Sigma Labs, Inc.
Q1 2021 Earnings Call Transcript

Published: 22 Apr 2021

[Operator:]

Good day, and welcome to the Sigma Labs First Quarter 2021 Financial Results Conference Call and Webcast. Today's conference is being recorded. At this time, I would like to turn the conference over to Chris Tyson, Executive Vice President of MZ North America. Please go ahead, sir.

[Chris Tyson:]

Thank you, and good afternoon. I'd like to thank you all for taking time to join us for Sigma Lab's first quarter 2021 business update and results conference call. Your host today are Mark Ruport, President and Chief Executive Officer; and Frank Orzechowski, the company's Chief Financial Officer. A press release detailing these results crossed the wires this afternoon at 4

[Mark Ruport:]

Thank you, Chris, and thanks, everybody, for joining the call today. I hope you and your families are safe and well as we get closer to the new normal. I know that I'm closer to the new normal because I'm sitting in an airport for the first time in a year. So I'm also pleased to tell you that Sigma Labs is headed also in the right direction. And if you hear some ambient noise here, I apologize. So Q1 was about acceleration, validation and execution. Acceleration of acceptance of 3D metal printing, validation of our PrintRite3D product and execution against all aspects of our business plan. As I mentioned in the 2020 year-end call last month, despite a very challenging year, we were able to execute on our business plan and position ourselves for an exciting 2021. Our Q1 results clearly reinforce my belief that the company has entered a new phase, focused clearly on revenue growth and securing our position as a leader in quality assurance for 3D metal printing. Before I go into more detail, I'll have Frank review the financials. Frank?

[Frank Orzechowski:]

Thank you, Mark. Our detailed financial results are contained in our Form 10-Q filed with the SEC today, and the press release we issued contains key highlights of our financial results. So today, I'll provide a brief overview for the first quarter of 2021. Our revenue for the first quarter of 2021 totaled $458,000, this compares to revenues of $222,000 for the first quarter of 2020. The increase in revenue was due to a doubling of PrintRite3D unit sales over the first quarter of 2020. Our gross profit for the first quarter of 2021 was which resulted in a gross margin of 72%. This compares to a gross margin of negative $23,000 for the first quarter of 2020. The improvement in our gross margin is due to a combination of manufacturing enhancements, which have reduced our cost of goods, the nearly complete wind down of legacy rapid test and evaluation or RTE programs, and a customer exchange of a PrintRite3D unit during the first quarter at a lower cost.

[Mark Ruport:]

Great. Thanks, Frank. As I hope you agree, every financial metric that you can evaluate the company on has improved significantly over the year ago, but it's not just the financial metrics that are improving. We're also beginning to see returns on our investments and improving results in other areas of the business that, in my experience, are leading indicators for future revenue growth.

[Operator:]

. Our first question is from Barry Sine of Spartan Capital Securities.

[Barry Sine:]

I wanted to just kind of get a big picture sense of when we might see the significant turn in revenue. If I look back, and this year has been no exception, you've been selling more stock than you've been selling 3D printing equipment. And I get that you need to fund the company and capital is available. Maybe you could talk about some of the impediments, is it that just 3D printing is not being -- metal printing is not being accepted as quickly as you had hoped? Your technology seems like it's really state-of-the-art, best in the industry, you seem to be accepted by the major players in the industry, but we're just not seeing yet the revenue on the top-line. You've added a lot of resources, I think 10 new employees. And I listen to that, they all seem to be around generating revenue. So at what point do you think we might get to a quarter or a year where we see more revenue on the top-line than we see sales of stock of the company?

[Mark Ruport:]

Sure. And that's a very fair question we’re asked. First of all, I'd say that selling stock was important and getting the companies funded at a level where we can take advantage of what we believe the opportunity will be, was very important to us. And without that, we wouldn't have an opportunity to pursue. An answer to the second part of the question, when do we expect to see some material increase in revenue? I believe in the second half of the year, we'll begin to see multi-unit sales. As far as the question relative to list the impediment. The first is the company -- the number of companies going into production using 3D metal printing. We're seeing more and more hit that production level where they have multiple printers from different manufacturers. And that's what's required for our software to have the value proposition that makes somebody move forward. So I will say the answer to your second question, material revenue in the second half of the year, driven by multi-system sales. Does that answer your question?

[Barry Sine:]

That's very helpful. And if you don't mind a follow-up on that. And this is kind of an -- on edges of the other question, so forgive me. What are the companies that are doing 3D metal printing now that are not using your product? What are they doing? Are they just accepting high error rates or just taking a chance at the product may have a lot of faults in it and going ahead with that anyway? I don't understand how you can be doing 3D metal printing without a Sigma Labs product in the process?

[Mark Ruport:]

Well, obviously, that's the vision we're trying to fulfill there. But the answer to your question is, when they acquire a printer and they're in prototyping or R&D, they probably are not worried about the quality and consistency because they start with a relatively low-value component that if something happens to it, it's not catastrophic. As they go up that competency curve and move into more complex and mission-critical parts and as they build those parts at more volume, the risk of catastrophe goes up exponentially. And so what we have to see happen is companies go through that competency curve from R&D to prototyping to doing a low-value part that's not mission-critical to doing a high-value product that is mission-critical, but getting it into production levels. And as they get more mission criticalness and the production levels go up, risk goes up. And that's when we'll begin to see the real inflection point in our revenue.

[Barry Sine:]

And if you don't mind, 1 last question, please. You've expressed optimism in the second half of the year you'll start to ship your multiple machine shipments. What end verticals are you seeing the most optimism in? Is it aerospace, medical devices, consumer products? Where are you seeing that interest and what is driving that enthusiasm? What broad industries?

[Mark Ruport:]

Sure. Right now, and just so I can draw you guys a visual, I'm sitting at a parking lot at an airport, and that's why you hear a car go by. Right now, the most activity we see is coming from aerospace, space exploration and Department of Defense. And the reason is because all of those are creating the high-value mission-critical parts that I talked about earlier. And as the increase in the usage of those parts and the number of parts they produce goes up, the economics of putting in a system like ours become much more reasonable and acceptable to the end users. So aerospace, defense, space exploration and Department of Defense initiatives around the globe are where we’re seeing the most activity.

[Operator:]

Net question is from David Lavigne of Trickle Research.

[David Lavigne:]

So first, I want to say thanks to Frank because it seems like most companies your size end up reporting sort of at the very last minute, it's refreshing to have you report early. So you must be doing something right and staying on top of things to report early and it's refreshing. That's just a personal note, so. So Mark, one of the things that, I guess, I've always sort of looked at as maybe a metric we should be considering in terms of your progress is this notion of being able to take the value proposition from the manufacturer down to the OEM. And I think I've always kind of felt like, well, there was some opportunity, certainly, in business that could be done by you going directly to those manufacturers that ultimately, for you to be successful you really would have to drive this down to the OEMs and get them to adopt it. And to me, that's one of the things that's going to measure the success of this. And how do you feel about the progress on that? Because it seems to me like you're making pretty good progress on the OEM side. And that to me is kind of critical.

[Mark Ruport:]

If I understand the complete nature of your question, when I talk about attacking the market holistically, what creates demand for our product or end users like an Airbus or Lockheed Martin who are well up the competency curve for 3D metal printing and have multiple printers from multiple vendors that are multiple generations, as we create the demand from those end users that puts pressure on the OEMs. Now as I've mentioned in the past, most of the 3D printer manufacturers have their own monitoring system. But what they don't have is a consistent monitoring system that's standards-based that works on other people's printers. So as we put pressure, as we create the demand and have success with the end users, like the ones I mentioned earlier, we'll put pressure on the OEMs. And our approach to the OEMs is one of cooperation. We would like to not compete with their monitoring system, but begin to use data from their monitoring system and combine it with our analytics. So it's kind of a symbiotic relationship between the end users creating demand, the OEM people, the manufacturers acting to that demand and opening up opportunities for us.

[David Lavigne:]

So can you tell us where most of those new salespeople are focused? Or are they just focused on both?

[Mark Ruport:]

They're focused on both. So they're focused on both OEMS. And then they're divided by vertical.

[David Lavigne:]

So are you happy with the progress you've made on the OEM side?

[Mark Ruport:]

Yes. We're very happy. And we have 2 that are selling actively now that are building a good pipeline for us. One coming online, and then we have several other initiatives that we're working with in the early stages. So OEM deals take time. And as I said, most of them have their own monitoring system. So we need to create demand from the end users up first. But yes, we're doing as well as we can, and we're happy with our progress.

[David Lavigne:]

Okay. So 7.0, it sounds to me like that's kind of progress towards what we've always sort of referred to as the closed system or a closed loop. If this is a 9-inning game, how far is 7.0 in the game towards the closed-loop holy grail?

[Mark Ruport:]

David, I'll answer the question, and then we'll move on to another question. But I would say, if it's a 9-inning game, we're in the bottom of the 7, top of the 8.

[Operator:]

Our next question is from shareholder, Bill Chapman.

[Unidentified Analyst:]

Do you think you'll keep momentum from Q1 to go into Q2?

[Mark Ruport:]

Yes. We already see the momentum going into Q2. And that's why I mentioned the other metrics that we track, such as the marketing inquiries and leads. And that's why we brought in industry veterans into the field organization because they clearly have the background both from the sales and from additive manufacturing to come up to speed quickly and add value to those companies that are making inquiries relative to our technology. So yes, I see the momentum continuing.

[Unidentified Analyst:]

Okay, good. You had mentioned the second half of the fiscal year. So I appreciate you hearing that. Let me ask you, too, on, did you get any revenue from DMG MORI or Additive?

[Mark Ruport:]

The deal with the European aerospace company was with Additive, it was a directly OEM through them. And they're right now assembling the printer in our system in their headquarters, and we'll be delivering it from their factory floor directly to the end user. We also have 1 trial going on with Additive where the customer prospect is paying an engineering fee to evaluate our technology. DMG MORI, we got a sale last quarter, but didn't get 1 this quarter, but we hope to get 1 or 2 this coming quarter in Q2.

[Unidentified Analyst:]

Okay. Good to hear. Let's see, you had a gross margin of 72%. And how is that looking for the future?

[Mark Ruport:]

Well, it will stay at 72%. I'll ask Frank to comment on this after I finish. But it won't stay at 72%. Our target is 60% to 65%. And as we drive more revenue and systems through DMG and Additive and Materialise, Ermaksan the new Turkish 3D metal printer manufacturer, we'll be able to have a consistent 60% to 65%. It's inflated a little bit to 72% because of some history and some winding downs of some old deals. And Frank, do you want to comment any more on that?

[Frank Orzechowski:]

Yes. I would say that a couple of things. One is the engineering group has gone through and really looked at the product top to bottom and made a number of enhancements, which has allowed us to reduce the cost of a number of the components. So our cost of goods has come down quite a bit from what it was in 2019 and early 2020. And we really did receive a benefit for that in the first quarter of 2021. We had a system that shipped at the end of 2020, and it was one of our older systems at a higher cost. And that system, the customer decided they wanted a new system. They didn't want the older system. And so effectively, what happened is we took that older system back into inventory, ship them one of our new systems at a much lower cost, and that gave us a onetime credit in our cost of sales of about $45,000. So there's about 10 percentage points in there for the first quarter related to that. But that puts us squarely in Mark's range of about 62%. So yes, we're pretty comfortable that the number ongoing is going to be in that 60% to 65% range, which is our target.

[Unidentified Analyst:]

Okay. Sounds great. Thanks, guys. Oh, go ahead, Mark.

[Mark Ruport:]

One other thing to add to that. As I've mentioned before, we expect the OEMs to take over some provisioning of the hardware. And today, when we do a deal with the DMG MORI or Materialise, we have a lower cost of goods because they provide some of the components that we utilize in our solution. As they take over the provisioning of the hardware in multiple stages, we expect the gross margin for the OEM deals to go up and approach 90%.

[Operator:]

Our next question comes from Anthony Charos of Symmetry Group.

[Anthony Charos:]

Mark, congratulations. I had just a quick question, 1 of my questions is answered already. Where do you see the increased sales activities coming from? And why do you believe it will be in those areas? And when do you believe those sectors will pick up?

[Mark Ruport:]

Sure. As I mentioned earlier, in the aerospace, space exploration and Department of Defense, that's where we're seeing the most pickup. And the reason is because the demand for them to create parts on demand and critical parts on demand and then increase the production is growing. And as you produce more mission-critical parts at a higher production level, your risk goes up. So I think that's what they're seeing. They're also expert users of 3D metal printing. So they have multiple printers. So they have all those things going in the direction of reducing risk and addressing the economics of printing by producing those mission-critical, high-value products and components. So that's where we see the most activity. The second area where we're beginning to see more activity is in electronic vehicles in automotive. And again, for the same reason. The competition is tough. They have to get lighter, stronger, more durable parts and get their production costs down and get their range up. So there's a lot of activity there that we're beginning to get involved with. Those are the 2 major areas that we see.

[Operator:]

Our next question is from Martin Roth of Ferret Capital Management.

[Martin Roth:]

First question I would like to ask is your ability or the ability of the 3D printers to do things that are made of metal, is there a metal that hasn't been used yet in 3D that will make the demand for 3D printing literally explode?

[Mark Ruport:]

Well, you're seeing more and more metals come on the market. So it's 1 of the most active parts of the industry right now is the invention and the innovation that's coming from metal powders and alloys that -- and allow the designer to design things they couldn’t in the past. I am not an expert when it comes to the powders and the materials. But given the progress that's been made over the last 18 months, I expect to see that progress continue. And the metal science for the materials continue to drive more innovation and allow designers to do things, as I said before, they couldn’t never imagine doing in the past. So it's a thriving part of the industry that right now a lot of people are innovating and inventing -- bringing to market metals that will, as I said earlier, allow designers to do things they couldn't have done in the past.

[Martin Roth:]

With regard to your relationship with Lockheed Martin, I think there were 2 events that turned me on. One was the fact that you were able to win a contract from them who I regard is certainly in the top 5 as a repository of technology, and it may be higher than that for all I know. And the second thing that is a validation is your performance in this quarter where you were able to book a significant order. My question is, if you look at the various conversations that you are having with potential customers -- let me classify them this way, something that's on the stove that is hot, it's not made yet, something that's on a back burner and something that may be still in refrigerator. Could you characterize what you're looking at and how that shapes up? If you want to be specific, I'd like that.

[Mark Ruport:]

Yes. Well, it's hard because it's across the spectrum. It all depends on where that prospect is on their curve and on their journey relative to their additive manufacturing initiative. If you look at Lockheed Martin or Baker Hughes, they're clearly out front. And the people in that category, we have several conversations that I would put in your first category as being very hot. We have a lot of conversations with people in the middle category who are trying to decide the value of a third-party agnostic and process quality assurance system. And then, of course, you have the new users who come up, who don't really know what they need yet. And one of the things we've talked about in the past is you have to know whether you're selling religion or selling bibles. To the people that are hot, we're selling bibles because they already know they need a third-party standard based system. To the people that are cold, we're preaching religion, educating them. And that's why you see our marketing efforts address both of those issues. We have very specific events and seminars and webinars for the very advanced users who are able to challenge our engineers. And then we have industry ones that really educate the whole industry, and that goes back to our radical collaboration strategy. Does that answer your question? Hello?

[Operator:]

Our next question is from Harold Weber of Aegis Capital.

[Harold Weber:]

Nice to see a good improvement. I hope that momentum continues to build. In relation to some of the comments about these new metals that you will make, metal question, I don't know if you're familiar with a company called PyroGenesis in Canada. These guys are making these -- buy some metals, the whole new story came out recently. I'm wondering how these new types of metal and they -- they've been -- they're making this, they're supplying it to Tier 1 aerospace guys, which I would assume is sort of an overlap of what we're doing. Is this agnostic regarding the type of materials or whatever they put in there, it's a usable, it's -- we can do our thing with whatever new materials are put into these printers. I'm assuming that is sort of the idea. Is that so or not?

[Mark Ruport:]

Yes. For the most part, we're agnostic to the type of metal. As the new metal comes out, of course, we have to build a knowledge base on how that metal reacts during the process. So there is an example with the customer just recently, who was dusting a part with a titanium powder, 90% through its production. And so we see people beginning to experiment with different types of metals and different combinations of metals. We can -- we're agnostic to that, except for the fact that we have to have enough knowledge in our knowledge base and have seen it enough to be able to begin to predict and use our machine learning. So each one is a little bit of a learning curve for us, but it's a repeatable process that we do relatively quickly.

[Harold Weber:]

So I would like to think that we're conscious with these new materials coming out and trying to build that database to supply a proper statistical info as we do to these customers about these new products coming online, coming on the market. Obviously, that's how the market is going to expand, like you said, about new metals and the materials for new purposes, new applications and so forth, so that would give us some additional first advantage of hoping?

[Mark Ruport:]

Sure. In our case, right now, we let the user drive which ones we focus on. So we don't look at all the ones that are coming out and pick and choose and qualify all of them. But as an example I used earlier, the combination of dusting a part with titanium. If that becomes more and more standard process and has value to the end user, then we'll build knowledge base around that.

[Harold Weber:]

So basically, you're doing it based on requests from your customers?

[Mark Ruport:]

Yes. They're driving our prioritization. Because the amount of activity in the whole material sector, we could not predict the winner, nor keep up with it. But if Lockheed Martin comes and says, we have a new metal we'd like to try, we're going to be all over it.

[Harold Weber:]

Okay. In regards to the new -- the PrintRite Lite that you announced a little while back, what type of responses have you seen in regard to that? I guess, some less heavy industrial users, I'm wondering to see about expanding our customer base to other potential industry applications and things of that nature? What have you seen on that?

[Mark Ruport:]

Yes. We're seeing more activity from the OEMs relative to the Lite product than we are from the end users. And I think the OEMs want a lighter product, less expensive that they can sell before they go after the PrintRite3D system. So more activity from OEMs and end users. And to be honest with you, not a lot of activity amongst the end users yet. And I think that's an educational thing and a marketing thing. So we still think it's an important product to our portfolio. And we think it will help on the OEM side more.

[Harold Weber:]

So is it reasonable to say that we are looking more to the OEMs for customer ventures, customer applications? Or…

[Mark Ruport:]

Well, yes. I mean, as I talked earlier, our philosophy and our strategy is to the attack market holistically. So we want the end users to create demand and the OEMs to provide leverage to our model. And if we can get a PrintRite3D Lite into an OEM and go after the mid-market, but they can then take a tremendous amount of the sales burden off of the company, and that's where we get the leverage. So yes, it's through the OEMs for Lite as the primary distribution.

[Harold Weber:]

In general, do we see that take up having effect?

[Mark Ruport:]

We have activity. I can't tell you that to use the example earlier, the metaphor, nothing hot right now. It's all kind of in the mid-stage on the back burner, but moving forward.

[Harold Weber:]

And in regards to our mainline products?

[Mark Ruport:]

I'm sorry.

[Harold Weber:]

I'm sorry, in regard to the main product?

[Mark Ruport:]

No, in regard to Lite.

[Harold Weber:]

Okay. And I take up on the other stuff, how is that going?

[Mark Ruport:]

As I said earlier, the activity is very good. And I expect to see continued momentum.

[Harold Weber:]

Is that globally going on? How do you see reactions based on we're opening up maybe earlier in other places? I know you do an international stuff, what type of deal do you have at this point?

[Mark Ruport:]

It's definitely global. 2 of the 4 deals we got were in Europe this quarter. I believe the forecast for the coming quarter, Q2, is about the same. So Europe continues to dominate as far as our customers. The U.S. is quickly coming behind. And we have some activity going on in Japan.

[Operator:]

Our final question is from Martin Roth of Ferret Capital Management.

[Martin Roth:]

Mark, I got cut off. So I missed a couple of questions that were asked. Let me ask you this. Do you have any indications that Lockheed is considering any additional units from you?

[Mark Ruport:]

No, we do not. All I can tell you is that we are heavily engaged with them. They challenge our engineers and our engineers, who I believe are the best in the industry, have stood up -- have responded to the challenges. So we're still in that phase where they're going through all their tests and their analysis. So right now, they're just a new customer with 1 system that has a lot of potential.

[Martin Roth:]

Do they see any additional things that you could do to make the product even more versatile?

[Mark Ruport:]

Of course, they're one of the most sophisticated users in the world. And so they have more ideas than we could possibly accommodate. But the great thing about the collaboration that we have with our customers is that it's very deep and they understand that we can only do so much, so they help us prioritize the functions and features that are most important to them. So to date, it's been a very fruitful and beneficial relationship for us.

[Martin Roth:]

I -- by my own calculation, I'm guessing that the doubling of sales was primarily due to the sale to Lockheed Martin. Would you comment on that?

[Mark Ruport:]

No, it wasn't primarily due to it. That was 1 of the 4 systems that we sold in the quarter. And it was at the higher end, but it wasn't primarily due to Lockheed Martin. It was an increase across the board.

[Martin Roth:]

Now with regard to Ermaksan, you're going to be an added option where Materialise is going to make the sale to the Turks, is that right?

[Mark Ruport:]

No. In that particular case, Ermaksan uses Materialise's MCP, which is their Materialise Control Platform. We've integrated our technology with Materialise’s. So I went to Turkey last January. It was the last trip I did prior to the trip I'm on right now. And we did a joint sale to Ermaksan. And they use our technologies integrated together and then install that on their machine on the factory and deliver it to the end user. So it's a joint sale, cooperative, integrated system that Ermaksan is using and selling. And we expect them to sell a couple more, hopefully, 1 or 2 more this quarter.

[Martin Roth:]

Now Materialise is taking you along, you didn't have to make a special sale to Ermaksan, is that right?

[Mark Ruport:]

No, we made a joint sales call.

[Martin Roth:]

I understand that, but make sure, Ermaksan is really the one that's doing the heavy lifting.

[Mark Ruport:]

I think it was a joint effort. But yes, I mean, they're clearly the bigger customer -- a bigger company, they have much broader reach than us. And they brought us into that particular opportunity.

[Martin Roth:]

Okay. With regard to that, they will be earning a profit of over and above your profit. Is that fair to say?

[Mark Ruport:]

No, they sell their product and we sell our product. So there's no -- and a matter of fact, our gross margin when we sell integrated with Materialise is much higher because they provide some of the hardware that we would traditionally provide, if it wasn't a Materialise Control Platform.

[Operator:]

Our final question is from .

[Unidentified Analyst:]

Mark, can you drill down a little bit more on what you think your estimate revenues will be in the second quarter and throughout the year? And also some indication of cash burn?

[Mark Ruport:]

Sure. Sure. As far as guidance, we're not giving guidance other than, I believe what I said earlier, we'll continue to see increasing revenue and the momentum is there to provide that increasing revenue. A lot of that depends on timing and when we hit the first multiple system sale. But all I'll say relative to revenue is that you should see increasing revenue quarter-over-quarter. And I'm sorry, Paul, what's your second question?

[Unidentified Analyst:]

Can you give us some indication on cash burn and what your cash being?

[Mark Ruport:]

Sure. Sure. So as you heard from Frank and also in the press release, we've got about $16 million in cash. Our cash burn went down from 1.5 million to 1.2 million in the first quarter. We're going to build the business based on demand. So I would expect our cash burn to remain about where it is, maybe go down a little bit. And that just depends on how quickly we build the company, and that depends on the demand for the product as companies go up that competency curve. So as far as the runway, you can do the calculation yourself, but we're funded so that -- I'm not worried about funding the company now. I'm worried about driving the company and building it. So I hope that answers somewhat your question.

[Unidentified Analyst:]

Okay. And also, can you give a little more color into -- I mean, one of the big areas that you want to hit are machines that are already out there, not just new machines? Are you making any progress in that area? And what will it take to get there?

[Mark Ruport:]

Yes. As a matter of fact, the Lockheed Martin, was an existing machine that they had. Airbus was a General Electric concept laser machine. So we are getting more and more activity in the retrofit market. We expect that to heat up as our relationship with Materialise begins to generate more opportunities for us because you can take Materialise's Control Platform and our technology, put it on an old printer and have a state-of-the-art system. And that, as we mentioned earlier, is in that bottom of the 7th, top of the 8th towards a closed-loop type of an environment. So you can take a second-generation system and make it a third-generation system with our technology.

[Unidentified Analyst:]

Okay. And are you looking at trying to get any analysts to follow you? I mean, I'm surprised that Wainwright hasn't put a report out on you.

[Mark Ruport:]

We are actively looking and having several conversations that I expect that we will have an analyst or 2 in addition to Trickle Research follow us in the future, and hopefully, not the too distant future.

[Mark Ruport:]

So I appreciate your questions. And as I mentioned earlier, this quarter was about acceleration in the industry, validation of our technology and execution. And those are the 3 things that we expect to see in the coming quarters. And if we do that, the answer is to a lot of these questions. We'll become new because you'll see our revenue begin to accelerate and at some point in time, begin to get that leverage set from the model that we've built in the multiple system sales. So with that, thank you for your time. If you have any more follow-up questions, please don't hesitate to contact MZ or Steve and Chris there, and we'll be glad to get back to you. Thank you, operator.

[Operator:]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.