QuickLogic Corporation
Q4 2014 Earnings Call Transcript

Published: 5 Feb 2015

[Operator:]

Ladies and gentlemen, good afternoon. At this time I would like to welcome everyone to the QuickLogic Corporation's Fourth Quarter and Fiscal 2014 Earnings Results Conference Call. [Operator Instructions] Today's conference call is being recorded. With us today from the company are Andrew Pease, President and Chief Executive; Ralph Marimon, Chief Financial Officer; and Brian Faith, Vice President of Worldwide Sales and Marketing. At this time I would like to turn the call over to Ralph Marimon, Chief Financial Officer. Please go ahead, sir.

[Ralph Marimon:]

Thank you, and good afternoon. Before we get started, let me take a moment to read our Safe Harbor Statement. During this call we will make statements that are forward-looking. These forward-looking statements involve risks and uncertainties, including but not limited to stated expectations relating to revenue from our new and mature products, statements pertaining to our design activity and our ability to convert new design opportunities into production shipments, market acceptance of our customers' products, our expected results in our financial expectations for revenue, gross margin, operating expenses, profitability and cash. QuickLogic's future results could differ materially from the results described in these forward-looking statements. We refer you to the risk factors listed in our Annual Report on Form 10-K, quarterly reports on Form 10-Q, and prior press releases, for a description of these and other risk factors. QuickLogic assumes no obligation to update any such forward-looking statements. This conference call is open to all and is being webcast live. For the fourth quarter 2014, total revenue was $5.7 million, which was above the midpoint of our guidance range. New product revenue totaled approximately $3.7 million and was above our guidance due to higher demand from Samsung for our display product. Mature product revenue totaled approximately $2 million, which was at the midpoint of our guidance range. Samsung accounted for 49% of total revenue during the fourth quarter, as compared to 27% of total revenue during the third quarter. Our non-GAAP gross profit margin for Q4 was 39% and was below our guidance. The primary reason for the lower-than-expected gross margin was due to the product mix and higher-than-expected display bridge sales to Samsung. Non-GAAP operating expenses for Q4 totaled $5.7 million, which was favorable to our guidance, and primarily due to the timing of engineering related expenses. On a non-GAAP basis, the total for other income, expense and taxes was a charge of $151,000. This resulted in a non-GAAP loss of approximately $3.7 million or $0.06 per share. We ended the quarter with approximately $30.1 million in cash. Our Q4 GAAP net loss was $4.1 million or $0.07 per share. Our GAAP results include stock-based compensation charges of approximately $492,000. Please see today's press release for a detailed reconciliation of our GAAP to non-GAAP results, as well as for detailed information on our full-year 2014 results. Now I'll turn it over to Andy who will update you on the status of our strategic efforts.

[Andrew Pease:]

Thank you, Ralph. During 2014 we laid the cornerstones for our strategic sensor hub initiative that I believe positions us to deliver sustainable revenue growth and higher gross profit margins. At the center of this initiative is our unique patent-pending flexible fusion engine sensor hub technology. Surrounding this are the cornerstones

[Ralph Marimon:]

For the first quarter of 2015 we are forecasting total revenue of approximately $5.7 million plus or minus 10%. The $5.7 million in total revenue is expected to be comprised of approximately $3.7 million of new product revenue and $2 million of mature product revenue. New product revenue reflects continued shipments of our display solutions into the tablet segment, shipments of various smart connectivity CSSPs, as well as production shipments of our ArcticLink 3 S2 sensor hub and other CSSP platforms. As in prior quarters, our actual results may vary significantly due to schedule variations for our customers which are beyond our control, schedule changes for existing opportunities, and projected production start dates for new opportunities could push or pull shipments between Q1 and Q2 and impact our actual results significantly. On a non-GAAP basis, we expect gross margin to be approximately 42% plus or minus 3%. The expected sequential improvement in our non-GAAP gross margin is driven by our forecasted product mix. We are currently forecasting non-GAAP operating expenses to be $6.1 million plus or minus $300,000. Non-GAAP R&D expenses are forecasted to be approximately $3.7 million. The increase in engineering expenses is due to outside service costs related to new chip development and new hires within the engineering organization. Our non-GAAP SG&A expenses are forecasts to be approximately $2.4 million. Our other income, expenses and taxes will be a charge of up to $60,000. At the midpoint of our guidance, our non-GAAP loss is expected to be approximately $0.07 per share. Our stock-based compensation expense during the first quarter is expected to be approximately $440,000. We expect to end the quarter with approximately $27 million to $28 million in cash. The forecasted cash usage is primarily due to the timing of payments related to an increase in spending for new chip development, which includes higher headcount and outside service expenses as well as capital expenditures. Before we move to the question-and-answer section of today's call, let me turn the call back over to Andy for his closing remarks.

[Andrew Pease:]

With the key discrete mobile FPGA opportunity shifting to an integrated solution and research companies forecasting another decline in tablet sales this year, delivering significant new product revenue growth in 2015 will be more challenging than I anticipated it would be last quarter. The good news is our sensor hub design activity is running well above the expectations I had one quarter ago. This is a direct result of the strategic cornerstones we've put in place during 2014. While it's tough to forecast the production timing and volume potential for our central hub opportunities, an important point for investors to consider, is that these opportunities carry higher gross profit margins relative to display bridges and discrete mobile FPGAs. With our strategic cornerstones in place and a rapidly expanding engagement funnel, I believe we are better-positioned now than we have ever been to achieve long-term growth and profitability and to deliver higher shareholder values. Operator, we would now like to open up the call for questions.

[Operator:]

Thank you, sir. [Operator Instructions] And our first question comes from Krishna Shankar from Roth Capital. Your line is open, please go ahead.

[Krishna Shankar:]

Yes. Andy, Ralph and Brian, congratulations on the design win momentum for your sensor hubs. Can you talk a little more about the ramp with the two products that you announced today based on your sensor hub, the Telepathy Japanese customer which I believe is kind of a smart wearable, headset, and secondly, you mentioned Foxconn ramping a new wearable device, can you give us a little more color on that and how they could ramp over the next few quarters?

[Andrew Pease:]

Well, if you're speaking about the size of the ramp, we obviously have forecasts, but the forecasts are -- can certainly change, and they're baked into our forecast right now, our guidance for Q1. So as you heard Ralph said, our guidance for Q1 is flat with what we feel will be a declining tablet market as we start to gradually increase our sensor sales.

[Krishna Shankar:]

Okay. And then you mentioned in your opening comments about engagements with top-tier, top customers, I think you said in the last call also eight top-tier customers. Can you talk about where you stand in the process of engagement to these customers in terms of initial feasibility versus design wins and what types of applications they are?

[Andrew Pease:]

So in the last call we talked about being engaged with eight top-tier customers, of which six were sensor opportunities and two were connectivity. One of those connectivity opportunities I think I addressed in this call, and that obviously has an impact on 2015 revenue. All of the other opportunities are progressing forward. In addition, we're engaged in far more activities and a wide variety of customers, many of which are very high name brand recognition in both the smartphone and the wearable space.

[Krishna Shankar:]

Okay. And then the sensor hub is your engagement model on this -- kind of the CSSP model or do you have many sort of customer engagements that customers are adding their own IP and you're doing custom designs? Can you talk about the mix between catalog CSSPs versus custom designs?

[Brian Faith:]

Krishna, this is Brian. I'll take that question. So we definitely see a variety of engagements right now. I would say that most of the activity right now is around our catalog solutions that combine the silicon platforms and the SensMe algorithms. We do see interest in some OEMs supporting their own algorithms to the hub, which is sort of underscoring the importance of the C compiler that we had talked about in the prepared remarks. In addition to that, we see another channel that's actually working with partners in the sensor space to make sure that our reference designs are compatible or perhaps include their sensors, and that can be a known good starting point that we jointly engage with customers. And I would say a perfect example of that is what we announced with Nordic Semi in December. Very close collaboration with them at the technical level. We have that reference design though, and that is also contributing to this increase in funnel size now.

[Krishna Shankar:]

Okay. Thank you.

[Operator:]

Thank you. [Operator Instructions] And our next question comes from Gary Mobley from Benchmark. Your line is open, please go ahead.

[Gary Mobley:]

Hi guys. Thanks for taking my question. Andy, wanted to go back to something you said in your closing remarks. Did you say it was going to be challenging to grow in 2015?

[Andrew Pease:]

Yeah. What I was referring was trying to tie in a statement I made in the previous conference call when I believed back in October that we would see significant year-over-year new product revenue growth. And what I'm saying now is, since that last call, there had been a couple of events that would make that more challenging for us, namely, the decrease in the tablet sales that is forecasted. You may recall that last year we had a very strong Q1 and then tablet sales fell off the cliff. And then the second one was this discrete FPGA programmable fabric opportunity that we had at a tier 1 customer that is now integrating discrete programmable logics into other components, making that a non-opportunity for us moving forward. So those two things make this see year-over-year new product revenue growth challenging. However, I want to underscore that our funnel activity is growing much more rapidly than I anticipated, and the funnel activity is filled with opportunities, mostly in our sensor hub solutions and our connectivity solutions that can in fact be integrated into our sensor hub solution.

[Gary Mobley:]

Sure.

[Andrew Pease:]

So I feel very optimistic about that.

[Gary Mobley:]

Well, let me try to pin you down a little bit more. Do you think you can grow -- do you think you can grow revenue in 2015?

[Andrew Pease:]

Like I said, I think it will be challenging.

[Gary Mobley:]

Okay. Going to the topic of the engagement you have with PolarPro III, can you talk about how the integrated programmable logic into another, you know, SOC and, you know, in other words, how do they work around the solution and solve their problem ultimately?

[Andrew Pease:]

So, you know, actually I can't comment specifically on that, but typically we know that the discrete FPGA solutions, we've talked about that, tend to be pretty much connectivity solutions. And without disclosing anything that I do or do not know about, that typically gets absorbed by the application processor one way or another.

[Gary Mobley:]

Okay, all right. And going back to your gross margin for the quarter, it was, what, 39% for the quarter. If I'm not mistaken, your guidance was 45%. The revenue upside was driven by stronger-than-expected sales to Samsung, which, assuming you're referring to that unfavorable increase in mix driving down the gross margin, but that doesn't fully explain it. If you were to, you know, comment, your gross margin guide based on your lower revenue guide as well, you would have had a higher gross profit dollar than what you actually ended up generating.

[Ralph Marimon:]

Yes. So our -- this is Ralph -- our gross margin was 39% and our guidance was 42%, not 45%.

[Gary Mobley:]

Okay.

[Ralph Marimon:]

It is mainly driven by the product mix, and Samsung was a much stronger and higher percentage than we thought. Going into Q1, the product mix is slightly more favorable. We're still obviously shipping into the display segment. But the other products we're shipping are carrying higher margin. So this is entirely a mix issue.

[Gary Mobley:]

Okay. And moving on to your SensMe algorithms, I appreciate the work that's been done there. If I'm not mistaken, there's a 20% team [ph] and it probably rivals what was created, some of these companies that were recently acquired, which I guess brings into question whether or not it is worth maybe slight tweak in your business model to actually license out the SensMe algorithms for some customer use cases, assuming they're not competitors and whatnot. Is that something you've considered?

[Andrew Pease:]

You know, the simple answer to that question is, if it increases our market share and it brings more shareholder value, then we will consider it.

[Gary Mobley:]

Okay. All right. That's it for me. Thanks guys.

[Operator:]

Thank you. And our next question comes from Robert West from Oak Grove Associates. Your line is open, please go ahead.

[Robert West:]

Hi, Andy, Ralph and Brian. Thanks for taking the call.

[Andrew Pease:]

Good to hear from you, Bob.

[Robert West:]

So let me start with a question, Andy, on your -- your growing engagements. Are these engagements one of the reasons why you flagged us on potential flat -- or to slightly up or down revenue this year, is that a function of the fact that these engagements are stretching out further, taking longer to move to production?

[Andrew Pease:]

In terms of the engagements that we have for the sensors, absolutely not. I think the function is really the biggest factor is the two -- especially the first factor I mentioned in the prepared remarks, the fact that the alternative source for the discrete FPGA opportunity is no longer there for us. And that's probably the biggest factor that caused me to make that comment.

[Robert West:]

Okay. Let me ask you about the general application for these engagements. Are they generally looking at the ArcticLink 3 S2 or are a lot of these engagements now looking at the ArcticLink 4 S3?

[Brian Faith:]

Bob, this is Brian. I'll take that. The majority of what Andy described as our funnel is definitely the ArcticLink 3 S2. It certainly helps that we have the S3 on the roadmap, and the fact that we've been able to open that architecture up a little bit more to certain OEMs under NDA makes them more comfortable to work with us because they see that that roadmap ties into what they're going to need. However, I also want to say, it's not just about the silicon, it's about the algorithm roadmap as well. The two are very tightly coupled for us now, and people are looking at the types of use cases that we're putting on a roadmap as being integral parts of their functionality moving forward. So it's both.

[Robert West:]

Okay. Now let me ask you another question about this engagement -- larger engagement population. Are these generally for an integrated solution, i.e. some smart connectivity as well as sensor hub? Excuse me. In other words, I'm asking, are some of these for smart connectivity like PolarPro III or are they mostly for ArcticLink 3 S2?

[Brian Faith:]

The majority is for ArcticLink 3 S2. There are cases, Bob, where we see there are connectivity elements that we can integrate into the S2, so it's not a discrete FPGA plus a sensor hub opportunity. But by and large it's ArcticLink 3 S2. There are some connectivity opportunities as well and I think that those are leveraging some of the TSPs that we talked about last year, like the relationship with Peel [ph] for IRDA an those types of functions.

[Robert West:]

Okay. Well, thank you for that. Now I had another question that's general area. Last quarter you had a smartphone customer, sensor hub smartphone customer, that -- who was pushed out some. Now I didn't quite catch all of your prepared remarks, Andy, but is that customer still and will they be shipping at this quarter or next?

[Andrew Pease:]

Yeah. We -- that customer certainly is still part of that larger funnel that we talked about. As a matter of fact, it's -- our engagement with that customer is expanding beyond the initial opportunity. And by the way, why it's engaging is they are very impressed with the overall depth and breadth of our solution. In other words, it's not just a piece of silicon. The algorithms play a very big part of that. And I also don't want to understate the value of having the QVL list for the various sensors which enables them to more quickly come out with a solution. So all of those things make that opportunity expanding with that particular customer.

[Robert West:]

Do you believe that that will -- or can you comment on whether or not you believe that will be a first half revenue opportunity or not?

[Brian Faith:]

Bob, I'd say for the phone that that will be a backend activity for us on the phone just because of the design cycle times associated with phones. As Andy mentioned on the breadth of the engagement, many of these smartphone OEMs now are developing wearables as well. Those certainly can have shorter development cycles and they don't have to go through carrier approvals in many cases. So there are other opportunities that we can see would be earlier than the phone simply because of that product category type.

[Robert West:]

Okay. I wanted to come back to a question asked earlier on your sensor software activity. This -- your focus on sensor algorithms is commanding obviously an increasingly large slice of your development resources and your mine's share. Would you talk about your strategy just on a general way on how you see quick-monetizing this investment? That's a little -- about the same question but maybe a little different slant on it than was asked earlier.

[Andrew Pease:]

Yeah. Well, I think what you're getting at is you're probably saying that we are certainly putting higher and higher emphasis on the sensor hub aspects of our business. Is that fair?

[Robert West:]

That's fair.

[Andrew Pease:]

Okay. So we believe that we're going after an enormously large market that iSupply right now predicts to be more than 1 billion units in 2015, and increasing from there. You may recall that three years ago, or four years ago now, as I was coming in to become CEO, we did extensive market research to understand the dynamics of this market, and really we were looking for an area where our crown jewels could bring differentiated value and our crown jewels are programmable logic technology. And what we see is that sensors are the ideal place for this. And what we also found last year was, by developing our own algorithms, we could more affect not only time to market but also power consumption and usability by having controlled those algorithms ourselves. So we believe that our value proposition is a lot higher, and therefore, when the value proposition is higher, then it's up to Brian and his team to monetize it. And we are definitely going about and doing that right now.

[Robert West:]

So we would see that, and I would conclude, mostly through improved gross profit?

[Andrew Pease:]

I think that it will certainly be -- ultimately we will have sustained long-term revenue growth because sensor hubs, unlike some of the other spikes that you've kind of borne through with QuickLogic, has a long-term life force [ph]. We do not believe that this function will be integrated either into the application processor, because they're peaked and tuned for performance, or into the sensors themselves. And we believe, as do many of the very knowledgeable people in this industry, that sensor hubs will be around for a long time, and having programmable logic were the barrier to entry to have that technology is high, will sustain us in this business for a long time to come.

[Robert West:]

Okay. I think -- I'm sorry.

[Andrew Pease:]

-- let me add one other thing. You are right. By putting together the whole solution, we do expect to get higher gross margins, so it should not take as much revenue to get to the bottom line. But I don't want you to think that we don't think that the revenue opportunity is large for us, because it is.

[Robert West:]

Okay. And I think just one last question. And that goes back to -- goes back to this -- to the smart connectivity area. And is this -- are you kind of expecting this is going to become a flat and there'll be more integration in that area going forward? Or do you still see that as being a high potential for you to integrate as you have done on the S3 and probably would assume doing the S4?

[Brian Faith:]

Bob, this is Brian again. I think we see opportunity continuing in smart connectivity, as well as the integration into the sensor hub. And I can tell you, from a sales point of view, being able to go talk to the customer about that spectrum and have choices for how we optimize the system, is really significant.

[Robert West:]

Okay. I guess I do have one last question, and that is back to the wearables. Can you describe the role of the quick sensor hub and that kind of design? Is there an SOC? Is another smart -- is there another compute device in the wearable as well as the QuickLogic sensor hub? Anything you can color on that would be appreciated.

[Brian Faith:]

Yes. So the architecture of the wearables today generally falls into two types. The host processor can be an application processor, more along the lines of what you would see in the smartphone, or it could be a micro-controller that's running one of the real-time operating systems that Andy was mentioning the prepared remarks. In both cases, our sensor hub is an offload engine from those host processors doing the always-on real-time processing that allows the host processor to stay asleep longer and increase the battery life. That's purely from the silicon point of view, how it fits in the architecture. And then of course you have to layer on to that the algorithms that we provide with SensMe that enable the use cases and features for the application developers. But fundamentally, it's the same time of offload engine in both architectures.

[Robert West:]

Okay. Well, thank you, Brian, for that amplification. And Andy, thanks for taking the call. And congratulations on building the engagement process. Now we just got to get them through.

[Andrew Pease:]

Yeah, that's right. Thank you, Bob.

[Operator:]

Thank you. And our next question comes from Rick Neaton from Rivershore Investment Research. Your line is open, please go ahead.

[Rick Neaton:]

Thank you. Hi, Andy, Ralph and Brian.

[Andrew Pease:]

Hi, Rick.

[Rick Neaton:]

Andy, I was a little confused by your answer to Gary Mobley's question about the challenging atmosphere for revenue growth. You said in your prepared remarks that it would be challenging to deliver significant revenue growth. And then you appeared to walk that back a bit in your answer to Gary's question. Are what you're trying to say is it's going to be challenging to deliver significant new product revenue growth or any growth in new products?

[Andrew Pease:]

No. That's -- what I'm trying to say is it's going to be challenging to come through on the promise for the statement I made at the last earnings call. It will be challenging to deliver significant new product revenue growth. And by that, I'm talking about looking at the total of 2015 over the total of 2014, keeping in mind that, remember, in Q1 of 2014, we had a record quarter, our largest quarter ever, that gets baked into the equation.

[Rick Neaton:]

Okay. And so it depends on your definition of significant, what constitutes significant to you. Do you see -- when do you see your EPS trend changing to a more positive trend than it currently is on?

[Ralph Marimon:]

Well, if you're talking about when do we get to profitability, I think the best case would be late 2015, and the most likely case is it's a 2016 event.

[Rick Neaton:]

Okay. I'd like to go to the -- back to some of the comments you made on the design intercept. An example of a discrete mobile FPGA Lattice iCE40?

[Andrew Pease:]

That would be a very good example of a discrete mobile FPGA, yes.

[Rick Neaton:]

Okay. In looking at your descriptions of your programmable fabric, it looks like, if you -- because you're including the programmable fabric in your sensor hub platforms, are you giving your customers an opportunity to eliminate the need to use a discrete mobile FPGA in future platforms?

[Andrew Pease:]

That's exactly the idea.

[Rick Neaton:]

Okay.

[Andrew Pease:]

Yes.

[Rick Neaton:]

Now recently, Lattice announced its intent to acquire Silicon Imaging, and does that have any effect on your strategy going forward as it pertains to these discrete -- the programmable fabric replacing discrete mobile FPGAs?

[Andrew Pease:]

Absolutely not. I think that Lattice made a bold move. They acquired a premier, high-performance connectivity customer that does ASSPs, and they want to blend that in. So I think it's interesting that the Lattice vision is kind of similar to our CSSP image that you have programmable logic with hard logic, the difference being that we are interested in power consumption where the customers care about microwatts, where what the Lattice and Silicon Image are talking about is they're looking at customers that are measuring bandwidths in gigabits per second. So those are two opposite ends of the technology spectrum. So I don't see that affecting us at all.

[Rick Neaton:]

Okay. One last question, Andy. How do you assess your competitive position in your markets now as opposed to 90 days ago at your last conference call? You talked a little bit about how you've put everything in place to have the proper products to sell. But how are you seeing your competitive position right now?

[Andrew Pease:]

I see that we are in a much stronger competitive position even 90 days ago by virtue of the fact that we have got an ever-building algorithm roadmap with the SensMe algorithms. We've got a pretty progressive [ph] QVL which ties into the sensors, and we're executing our silicon roadmap. So I think all three -- plus we're actually delivering reference platforms that give us physical evidence of what we're capable of doing and give customers a good starting point design. So all of those things have gotten much stronger in the last 90 days, that have enabled our sales guys to go with confidence into the customer community and start engaging in all the designs that we're talking about.

[Rick Neaton:]

Okay. Thanks, Andy. That's very helpful. And thank you guys.

[Operator:]

Thank you. Our next question comes from Krishna Shankar from Roth Capital. Your line is open, please go ahead.

[Krishna Shankar:]

Yes, Andy. Do you think that the revenue ramp for this year is, you know, you'll see a more significant ramp in the second half of this year, or will some of the new design wins ramping result in sequential revenue growth in Q2?

[Andrew Pease:]

You know, with the things that I mentioned before about the two things that are impacting our revenue, I do tend to believe that it will be more of a second half of the year. But a lot of these things are fairly unpredictable. But I'm certainly optimistic about the direction that we're going in.

[Krishna Shankar:]

And can you size for us what's the center hub revenue -- the revenue opportunity, the market size this year that you're pursuing, if you have some estimate for us for your served market?

[Brian Faith:]

Well, the total available market, Krishna, is quite large. It's on the order of a billion units if you look at iSupply. I think obviously our served available market is a significant chunk less than that, but it's still in the order of tens of millions of units of available market share to go after there. And again that's spread across smartphones and wearables, which is a very fragmented market in its infancy right now.

[Krishna Shankar:]

Okay. And in terms of design wins, are you getting more traction with wearables or smartphones? Because the wearables market, you know, many industry analysts, you know, seem to be somewhat cautious on the wearables. Do you think there's fair amount of new form factor innovation and all that to happen versus smartphones as a more established market? So, can you talk about your traction for sensor hubs in smartphones versus wearables?

[Brian Faith:]

You know, from a volume perspective, they're probably very similar for us, but there's certainly many more individual opportunities in the wearables space, simply because there's a lot of new entrants. There's similar OEMs trying to do new products. And if you think about a wearable battery, it's probably an order of magnitude smaller than a smartphone battery, and power is critical. And because of the low power consumption we have and because we're bringing these algorithms that perhaps these OEMs don't have yet, it's really an ideal situation for us in that respect.

[Krishna Shankar:]

Okay. And my final question, the AL 4 S3, will that lead to a rapid customer migration from the S2 to the S3, or will the two coexist for some time in the market?

[Brian Faith:]

I think they probably will coexist because they're addressing slightly different levels of functionality. But I will repeat what Andy said on the prepared remarks about forward compatibility of algorithms, anybody that's putting algorithms and deploying them on the S2 will have some assurances for forward compatibility with the S3. So that means very quick migration over to the new platform if they choose to do that.

[Krishna Shankar:]

Okay. Thank you.

[Operator:]

Thank you. I'd now like to hand it back over to management for closing remarks.

[Andrew Pease:]

Thank you. During the next few months we will be at the following industry events. We'll be at Mobile World Congress in Barcelona in March; the IoT Summit in Santa Clara in March where Dr. Timothy Saxe, our Chief Technology Officer, will be delivering the keynote address; the Wearable Technology Conference and Expo in London in March; and finally, the Linley Mobile Conference in Santa Clara in April. Details will be included in our upcoming media alerts. We want to thank you for your continued support. And I look forward to reporting our strategic progress on the next earnings calls which is scheduled for Wednesday, April 29th, 2015. Thank you.

[Operator:]

Ladies and gentlemen, thanks for participating in today's conference. This concludes our program. You may all disconnect. And have a wonderful day.