O2Micro International Limited
Q2 2015 Earnings Call Transcript

Published: 1 Aug 2015

[Operator:]

Good morning and thank you for joining us today to discuss O2Micro's Financial Results for the Second Quarter of Fiscal Year 2015. If you would like a copy of the press release we issued this morning, please call Pamela Campbell at area code [phone], extension 8095, and we will fax you a copy immediately. It is also posted on the O2Micro's website at www.o2micro.com under the heading Investors. There will be a replay available through August 6, 2015 at 9

[Scott Anderson:]

Good morning and thank you for dialing into O2Micro's financial results conference call for the second quarter of fiscal 2015 ending June 30, 2015. This is Scott Anderson, Director of Investor Relations. I'd like to remind listeners that the discussion of business outlook for O2Micro contains forward-looking statements. Statements made in this release that are not historical facts are forward-looking statements within the meaning of the Federal Securities laws. Actual results may differ materially due to numerous risk factors. Such risk factors are enumerated in the company's 20-F Annual Filings, our Annual Report, and other documents filed with the SEC from time-to-time. Listeners are referred to the O2Micro's earnings press release and the documents filed with the SEC to understand these forward-looking statements and the associated risk factors. The statements made herein are dated information; the company assumes no responsibility to provide updates to this information. With me today are Perry Kuo, our CFO and Director; our Head of Marketing and Sales, and Director, Jim Keim; and Sterling Du, O2's Founder, CEO and Chairman. After the prepared remarks from these gentlemen, the floor will be open for your questions. Lastly, management is very focused on continuing our recovery efforts and making the company more efficient aimed at increasing shareholder value. To further aiding the process O2Mrico welcomes any input from its shareholders on how to obtain such. However, in an effort to make sure the company properly addresses those concerns, we encourage any shareholders who have suggestions to make such proposals in writing so that the Board of Directors can give such advice their proper due and review such at our regular Board meetings. Just want to ensure that there is no miscommunication from shareholders and that everyone is operating on the same information. Now, I would like to introduce Perry Kuo, CFO of O2Micro for a discussion of the financial highlights of the second quarter of fiscal year 2015 ending June 30, 2015. Perry?

[Perry Kuo:]

Thanks, Scott. We will now review our financial results for Q2 2015. Please note that financial results will be presented on a GAAP basis unless we designate otherwise. The non-GAAP results exclude stock-based compensation expenses, one-time charges, non-recurring gains and losses from discontinued operations. Our full GAAP results are available in our press release that was issued earlier today. GAAP revenue in the second quarter of 2015 was $14.7 million. GAAP net loss in the second quarter of 2015 was $2.7 million. If we exclude stock-based compensation of 447,000, the non-GAAP net loss will be $2.3 million. GAAP net loss per ADS in the second quarter of 2015 was $0.10. Non-GAAP net loss per ADS was $0.09. Gross margin was 49.6% in Q2. The gross margin reflects the current revenue level and the product mix. R&D expense was $3.8 million, or 25.6% of revenue. This amount excludes stock-based compensation expense of $76,000. SG&A expense was $5.9 million, or 40.5% of revenue. This amount excludes stock-based compensation expense of $371,000. The non-operating income was $424,000. This amount includes the gain of sales of real estate properties for $201,000, and the interest income on current deposits were $199,000. Income tax was $287,000 in the second quarter, and is mainly based on the estimated effective tax rate of each taxable location. In Q2 2015, we repurchased 497,082 ADS units at a cost of $1.21 million. Q2 2015 revenue by end market breaks down into the following percentages; consumer was 50% to 55% of revenue, computer was 10% to 15% of revenue, industrial was 30% to 35% of revenue; communication was less than 5% of revenue. At this time, I would like to provide some additional information. O2Micro finished the second quarter with $58.2 million in unrestricted cash and short-term investments. This represents cash and cash equivalents of $2.24 per ADS. In addition, O2Micro has no debt. Accounts receivable at the end of Q2 was $7.7 million. Our DSO is 43 days. It is in our target range of 40 to 60 days. Inventory was $8.4 million at the end of the second quarter. This represents 101 days of inventory, and the inventory turnover was 3.6X in Q2. From a cash flow perspective, we generated $2.0 million cash outflow from operating activities in Q2. Capital expenditure was about $95,000 in the second quarter while R&D equipment and the computer. Depreciation and amortization was $600,000 in Q2. At the end of the second quarter of 2015, O2Micro had 386 employees, 51% of which are engineers. At this time, I would like to provide our financial guidance for the third quarter of fiscal year 2015. This guidance reflects our best estimates for the current environment, and is subject to change. This is the only official guidance we will provide unless we update with a public announcement in the future. O2Micro expect Q3 revenue to be up 2% to 10% sequentially. We are guiding the Q3 gross margin will be in the range of 50% to 52% and is mainly from the product mix. R&D expense excluding stock-based compensation should be $4.5 million to $5 million in Q3. SG&A should be $5.5 million to $6 million in Q3, excluding stock-based compensation expense. Stock-based compensation expense should be in the range of $450,000 to $550,000 in the third quarter. Non-operating income should be in the range of $400,000 to $500,000 in the third quarter. Based on the service income of our subsidiaries in different countries, we expect our tax amount to be in the range of $200,000 to $300,000 in the third quarter. While we wait for our [indiscernible] next significant product cycle to continue to mature. The goal of this management team and the four directors is to maximize shareholders value, and we are taking the necessary steps to do it. Regarding our share repurchase program, we have been active in this program historically, and we plan to be active going forward. Since 2002 we have repurchased approximately 18 million ADS shares for approximately $100 million. At the end of Q2, we had 11.1 million remaining in our share buyback authorization. Returns to shareholders are very much on our mind, and will continue to be a focus in the future. We will provide a base to the additional measures to enhance shareholders values throughout this year. We believe our cash breakeven point is between $17.5 million to $18.5 million in quarterly revenue, and our profitability breakeven point is between $20 million to $21 million in quarterly revenue. Our guidance for the third quarter of 2015 reflects the ongoing ramps in our big lighting, general lighting, battery product lines, and the power management products for tablets and the smartphones. Given the uncertain demand and the macro environment, we are prepared to continue to manage costs as needed, although we believe we have aligned current cost base on current and anticipated revenue levels. I would like to thank everyone for participating, and turn the call over to Jim Keim, to talk more about our business. Jim?

[Jim Keim:]

Thank you, Perry. Good morning everyone. Last quarter we stated our new product areas; general lighting, battery management and power management for tablets and smartphones would help drive our Q2 growth, with their combined revenue contributing approximately 25% of our projected Q2 revenues. We also stated our largest product line, backlighting for TV and monitor markets, was expected to experience improved revenues in Q2, and we also noted that the growth in backlighting could result from modest market growth, coupled with additional silicon content that key TV manufacturers will utilize our new DC to DC and AC to DC products. These projections were correct with general lighting, battery management and power management for tablets and smartphones contributing the expected 25% of our revenues. As projected, we also increased our backlogging revenues for the TV and monitor markets in Q2. These products are expected to see ongoing expansion through the balance of 2015, and we remain committed to give more detail of the revenue contribution of these products as our revenues continue grow in 2015 and 2016. While our first power management product for the tablets and smartphones remain a small part of our total revenue, their impact will become significant as these new products ramp into much higher volumes and increase our company's revenues in Q4 and all of 2016. Before discussing individual products line, we will make a few comments regarding Q3 revenue. While projecting some increase in Q3 revenues from ongoing growth and mid-product sales, there is softness in some key markets resulting from well-known economic issues in Europe and slowed China growth. This has caused many manufacturers to slow their purchasing activity, while also cutting back inventory. Nevertheless, we remain very optimistic regarding our goal to continue to grow revenue at quick pace. Battery unit product areas back to world drive our growth. In battery management, we continue to see expansion revenues in all key markets; power tool, e-bike, e-vehicle, appliances, and vacuum cleaners as the lithium ion battery technology continues to become more reliable and cost effective with the use of our battery management products. Major OEMs using our products include Black & Decker, Electrolux, LG, Panasonic, and TTI. Additionally we're seeing increasing design activity for our products in uninterrupted power supply applications, and we continue to see the usage of our battery management products expand at major OEMs. While battery management product revenue generally tends to grow slowly due to the nature of this business, we continue to expect product sales in battery management to grow to approximately 15% of our 2015 sales revenue in the second half of this year. Our intelligent back lighting products enjoyed good growth in Q2 by reasonably good market conditions and product expansions in the TV sector. While market softness and inventory corrections from the TV market showed slow growth in Q3, we nevertheless are projecting growth in both Q3 and Q4 based on our increase in design win activity in TV, monitor and tablet areas. Although general lighting revenue continues to expand we remained focused on the higher end of this market, where we continue to gain new design wins worldwide, and expanded more applications with our patented products. Our customer list now includes GE, IKEA, Iris Ohyama, Lights of America, Osram, Panasonic, Samsung, TCP, and Toshiba as we continue to see a broader based acceptance of our proprietary free dimming and two color dimming products in more and more applications and a widening international customer base, including a growing number of Asian countries. We have also successfully introduced our TRIAC controller lightening products for legacy dimmable fixtures and see these products gaining revenue momentum in 2015. We now expect general lighting revenues to contribute approximately 13% of 2015 revenue in the second half of this year. Finally, we are pleased to report that our power management products for tablet and smartphone continue to achieve design wins and qualifications. Q2 starts the beginning of volume delivered. We expect to see increasing revenues in Q3 and significant revenue expansion in Q4 and 2016, more than offset any decrease in traditional notebook product sales and allow our color products to reverse the downward trend of the past few years. While we are working on key design wins on tablet and smartphone platforms for leading Chinese CPU manufactures, whose programs are expected to go into mass production in Q4, 2015, we will continue to work on new charger in DC to DC product design wins in notebooks. We will also be announcing more regarding revenues in specific power management customers as we move forward. I will now turn the call over to our CEO, Sterling Du, for closing remarks.

[Sterling Du:]

Thank you, Jim. Q2 revenue was in the range of guidance that we provided in April. We generate revenue of $14.7 million in the second quarter of 2015, an increase of 12% sequentially, and a decrease of 16% from the same quarter last year. The year-over-year revenue decline was mainly due to the overall weak macro environment. Through a combination of operational expense reductions, and the implementation of certain initiatives to monetize assets of the company, we believe we have transition the company to benefit from our next growth phase. Our high priority initiatives to deliver superior customized solution result in design win momentum in our new tablet and smartphone products, and expansion of customer base in our backlighting, battery management, and general lighting markets. We reported a GAAP loss of $2.7 million in the second quarter of 2015. GAAP net loss was $3.2 million in the second quarter last year. We reported gross margin of 49.6% in Q2, mainly reflect product mix. I would like to highlight considerable progress that we have made in key growth drivers. In our backlighting business, we are projecting renewed growth in the product area as we move throughout 2015, based on increasing these activities in TV and monitor. Although our revenue from backlighting was slightly weaker and we expected in a quarter with LED backlighting business for TV market would continue to grow is content spend from a portion of higher end TVs where we have the opportunity to design LED IP for high end TVs. We continue to be worldwide leader in LED backlighting for TV and monitors, and are expanding customer bases in our backlighting business, including such market leader as Sony, Toshiba, HP, Dell, Lenovo, Sky Walk, TCL, Hisense, and others. O2Micro proprietary analog power management technology in our battery management sector supports a variety of end markets and continue to grow with our expanding customer base. Our battery management products continue to achieve many new design wins, and we continue to be very optimistic for their continued growth in many end markets going forward. We made significant progress in our goal of targeting smartphone and tablet manufacturers. We are engaged with several Tier 2 smartphone and tablet manufactures, and we expect to realize additional revenue from those new customers in the second half of 2015. In order to maximize the efficiency with our tablet and smartphone customer, we've actively engaged distributors in this market, while our customer receive direct technical support for O2Micro. Our strong engineering and customer service present in Chinese markets enable O2Micro expand our custom base in the region. We expect this business directly expand and the general additional revenue throughout Canada deal 2016. Finally, our LED general lighting business continues to grow in this competitive market. Our strategy of targeting leading LED manufacturer in the U.S. and Japan is working. We also had a strategy to penetrate Chinese general lighting market. The general lighting market continue to evolve and our product and technology are well positioned to serve this market. I'm excited about our demonstrated success across all of core power management product lines, including general lighting, backlighting, power IC's for smartphone and tablet, and the battery management. Based on guidance for third quarter we are very close to the cash breakeven level. We look forward to providing you updates on our progress throughout the remainder of the year. At this point, I'd like to thank you for listening to our conference call. And I'll turn it back to Scott.

[Scott Anderson:]

Thank you, Sterling. Operator at this point, we'd like to open the call to questions.

[Operator:]

Thank you. [Operator Instructions] We'll take our first question from Tore Svanberg of Stifel Nicolas.

[Tore Svanberg:]

Yes, thank you and great job on returning to sequential growth. The first question, looks like your gross margin is going to improve in Q3, I assume that is related to mix but could you talk a little bit about the specifics of that?

[Perry Kuo:]

I think demanding for the product mix in Q3 as we enjoyed some EBITDA gross margin from the largest side P&L inclusive of TV and the monitor and also reaching more busy product in Q3. These are two very -

[Tore Svanberg:]

Very good. And a question on the TV business, it sounds like you expect growth there although market trends would suggest that market potentially declining in the second half. So could you just elaborate a little bit more on the dollar content increases as you're experiencing there?

[Perry Kuo:]

Yes, as we mentioned we have been focusing on having additional products into the TV customer base including our DC to DC, DC to AC type products and we will continue to focus on growing that into the business. So we launched the opportunity for not only increasing battery but also the high end where we are engaged with some proprietary products with some of the market leaders to expand the performance of some of their high end offerings in TV. So we're quite happy with our position in TV, we take that we continue despite a weak TV market to grow our revenues in that area for the second half.

[Tore Svanberg:]

Very good and a question for Sterling, Sterling it sounds like you are now finally penetrating smartphone and tablet vendors, at least Tier2 vendors. I was hoping you can add some color on there, you mentioned battery management, so what types of components are you starting to see to market? Are these primarily charger ICs or is there something else there?

[Sterling Du:]

Yes, happy to. These are charger IC and also have to old [ph] from the battery back to the USB connector. And then the third product we are designing in the production is the case cage. We have a coolant counter which would calculate the current in a precise after quantity and that is the third one. And we also hired some of the CPU DC to DC to serve for the high end, a 4-Core, 8-Core, even 10-Core CPU and those are getting to some early activity. So basically we have a three position class, the CPU this is the number four but it is activities.

[Tore Svanberg:]

Very good. Last question, it sounds like you're starting to have some more exposure to the distribution channel and I was hoping you could talk a little bit of more about that - are we talking about multiple distributors here or is it one or two main ones and are these distributors primarily serving you in any specific region, is it China or is it more worldwide?

[Perry Kuo:]

We remain focused on major accounts and that's where we intend to continue our focus. You are correct that we have increased the number of distributors, those distributors are usually very specific distributors for specific targeted customers and specifically in Japan and China, where it helps handle the currency transactions that are involved. So we are not engaged with full wide distribution but primarily in those areas where we need to see currency transactions.

[Tore Svanberg:]

That's very helpful. Thank you very much.

[Operator:]

[Operator Instructions] We'll move next to Lisa Thompson of Zacks. Your line is open.

[Lisa Thompson:]

Hi, good morning, good afternoon, where you are. I have a few questions, first of on your expenses. And I look at the R&D and the SG&A line, R&D is a lot lower and SG&A is a lot higher. Is there something that went on and how you categorize expense of this quarter?

[Perry Kuo:]

Yes, this is a little bit lower, it's because of our NIE outlook, little bit delay to Q3, that's why I guided Q3 a little bit higher by $500,000, our conveyer to earlier quarters. And SG&A spends there, we do have some extra I spend [ph], this turns out to be one-time expense but I still call it a regular SG&A expense as most of these are related to the corporate activity, for the shareholders activity.

[Lisa Thompson:]

Okay. So that's why it goes back because normal mix quarter vary?

[Perry Kuo:]

Yes. And mid-quarter R&D is a little bit higher than the rates of that because of the - and Q4 we can go through that normal hold.

[Lisa Thompson:]

Okay, good. And on the real stay, are we kind of - are you done shying things for now?

[Perry Kuo:]

We still have some portion, maybe about 30% to be sold in Q3/Q4. It's - make time, maybe some more some tied to real estate. So the real estate was about 30% available for sell in Q3/Q4.

[Lisa Thompson:]

So it's actively for sale, is that correct?

[Perry Kuo:]

Yes.

[Lisa Thompson:]

Okay. And getting back to the smartphones which used to be the most exciting thing going on next year, you talked that you had several vendors and you're shipping to one. Are you going to be shipping to more than one in the next quarter?

[Perry Kuo:]

We're shipping to several one but majorly in China region.

[Lisa Thompson:]

Okay. Several different companies, so that's multiple different hands, that's right.

[Perry Kuo:]

Right, right.

[Lisa Thompson:]

And at what point are we going to find out what hands actually?

[Perry Kuo:]

Could you repeat that again?

[Lisa Thompson:]

Yes, when will we find out what - who the customers are, and which specific handsets you designed into?

[Perry Kuo:]

Yes, well I think that before the holiday season there will be several as major. We are selling this earlier already in the market, most of the white box and also some of the white box go to China Unicom and the China Mobile for their so coded contract form in China, and therefore the particular print is only to come up before the end of the year.

[Lisa Thompson:]

Okay. And given what you're seeing in that business, what would be your guess on percentage of revenues in 2016 from smartphone and tablet?

[Perry Kuo:]

Yes, we also like to note that our sales - we did that on the right path, their action go to the significant revenue as Jim has just stated in the conference call. However, the timing of the revenue happening could be one or two quarter shift towing based on several factors, even including a macro environment as we know. But we have reasonable penetration right now, so we believe it's the readiness of our play phone we're designing and went there - how much, how many they are shipping. So we expect that 2016 is going to be quiet growth compared to the 2015 and that we will continue to see that for many years to come, the high potential growth for this driver. But actual accuracy probably difficult to predict at this moment yet.

[Lisa Thompson:]

Do you think that you will have more than 5% of revenues coming from that?

[Perry Kuo:]

Next year?

[Lisa Thompson:]

Yes.

[Perry Kuo:]

Yes.

[Lisa Thompson:]

Yes, okay. So it's going to be quite meaningful as we progress, right?

[Perry Kuo:]

Yes.

[Lisa Thompson:]

That sounds like -

[Perry Kuo:]

And just like - and we haven't - but we will be begin the worlds more information while its customers just like we're doing in battery now, we expect certainly by some time and the first half of next year we'll begin to certainly really some specific customer information.

[Lisa Thompson:]

Good, that would be great to track what they are selling and keeping our eyes on their volumes. Very good, great quarter, I'm glad to see that there is no drama this quarter, everything looks good and the guidance sounds wonderful. Thank you.

[Perry Kuo:]

Okay, thanks Lisa.

[Operator:]

[Operator Instructions] And we'll take our next question from Tom Sepenzis. Your line is open.

[Tom Sepenzis:]

Hey, thanks. I was just wondering if you could talk a little bit about your share in the television market just between Taiwanese display, Korean and Chinese display companies. And if you've seen any kind of shift in the marketplace away from Taiwan and Korea, towards Chinese display manufacturers?

[Perry Kuo:]

Interesting question, and that's necessarily easy to answer, I will try to say a few words but maybe or many more. First of all, we are well positioned in China, we're well positioned in Japan, Korea tends to be a little bit more vertically integrated, we do have designed wins revenue in Korea but not as stronger penetration as we do elsewhere. We are seeing more activities but I think you would say brings Taiwan and China more together in terms of some Taiwanese companies doing more and more in China. So I think that our position being strong in China and that will enable us to retain a strong position in Taiwan as well. So we feel we're well position in TV and we see no reason given our current position that we can continue to expand.

[Tom Sepenzis:]

Again, thank you and then I apologize if you've talked about this and I missed it but in terms of the smartphone business, you had mentioned a number of color and battery components but in terms of the volumes, you're talking about next year on the prior question, is that backlighting? And when should we expect if that starts to hit the model?

[Perry Kuo:]

Relative to the smartphone we were talking more about our power products.

[Tom Sepenzis:]

Okay.

[Perry Kuo:]

Not that we won't have phone in certainly lighting but I think Sterling addressed most in his comments to grow the color area.

[Sterling Du:]

Right. I explained that to charger ICs, battery case cage ICs, and also boost IC which is supported a USB connector recall on the go. And number four, we have the CPU DC-DC which is we have just early stage activities. As Jim indicated, we also have some activity in the backlighting relate to flash, and a backlighting LED.

[Tom Sepenzis:]

Okay. So all those actually going to phone itself and not just the charger piece?

[Sterling Du:]

Right. It's not - we have - yes, we just full power management needs for the smartphone and table PC.

[Tom Sepenzis:]

So what is your addressable content within the cell phone from an ASP perspective, not necessarily what you're going to get to H1 but what's the total dollar content that you can address with your product portfolio now?

[Perry Kuo:]

Right. That amount won't be very high. Times the union number, right, but it is not something regarding that we can get 10% as although I know it's not going to happen, that will take some time. But to answer your question, yes, $1 minus/plus is because silicon content will gain design smartphone one piece of table PC.

[Tom Sepenzis:]

Thank you for that. And then lastly, just - last year on this time you lost one of your customers on the power side and I think there was hope that you might get them back this year, has there been any progress on that?

[Perry Kuo:]

Yes, we are working on that situation but at the same time we're taking versions of that product into the tablet area. So we are highly focused with our engineering efforts in tablet. Yes, we will continue to try to win customers back but at the same time the dynamics of the notebook markets there have been a number of shifts that have occurred in terms of the market share and also the OEMs and the ODMs that they are working with. And we're seeing fewer and fewer OEMs due there underlying right now as already more and more white box activity, specifically in the notebook area, and that causes us to focus more of our engineering efforts into the tablet and smartphone there.

[Tom Sepenzis:]

Okay. So we're not likely to see all the sudden extra $3 million in the quarter here starting in September/December, thus you just have to win back that business incrementally?

[Perry Kuo:]

Yes, and some of that business has shifted.

[Tom Sepenzis:]

Yes, it shifted to tablets. So it doesn't really exist in its former form I guess, right? Does that make sense?

[Perry Kuo:]

Right. And we think we're better off positioning ourselves for the long term with the tablet and that's really where we're focusing more and more of our engineering efforts, with some staff, I might add.

[Tom Sepenzis:]

Thanks very much.

[Perry Kuo:]

Thanks, Tom.

[Operator:]

And we have a follow-up question from Lisa Thompson of Zacks.

[Lisa Thompson:]

Hi, I know we talked a little bit about this before but I think it's interesting to go through a little bit about who you're displacing and who you remain competition in the smartphone businesses and how you are selling against them? How is that turning out?

[Perry Kuo:]

Yes, the competition is from TI and some is from Dialog, some is from Maxing. About majorly what we would players is kind of yes and no because our part of major focus is the high end well new for this way. It's more like today's mid-ranges smartphones - we just increase with 4-core CPU and to the 8-core or 10-core or 12-core which is in the future. So far those CPU in a pic after assumption they will reach 20-watt or 30-watt and that is equivalent to the CPU in a notebook. So this is naturally - as Jim indicated, we have a technology and we do the different version to address the tablet and the smartphone by using our notebook technologies. So in this area which is in the 4-core and 8-core and 10-core, used to be there is no so called on the go functionality. Newsfeed [ph] hasn't no so called recorded a fast charge or quick charge on charity, so we address those needs is really for the new functionality to the phone, its additional features. And for those who have now replaced anyone. For the charger, yes, we are replaced, it's a TI and maxing, and the field [ph]. So for the DC-DC we placed TI and a dialog.

[Lisa Thompson:]

Okay. And so at this point do you have an idea of what percent of the smartphone market is the 4-core to 8-core to 10-core, the notebook equivalent or is that a tiny part or is it 1%, 10% - how far they've gotten though?

[Perry Kuo:]

I ordered new designed project, they all is - in the most of it is a 4-core in the box, those few is 2-core, majority is 4-core in the box which we can address most of these activity project right now.

[Lisa Thompson:]

Great. So all the new stuff is going to be that but the current stuff that's being sold is - do you know what portion is sealed technology that's going to go away?

[Perry Kuo:]

We don't have a third-party number but it's [ph] we just cannot - their partition is like this, they probably go to the third world, they may be using 2-core smartphone, all the major design that they all focus always a 8-core, 4-core and a 10-core.

[Lisa Thompson:]

That's great, sounds great. Thank you very much.

[Perry Kuo:]

Thank you.

[Operator:]

And there are no further questions in the queue. I would like to turn the call back over to Scott for any closing remarks.

[Scott Anderson:]

Thank you all for your attention this morning. Please feel free to contact me at area code [phone], extension 8888 with any follow-up questions. So have a good day and thank you again for your attention. Good bye.

[Operator:]

This does conclude today's conference. Once again there will be a replay available through August 6, 2015 at 9 AM Pacific Time by calling toll-free 888-203-1112 or area code [phone], pass code 6355008. You may now disconnect your lines. And everyone have a great day.