Sharps Compliance Corp.
Q1 2015 Earnings Call Transcript

Published: 29 Oct 2014

[Operator:]

Greetings and welcome to the Sharps Compliance Incorporated First Quarter 2015 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded. I will now turn the conference over to your host, Mr. John Nesbett with IMS. Thank you sir. You may begin.

[John Nesbett:]

Good morning and welcome to our conference call to discuss Sharps Compliance's financial results for the first quarter of fiscal 2015. On the call today, we have David Tusa, Sharps' President and Chief Executive Officer; Diana Diaz, Sharps' Vice President and Chief Financial Officer; and Brandon Beaver, Senior VP of Sales. David will review the Company's business operations and growth strategies and Diana will review the financials. Brandon will discuss the sales organization and related initiatives. Immediately following their formal remarks we will take questions from our call participants. If you are listening via webcast, please note that you've the ability to submit questions through the Internet. As you're aware we may make some forward-looking statements during the formal presentation and in the question-and-answer portion of this teleconference. These statements imply the future events which are subject to risks and uncertainties, as well as other factors that could cause actual results to differ materially from where we are today. These factors are outlined in our earnings release as well as in documents filed by the Company with the Securities and Exchange Commission. These can be found at our Web site or at sec.gov. So with that, let me turn the call over to David, to begin the review and discussion. Go ahead, David.

[David Tusa:]

Good morning everyone and welcome to our first quarter fiscal year 2015 earnings conference call. We started the fiscal year strong with customer billings at $7.5 million for the first quarter, an increase 12% over the prior year. The increase in billings for the quarter was driven primarily by significant growth in the pharmaceutical manufacture segment and continues strengthen the retail market for our mail-back solution to facilitate the cost effective disposal, syringes used by retail pharmacies primarily in the flu shot season. Our pharmaceutical manufacturer market generated $1.4 million in quarterly billings which is up 129% increase over the prior year and 27% growth in billings sequentially. The increase was a result of a large order for new inventory builds for an existing program, plus an initial supply order for our new patient support program. During the December quarter, we’ll launch one new patient support program for our new drug. We expect to launch three additional patient support programs for new drug therapies during calendar year 2015 and the first half of calendar year 2016. We continue to build on our strong relationships in the sector and believe our ability to provide innovative customized programs for our customers and their patients have seen as value added. Now professional market, on the surface it appears flat at $1.5 million in billings for the quarter but the prior year first quarter included about $315,000 in billings from our professional market distributors which we did not see in the current quarters. So there is really a mix match of the billings between the quarters. And without that mix match professional market billings were actually about 18% higher than the prior year. Our retail market billings grew 8% to $2 million in the first quarter due mostly the increases in flu shot related business. On a trailing 12 month basis, our retail market billings were $5.7 million which is 15% higher than the prior year and as we move into the second quarter of fiscal year 2015, we’re seeing significant growth driven by more flu shots administered in retail and the alternate side setting. In our last earnings call, we estimated the flu shot related business for fiscal year 2015 would be about 20% higher than fiscal year 2014. But based on the strength of the orders that we’ve received in the month of October 2014, and what we see for the December quarter, we think we have the opportunity to exceed this goal. As a growth company we focused on the introduction of new products and services to the marketplace and our customers. And as many of you have seen we’ve recently launched our new MedSafe solution which addresses the consentient cost effective disposal of unused medications including controlled substances. The MedSafe product is a result of the new DDA rule that are designed to help industry by allowing new and cost saving methods of disposal, a patient dispense medications again including controlled substances. The new solution is aimed primarily at our assisted living long-term care markets as well as our retail pharmacy market. So with that let me turn it over to Brandon who’s is going to speak more about the new product launch as well as what’s going on in the sales side of the house. Brandon.

[Brandon Beaver:]

Thanks David. I’ll begin with the MedSafe launch. Healthcare facilities around the country have been struggling for a long time to find a safe and convenient cost effective means of disposing of unused medications including controlled substances. We believe our MedSafe not only meets and exceeds the requirements of the new DDA regulations but also is a great fit for long-term care facilities, pharmacies, local law enforcement, narcotic treatment programs, hospitals and clinics with onsite pharmacies. We’re in the beginning stages of this new product launch which is included not only inside in field sales but also significant web and traditional marketing initiatives. We’re creating awareness of MedSafe offering with existing and perspective customers. We’re beginning to sign up new MedSafe customers but are looking for new sales by the mark 2015 quarter. Keep in mind this is a new product in the industry and that customers will study carefully before making a buying decision especially since it involves controlled substances. We’ll be in a better position to comment on the status of the launch over the next quarter or two. In line with the new DDA rules we’re also in the process of launching our new takeaway non-descript envelope solution as well as the new box configurations that facilitate a proper and cost effective disposal of unused medications and for the first time in the industry including controlled substances. Over the past five years we’ve sold over 1.5 million of these envelopes. We believe the new systems have the opportunity to generate incremental revenue growth in many of our markets including retail, home healthcare, government and long-term care. On the pharmaceutical manufacturer market our sales efforts over the past couple of years are generating solid returns for our pharmaceutical manufacturer market revenue. Our unique offering is much more of Sharps disposal in home setting for self-injecting patients. We provide opportunities for pharma branding as well as opportunities to improve patient compliance and medication adherence. We’ve launched a number of additional marketing and related sales initiatives aimed at carving more sales opportunities for this market. I am pleased with the progress to date and believe we can close additional opportunities over the next 12 months. When including sales, field and support our sales team has up to 21 employees this compares to 14 employees at the beginning of the calendar year. We recently added an additional regulatory support professional which we believe is very important to perspective as well as existing customers. The sales team has really gelled and we’re beginning to see new deals starting to close. We remain very excited about the new fiscal year and believe the sales team will deliver solid results. With that said I’ll turn it back to you David.

[David Tusa:]

Thanks for the update Brandon. Now Diana how about addressing the financials.

[Diana Diaz:]

Thank you David. During the first quarter the company reported revenue growth of 12% to $7 million as compared to $6.3 million in the first quarter of last year. Revenue is about $500,000 less than customer billings because of the significant GAAP revenue recognition adjustment. We should see this turn positive in the December 2014 quarter. Gross margin was 33% in the first quarter as compared to 37% in the prior year first quarter. The margin decrease is due to a mix of business which was adversely impacted by legacy pharmaceutical manufacturer patient program with a lower upfront margin and a split revenue model. Selling, general and administrative expense increased to $2.3 million as compared to $2.1 million in the first quarter of fiscal 2014. Due to increased sales, marketing and compensation related spending. SG&A as a percentage of sales was eventually flat at 33% in the first quarter of fiscal 2015 as compared to the same prior year period. The company reported an operating loss of $74,000 dollars as compared to operating income of $130,000 in the first quarter of fiscal 2014. The company recorded EBITDA or earnings before interest taxes depreciation and amortization of $200,000 for the first quarter of fiscal 2015 as compared to EBITDA of $400,000 in the first quarter of fiscal 2014. Overall the company generated a net loss of $74,000 or breakeven basic and diluted share compared with net income of $122,000 or $0.01 per basic and diluted share in the first quarter of fiscal 2014. Our balance sheet remains solid with $16.1 million of cash and cash equivalents at September 30, 2014 compared with $13.7 million at June 30, 2014 with no debt. At September 30, 2014 working capital, stockholders equity and total assets were $18 million, $22 million and $27 million respectively with no change from June 30, 2014. As we previously disclosed Chuck has an authorized stock repurchase program in place for up to $3 million on expanse through calendar 2014. During the quarter ended September 30, 2014 the company repurchased 29,449 shares under the program at a cost of $128,000 at an average price per share of $4.35. Since the inception of the program, the Company has repurchased 191,250 shares under the program at a cost of $809,000. And with that I’ll turn the call back to David.

[David Tusa:]

Thanks Diana. Just a couple of statements before we turn it over to the Q&A. It’s a very exciting time for our company, the management team and all of our employees. We’re launching new products, we’re closing new deals, we’re filling very large flu shot related orders and we’re chasing a significant number of new opportunities. We’re also in the middle of what appears to be one of our strongest quarters in company history exclusive of the 2009, 2010 CDC program revenue. So all in all we’re very busy. With that operator let’s open it up for questions.

[Operator:]

Thank you. At this time we will conduct a question-and-answer session. [Operator Instructions]. Our first question comes from Ryan Daniels with William Blair. Please proceed with your question.

[Nick Hiller:]

This is Nick Hiller in for Ryan Daniels. On the environmental businesses sequential decline -- I realize that's a smaller component to overall revenue. But is there a seasonal aspect to that? And if so, what drives that?

[David Tusa:]

The environmental are really more project related, it’s not really recurring revenue opportunities as our core businesses, really more projects. So we’ve had a number of projects we worked on in prior quarters and then we hope to see that pick up again in December and the March quarter. But it was just a low quarter for third party activity.

[Nick Hiller:]

Okay, great. Thanks. That makes sense. And then just a quick question on Ebola -- I realize that that probably has zero direct impact on your business. But do you think there is an indirect impact, insofar as the headlines that we see raise awareness about the need for compliance with proper disposal of medical waste and the solutions that you offer?

[David Tusa:]

Let me just address it this way. With respect to Ebola and yes there have been a lot of questions. But let me just say the areas where I think that there is a potential for us to generate incremental revenue related to what’s going on with Ebola. One, there appears to me and we’ve seen it more flu shots that are being administered and because of what’s going on in the media and America is just being advised to get flu shot. So flu shot season is going to be strong again we thought it was going to be 20% higher in prior year and it appears and especially based on what we’ve seen in October it can be higher than that for 2015. We also sell biohazard spill kit that’s used in a number of retail and healthcare settings and we’re seeing an increase in the sale of those items and that would hit primarily in the December quarter. You could also see just increased medical waste volumes at the customer level because they’re maybe overly cautious about making sure that anything and everything that maybe infection goes into medical waste container. So we could see increased volumes. And that really lasts and hopefully we’re not going to have this in this country but if there was some sort of pandemic or if there was a need to immunize Americans on a large scale than we think there is a potential to benefit, because our solutions are designed for the alternate side. Disposal of Sharps medical waste and the alternate site setting. Those are really the four areas that could impact us in a positive way.

[Nick Hiller:]

Okay, thanks a lot. And then just one last question -- in the quarter, could you parse out the impact of that inventory build on the Pharma Billings versus the impact of the new patient support program?

[David Tusa:]

The margin impact, what is it? We’re probably between that build it was probably -- we probably should be close to the 35%, 36% gross margin. What you say Diana?

[Diana Diaz:]

Yes, that’s correct.

[Operator:]

Thank you. Our next question comes from Joe Munda with Sidoti & Company. Please proceed with your question.

[Joe Munda:]

David, I was wondering if you could provide a little bit more color on the professional market. You talked about some distributor orders being pushed out here. Can you give us some color here? Are we going to see those orders come back, I guess, in Q2 or Q3? Any help there would be great.

[David Tusa:]

Well we expect in the next quarter the December quarter you’ll see that this strength; you should see the strength in the professional market as you have seen in prior quarters. So I think it was a blip because of the prior year quarter was an unusual comp.

[Joe Munda:]

Okay. That's helpful. And then on the home healthcare side of the business, fourth quarter down 8%, this quarter down 10%. Can you give us some color? Are you losing some customers here? What's going on there?

[David Tusa:]

No we’re not -- we don’t see ourselves losing -- a lot of that business comes through distributor whereas the orders are sometimes a little bit difficult to predict. It’s still up on a trailing 12 basis. And I think our goal for the year was about 10% increase for fiscal year ‘15 over ‘14. So you’ll see some difficult ordering patterns throughout the year. But I think we should be at that about 10% level of increase for the year year-over-year.

[Joe Munda:]

Okay. And then as far as gross margin is concerned, Diana, can you go into a little bit more detail regarding that legacy business and the inventory build? I'm just a little confused.

[Diana Diaz:]

This particular program is a split revenue model, where there is a lower margin on the front end, there was an inventory build. And unfortunately we love to have the inventory build but it does have a slightly negative impact on the margins. It’s not something that happens every quarter and that’s just came in this quarter. So we still think our model on the gross margin works where each quarter we have $1.1 million in fixed cost of sales and that our product cost range from 48% to 50% of revenue.

[Joe Munda:]

Okay. Just looking at the inventory right now, how much of that inventory was devoted to this legacy business line?

[Diana Diaz:]

None of it because it’s a vendor managed inventory program. So what we sold to the customer is not on our balance sheet.

[David Tusa:]

It was roughly about $400,000 worth of revenue that came in, there was a low margin, because on this particular legacy field the margin is really shipped into the back and when the units will return.

[Joe Munda:]

As far as -- I got one other question. As far as MedSafe goes, I think Brandon said the March quarter is when we can expect to see that launched and really hit the P&L. Is that correct?

[David Tusa:]

Yes Joe that’s correct. We’re looking at the next couple of quarters, as I mentioned this is a product knew the industry; it’s certainly taken some time for the customers to feel comfortable with it. At the end of the day we feel very confident, need to have a lot of leads come in through some marketing initiatives through the web, through inside and field sales quite a few in fact. And as I mentioned we have converted a few of those right now, we really anticipate this to start taking off over here over the next three to four months.

[Joe Munda:]

Yes. Because I remember when the regulations came out, I believe some pharmacies were -- or some retail pharmacies gave a little pushback. They weren't sure if there were going to participate. And then they came out and said we will do anything to ease the concerns here. What has been the response so far from potential customers?

[David Tusa:]

I will just tell you this and then Bran you add to it. But the response has been very positive from both the retail pharmacy sector as well as from long-term care. And we have a lot of proposals out. We have a lot of pricing deals out. We have started to close some of the smaller ones. But as we mentioned it’s new, it’s brand new in the healthcare industry and it’s not simple that you want to, it’s available out there, the new rules are available out there when you make it through all 157 pages, you’ll realize that its bit more complex. So the customers’ especially large ones really didn’t understand the rules how to operate under the rules. We’re here to help and to help them with interpretations of the rules. Brandon what else do you see out there?

[Brandon Beaver:]

I would say Joe, many of our discussions are actually getting on actually speaking with whether be legal, your clinical folks. I mean it’s certainly a sales process and we’re seeing retailed chains, we’re seeing independence, we’re seeing long-term care, large chains as well as independence on those all showing interests. And we feel it’s going to take a while but it’s going to gain some momentum. You’re going to start to see a few larger customers start to come on board and then once that kind of starts to happen starts a snowball.

[Operator:]

Thank you. Our next question comes from Kevin Steinke with Barrington Research. Please proceed with your question.

[Kevin Steinke:]

Just following up on MedSafe, I know there's a range in terms of potential size of customers. But any thoughts on what the typical size of revenue from one of those deals could be in terms of a long-term care facility or something along that nature?

[David Tusa:]

It’s pretty straight forward. The way we look at and this is just average big picture, as you could think about it roughly maybe $800 to $1,000 a year our facility. So you just kind of do the math from there. And again they’re all different, but that’s probably on average what they would represent a revenue.

[Kevin Steinke:]

Okay, perfect. That's helpful. And if you could just, since it's a newer offering, just walk us through the mechanics of how a MedSafe relationship would work with, say, a long-term care facility and what the margins are on that type of revenue?

[David Tusa:]

I’ll walk you through the process, really in essence long-term care right now has the ability or it has had the ability to destroy controlled medications to various means. Unfortunately none of them have been preferable means, typically flushing down the toilet, coffee grounds things like that. So really with the inception now of the MedSafe coming into a facility we provide a kiosk if you will, receptacle that goes inside of a long-term care facility. In the internal components of it is a liner, basically it’s a box liner that allows all of the drugs now co-mingled controls and non-controls to go into that box. This box is sent back to us, via common carrier through just a normal distribution channels back to iteration purposes. So really it’s a very similar process to some of our old medication take away, the products we've had, but now it just really comes with some additional security functions with it.

[Kevin Steinke:]

Okay, perfect. And in terms of the new pharmaceutical manufacturer contracts that you expect to rollout in calendar 2015, can you just update us on the timing of when those might hit?

[David Tusa:]

We said that, we said we know one is coming into December quarter and then we said three more over the 18 month follow that Rod. Calendar '18 and in the first half of '16.

[Diana Diaz:]

Right. And we had one that started this quarter in the September quarter.

[David Tusa:]

Right. So they are starting to roll out, and as we talk about before each deal fall in average is about a $0.05 million to a $1 million a year on average in revenue and that's after they are fully ramped but it starts with an opening order of intermanaged inventory order and then awarding the bills as patients offering to that patients for program.

[Kevin Steinke:]

All right. Yes, great, great. I meant more in terms of the calendar 2015. I think in the past, you had said maybe that was more of a second half of calendar 2015 event. But I just wanted to make sure of that.

[David Tusa:]

That's true. But again there is -- it's difficult sometimes to predict when these launch because there is lot more that is going on than just mail back program and the patient support program. A lot of activities with the drug itself. So probably the latter half and some of them may even fall over into the first half of the calendar year '16.

[Operator:]

Thank you. Our next question comes from Brian Butler with Stifel. Please proceed with your question.

[Brian Butler:]

Just to go back onto professional in a little bit more detail -- so without the timing issues, you said growth was somewhere around 18%. Is that the right way to think about growth through 2015? Is that the pace? Or is that going to ramp somewhere in the second half or the next three quarters for the professional business?

[David Tusa:]

No I think it should increase and what is on trailing 12, that's about, it's about a 20% increase on a trailing 12 basis, but I think it's going to be higher than that on a fiscal year 2015 over '14 on the professional side. So we should hope to see that higher than that 20%, maybe 25% to 30% if are guys in the back they do their job. What do you think, Brandon?

[Brandon Beaver:]

I do I think we have several key targets in the professional market and in field sales as well, that are, that will definitely make an impact to that.

[Brian Butler:]

And from a perspective of customers being aware of this product in the professional market, where do you guys feel you guys stand from an awareness point of view? I know that has been a big push over the last couple years to try to get that higher. And I'm just trying to measure how successful that is and what that could also do from a growth perspective.

[David Tusa:]

Well, we hit it two ways. First of all, on the field sales they are out there face-to-face with their customers and actually the last couple of deals that you guys landed on the field sides were in the professional market. So that is expected to face if it is not a large the one over $100,000 a year. But if you do smaller deals and that's going to be through inside sales and that's going to be through a number of traditional marketing methods as well as through wave and other kind of advertising. I think we are doing a much much better job of creating the awareness on the professional side. And what we are doing as well as on the inside sales is we have been focused on larger deals as well. So we are just going after just ones or twos just maybe going after a 10, 15, 20 facility chain. So we hope to see as a result of that a pickup in the revenue pace in the remaining portion of '15.

[Brian Butler:]

Okay, great. And on the retail side, retail growth was, I think, 8%. Is that including some of this from the flu shots? Or is that 20%, exceeding that 20% growth from the flu shot -- is that really going to work its way into the retail sales revenues in the remainder of the year?

[David Tusa:]

There is a little bit. But what we saw is a significant strength in the October. So I think you are going to see much higher -- you will see much higher growth in the December quarter from the flu shot business. Just the month of October alone was quite busy.

[Brian Butler:]

Okay, good. And last one here, just on the pharmaceutical piece -- what type of competition, if any, are you seeing in this business? Is there anyone else out there with -- offering similar type of proposals to these guys? Or are you still really the only player out there?

[Brandon Beaver:]

Brian, really we are really the only player that does as we mentioned earlier customization, branding and really monitoring adherence really looking at from a global perspective on drug itself. So we look at from beginning to end, we do have a little bit of competition in this area, not a lot but really they are focused on really just the containment of the drug. So we look at it from beginning to end. We are looking at health and manufacture market this drug. That means everything from customizing the systems themselves to the reach out to the patients, everything. So when we look at this we look at as a unique space for us. There certainly is kind of your generic type of organizations that will offer just as I mentioned just a containment piece.

[Brian Butler:]

Okay, that's helpful. And I guess the same question could be asked for MedSafe, a new product that you guys are rolling out. Is there other products out there? Can you talk maybe a little bit about the complexity of someone else offering this and if there is already some other offerings of this type of product out there?

[David Tusa:]

First of all, we haven’t seen anything like the MedSafe the collection receptacle and the line and we’ve worked in this probably over the last year but we think it’s a very unique offering and actually its patent pending offering. The only other thing that we see now there and again there’s nothing like our MedSafe we’ve seen those all traditional like, is it a bottle of bleach or something you put the pills in it and store it up from the trash. So we don’t really see that as we going at least don’t consider that to be near the program that we’re offering. But those are randomly -- we’ll see some of those. But we haven’t seen anything that’s comparable to what we’re offering; I mean MedSafe or the collection receptacle on the line.

[Brandon Beaver:]

Now there has been around, Brian there has been some solutions that you can as David motioned concussions if you will to destroy on site right there. But really those have been around for a number of years but at the end of the day from an environmental standpoint it’s not as sound and really as David mentioned this is just really a turnkey program, says on numerous factors from labor to destruction to multiple things.

[David Tusa:]

There is a lot also -- there is a lot of very strict requirements for storage there is lot of strict requirements for the amount of time before you perform the destruction. And I don’t know about all the other solutions that are out there but I do know that we’ve designed our specialty very strict compliance with all of the new rules and we can show that to the prospects.

[Operator:]

Thank you. Our next question comes from George Walsh with Gilford Securities. Please proceed with your question.

[George Walsh:]

David, could you just clarify once again the difference between the billings and the revenue for the quarter, the $7 million versus the $7.5 million in the billings? Those were timing issues, you said, basically?

[David Tusa:]

That’s our wonderful illustrious revenue recognition, we have half hour so we could share that. But the easiest way to think about it is every element of the sale is broken into three different components, when a portion of the revenue when you sell it a portion of the revenue when you return it, a portion of the revenue when you destroy. So think about it in terms of, if we ship on a lot of units towards the end of quarter and they haven’t come back yet and you can differ that revenue. If you look historically what you’ll see is you’ll see usually and it happened last year too, so it was about a negative $400,000 GAAP adjustment in the September quarter of last year. And that usually flips in December and this positive 400,000 in December. And we expect that to happen this year. So you should see a positive GAAP adjustment this year.

[George Walsh:]

Okay, all righty. And did that have an impact on margins or are the margins just really, the gross margins -- so that was really mostly the pharmaceutical issue?

[David Tusa:]

The pharmaceutical manufacturer program, the revenue recognition does not have an impact on margins.

[George Walsh:]

Okay, fine. Also just to discuss these DEA regulations and the Secure and Responsible Drug Act, which is helping with the MedSafe, these are still voluntary programs at this point. Is that correct?

[David Tusa:]

It’s not a rule; the DEA is requiring everyone to follow. What the DEA is trying to do is to help industry with a problem. And the problem is the cost effective convenient properly disposing of unused medications including controlled substances. So they’re offering new rules that should help industry. So where their aim primarily is in the long-term care market where this has been a problem for years, what do you do? How do you properly dispose patient dispense the controlled substances, it’s a real problem. Now you can co-mingle those within our controls and put them in our solution very cost effective. The other area that attain that is retail pharmacy. Was asking that if there is 250 million pounds of unused medications that are improperly disposed, in the consumer side. So what they’re aimed at is, you’ll be able to go into your retail pharmacy whether it’s independent and maybe for the larger ones and be able to bring in unused medications including controlled substances which has never been allowed in this country before. So the retail pharmacy can provide an additional service to its customer and say bring, get the meds out of medicine cabinet, don’t flush them being them back to our facility and out it into the MedSafe where there will be properly contained, collected, and ultimately destroyed. So those are the two markets. Now, it was interesting. The rules also allow the systems to be used in – what was it? It was hospice narcotic treatments and one or two other markets that they allowed it to be used as well. So the DEA is trying to help industry help consumers so we can get these controlled substances properly disposed of.

[George Walsh:]

Okay. And it sounds like it's a good program. It should be done. And I guess my question is with that, are they taking the lead in any way and actually enforcing and implementing these in their own type of facilities, the CDC or the VA or these kinds of things? They have programs that they are dealing with these things with patients or even under -- even on your systems, there's something where they are taking a lead on that and it creates any opportunities for you guys?

[David Tusa:]

That's right. I mean it potentially could. We are early. We're early into this and everyone is trying to figure out these rules. We keep a running list of all the questions that are coming in and helping provide responses and interpretations of some of these which are list of like 50 questions now that we have. So I am like kind of working that way through it George but I think ultimately it could be an opportunity there as well.

[George Walsh:]

Yes. Well, I would think they would want to lead by example. Okay, all right. Thank you, David.

[David Tusa:]

Hey good talking to you George. Thank you.

[Operator:]

Thank you. At this time I would like to turn the call back over to management for closing comments.

[David Tusa:]

All right, thank you. Thank you, everyone for joining us. We look forward to speaking with next quarter, we appreciate your support.

[Operator:]

Thank you. This does conclude today's teleconference; you may disconnect your lines at this time.