is getting absorbed by the customers and that’s how they are nurturing. That’s how we have to regenerate new customers and that yields very strategic nice order. Like David mentioned, the nice visibility of going forward and the growth going forward. So, I see relating to the growth, we see this bottom up. We see this from the plan that we set very clearly in the beginning of the year. We are moving ahead of our plans and exposing the products one by one out to the market with the new technology. One of the first to comply with all the new mandate requirements, which like David mentioned is a growth engine to the company but only one will drive growth engines of the company in our plan. And it is going to be of course, related to your question, it is going to be a game changer causing to us obligations people are waiting for this to kick in everyday now, which is good news for Micronet of course. Being at the position in place we are in the market, today gives us a good added value over other in order to make significant change in the company.

[Mike Vermut:]

Great. And then just expanding on that, can you give us an idea of when you are going into these large software providers to deliver your hardware? Who are going up against? Who is the competition that you are seeing or is there not real competition, you are just kind of replacing an internal device?

[David Lucatz:]

So what we see when we go, we see companies that are few companies -- I can’t mention names and everything. But very, very large ones, which don’t have -- let me answer it this way. There are few very large ones that you can read about everyday and there are few also smaller ones. In the positioning place we are at, we don’t see much competition. The reach in competition is great and healthy. So it’s actually good for us because it allows us to provide and show where we are better to win and gain the markets. But the situation again is the ability to customize very quickly. Our markets require customization. Of the 800-pound gorillas that we are approaching everyday and some of them we already received strategic orders, which will continue in 2016 for the ELD mandates for our tablets. All of them require customization, the result of the solution. Everything is unique. Our R&D can -- and that’s where we kick in our strengths. Our R&D team does these customizations very quickly. We started working on this already, at the beginning of 2015, probably the end of 2014. But we knew what we needed to do and practically, we started this in the beginning of 2015. That’s how we got already ordered for ELD requirements this quarter, significant orders. So, continuing that way, continuing from closing our merger and moving of the operation to the U.S. where we can serve better our customers as we do today, which shows immediate effect, continuing everything but will lay down as a plan to penetrated customers, which we see today very nice. However, David mentioned, with our backlog, is the highest backlog we ever had in the history of the company. So this is where I’m looking at when I try to see and measure our performance. Going forward, it is better than -- when you look at the backlog, it’s even better. And we expect it but we need to do much more. So, we got a lot to do. The work is not an easy task. Everybody is working very hard to make it happen but the orders we are getting, the healthy backlog we got in the company shows that we are moving in the right direction.

[Mike Vermut:]

Excellent. I appreciate it, guys.

[David Lucatz:]

Thank you.

[Shai Lustgarten:]

Thank you.

[Operator:]

The next question is from Katie Messer of Northwest Management. Please go ahead.

[Katie Messer:]

Hi. Good morning. Would you be able to provide any additional detail around what kinds of new customer penetration that you’ve been seeing?

[David Lucatz:]

And how do you -- can you please repeat the question?

[Katie Messer:]

Yeah. Would you be able to provide any additional detail or color around what kinds of new customer penetration you are seeing?

[David Lucatz:]

Okay. Shai, can you help with this?

[Shai Lustgarten:]

I can’t like you said we mentioned names that will give you the right color. The market is segmented to different verticals. And we had laid in our plans the objective to penetrate the largest vertical, which is the local fleet, the heavy equipment and agriculture equipment vertical, which is the third largest long haul, which we operated before doing the second one and there is municipalities and additional. So, as you can see from our obligations and information we put in the market, we were successful to penetrate all of these verticals that we said we will. We got -- with the local fleet, the largest one by far. And today became actually 30% of our revenue. Heavy equipment is about 28%. The rest is long haul which we operated before OEM. So, I hope that gives you a little color on the municipalities, waste management, cement mixers, taxis, school buses or yellow school buses and wide bands, technician bands for companies like AT&T, Verizon, et cetera. All of this is in the local fleet. And we are actually delivering thousands of tablets to that vertical and that’s how it became very quickly 30% of our revenue.

[Katie Messer:]

Great. Thank you.

[David Lucatz:]

Sure.

[Operator:]

The next question is from George Melas of MKH Management. Please go ahead.

[George Melas:]

Hi. Good morning, guys. First question on the balance sheet, can you tell us how much of the cash and how much of the debt is held at corporate and how much is with Micronet Israel please?

[David Lucatz:]

Yeah. Hi. It’s David here. Of total cash, around $7 million is in Micronet and debt $3 million. On the corporate level, none of the cash is there. All the cash and the debt is in the company themselves.

[Tali Dinar:]

George, did you get that?

[George Melas:]

Okay. That’s an easier question I’m asking. How much of it is with Micronet Israel and how much of it is with Micronet Enertec?

[David Lucatz:]

Okay. Well, if we look at the $10 million cash, $10 million plus of the $10 million, $7 million in Micronet itself and the remaining is in Micronet Enertec.

[George Melas:]

Okay. So of the cash, $7 million is with Micronet Israel and then roughly $2 million to $4 million is with Micronet Enertec.

[David Lucatz:]

Yeah. Absolutely, correct.

[George Melas:]

Okay. And then what about the debt?

[David Lucatz:]

Debt, of the total debt, roughly $3 million in Micronet and the remaining is in Micronet Enertec.

[George Melas:]

Okay. Okay. Great. All right. The question about trying to understand the revenues of MRM segment, prior to the Beijer acquisition, the company is highly dependent on Trimble, I think three programs at Trimble that were a huge portion of the revenue and that basically declined rapidly. There was a lot more diversified. But if you look at the second half of last year, the revenues were roughly like you said $8.2 million in the third quarter. So, I’m trying to understand -- but first of all, I’m trying to understand the All-In-One product, if you do roughly 60 million units in ’15, maybe that’s roughly $5 million in sales. So it would be roughly 30% of the revenue of that division. So the majority of the revenue is still with sort of the older solutions but these older solutions have declined drastically. So can you help us understand why they have declined so much?

[David Lucatz:]

First of all -- sorry, go ahead. Okay. So first of all, just to correct the real big data, the acquisition came with two major customers. And you are right about the one focused before from LTD on one customer. Today, 70% of the revenues come from 10 major customers. We penetrated additional customers and we actually enlarge the volume with existing customers because of the new penetration of the 317 which is not an old platform, its actually a new platform that the older version -- its an upgrade of an older version, but it’s a totally different products, because its an All-In-One concept, all the connectivity within that tablet before we had screen-only. So it’s a totally different product. We kept the name because it was going well before but a much, much, much less revenue share, so in the...

[George Melas:]

So Shai what happened -- so they came with two major customers, right. What happened to those relationships?

[Shai Lustgarten:]

Two things, one, you will see additional, I mean, as David mentioned, you will see the growth and I’m not worried at all, a lot of it is a project oriented sometime as well. So it is shifting sometimes from Q2 to Q3 or from Q4 -- from Q3 o Q4, but I’m not worried there at all, none so -- none what deliver. So, like David mentioned, sometimes you do have a shift of revenue, but I do expect to get it and I am not -- you will see as we advance forward. And in regarding the additional portion of that -- of my response is that, there is a huge trend of moving into Android systems. All the Beijer acquisition focused on window-based which helps us allow to penetrate the enterprises and they’re moving very slowly, but future volumes and we expect to see of course there. This is good. But a lot of the customers are moving into Android that is the trend of the market. This is the added value that we brought to the acquisition. And you’d see how the existing customer base of Beijer, the acquired entity is actually now shifting into additional LTV products which are 317 and et cetera and that’s why you see also this became as more than 30% of our revenue.

[George Melas:]

Okay. And then just to try to elaborate a little bit. So those two major customers were big contributors in the second half of last year, but in the first three quarters of ’15 hardly contributed at all?

[David Lucatz:]

George, its David. Let me just, allow me please to correct you, if you compare the revenue of which derived from the old major products and customers are -- it is not -- there is no real difference between this year and last year. So you are absolutely right about the introduction of the All-In-One new product, which as we said going to be a 30% less, but its not that we see decline in the numbers, okay.

[George Melas:]

Okay. I’m just thinking it’s not very clear and given the revenue decline of 54% you have to provide more clarity.

[David Lucatz:]

Okay. But…

[George Melas:]

It’s not enough to say, I’m confident about the future, just have to basically explain things better.

[David Lucatz:]

Okay. First of all, allow me again to elaborate a little and clarify. Its not that we are confident about the future, we really see the future, because as we already stated, we see a 60% growth next quarter. So it’s not only confidence. And back to your question, we see a trend of moving to the new Android-based new system All-In-One, but it is not to say that we see the old product vanish, of course, tens of time, its not going to last forever, but we see a nice transition from the old one to the new one.

[George Melas:]

Okay. One more question for you David. What is the relationship with Micronet Israel and are you actually working on trying to maybe consolidate the companies or not really?

[David Lucatz:]

The answer is, of course, we -- its part of our strategy and we said it many time in the past, we thinking of -- we’re exploring all kind of ways, ideas, directions to be able to consolidate the two companies. I believe it’s a matter of time, but eventually we’ll probably be able to do something. Again, it’s not all in our hand as you can imagine.

[George Melas:]

Okay. I mean, all right.

[Operator:]

At this point, there are no further questions. Before I ask David to make his concluding statement, I would like to remind participants that a replay of this call will be available within two hours. In the U.S. please dial 1 [phone], in Israel please dial 03-925-5929, internationally, please dial (972) 3925-5929. I see that there is no additional question. Management there is no additional question. Eyal?

[Eyal Leibovitz:]

Okay. In conclusion, we are extremely excited about the progress we are making. Despite the fact that this progress was not reflected in the financials for the quarter, we experience it everyday from our existing and potential customers. Our projects with MiX Telematics and the Taxi and Limousine Commission's of New York City then validation to the market acceptance of our new All-In-One technology on the MRM side of our business and we are excited about our new Mobile Command & Control Centers in Aerospace business. Our revenue are significantly more diverse now across many more customers are suppose to be independent on one customer representing a proportional amount of our revenue as were the case last year. Our Salt Lake City facility is fully integrated and our MRM business is benefiting as a U.S. based operation. We see great interest from the market and we are opportunistic about our future opportunities for growth. I would like to thank the devoted team of employees and manager and I look forward to speaking with you next quarter. Thank you.

[Operator:]

Thank you. This concludes Micronet Enertec Technologies Third Quarter 2015 Results Conference Call. Thank you for your participation. You may go ahead and disconnect.