Ultralife Corporation
Q1 2015 Earnings Call Transcript

Published: 3 May 2015

[Operator:]

Good day, everyone and welcome to today’s Ultralife Corporation First Quarter 2015 Earnings Release Conference Call. At this time, I would like to introduce your moderator for today’s conference, Jody Burfening. Please go ahead, ma’am.

[Jody Burfening:]

Thank you, April. Good morning, everyone. This is Jody Burfening of LHA. Thank you for joining us for Ultralife Corporation’s earnings conference call for the first quarter of fiscal 2015. With us on today’s call are Mike Popielec, Ultralife’s President and CEO and Phil Fain, Ultralife’s Chief Financial Officer. The earnings press release was issued earlier this morning. And if anyone who has not yet received a copy, I invite you to visit the company’s website, www.ultracorp.com, where you will find the release under Investor News in the Investor Relations section. Before turning the call over to management, I would like to remind everyone that some statements made during this conference call contain forward-looking statements based on current expectations. Actual results could differ materially from those projected as a result of various risks and uncertainties. These include potential reductions in U.S. military spending, uncertain global economic conditions and acceptance of the company’s new products on a global basis. The company cautions investors not to place undue reliance on forward-looking statements, which reflects the company’s analysis only as of today’s date. The company undertakes no obligation to publicly update forward-looking statements to reflect subsequent events or circumstances. Further information on these factors and other factors that could affect Ultralife’s financial results is included in the – in Ultralife’s filings with the Securities and Exchange Commission, including the latest Annual Report on Form 10-K. In addition, on today’s call, management will refer to certain non-GAAP financial measures that management considers to be useful metrics that differ from GAAP. These non-GAAP measures should be considered as supplemental to corresponding GAAP figures. With that, I would now like to turn the call over to Mike. Good morning, Mike.

[Mike Popielec:]

Good morning, Jody and thank you everyone for joining the call this morning. Today, I will start by making some overall comments about our first quarter 2015 operating performance, then I will turn the call over to Phil, who will take you through a detailed financial results. After Phil is finished, I will provide an update on the progress against our revenue initiatives for 2015 before opening it up for questions. For the first quarter of 2015, we were pleased to deliver a second consecutive quarter of total company profitability, generating an operating profit of $0.8 million on revenues of $19.2 million for an operating margin of 4.3%. This represents a year-over-year improvement in operating profit of $1.9 million on an increase in revenue of $3.9 million and demonstrates the operating leverage obtainable from increased revenue and execution of our business model. Commercial revenues for our battery and energy products business continued to make up approximately 50% of total B&E revenues, with a strong contribution from our 9-volt product line and were within 2% of the prior year first quarter commercial revenues. However, in our government/defense revenues for battery & energy products, we saw an increase of 45% year-over-year driven by sales to OEMs and the DLA, which led to an overall battery & energy products sales increase of 17%. In our communications systems business, sales of a broad range of new products through our OEM channels as well as an increase in the day-to-day flow business, grew first quarter 2015 year-over-year revenues by 113%. On the strength of both businesses achieving year-over-year revenue increases, total company revenue increased by approximately 25% from the prior year. Looking at gross margins driven by favorable mix as well as volume leverage, both business units showed improvements in Q1 2015, which increased total company gross margin year-over-year by 290 basis points to 31.3%. We are encouraged by this result as achieving 30% plus total company gross margin is the cornerstone of our stated 30, 5, 5, 10 equals 10 business model, which provides us a general guideline for allocating funding for our revenue initiatives such as new product development and market reach expansion, while targeting an initial 10% operating margin rate goal. We continue to control over our operating expenses, while we look to increase revenue. And in the first quarter, the combined effect lowered our operating expense to sales ratio by 850 basis points from 35.5% to 27.0%. In the case of the battery & energy products business, our spending allocations are closely approaching the parameters set forth in the stated numerical business model. However, in the communications systems business, we continued to fund an amount of upfront new product development engineering and market reach expansion expense associated with specific domestic and international program customer opportunities ahead of current revenue streams, which is skewing the costs alignment of that segment’s business model parameters despite the gross margin rate being achieved. As a result of the actions taken over the last few years to improve our company wide operational efficiency in terms of gross margin and liquidity, we are in the position to allocate the discretionary spending in cash in pursuit of these potential sales opportunities with the full expectation that they will lead to more profitable revenue growth in the not so distant future. Now, I would like to ask Ultralife’s CFO, Phil Fain, to take you through additional details of the first quarter 2015 financial performance. Phil?

[Phil Fain:]

Thank you, Mike and good morning everyone. Earlier this morning, we released our first quarter results for the period ended March 29, 2015. Consolidated revenues for the first quarter totaled $19.2 million, representing a $3.9 million or 25.5% increase from the $15.3 million for the first quarter of 2014. Revenues from our battery and energy products segment were $16.3 million, an increase of $2.4 million or 17% from last year. The year-over-year growth was fully attributable to a 45% increase in U.S. government and defense sales, driven by higher sales of chargers and batteries to a large international prime defense supplier and shipments of primary batteries to the U.S. government’s Defense Logistics Agency for the second consecutive quarter. Commercial sales for the first quarter of 2015 were essentially flat with the year earlier period. Shipments of 9-volt batteries increased by over 40%, driven by demand from large global smoke detector OEMs in response to legislation and trends in certain European Union countries for products lasting 10 years. This increase was offset by launch quantities for certain commercial products in medical channels in 2014, as well as the timing of primary battery pack and charger orders. As a result, battery and energy product sales were split 50-50 between commercial and government and defense compared to 60-40 for the 2014 period. Communications system sales of $2.9 million, increased by $1.5 million or 113% from the prior year. This increase was primarily driven by higher sales of new products, including our universal vehicle adapters, to a large global defense prime as well as increases in our order flow, reflecting increased demand from system integrators in support of U.S. Department of Defense programs in international projects. Our consolidated gross profit was $6.0 million compared to $4.3 million for the 2014 period, an increase of 39%. As a percentage of total revenue, consolidated gross margin was 31.3% versus 28.4% for last year’s first quarter, a 290 basis point increase. The improvement in overall gross margin as compared to the sales growth for the period highlights the leverage of our underlying business model. Gross profit for our battery and energy products business improved by 26% reflecting the leverage from the 17% sales increase for the period. Gross margin for the segment was 29.4%, a 210 basis point increase from the 27.3% reported last year. The improvement reflects the higher production volumes increasing the absorption of our manufacturing overhead and continued lean productivity gains for the business. For our communications systems segment, gross profit increased by 129% on a sales increase of 113%. And gross margin of 42.2% improved by 300 basis points over the 39.2% reported for last year’s first quarter. This performance reflects the higher mix of new products and impact of higher production volume. Operating expenses totaled $5.2 million, which was $0.2 million or 5% below the $5.4 million reported for the 2014 first quarter. The 2015 operating expenses reflect our continued efforts to contain discretionary spending while continuing our investment in new product development. As a percentage of revenue, operating expenses represented 27.0% compared to 35.5% for the year earlier period. The increased revenue and the resulting leverage of our business model resulted in an operating profit of $0.8 million for the 2015 first quarter compared to an operating loss of $1.1 million for the 2014 period. The year-over-year improvement in operating profit of $1.9 million consisted of $1.1 million contribution from the 25.5% increase in sales, a $0.6 million contribution from the 290 basis point improvement in gross margin and $0.2 million from lower operating expenses. Operating margin improved from negative 7.2% in the first quarter of 2014 to positive 4.3% for 2015. First quarter non-cash operating expenses including depreciation, intangible asset amortization and stock compensation expenses amounted to $0.8 million compared to $1.0 million for the year earlier period. This brings us to adjusted EBITDA, defined as EBITDA including non-cash stock-based compensation expense of $1.5 million or 8% of sales versus negative $45,000 for the first quarter of 2014. Other expenses primarily comprised of foreign currency translation and interest expense netted to $188,000 versus $63,000 in 2014, primarily reflecting the strengthening of the U.S. dollar to pound sterling. And our tax provision was $111,000, primarily reflecting income taxes for our profitable China operation and the timing of deferred assets. Our tax provision was $60,000 for the 2014 first quarter. Net income was $0.5 million or $0.03 per share compared to a net loss of $1.5 million or negative $0.07 per share for the same period last year. The company’s liquidity remains solid, with cash on hand of $20.3 million, our highest balance ever reported, no debt, working capital of $46.4 million and a current ratio of 4.8. By comparison, the cash on hand at year end 2014 was $17.9 million. The $2.4 million increase in cash on hand reflects our operating profitability and $1.3 million or 5% decline in inventory since year end. During the first quarter, we repurchased 78,401 shares, bringing the total number of shares repurchased under the 1.8 million share repurchase program through April 29, 2015 to 388,122 shares at an average purchase price of $3.54. Demonstrating our commitment to these key elements of our capital allocation policy, our Board of Directors has unanimously agreed to extend our share repurchase program for another year or until we reach our 1.8 million share repurchase target during the extension period. The goal of our capital allocation plan continues to be a balancing of longer term investments in revenue growth, including new product development and acquisitions with enhancing shareholder returns in the near-term. In summary, the actions we have taken to optimize our business model while preserving our strategic investments in building a strong balance sheet are demonstrated in our first quarter results. We have started the year well and remain intent on driving volume and sales through organic initiatives and acquisitions to unleash the full leverage potential of our business model. I will now turn it back to Mike.

[Mike Popielec:]

Thanks, Phil. With respect to our revenue growth initiative, in 2015 we remain focused on three core elements. Expanding our market sales reach, new product development and pursuing acquisitions. In our battery and energy products business, the momentum of our commercial diversification strategy continues. Our particular note is an increase in the demand for our 9-volt lithium battery from blue chip smoke alarm manufacturers in Europe and Asia. In Q1, we had record unit shipments from our facility in China and 9-volt revenue was up over 40% year-over-year. Our next generation 9-volt battery utilizes Ultralife’s Thin Cell technology to produce the highest capacity battery on the market today, with the design life that meets the regulatory criteria for a newly developing 10-year life smoke detector market. In the medical space, in addition to continued traction in our products supporting respiratory devices, infusion pumps, medical carts and various other diagnostic devices, we also recently received a provisional PO pending FDA approval from a leading manufacturer for our battery pack to be used in an – excuse me, in an automated external defibrillator or AED equipment. Upon final FDA approval, this supply agreement could be worth several million dollars over the next few years. The accumulation of these multiple new emerging revenue streams is creating better visibility for the commercial revenue base of our battery and energy products business and has helped us to fully offset the recent government defense revenue decline to obtain year-over-year B&E revenue growth the last several quarters. That said, in Q1 of 2015, we also experienced a slight pop in government defense revenues both internationally from U.S. based prime defense contractors and domestically through the DoD Defense Logistics Agency. As approximately 50% of our present B&E revenue now comes from commercial customers and for which several new revenue streams are under development to drive continued growth, should the government defense revenues continued to recover, we are well positioned for not only more top line revenue growth, but also more business model driven leveraged earnings growth. Regarding our B&E new product development, since the beginning of 2012, we have derived over $80 million of revenue as a result of our deliberate step to invest in developing new products for organic revenue growth. Those efforts are ongoing, with several new products recently through final design review and released for manufacturer. We will also continue the business model defined discipline of investing at least 5% of our revenue in new products to both grow and diversify our battery and energy products business by working closely with our customer partners and developing products either specifically for them or for our market opportunity we can capture together. For our commercial customers, we have multiple OEM device battery pack collaborations underway for medical, safety and security, asset tracking and portable energy storage applications. An ongoing pool of purchase orders for batteries and battery systems developed for the medical space received in Q1 and expected to ship over the coming quarters. In government defense, we are developing OEM device battery packs, vehicle and volt chargers, conformal batteries and new battery chemistry blends. In fact, Ultralife recently received the Department of Defense 2014 Defense Manufacturing Technology Achievement Award in recognition of our contribution to the success of establishing the production capability for lighter, higher energy soldier batteries. With new product development being a fundamental part of our revenue growth initiatives, we will continue to provide noteworthy updates on the mix of our total B&E revenue that is obtained from products less than or equal to 3 years old as an illustration of the vitality of our new product revenue streams. In Q1 of 2015, new product development revenue represented more than 30% of our total B&E sales. However, as products graduate from our 3 year new pipe definition window, such as the case with the next generation 9-volt lithium battery, which is now clearly a valuable part of our core revenues, we will reset the quoted mix percentage so we can continue to maintain a fresh view of the new product development driven revenue under 3 years or less standard. At communications systems, our domestic business activities in 2015 are targeted on a handful of promising opportunities. Our team continues to work closely in a collaborative environment with Department of Defense program executive officers, program managers and engineers and in conjunction with both small and large industry business partners. We have nurtured strategic relationships with a heavy focus on Special Forces, where we can apply our core subject matter expertise and experience to provide immediate value added contribution, particularly with major program activities and within U.S. SOCOM. The resulting technology configurations and innovations – integrated solutions can benefit both our Special Forces troops as well as the other DoD service branches now and in the future. While our net has been cast quietly and our business development project efforts are leading to new product requirements for providing our soldiers greater operational capability and flexibility, we continue to be highly selective in our investments in internal new product development. Our communications systems’ focus on international markets has revealed short-term and long-term opportunities. Over the past several quarters, our team has worked to cultivate business prospect in both new and established regions of the globe, including the Middle East, Far East, Latin America and South America and Europe. In several cases, we have already successfully undergone extensive technical testing, field trials and long-term capability road mapping with select strategic countries and are working through the final stages of contracting and funding. In addition to our own contacts, we have expanded our global reach with world class OEM partners, distributors and sales agents with proven relationships with key customer decision makers and stakeholders. We continue to maintain up-to-date market intelligence to ensure that our time and resource investments are targeted on prospects with realistic short and long-term growth potential. We are encouraged by our progress to-date and we will opportunistically expand our global footprint over the coming year. Regarding new product development in communications systems, in Q1 of 2015 revenue from new products less than or equal to 3 years old represented 54% of total communications systems sales and was driven largely by products such as the A320, B320 watt power amplifier and the MRC-UVA universal radio vehicle adapter. Our ongoing new product development efforts support device for the customer and meet current and future requirements for emerging radio demands and the continually evolving communications environment. We have tactically chosen a vital few new product development efforts for 2015 based on closed customer interactions while continuing to expand our capabilities for both design and manufacturing by adding new talent, technology and improved processors. Our communications system teams remain strong, flexible and focused to launch any needed new products in support of our customers and the end users service men and women. In closing, in Q1 we were pleased to get off to a solid start in 2015 by achieving a second consecutive quarter of profitability and again validating that our strategy, business model and operational execution are positioning us for more consistent profitability in the underpinnings for total year top line revenue growth. As the company maintains its solid balance sheet and liquidity, we have the flexibility to create more organic revenue growth opportunities through new product development and market reach expansion, seek out and integrate bolt-on acquisitions and enhance shareholder return through stock repurchases. The battery and energy products business continues to capitalize on new revenue streams from new products, customers, markets, geographies and globalization to diversify and fully offset the recent government defense revenue decline and achieve revenue growth. With the growing commercial business, expanding and evolving product lines, proven business model and some potential but way too soon to call government defense recovery, we are excited about the potential to achieve revenue growth and profitability for battery and energy products in 2015. At communications systems, we have said that 2015 is about beginning to capture of some of the larger projects that have been under development over the last few years and to start realizing initial revenue from the numerous multiyear opportunities in the pipeline. We continue to see a high level of customer interest and increased project activity for our products and integrated solutions, yet predicting the timing of converting those opportunities into sales revenue remains our biggest challenge. Given our strong presence with the global special operations forces, our OEM customers, industry business partners and the current world dynamics, we remain optimistic about the revenue growth prospects for our communications systems business. Operator, this concludes my prepared remarks and we would be happy to open the call up for questions.

[Operator:]

Thank you. [Operator Instructions] And we will first hear from Gary Siperstein of Eliot Rose Asset Management.

[Gary Siperstein:]

Hey guys, good morning.

[Mike Popielec:]

Good morning Gary.

[Phil Fain:]

Good morning Gary.

[Gary Siperstein:]

Congratulations on another solid quarter and what has historically been the very tough quarter seasonally for you guys. Mike, can you – I missed a couple of things on your comments on the commercial side opportunities. So besides the 9-volt and besides medical, I think you said asset tracking, is that one of them?

[Mike Popielec:]

That’s correct.

[Gary Siperstein:]

And what does that mean, asset tracking, give me an example?

[Mike Popielec:]

Well, there is different type of things we are talking about here are for instance, in transportation vehicles, whether they would be toll pass type applications. We are looking at some interesting applications of RFID capability for product pricing and retail stores. Sometimes and maybe this is a loose definition of assets, for emergency locator devices, that people may use it and they are doing in their various recreational activities. We are working on a number of different activities in that area.

[Gary Siperstein:]

Okay. And that’s all with batteries or is there something else involved?

[Mike Popielec:]

It’s all with the batteries and energy products business.

[Gary Siperstein:]

Okay. And after medical and asset tracking you mentioned two more sectors what were those again?

[Mike Popielec:]

I believe we mentioned energy storage. And I think we are continuing to make progress, obviously in our commercial devices, in all various different devices not just smoke alarms, but other devices using our legacy 9-volt product. You mentioned medical in that asset tracking. We started to see some initial traction on our energy storage large format MKM product at the end of last year. And we are working on some new applications of that. And I think that’s an area that we can continue to do a lot more than we are currently doing.

[Gary Siperstein:]

Okay. And the – I think I missed it when Phil called it out. The commercial piece of B&E being flat year-over-year was that due to an initial ramp in the early part of the year on medical carts that didn’t repeat this time, which helped to offset the increase in the 9-volts for the smoke detectors?

[Phil Fain:]

You are pretty close Gary, its medical carts and certain medical devices.

[Gary Siperstein:]

Okay. So the fact that it was spread is not of concern for you because that was basically the start of that program or big shipment in the period last year and we should still see growth coming year-over-year on the commercial side?

[Phil Fain:]

Yes, that’s correct, Gary.

[Gary Siperstein:]

Okay. And Mike just backing up a step, you mentioned may begin some traction on the energy storage, what is the – what kind of volumes would that be if that turned into a production order?

[Mike Popielec:]

It’s really impossible to predict that. I know last year we had an award that was just under $1 million. And so we are continuing to pursue several different opportunities in that order of magnitude.

[Gary Siperstein:]

Okay. And the – on the smoke detector side with the 9-volts, how many different customers does that represent and what’s the size and possibly the length of the opportunity there with the new 10-year mandate?

[Mike Popielec:]

Now, there is a handful of different customers. I mean we see it on a global supply chain basis. So there are a number of different channels to which these products go into the market. So I would say there is a handful of some of the things that you would recognized both in the U.S. and on a global scale. Relative to the size of the market, we know that there is tens of millions of smoke detectors out there. We know that there is various pieces of legislation in different countries about what their mandate is for requiring some piece, just smoke detectors to begin with, sometimes with a particular life or style of smoke detector. And at the same time, we know that 9-volt technology as a legacy technology has been around for a while. So I would say that we are cautiously optimistic that as this legislation continues to drive demand, that we would see additional potential volumes of our 9-volt business. We also know that as a result of the evolution of technology, that there is opportunities for 3-volt product. We have developed a 3-volt product as well. And we know that overall, there is a pretty large 9-volt business, of which still a very small sub-segment of that is lithium. So without giving you a specific number, we think we have several different irons in the fire to continue to grow our 9-volt business and we are very pleased that the performance level of 9-volt that we introduced a couple of years ago is being validated by the strong demand we are seeing today.

[Gary Siperstein:]

Okay. And on the government side for B&E, the increase in business, so was there any catalyst for that increase, I mean any discussion with the contracting officers, I mean why all of a sudden and was it just the time past they depleted inventories and do you have any sense?

[Mike Popielec:]

They keep it pretty close to chest in terms of what the real demand is from. I mean we have mentioned over the last couple of quarters that demand for our 5390 battery. We don’t re-enter this anymore than just restocking and sort of expiration shelf life of some existing capacity. But we put our business model together such that we are not dependent upon that to still make money. So we are delighted when we get any additional volume request from DLA. And as other customers in our space continue to do well on a global scale, that’s opening opportunities for us to continue to sell our government defense-related products there as well. So nothing that I can stick a finger on specifically in terms of a market dynamic, but to the extent we have got our cost position do not expect that it’s had a nice impact on our overall P&L.

[Gary Siperstein:]

Okay. And just stepping back again to medical, you mentioned this new opportunity with the defibrillator, what – again is that a new company or is that a company we have already dealt with through medical carts, A. And B, what essentially is the timing, is it something where – I mean, it’s not a new drug or anything, so the FDA on equipment is generally on the fast side and certainly for defibrillators that have been out there for a long time, so is that something maybe by June 30, the FDA should approve and we should start shipments in the back half of the year or is it sooner or later than that?

[Mike Popielec:]

I think to try to predict what our – any government agency would do in terms of timing I think would be very difficult to do. This is a customer that we have been dealing with for several years in various capacities. It’s not someone that we have talked about a lot nor will we disclose today. And we would expect that we would see an FDA approval within the year. But these things have a way of sort of extending to things that have nothing to do with us or even sometimes our OEM partner. But we haven’t – if there is something imminent that happens of any magnitude, we will be for sure, to disclose that in a press release or during the future earnings call.

[Gary Siperstein:]

Okay. And then moving on to the comm side, you talked about funding, we have been doing R&D and funding ahead of revenues on that, you mentioned a handful of larger opportunities, it seems like we have been going after these elephants for a long, long time, is there any additional color on that, I think last call or a couple of calls ago, it seemed like there was a little bit of movement and they had maybe gone into the field for testing or trials or things of that nature, can you give us any color on that?

[Mike Popielec:]

Yes. I know it’s been an area that we have talked about a lot. And it’s rippled through our P&L as discussed in our prepared remarks. I would say some of the indicators that we are seeing as positive are on a macro level, those associated with the U.S. budgeting. We are starting to see more movement at least in concept by the various components of the next U.S. Department of Defense budget, where you are seeing some increase in funding. We are doing our best to understand ourselves and through our key business partners if they are seeing allocations in tactical communications, that’s something we always look at very closely to see if there is a specific an amount of funding there. And then as you start to read in the press various announcements of radio decisions, whether they would be IDIQs or other types of radio contracts, that’s also a sort of a good leading indicator because our products are associated with radios. And if they are running a new radio contracts, they are running news in any of that, that’s still a new demand for our product. So I would say the top level because of the budget movement, because of some recent publicized churn in the tech communications radio market, I would think that those were all real positive indicators about some of the things we have been working on for a long time. And obviously, it can’t happen soon enough, but I think we have tuned our business model to be able to fund our continued participation in the new product development associated with some of those programs. We would try to be bluntly transparent about how it’s impacting our P&L and why we are doing it and we will continue to keep you updated the second if any of those large problems – excuse me, large programs should start to come to fruition, we will let you guys know about it.

[Gary Siperstein:]

Okay. And then I think in the 10-K at year end, you indicated a B&E backlog, can you tell me where the backlog is for – at the end of the first quarter for B&E?

[Phil Fain:]

Yes, it’s approximately at a comfortable level to what we disclosed in the 10-K, Gary.

[Gary Siperstein:]

Super, okay. And guys, with – Mike, with two quarters under your belt now, I know it’s only two quarters and it’s just the start, but we have been very much under the radar from an IR point of view for a number of years until the model was set and until we have seen a little turn in the defense business and obviously the improvement in commercial sales with the medical carts and batteries for smoke detectors, etcetera. So that being said, any plans to start going out for the investment community and making them aware of the company, again trading under book, under one-time sales, building cash, GAAP profitable, cash flow profitable, it seems like we are still extremely cheap, assuming you continue to make money, so are we at a point where you can start maybe advertising that a little bit where the company is?

[Mike Popielec:]

Yes. I mean we continue to take calls from various interested investors. We are trying to return some of our success in the form of share repurchases to our existing holders. I think the best investor relations activity that I can do is to continue to improve our top and bottom line. As we get more traction on this and it’s proven to be sustainable, obviously assuming quarter – last quarter is not a trend, now we have two consecutive quarters we are very delighted about, we would like to see a number of consecutive quarters come together the way the last two have. But certainly, we would be open to going out and talking to whoever may be interested in purchasing our stock, as we think we have a very solid story. And it’s a pleasure now to actually see it evolving the way it is.

[Gary Siperstein:]

Okay, yes, agreed. And there is a lot of conferences out there, for micro caps, B. Riley is having a conference, there is Sidoti, there is ROTH, there is a plenty of small broker-dealers that – on the sell-side that have conferences for companies. So in addition to dealing with incoming calls, a little bit on the outgoing side can’t hurt, especially with the results coming together so beautifully. So thank you very much and congratulations again on the improvement in two quarters in a row. I am looking forward to the next quarter.

[Mike Popielec:]

Thank you, Gary.

[Phil Fain:]

Thanks.

[Operator:]

[Operator Instructions] And it appears there are no further questions at this time.

[Mike Popielec:]

Okay. Well, thank you once again everyone for joining us on our first quarter 2015 earnings call. We look forward to sharing with you our quarterly progress on each quarter’s conference call in the future. Thank you very much and have a great day.

[Operator:]

And that does conclude today’s conference. Thank you all for your participation.