Veeco Instruments Inc.
Q3 2013 Earnings Call Transcript

Published: 12 Nov 2013

[Operator:]

Good afternoon, and welcome to the Veeco Instruments' Third Quarter 2013 Earnings Call. Today's presentation is being recorded. I would now like turn conference over to the Senior Vice President of Corporate Communications and Investor Relations, Ms. Debra Wasser.

[Debra Wasser:]

Thank you, operator, and thank you all for joining today's call. With me today are CEO John Peeler and our CFO, Dave Glass. If you've already done so, please visit veeco.com to get a copy of the slides that accompany this website. This call is being recorded by Veeco Instruments and is copyrighted material. It cannot be recorded or rebroadcast without Veeco's expressed permission. Your participation implies consent to our taping. To the extent that this call discusses expectations about market conditions, market acceptance and future sales of the company's products, future disclosures, future earnings expectations or otherwise make statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors are discussed in the Business Description and Management's Discussion and Analysis sections of the company's report on Form 10-K and annual reports to shareholders and in our subsequent quarterly reports on Form 10-Q, current reports on Form 8-K and press releases. Veeco does not undertake any obligation to update any forward-looking statements, including those made on this call, to reflect future events or circumstances after the date of such statements. During this call, management may address non-GAAP financial measures. Information regarding such non-GAAP measures, including reconciliation to GAAP measures of performance, is available on our website. With that, I'll now turn the call over to John.

[John R. Peeler:]

Thanks, Deb. It's good to be able to share our full results again and have our accounting review in the rearview mirror. This has been a costly and distracting chapter for Veeco. But on the positive side, we're confident that our historical results are accurate and that we have effective procedures in place for financial reporting. Business conditions in the third quarter continued to be weak. Revenues were up slightly at $99 million, and overall bookings were up a bit to $92 million. While we saw a 28% sequential increase in MOCVD bookings, this continues to represent incremental capacity adds from just a handful of customers. We're winning the most important deals, but this does not feel like a true recovery. And unfortunately, we're not getting much help from our other businesses, as production orders for MBE and Data Storage systems remain elusive. I'll now turn the call over to Dave to cover the accounting review and our financial highlights.

[David D. Glass:]

Thank you, John. Just to recap how the accounting review got started. During the Veeco internal audit in Korea, we found documentation issues that led us to begin an internal review. During that review, questions were raised that caused us to initiate the revenue recognition accounting review. All along, this review has been focused on technical accounting matters, specifically tied to multiple element arrangements. We prepared and analyzed over 100 complex multiple element arrangements transactions, covering over $1.8 billion in revenue from 2009 to 2012. And while we were primarily focused on revenue recognition accounting, many other areas were also reviewed. A significant amount of the past year was spent reassessing how accounting principle applied to all the many deals we entered into. In end, while we found some errors and adjustments that had to be made, our accounting was determined to be materially correct. And we disclosed in last week's filings, the cumulative effect on earnings of errors in the prior periods was $0.5 million favorable, which was booked in the Q3 2012 statements. These errors fell into a few main buckets

[John R. Peeler:]

Thanks, Dave. As you can see from our results, we haven't yet seen a recovery in any of our markets. LED fab utilization rates appear to be relatively stable and high at all of our key accounts. Many of our top customers are reporting improved profitability and are optimistic about the future of the LED market. But overall, they're cautious about expanding capacity. In Q3, we won key MOCVD deals from a top Taiwanese customer for one of their Chinese factories and from the global GaN-on-Silicon leader in Japan. In MBE, production orders remained low due to manufacturing overcapacity, but we're doing well in the R&D applications. And in Data Storage, Seagate and WD have both acknowledged the need to invest in technology to increase aerial density, but their CapEx remains low with no near-term increase is expected. Diving a little deeper into the LED market cycle, you can see from the chart that the market was first driven by mobile phones, and then by TV backlighting, and it's not being driven by lighting. Along the way, the massive investments in Korea for backlighting and then driven by the China subsidies have caused an oversupply situation. As LED lighting penetration increases in outdoor and then in industrial commercial and ultimately in residential, demand will once again exceed supply and will come out of the MOCVD down cycle. And there are positive things happening along this front. I'll come back to this slide in a minute. Chinese customers like Sanan, Oectech, and HC SemiTek, who are formally relegated to the low power LED world, have become established players in the midpower space. And top Korean and Taiwanese customers are also improving their brightness and cost efficiency and are making significant inroads into the high power market. Many of Veeco's top customers are reporting strong demand for midpower LEDs for indoor replacement bulbs and for high power LEDs for outdoor lighting. To think that all this movement up the LED food chain will have a disruptive effect on supply and demand dynamics and it'll drive down residential light bulb prices and will ultimately drive the tipping point for lighting. New York Mayor Michael Bloomberg announced that all of the city's 250,000 streetlights will change over to LEDs in a 4-year initiative. He said that LEDs are the wave of the future and that this effort was a no-brainer to conserve energy and save the taxpayers' money. Penetration in the industrial commercial is also picking up and increase consumer awareness about the benefits of LED lighting is driving the beginnings of residential adoption. We're seeing top retailers offering 60-watt bulbs from name brands like Philips and GE in the $10 to $15 range and from emerging brands like ATI, for under $10. Going back to our supply and demand chart, it's important to note a couple of things about the residential market. First is that the residential market is by far the largest market in terms of the number of sockets, and second is that we're really early in the transition to LED lighting. LEDs represent only about 1% of the bulbs in American homes. As competition heats up, bulb prices drop. Residential demand will be pulled in, as the dotted green line indicates, and that will kickstart our MOCVD demand. We're confident that this will happen, but the timing is really hard to predict. As our results continued to show, Veeco has taken a significant lead in the market by providing LED manufacturers with the lowest cost of ownership solutions. But we're not done. Customers are demanding increased productivity and want systems that deliver increased yield, more runs per day, increased throughput and higher uptime. And they want it all with lower direct costs, including maintenance, Consumables and capital costs. We're continuing to invest heavily in the development of next-generation systems that will satisfy these needs and expand our leadership position. Moving on to MBE. We've been working to expand our leadership position by growing our share in the R&D segment. We identified that university customers wanted epitaxial deposition tools to do world-class research at a rational price. So we took our nearly 30 years of MBE knowhow. We combined it with engineering, design and manufacturing experience from MOCVD, and we created the GENxplor. This is a highly reliable and cost-effective MBE R&D tool that's really unlike anything seen previously. The GENxplor is generating quite a buzz in the research community. We're already seeing evidence of increased market share. And our customer engagements span multiple research fields, including hot areas like graphene and UV LEDs. About 6 weeks ago, we announced the acquisition of Synos Technology, which we now refer to as Veeco ALD. This acquisition represents a jump-start into the fast-growing flexible mobile OLED display market that's forecasted to be over $5 billion by 2020. Having worked with the Veeco ALD people and technology for the last 6 weeks, I can tell you that I am more excited than ever about the potential for this business. Our new fast array scanning technology or FAST-ALD is a plasma-enhanced linear ALD approach, which we believe represents a true breakthrough for flexible OLED encapsulation. It's 10x faster than traditional ALD. It can be scaled with virtually no limits. And it operates at low temperatures that will not damage sensitive organic materials or plastic substrates. I probably don't have to tell you that the world leaders in mobile phones have been racing to announce flexible OLED products like Samsung's Round or LG's G Flex. These early products are the first tangible evidence that OLED displays are on a path to migrate from rigid to unbreakable and curved and then to foldable. Mobility requires a thin and light display to maximize portability while still leaving room for more battery. So flexible technology is seen as a real game changer in this industry. The mobile phone market for OLED display is expected to triple from 2012 to 2020 and become an $18 billion market. And the flexible OLED display technology is already being adopted for mobile phones and will likely be adopted for tablets over the next couple of years. We expect a huge growth wave as flexible displays penetrate mobile. IHS iSuppli forecasts that 1.4 billion smartphones will ship in 2016 and nearly 400 million of those will be OLED. Veeco estimates that as many as half of these OLED phones will use -- utilize flexible OLED displays, implying that about 14% of the world's smartphones will be flexible just 3 years from now. We're now working with our key customer on both current and next-generation systems and expect production-scale orders for ALD cluster tools in 2014. We are forecasting shipments of about $80 million next year. And assuming our customer achieves their estimated production targets of 250 million flexible OLED phones by 2016, our ALD business could become a few hundred million dollar revenue contributor in a very short period of time. One of the reasons that Synos joined forces with Veeco was to better pursue the very large market opportunities in front of them. I can see huge potential for this technology in adjacent markets, and we're looking in the fast ALD applications and OLED TVs, OLED lighting, solar, energy storage and semiconductors. We're very excited about this and hope to start product development of a new application early next year. I'll now touch on our strategy to transition Veeco back to profitable growth. I don't think anyone, including me, could have predicted Veeco's journey from 2007 to now. But from the beginning, we've hyper-focused on building a great company, and I want to spend a minute on what we accomplished. We've strengthened our product development capability and delivered numerous exceptional products, like the K465i and the MaxBright. We took the global lead in MOCVD for LEDs, MBE for compound semiconductor production, IBE and IBD for thin film magnetic heads on disk drives. We built a highly flexible and variable cost manufacturing organization, and that allowed us to ramp exceptionally fast in 2009 and to pull back without excessive inventory or overhead in 2012. We built a culture around quality and customers satisfaction, built a strong leadership team, paid a lot of money, paid off our debt, and built a great balance sheet. All of this gives us a strong foundation to build on. On the operational side, we're focused on 3 areas to improve our financial performance. We're managing our expenses to save money wherever we can without compromising our future. We're driving process improvement initiatives to make us more efficient in the way we do business. And we are executing manufacturing cost down programs to drive down the cost of manufacturing our products. Let me give you an example. During the past 2 years, we reduced MaxBright manufacturing cost by about 20%, design improvements and reductions in material cost, reductions in service and installation costs, freight cost, et cetera. And now, we've just started to ship a new version of MaxBright, which reduces costs by another 10% versus what we were just recently shipping. Expenses and costs are really important but, ultimately, our success will come from top line revenue growth. We're willing to run Veeco at a loss for a few quarters to seize on the market opportunities in front of us. We're huge believers in LED lighting and flexible OLED encapsulation, and we intend to fund these areas to be the world leader in both. We also think GaN power electronics has potential -- has great potential for energy efficiency, electric vehicles and other applications and we'll fund it appropriately. We recently created a new core R&D group and staffed it with some of our best talent. This group will work with our business unit R&D teams to explore and execute on initiatives that penetrate adjacent markets such as new ALD applications. I'm really excited about the approach, and I think it's going to have big benefits. We'll continue to build our services offerings. An interesting thing there is that services revenue tends to correlate with installed base rather than the business cycle, and that's really been pretty helpful to us during this downturn. And we'll continue to look for businesses and technology acquisitions to accelerate our growth. So here's where I believe we'll get to over the next few years. We'll sustain our lead in lighting as the market recovers. We'll be the leader in flexible OLED encapsulation. We'll lead in power electronics, and we'll enter some adjacent markets. Our revenues will more than double, gross margins will be strong again, and profit will be exceptional. That's why I'm here. At this point, we'll take your questions. Operator, could you please start the Q&A session?

[Operator:]

[Operator Instructions] And our first question comes from Krish Sankar with Bank of America Merrill Lynch.

[Krish Sankar:]

Yes. I had a couple of them. First and foremost, John, if you look at the Q4 of 2013, when you look at the MOCVD revenues, is there a way to quantify how much of the weakness was unit driven versus pricing driven?

[John R. Peeler:]

Well, it's -- I mean, it's obviously both. But the orders are pretty slim these days though. The conditions in China have slowed and basically customers are ordering less. Obviously, there's pricing pressure too, but we've had pricing pressure for quite a number of quarters now. So really a combination, but overall a slowdown in unit purchases. I think you also need to recognize that the numbers of units being booked are relatively small. And one big order ending up in 1 quarter versus the other quarter shifts things down or up. I mean, we are bumping along the bottom and which is why we wanted to caution everybody to not look at a couple of quarters of bookings increases and say, "Hey, the recovery's begun" because all that came off of the very low Q1.

[Krish Sankar:]

Got it. And if there is a case that the recovery is still not yet here, should we assume that we should see normal seasonality in Q1 wherein any kind of a seasonal uptick would happen in Q2 versus Q1?

[John R. Peeler:]

It's -- revenue is likely to bounce around basically depending on when customers want to take things that are in backlog plus new orders. But we haven't seen the beginnings of an upturn, so I wouldn't be thinking that Q1 represents an upturn here.

[Operator:]

Our next question comes from Vishal Shah from Deutsche Bank.

[Vishal Shah:]

John, the pricing pressure comments you've made, are they from one large competitor? Or are you seeing a new competition from some of the local suppliers in Asia?

[John R. Peeler:]

Yes. They're really coming from Aixtron. I mean, we're just not seeing competition from local suppliers in Asia. And from the little involvement they've had, reports have been that their performance is poor. And I'm talking about other Asian competitors. But it's really Aixtron that has driven down the pricing.

[Vishal Shah:]

And to what extent are you seeing some of the tools that are lying out there being utilized by some of your customers versus buying new tools? So the used tool market and how active is that?

[John R. Peeler:]

We have not seen a lot of activity from the used tool market. I think there's some cases where one company will be picking up the site of another company, but we're not seeing a lot of it yet. Thanks, Vishal.

[Operator:]

We'll go next to Brandon Heiken with Crédit Suisse.

[Brandon Heiken:]

Can you give us a sense of how much weaker do you think margins may be in the fourth quarter, and when do you think margins may trough? You mentioned for the next few quarters, we may see losses.

[David D. Glass:]

Brandon, this is Dave. They are definitely going to be weaker. The selling price pressure continues. And with the level of revenue that we're forecasting, you can expect them to be weaker.

[Brandon Heiken:]

Okay. And is there any update on Synos and maybe the expected orders? It sounded like the shipments -- shipment guidance was the same for next year.

[John R. Peeler:]

Yes. We're very hopeful to get orders in 2014, hopefully in early 2014. We've worked with the technology and people a lot and we are excited about it. We think it's compelling and has just tremendous advantages in terms of speed, cost of ownership, better material utilization and basically a better end product also, as well as being able to move into a lot of applications where you can't address with higher-temperature technologies. So we feel very good about it, but timing is pretty hard to predict.

[Operator:]

[Operator Instructions] We'll go next to Stephen Chin with UBS.

[Stephen Chin:]

John, just a follow-up question on the Veeco futures data. I think you said you believe Veeco could again double sales over the next 2 years. So I'm just wondering if that's mainly driven by ALD sales in your view with maybe MOCVD remaining relatively flattish and Data Storage kind of that historical levels? Just curious on some of the components thereof, of how you're thinking about that trend.

[John R. Peeler:]

Yes. I think we can double sales with the businesses we have. And that it'll be a combination of MOCVD and Veeco ALD, plus maybe a little bit of help from the other guys. But I think the bigger growth drivers are, for us, are MOCVD and ALD.

[Stephen Chin:]

Okay. And then maybe a follow-up on the goal to try to get Veeco's gross margins back over 40% longer term. Is your confidence mostly from the manufacturing cost down so you're starting to achieve in MOCVD? Or is it margin upside from ALD? Any color that you can share there?

[John R. Peeler:]

I think it's a couple of things. First of all, we are always and have always been focused on cost down initiatives. So that will help, but that's not going to be the main driver. The main driver will be new products with good differentiation and better value for the price to our customers. It might also help if Aixtron finishes selling off its surplus inventory and kind of quits selling at crazy prices. But I'd have to put that #1 driver is new products. And we've done a great job with that in the past, and I think we'll do a great job in the future.

[Operator:]

We'll go next to Craig Irwin with Wedbush.

[Min Xu:]

This is Min Xu, for Craig. Right now, Veeco is shipping historically low number of MOCVDs. So how would the low volume impact the cost? Is cost still mostly flat or up year-over-year? Any color will be helpful.

[John R. Peeler:]

So the lower volume -- eventually, you'll have some fixed overhead and that has to be spread over a smaller number of units. So it does contribute to driving the gross margin down. On the other hand, we did very successfully build a variable cost manufacturing model that has been able to ramp exceptionally well when customers went from 5 units a quarter in the market to well over 100 units a quarter. And it's also performed well as we came down, so I think we have the right model. We're also very careful about inventory and projecting what we need, so that's worked well. But when you get down to these levels, and it is going to -- it is hurting the margin, and which is why Dave said next quarter is going to be a worse-margin quarter than this quarter because the volumes are down more.

[Min Xu:]

Okay, it's helpful. And what percentage of the Q3 booking and revenue is service?

[John R. Peeler:]

Probably 35%, and that's an estimate. In general, the services is a bigger percentage in our more mature markets and a smaller percentage in the MOCVD market, which is a newer market. And keep in mind that services also tends to tie, at least on the first order with the installed base, and then on the second quarter with utilization rates. So -- but probably you're in the 30s, and we think that's actually a healthy level.

[Operator:]

Our next question comes from Edwin Mok with Needham & Company.

[Y. Edwin Mok:]

So first question, just following gross margin. Any way you can quantify or at least rank, how much of the weaker gross margin come from just generally weaker pricing versus your competitor maybe selling older-generation equipment that typically have lower pricing, right? And how much of that relates to volume?

[David D. Glass:]

Well, the lion's share of the declining or weaken -- weak margin is related to the selling price. I can't really quantify how much is -- the reasons from the competition, but most of the decline is definitely selling price.

[John R. Peeler:]

I think I would add to that, we generally get a pretty good premium versus what Aixtron sells its products for because our product's better. But that still doesn't really get us up to where we'd like to be, obviously.

[Y. Edwin Mok:]

I see. If pricing stays where it's at right now and the competitor doesn't really let the price go back up, right, then your only lever would be volume. Am I reading it correctly? Or new products, I guess?

[John R. Peeler:]

Well, it would be volume and manufacturing costs down. But more than anything, it's going to be new products. And I think that's where both of us, companies in this market, are going to restore prices as we introduce new products. So I'd be looking for the products.

[Operator:]

And we'll go next to Colin Rusch with Northland Capital Markets.

[Colin W. Rusch:]

What's giving you the confidence that eventually you're going to see a material recovery in MOCVD orders? It appears that the industry is keeping up with the demand growth. And certainly, they're going to be some adjustments in terms of LED shape and what throughput can actually be on these tools. So just curious, what level of granularity you'll get into to give you that confidence in the recovery?

[John R. Peeler:]

Yes. Well, people have -- our customers have gotten better productivity out of the tools over the last couple of years, and they've been able to get significantly more out of the installed base. But the utilization rates are high. They're very high, in many customers are over 90%. And lighting has -- basically adoption has not started or has started in a very meek way. In the residential segment, prices are coming down. I was quoting $10 to $15 prices in -- for 60-watt bulbs. But I can say that in the Somerset, New Jersey area, they're $5 less than that. They're $8 here because the power companies are kicking in subsidies, and this basically helps to drive adoption. So we think adoption is accelerating. It's ticking up. The business case is a no-brainer for outdoor applications. It's gotten very good for industrial commercial. And the prices, the real driver in residential. People don't think of business cases. So we're confident that as adoption goes, so will the supply-demand situation.

[Colin W. Rusch:]

And then, just a follow-up on the business strategy. It seems like you're reaching into the research area in a much more substantial way and with a number of different applications in terms of some of the material sciences going on in the research community. Can you talk a little bit about how you see those opportunities bubble up just in general and turn into a more substantial investment opportunities for Veeco?

[John R. Peeler:]

Yes. So the research area that we've focused on has been the MBE research area, and we've been the global market share leader in MBE for quite a while. We've been very strong in the production space, which has some overcapacity now due to some fab consolidations. But we were strong in R&D, but we weren't absolute #1. We think we can take the #1 position. We've introduced a product to do that. So we just wanted to have the strong leadership in both the R&D and the production market. And the thing -- one of the things that makes this interesting is you use MBE to make compound semiconductors, and you can use MOCVD to make compound semiconductors. And in fact, you can make an LED on both. You can make a lot of products on one or on either one. So being out there more in the emerging markets where the research is being done, which is mostly on MBE, gives us a better view into the future, and we think it'll help us pick some -- pick up on some new growth opportunities.

[Operator:]

We'll go next to Jagadish Iyer with Piper Jaffray.

[Jagadish K. Iyer:]

John and Dave, 2 questions. First, if the order levels remain at about 225 to 250 tools for the year. How should we think about your overall profitability in terms of you trying to reduce the breakeven? And then I have a follow-up, please. By end of next year.

[John R. Peeler:]

Well, we have brought down our prices and our costs, brought down some of our prices. But we brought down our costs, and I think there are some more reductions coming that haven't kicked in yet. On the other hand, we have the counterbalancing effect of Synos being acquired. So if we just look at the traditional Veeco business, and it's flat year-to-year, I think we're likely to be a breakeven or we're likely to be around breakeven probably. On the other hand, I don't think you're going to see a perfectly flat 4 quarters of business next year. I think -- we think the market will tick up at some point and that will improve it. And then you add Synos on to that, and that kind of shifts things a little more. It's going to add more costs for the next few quarters. And then hopefully, you're going to see some revenue start to kick in to offset that and really improve the whole picture. I would say there's going to be some delay between shipments of Synos products in recognition of the revenue. Because early on, we're going to recognize revenue on final acceptance. So there will be a delay there to see the shipments translate into revenue.

[Jagadish K. Iyer:]

Just as a follow-up, I just wanted to understand how should we be thinking about share gain opportunities for 2014 vis-à-vis 2013 in your MOCVD?

[John R. Peeler:]

We want to hold on to the share we have. We have great new products and that can always help to shift share. But keep in mind that our share's already above 60%. So as you get higher, it becomes harder and harder to gain more. We hope to gain more, but I wouldn't -- we wouldn't put it in our forecast at this point until we actually see it. That's the way we've run the business historically, and I think it served us well.

[Operator:]

We'll go next to Thomas Daniels with Goldman Sachs.

[Thomas Daniels:]

This is Tom Daniels, for Brian Lee. I had 2. First question for David, you guys have done a very good job on working capital management. And we were wondering if there's any more levers kind of the pull on that front over the next couple of quarters? And if not, do you have a cash burn expectation on a quarterly basis at these revenue run rates?

[David D. Glass:]

Yes. I wouldn't say there's new levers to pull, but working capital in this environment remains at the top of our list. We look at it very, very carefully. And we just watch every dollar, but in terms of new or different levers, I don't think so.

[John R. Peeler:]

Yes. I don't think you're going to see big swings in reductions in inventory. Our inventory is relatively low, and so I don't think that's going to be a drive, but cash burn, Dave?

[David D. Glass:]

Cash burn, well, you can -- our cash breakeven, as John mentioned before, we are talking about breakeven. Our EBITDA breakeven is -- we are talking a year ago about -- around $90 million. That's probably up about $20 million. With the margin levels that we're at right now, you could expect cash breakeven to be probably $20 million to $25 million less than that.

[Thomas Daniels:]

I understood. And then, just one other question on Synos, if you don't mind. OpEx, how much do expect that to increase sequentially from Synos? And then, would that also be a kind of working capital increase in the back half of '14, as you guys ship before receiving the cash?

[David D. Glass:]

Yes. In the next couple of quarters, we're looking at a few million dollars per quarter. And then if the business ramps as expected, then of course, the advancement and OpEx would go up as well. And yes, again, it's the business ramps like any growth stage business we'd see in investment in working capital.

[Operator:]

And our question in queue comes from Srini Sundararajan with Summit Research.

[Srinivasan Sundararajan:]

My only question is based on the Analyst Day that Samsung had. They still seem to show Vitex had the encapsulation technology that they use. So does that give you any second thoughts on the Synos acquisition? Or it's just that Samsung is taking their own time to reveal what they will be using next?

[John R. Peeler:]

I think that the Vitex patents cover the diodes of encapsulation technologies, and I think our technology fits well within that scheme. So I wouldn't read too much into that.

[Operator:]

And we'll go next to John Shen with Sterne Agee.

[John Shen:]

Can you talk about consolidation efforts at Chinese customers?

[John R. Peeler:]

We have not seen a lot of it. We have not seen the -- many of the larger players picking up a lot of tools that way. I think it's a natural thing to think about over the longer term that some of these companies will consolidate and I -- but I do think they will consolidate within provinces and within their region and don't think that tools are going to float around wildly. So just speculation at this time, haven't seen a lot of activity yet.

[John Shen:]

Okay. And as a follow-up, can you talk about the trends of utilization rates in China?

[John R. Peeler:]

Well, they're high at the top providers. I mean, they're in the 90s, and they're able to sell everything they can make. So for the most part, they're pretty high. I think where you'd guess the lower ones are the guys who were smaller players, and haven't gotten their cost structures down to the point where they can compete as well. And if you look at the average of the low market, maybe it's 50% or something like that. And that's really more of an educated guess than an exact fact. But we know that our top players are virtually fully utilized. Okay?

[Operator:]

And we have no more questions in queue.

[John R. Peeler:]

All right. Well, thank you, all, for joining us tonight, and looking forward to being back into the normal mode and being out to talk to some of you on the road. Thank you.

[Operator:]

And this concludes today's call. Have a wonderful day.