Sierra Wireless, Inc.
Q3 2016 Earnings Call Transcript

Published: 4 Nov 2016

[Operator:]

Good afternoon. My name is Kristine, and I will be your conference operator today. At this time, I would like to welcome everyone to the Sierra Wireless Q3 2016 Earnings Results Webcast. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] Thank you. David Kwame, Vice President of Investor Relations. You may begin your conference.

[David Climie:]

Thanks Kristine, and good afternoon, everybody. Thank you for joining today's conference call and webcast. With me today on the call is Jason Cohenour, our President and CEO; and Dave McLennan, our Chief Financial Officer. As a reminder, today's presentation is being webcast and will be available on our website following the call. Today's agenda will be as follows. Jason will provide a review of our third quarter results, Dave will then provide a more detailed overview of our financial results as well as our guidance for the fourth quarter of 2016 and following Jason will provide a brief summary, and then we’ll finish with a Q&A session. Before we get started, I will reference the company's Safe Harbor statement. The summary of the Safe Harbor statement can be found on the page two of our webcast and is now being displayed. Today's presentation contains certain statements information that are not based on historical facts and constitute forward looking statements. These statements include our financial guidance and commentary regarding the longer term outlook for the business. Our forward looking statements are based on a number of material assumptions including those listed on page two of the webcast presentation that could prove to be significantly incorrect. Additionally, our forward looking statements are subject to substantial known and unknown material risks and uncertainties. I draw you attention to a longer discussion of risk factors in our annual information form and management’s discussion and analysis, which can be found on SEDAR and EDGAR, as well as other regulatory filings. This presentation should also be viewed in conjunction with our press release. With that, I will now turn the call over to Jason Cohenour for his comments.

[Jason Cohenour:]

Thank you, David, and good afternoon, everyone. I’ll start with the summary of our third quarter 2016 results. Revenue in the third quarter was $153.6 million, which was down slightly on a year-over-year basis.Q3 revenue included $2.7 million from GenX Mobile which we acquired on August 3rd. As expected, lower OEM Solutions revenue during the quarter was mostly offset by growth in Cloud and Connectivity Services and Enterprise Solutions and the GenX contribution at inside the Enterprise Solutions number. Adjusted EBITDA in the third quarter was $9.7 million, and non-GAAP EPS was $0.13 which was at the high end of our guidance range. And for the second consecutive quarter, we experiences excellent cash flow performance, generating nearly $20 million in free cash flow. Also during the quarter, we continue to drive new product momentum, a key driver of our anticipated return to growth announcing several new break though products and service offerings across our lines of business. And I’ll provide additional detail on these new launches during the fourth coming segment updates. Customer acquisition activity was quite strong during the quarter as well as each of our business units win new programs and customers across a broad range of segments and regions. And I will add that on a relative basis. New customer acquisition activity was particularly strong in cloud and connectivity. So moving to the business segments and starting with OEM Solutions. Revenue in our OEM Solutions business was $127.8 million in the third quarter of 2016 compared to $130.7 million in the same quarter of 2015. Non-GAAP gross margin percentage in the quarter was 29.2%. As expected, we experienced softer demand in the quarter with some established customers which was partially offset by growing contribution from new customer programs. Also in the quarter, we announced our latest AirPrime HL and WP series modules for LTE category M1 and NB1 for low-power wide-area deployments. Sierra Wireless has been instrumental in establishing the LPWA at the 3GPP standards body and we now have several patterns that have been declared essential to these standards. Our out new Cat-M1 and NB1 devices are cost optimized deliver far broader coverage and consumer much less power than conventional cellular devices. We believe that these critical attributes will significantly expand the IoT opportunity and the addressable market for cellular technologies. During Q4, we’ll be working with AT&T, Verizon and leading OEMs to pilot the technology and early network deployments. Q3 design-win activity was the strongest so far this year both in terms of volume of wins and estimated lifetime value. A design-win activity continued to be strong in automotive particularly for Asian markets and we also secured new wins in the energy, networking and transportation markets. Also during the quarter, we announced a device-to-cloud win with Itelma, a Tier 1 supplier to AvtoVAZ, the leading carmaker in Russia and Eastern Europe. The Itelma solution provides cellular connectivity and service delivery to comply with Russia’s ERA-GLONASS emergency response system which is harmonized with the EU’s eCall System that we’ve talked about several times. Central [ph] to the Itelma solution, our smart automotive modules and AirVantage IoT platform which together provide the cellular connection, SIM management and device management for the first cars in Russia to comply with ERA-CLONASS. We believe this win provides another example of the power of our device-to-cloud solutions as well as excellent collaboration and leverage across our business units. And then finally for OEM, just yesterday, we added another important new category of products and capabilities to our OEM Solutions business with the acquisition of Cambridge, UK-based Blue Creation. Blue Creation is a provider of innovative Bluetooth, Bluetooth low energy and Wi-Fi modules, software, technology and consulting services for global OEMs. Blue Creation’s products include proven Bluetooth protocol stacks for both audio and data applications. We intend to level Blue Creation’s products and capabilities to expand our position with global OEMs seeking to add a wide range of wireless capabilities to their solutions. We paid $3 million in net cash consideration for Blue Creation at closing with additional contingent cash consideration of up to $0.5 million. And we are thrilled to welcome the Blue Creation team as of yesterday to Sierra Wireless. Moving to Enterprise Solutions, revenue in our Enterprise Solutions business was $18.9 million in the third quarter including a $2.7 million contribution from GenX. Excluding the acquired GenX revenue, Enterprise was slightly lower on a year-over-year basis compared to an exceptionally strong Q3 2015, which benefited from an unusually large public safety customer deployment. In Q3, gross margin percentage for Enterprise Solutions was 40%, down from the prior quarter due to the addition of GenX revenue which is slightly dilutive to enterprise gross margin. As discussed last quarter, the addition of GenX significantly upgrades our position, product offering and capabilities in the fleet management and asset tracking segments. We also see a natural bundling opportunity for GenX devices and our cloud and connectivity services. Integration with the GenX team is well underway and we expect to capture cost of goods and growth synergies overtime. During the quarter, we continued to launch new products as part of our ongoing commitment to accelerate our product portfolio, a critical part of our return to growth strategy. In Q3, we launched our third new product of the year, the MG90, a high end vehicle router that provides multiple wireless wide-area connections in a single platform. The MG90 is the world’s fastest vehicle router delivering always on secured connectivity which is critical for first responders, transit and field service customers. We expect to continue our new product launch activity in Q4. Our new products combined with targeted investments and sales and the channel are helping to accelerate customer acquisition activity. During Q3, we secured new wins in the industrial, public safety and security markets. One of these new customers provides another excellent example of the power of our device to cloud offering. This customer a global industrial equipment manufacturer providing solutions to the hospitality and help services markets had selected our entire device-to-cloud solution including smart gateways, Legato embedded software, smart global connectivity and AirVantage cloud for device and SIM management. Looking forward, we continued to be bullish on the opportunity in Enterprise Solutions and expect that our new product activity combined with targeted investments in sales will drive year-over-year organic revenue growth. Now moving to our Cloud and Connectivity services segment, Cloud and Connectivity revenue which is comprised mainly of recurring service based contracts with $6.9 million in Q3 with slightly improved non-GAAP gross margin of 42.4%. New customer acquisition activity continue to ramp in Q3. As we closed more deals than we did in Q2 and almost twice the number that we closed in Q1. Our new wins came from a number of segments including industrial, transportation and security. They are also very pleased to see that a high percentage of new wins came as a result of a continued high level of inter BU lead sharing and collaboration, supporting our key strategic thesis that device sales can lead directly to cloud and connectivity services wins and that by combining CR devices with CR cloud and connectivity services results in a differentiated solution. We are also very encouraged to see that the vast majority of new Cloud and Connectivity customers are adopting our patented smart SIM technology that we launched earlier this year. Our smart SIM technology enables us to deliver the highest quality of connectivity service available while also managing our cost of service. During the quarter, we also introduced an important new capability for our connectivity services called eUICC that is often referred to as eSIM and this is a standard based capability that allows our customers to remotely provision and/or change full SIM profiles and thus the underlying service provider over the air. This capability is critical for many global IoT applications particularly long lifecycle deployments as it provides customers with more control over their subscription cost, coverage and service level for the entire life of their solution. Additionally as standards based solution eSIM will ensure global interoperability with MNOs. Now the core network side as we mentioned before, our platform is fully upgraded to support LTE services and we are continuing to expand our wholesale agreements with MNOs as we seek to broaden our connectivity services globally. I'll now turn the call over to Dave McLennan, who will provide more detail on the Q3 financial results and our guidance for Q4.

[David McLennan:]

Great. Thanks, Jason, and good afternoon, everyone. Please note that we report our financial results on a U.S. GAAP basis. However we also present our non-GAAP results in order to provide a better understand of our operating performance. As a reminder, our definition of non-GAAP and a full reconciliation between our GAAP and non-GAAP results is available on our website. Third quarter financial results were in line with our expectations. During the quarter, revenue was $153.6 million and non-GAAP net earnings were $4.1 million or non-GAAP earnings per share of $0.13. Our Q3 results include contribution from GenX comments in August 3, the day we closed the acquisition. To the partial quarter from August 3, GenX contributed $2.7 million of revenue and non-GAAP earnings of $0.01 per share. Our guidance for the third quarter excluded GenX, so looking at the results excluding GenX and comparing it to our guidance. Revenue in the third quarter was $150.9 aligned with the midpoint of our guidance range of $145 million to $155 million. This combined with lower than expected OpEx resulted a non-GAAP net earnings of $3.8 million or $.012 a share which is at the high end of our guidance range of $0.06 to $0.13 per share. Q3 OpEx was lower than expectations primarily as a result of some expected R&D expenditures which are shifting into Q4. Moving back to consolidated non-GAAP results for a moment including GenX. Non-GAAP gross margin of $32.2% was slightly lower on a sequential basis compared to Q2 mainly reflecting product mix within our OEM business unit. I also note that our non-GAAP effective tax rate was relatively high in Q3 approximately 34.8%. This primary reflects a year-to-date catch up in Q3 to adjust for a modest increase in our estimate for our full year tax rate. Looking at key metrics for the third quarter and comparing them to the same period in 2015 as well as to the second quarter of this year. Year-over-year revenue decline by 0.7%, OEM revenue decline 2.2% reflecting demand softness from certain established OEM customers and programs which was partially offset by contribution from new programs. Partially offsetting this OEM decline was stronger revenue from both enterprise solutions and Cloud and Connectivity Services. On a sequential basis compared to Q2 of this year total revenue decreased by 1.7%. This decrease was driven primarily by a 3.7% decline in OEM revenue. As expected, we experienced softer demand with certain established OEM customers which was partially offset by growth from new customer programs. Enterprise Solutions revenue was up sequentially in Q3 by 14.2% driven by the contribution from GenX. Looking at adjusted EBITDA and non-GAAP EPS on a year-over-year basis that decline in profitability reflects slightly weaker revenue as discussed above combined with higher operating expenditures mainly reflecting the addition of the cost structures of acquired companies and investment and go to market capabilities during the year. On a sequential basis compared to Q2 excluding the one-time recovery of legal costs in Q2 our profitability metrics were fairly flat in Q3. Specifically Q3 adjusted EBITDA of $9.7 million or 6.3% margin compared to $10.2 million or $6.5% margin in Q2 and Q3 non-GAAP EPS of $0.13 compares to $0.14 in Q2. Looking at cash, we had very strong cash generation quarter during Q3 adding $13.6 million of cash to end the quarter with $112 million and no debt. During the quarter the business generate a very healthy $24.4 million in cash from operations this level of cash generation includes the impact of favorable working capital management during the quarter we had solid accounts receivable collections and we also benefited from stretching our payables. What we strive to continuously manage working capital I must say the magnitude of the impact in Q3 was unusually high. Free cash flow was $19.7 million after taking into account $4.7 million of capital expenditures. And we deployed a net of $5.9 million of capital during the quarter versus GenX, so on all a very strong cash for us. Moving on to guidance. In Q4 of 2016 we are expecting a sequential and year-over-year improvement in our financial results with revenue in the range of $157 million to $166 million including a full quarter of contribution from GenX mobile and non-GAAP earnings per share in the range of $0.13 to $0.19. We expect our non-GAAP tax rate in Q4 to be in the mid 20% area as a percentage. Our expectation of sequential on year-over-year revenue growth in Q4 is based on overall stable demand from established OEM customers continued growth from new OEM customer programs and improved revenue from Enterprise Solutions driven by organic growth plus the addition of a full quarter contribution from GenX. And finally regarding our normal course issuer bid, the buyback program continues until its expiry date on February 8 of next year. And to date we have purchased 554,000 shares under this program for a total of $6.2 million and it today share price we would expect to be active with the buyback program during Q4. I'll turn the call back to Jason for his summary comments.

[Jason Cohenour:]

Thank you, Dave. So to summarize, in the third quarter of 2016 we delivered financial results that were in line with our expectations with the exception of cash flow, which was significantly better than our expectations. We also continued to launch new market leading products and services that we believe strengthened our strategic position. New customer acquisition activity was also strong in the quarter, adding significantly to our backlog of customer programs. We expect that our new products, new services, and new customers will be key to driving future growth. We're also very pleased to see a continued ramp in customer selecting our Cloud and Connectivity services and full device to cloud solutions. This progress provides validation of our strategy and puts us on a track to expand our position in the value chain and to ramp our recurring revenue base. Looking forward to Q4 we have a stronger outlook for financial results supported by an expectation of solid sequential and year-over-year revenue growth. Longer term we continue to be excited about the growth opportunity ahead with the clear global leader in cellular connectivity solutions for the Internet of Things. Our three main business segments expose us to a large and valuable market opportunity, and we believe that we are a better position now than ever before. Capture a significant share of this opportunity. We also plan to stay active in M&A that supports our device to cloud strategy and that helps us to accelerate long term growth and value creation for shareholders. And with that Christine, thank you. That concludes our prepared remarks. You can now open the line for questions.

[Operator:]

[Operator Instruction] Your first question comes from James Kisner there with Jefferies. Your line is open.

[Unidentified Analyst:]

Hi everyone. This is actually Tim [ph] for James Kisner today. And so the first question we have is - so looks like you're still seeing some OEM softness just like last quarter, and in the still tighter majority management or is there some other factor and do you see any signs of reversal it looks like you are actually guiding some stability in Q4?

[Jason Cohenour:]

Yes we are, hi. It’s Jason here. Well, yeah, so Q3, an OEM played out as we basically as we expected. And as we provided commentary around our Q3 guidance, we did say that a certain group of established OEM customers were seeing softness in there and customer demand and that certainly color our guidance for Q3. And we expected that to be partially but not fully offset by contribution from new programs and that did play out as we expected. So as we look forward to Q4, clearly we’re expecting a bit of a recovery there and that’s comprised of stability from these established OEM customers. And in programs, we think we’ve got that visibility locked down. And we expect a continued contribution from ramping new customers and programs and that is a significant contributor to the expectation of sequential growth in Q4.

[Unidentified Analyst:]

Alright and could you provide any updates on your PC OEM business, we talked about there is a win ten refresh cycle going on. Is that going to be helping at all in the enterprise notebook space?

[Jason Cohenour:]

On PC OEM, that’s - I would think about think about our sales into PC OEM to be from a growth standpoint be roughly aligned with the overall PC market, that’s kind of been the way it’s been playing out. So a little bit down this year in PC OEM, so we don’t expect it to be a key contributor of growth. Most of the growth that we see is coming from industrial M2M customers. Having said that we could be surprised with the launch of new platforms, there could always be an increase in penetration. We don’t think there’s going to be a lot more notebook sold, but there could be an increase in 4G penetration that currently is not part of our expectation.

[Unidentified Analyst:]

Alright, and the last question before I pass is to regarding your acquisition of Blue Creation, could you explain which OEM application would be enhanced, it seems like it’s a short range, signal only, so any details you could provide that would be great?

[Jason Cohenour:]

Yes, I will. So maybe just a little bit of background, about 10% of Internet of Things connections today are our cellular, so that leaves first of all is a massive part of the market for us that we currently don’t have exposure to. So know clearly adding Bluetooth and Wi-Fi exposes us to high, a bigger a much bigger part of the overall IOT market. And as we look at our existing OEMs, they have wide ranging need, just the way to think of it. We’ve got - today we have OEM customers who have solutions that have cellular Wi-Fi and Bluetooth all in the same solution. There are solutions that start with Wi-Fi, and then evolve the cellular. And then for some OEMs, they have a range of different solutions for different market needs, somewhat short range, somewhat wide areas. So we see that today in our current OEM customer base and by having these technologies in our product lineup, it definitely exposes us to a larger part of their embedded bill of materials and we believe that we can leverage that and become a bigger and stickier supplier to these OEMs.

[Unidentified Analyst:]

Alright, thanks Jason. I’ll pass.

[Jason Cohenour:]

Sure.

[Operator:]

[Operator Instructions] Your next question comes from Thanos Moschopoulos with BMO Capital Markets. Your line is open.

[Thanos Moschopoulos:]

Hi, Good afternoon. Jason, can you provide some more color on the automotive vertical in OEM. You highlighted the deal win in Russia, any additional color as far as maybe the near term demand environment, is it looking more stable following some of the inventory durations you experienced? And then remind us when we might start seeing some of your large design wins in that area hitting the revenue line in a more meaningful way?

[Jason Cohenour:]

Sure, sure. So automotive activity, first of all on the design win side continues to be very high. So we continue to compete for a lot of deals. We are winning some of those as I reported and in the Q3, we had particular success in Asia with more than one automotive OEM in Asia. With respect to current demand trends on current programs that stable is the way to think of it Thanos, so that has had some volatility I know in the past few quarters. Our short term view is that is stable. And we are also going to production now on some of our new quote unquote new programs that we won one plus years ago and those programs are starting to contribute. Now with respect to the big ones and in particular, the large international OEM that we announced late last year on that particular program, which is the largest design win in the company’s history, we do not expect that program to contribute until the end of 2018. However, between now and then, we do expect automotive to be a key driver of growth for us next year and beyond and that is based on the customer programs that we currently have in the pipeline and our visibility to their start of production schedules.

[Thanos Moschopoulos:]

Okay. It’s helpful. On the cloud and connectivity business, seems like the revenues have been somewhat range beyond the last couple of quarters. Is there a currency dynamic here or is it just the some latency in terms of the time required to bring some of your recent wins on board and coming out the revenue?

[Jason Cohenour:]

There is a currency dynamic in Q3 was not a big impact however. Historically it has been a significant impact but was not in Q3. Q3 is seasonally low in the CCBU. That business is impacted by usage patterns to a certain degree depending on the customer, some customers are on the meter. And if they use more services, they get they get billed more. And in Q3, they tend to use less. And so that is a factor in CCBU revenue that we put up in Q3. And you are right, it also takes time to ramp new programs. You have to - our CCBU wins and as I mentioned in the prepared remarks, we see our CCBU wins accelerating. But we have to look at those wins almost like OEM wins because many of them are OEM wins and it takes time for these programs to mature and alternately launch. So I think about it right now that we’re building a customer program pipeline in CCBU much likely we are in OEM. So it will take a bit of time to ramp.

[Thanos Moschopoulos:]

Okay, make sense. And one last one for Dave, how should we be thinking about the tax rate for 2017?

[David McLennan:]

Yeah. Thanos, your Q4 will be in the mid 20’s and we’re just currently looking on our 2017 detailed plan, but I wouldn’t expect it to be much different from that.

[Thanos Moschopoulos:]

Okay. Great, thanks. I’ll pass the line.

[David McLennan:]

Thanks.

[Operator:]

Our next question comes from Todd Coupland with CIBC. Your line is now open.

[Todd Coupland:]

Hi, good evening, everyone. Couple of questions if I could, just so I get the guide correct for the fourth quarter. So you know just about $3 million from GenX in Q3 for two months, so is the run rate embedded in let’s call it $160 million, roughly $4.5 million for Q4?

[Jason Cohenour:]

Yeah. I’d say that’s a little high Todd, I mean if quarters are necessary sequential in each months. So that math would maybe get you a little heavy yourself.

[Todd Coupland:]

Okay. Fair enough. When you think about Q4 and the various puts and takes, the recovery you’re seeing in your business, what would cause you to come in at the low or high end of the range, what are the largest variables in your mind as you think about Q4?

[Jason Cohenour:]

Yeah, I think couple of things, one is that OEM business, and we have many, many customer’s right. So there’s a lot of moving pieces there and it’s - what we do have some large customers, there is - the that cumulative effect of many moving pieces they could change there what plus or minus around that around guidance. So that would certainly be one factor. In our enterprise business as we’ve talked before that’s our book-to-ship business, largely we have you know nice momentum on the backs of new product launches and investment in go-to-market activity, but that is book-to-ship business, so a little less visibility there.

[Todd Coupland:]

Okay. And with this recovery into Q4, is there any way to think about sort of a fundamental organic growth rate for 2017 like I would talked about 10% plus for the market over time. I mean is that achievable in this economic environment or are you still thinking about single digits for planning purposes?

[Jason Cohenour:]

Yes, hi Todd. This is Jason, I think we're cautious, so obviously we’re happy to see the step up are expected to step up here in Q4. The pattern is playing out roughly as we expected it would 90 days ago for all the reasons we've previously stated. So short term for Q4 we see at the midpoint of our guidance, I think that implies about 12% year-over-year growth rate against a very easy comp. And any other drivers there as we said, we don’t more stabilized demand view from existing OEM customers and programs, and then we're adding new programs plus we see opportunities to grow enterprise and cloud and connectivity. So beyond that call it mid-term or 2017 we think we have demand stability that's good. And when we have visibility to more new programs ramping, and we believe we've got the right ingredients to drive growth and enterprise. But having said that, we've had a top 2016 and we still see some macro uncertainties. So we are cautious, I guess is word I would use and yes longer term we think this market can deliver and we can deliver 10% to 15% year-over-year growth. We are not modeling that for 2017 because of this overhang of uncertainty, notwithstanding the progress that looks to be underway. We're still a bit cautious with respect to 2017. So the range of 10% to 15% in our business we're not modeling within the range just to be clear, and I think the streets at about 8% growth for 2017 and nothing in our Q4 or Q4 guidance would lead me to believe that expectations should go up or down.

[Todd Coupland:]

No that's actually very helpful color, Jason. If I could just ask one question on your Wi-Fi acquisitions were short range clearly it expands your total available market. How should we think about the impact of that, is that a 2017 material driver or will it take a little bit of time to have an impact on the overall company?

[Jason Cohenour:]

I think that I think it's going to take time. First of all in the short term in the press release we characterize that has minimal impact, financial impact in the short term. And during 2017 we certainly have a plan to grow it from where it is, but it's not going to move the needle. So I think you're looking at 2018, 2019 but before begins to be a significant contributor. And then there's also defensive value by the way in adding this too, there's - we do have competitors who have this capability inside, I think that is a key reason for us to have it as well. And we think it will expose us earlier to some opportunities that may not be cellular today, but that will be cellular tomorrow.

[Todd Coupland:]

It was clearly an important addition to the portfolio I absolutely see why you made the acquisition. I appreciate that color. Good luck gentlemen, appreciated.

[Jason Cohenour:]

You bet. Thanks.

[David McLennan:]

Thanks Todd.

[Operator:]

Our next question comes from Richard Tse with National Bank Financial. Your line is open.

[Richard Tse:]

Yes, thank you. Jason, your comments on the design win activity being strong so far that's kind of the most bullish I've heard you in some time, is that strength sort of a market change or is this specific to Sierra?

[Jason Cohenour:]

Gosh, Richard it's tough to say if it's - I wish we had visibility to our competitors design wins. Sometimes we do indirectly, but I'm not thinking that the market has suddenly accelerated based on our Q3 design wins success. So is that company specific that it was our best design win a quarter of the year or is it timing or is it kind of customer specific factors, it's probably a combination of all that. So I wouldn't turn our Q3 design wins success into a trend yet, I guess is the way I would put it. Whether it's market driven or company specific, for now the way we're looking at it is it was a particularly strong quarter. And we'll see what the activity is like in Q and of course we'd like to turn that into a trend, but I think it's too early to say is that.

[Richard Tse:]

Right. And when you sort of call out market segments like automotive, networking, energy, is it possible for you, give us maybe a proportional split of those verticals when it comes to your recent design wins?

[Jason Cohenour:]

No it's not possible for me to do that with precision. It was pretty automotive heavy, I would say these are not huge automotive programs by the way, but there were - there was more than one and as a group that represented a significant contributor. And I would put energy pretty high on the list too, because that that's driven by very specific utility planned utility rollouts for smart meters.

[David McLennan:]

To transportation as well I think Richard.

[Richard Tse:]

Okay, okay that's great. Thanks.

[Jason Cohenour:]

Yes, you’re welcome.

[Operator:]

There are no further questions at this time. I will now turn the call back over to Mr. Jason Cohenour.

[Jason Cohenour:]

Great, thank you, Kristine. And thank you everybody for joining today's call. As usual management will be available after the call should you have follow-up question. Kristine that ends our call, you can terminate the line.

[Operator:]

This concludes today's webcast. You may now disconnect.