Leslie Green - IR Gary Fischer - CFO Morris Young - CEO Hong Hou - COO.

Richard Shannon - Craig-Hallum Arthur Su - Needham & Company Dave Kang - B. Riley.

Good afternoon everyone and welcome to AXT's Second Quarter 2015 Financial Conference Call. Leading the call today is Dr. Morris Young, Chief Executive Officer and Gary Fischer, Chief Financial Officer. Also available for questions if Dr. Hong Hou, AXT's Chief Operating Officer. My name is Robert and I will be your coordinator today.

As a reminder, today's conference call is being recorded. I would now like to turn the call over to Leslie Green, Investor Relations for AXT..

Thank you, Robert, and good afternoon, everyone.

Before we begin, I would like to remind you that during the course of this conference call, including comments made in response to your questions, we will provide projections or make other forward-looking statements regarding, among other things, the future financial performance of the company and our ability to control costs and improve efficiency, increase orders in succeeding quarters, improve our competitive position as the market improves, as well as the other market conditions and trends.

We wish to caution you that such statements deal with future events and are based on management's current expectations and are subject to risks and uncertainties that could cause actual events or results to differ materially.

These uncertainties and risks include but are not limited to overall conditions in the markets in which the company competes, global financial conditions and uncertainties, market acceptance and demand for the company's products, and the impact of delays by our customers on the timing of sales of products.

In addition to factors that may be discussed in this call, we refer you to the company's periodic reports filed with the Securities and Exchange Commission and available online by link from our website for additional information on risk factors that could cause actual results to differ materially from our current expectations.

This conference call will be available on our website at axt.com through April 30, 2016. Also before we begin, I want to note that shortly following the close of today, we issued a press release reporting financial results for the second quarter of 2015. The information is available on the Investor Relations portion of our website at axt.com.

I would now like to turn the call over to Gary Fischer for a review of the second quarter results.

Gary?.

Thank you, Leslie, and good afternoon. Revenue for the second quarter of 2015 was $21.0 million compared with $20.1 million for the first quarter of 2015. This represents approximately 5% sequential increase in quarterly revenue.

In the second quarter of 2015, revenue by geography, from North America was 14%, Asia Pacific was 59% and Europe was 27% of total revenue.

In second quarter we didn't have one customer that generated more than 10% of revenue and the top five customers generated approximately 36% of total revenue reflecting again our diversification of both products and customers. Gross margin in the second quarter was 20.9% compared with 23.7% of revenue for the first quarter of 2015.

This decline was primarily due to product mix. Total operating expenses in the second quarter were $5.2 million compared with $6.5 million in the prior quarter. This sequential decrease was largely the result of the decline in professional fees.

During the first quarter, AXT included $1.2 million in fees related to the internal investigation of certain potential related party transactions. The investigation was completed during the first quarter and there were no charges associated with it in Q2.

Total stock compensation expense was $466,000 for the second quarter of 2015, of which $5,000 was included in cost of revenues, $417,000 in SG&A, and $44,000 in R&D. Operating loss for the second quarter of 2015 was $780,000 compared with $1.7 million operating loss in the first quarter. Other income for the second quarter was $1.1 million.

This net number consist of four major categories.

Number one, foreign exchange gain of $30,000; number two, sales of IntelliEpi stock for a gain $491,000; number three, net interest earnings on our $46 million in the bank plus other items adding upto $213,000; and number four, equity earnings of our unconsolidated joint ventures, which was a gain of $410,000.

Net loss in the second quarter of 2015 was $300,000 million or $0.00 per diluted share compared with a net loss of $1 million or $0.03 per diluted share in the first quarter of 2015. During the quarter we closed our acquisition of Crystacomm in an all cash transaction that was announced via press release at the close of market today.

The terms of the deal have not been disclosed but it is now expected to have a meaningful impact on our depreciation cost going forward. Accounts receivable net of reserves were $19.3 million as of June 30, 2015, compared with $18.8 million in March 31, 20015. So basically revenue increased almost $1 million and AR increased $525,000 sequentially.

Net inventory decreased in the quarter and ended at $38.9 million compared with $39.5 million as of March 31st. Ending inventory consisted of approximately 53% in raw materials, 41% in work in progress, and 6% in finished goods. Depreciation and amortization in the second quarter was $1.4 million, and CapEx was $1.5 million.

We also used cash in Q2 to repurchase our stock, and this cash used was $904,000.

Cash and cash equivalents with maturities of less than three months, short-term investments and other investments in high grade debt securities with maturities of less than two years, was $46.3 million at June 30, 2015 which represents a slight decrease of $1.2 million compared with $47.5 million as of March 31st. Okay.

This concludes the financial overview, I will now turn it over to Dr. Morris Young for a review of our business..

Thank you, Gary, and good afternoon. In addition to posting solid second quarter results, we continue to receive AXT to focus our resources money in new emergency business opportunities in the fiber optics, solar cell and RF communication markets.

One of our key priority this year is to ensure we are well positioned in certain strategic areas of our businesses where we believe we have a competitive fleet.

As such we are actively investing in our substrate technology across all four of our product groups, including internal R&D development, the upgrade of our manufacturing infrastructure, the increased automation.

These investment should enable us to reduce costs, improve the efficiency and competitiveness, and to ensure long term consistency and our product quality and technical specifications. We also continue to build strength in our management team attracting some of the highest caliber talent in our company history.

We are very pleased to announce this quarter that Dr. Hong Hou has joined AXT as Chief Operating Officer. Hong has extensive technical and executive level experience in our industry.

Having previously served as CEO of EMCORE Corporation, he has a demonstrated record of success, and he brings the vision and skills necessary to drive further improvement in our operations, and to help us prepare the business for this next level of growth.

I look forward to work closely with him and to leveraging his expertise and industry knowledge and a long standing relationships.

Now turning to our markets, indium phosphide continues to be a strong contributor to our business for both new and existing applications, including optoelectronic devices for fiber optic communications, passive optical diverts, and data center connectivity, as well as solar cells and next generation wireless amplifiers.

In the first half of 2015 our indium phosphide revenue have grown well over 50% from the comparable period a year ago. As many of you know, we have long been investing in this area establishing an early leadership position with our VGF technology.

The last indium phosphide subsidy providers have been limited as a result of relative technical difficulty in producing substrates that meet the stringent specifications for various optoelectronic and electronic applications. But overtime as the demand for indium phosphide increases, the market is likely to attract more interest.

As such we are pleased to announce today our acquisition of Crystacomm. It's a leading provider of LEC based indium phosphide substrates headquartered in Mountain View, California.

The acquisition which I will characterize as primarily a technology and equivalent, it's highly synergistic to our current indium phosphide business and provides further competitive differentiation and cost benefits. It allows us to broaden our technology base and give us the flexibility to serve customers with varying technical requirements.

The equipment will be installed in our Freemont, California facility and Dr. George Antypas, Crystacomm's Founder & CEO, would stay on as a consultant to AXT to assist us in bringing up the LEC in the form of crystal grows and polythene processes. George is a pioneer in the development of indium phosphide technology for commercial uses.

Crystacomm was the first company due to introduce two, three and four indium phosphide wafers that had since become industry standards as demand for larger indium phosphide wafers have increased. It has also being an industry leader in the development of 6-inch indium phosphide technology.

One of the potential drivers for 6-inch indium phosphide substrates is next generation wireless communications. Widen networks which is user we believe could come year 2020 promises speeds of upto 40X faster than the 4G to enable among other things, the ultra-high definition video on mobile devices.

It is also likely to offer greater network intelligence to manage the emerging complexity of internet and things. As such, we expect to see frequencies upto 25 Gigahertz which will be challenging for silicon or even gallium arsenide to support. Indium phosphide is a natural choice as it has the properties to enable the increasing requirement of 5G.

And the slowing cost and power consumption than gallium nitride. This acquisition comes about opportunistically as the results of our long and positive relationship with Crystacomm.

While we are not expecting revenue in this calendar year, we believe that additional capability will provide incremental business opportunities for AXT in the years to come.

Even in the second quarter we've posted sequential revenue growth in semi-conducting gallium arsenide substrates, as we continue to expand our engagement with customers in both, mobile and non-mobile applications. We believe that the market has stabilized at this current level having evolved significantly in the past several years.

Though we are conservative in the way that we forecast this area of our business, we continue to look for opportunities to increase market share and identify new applications for our products. Semi-conducting gallium arsenide revenue also grew in Q2.

Although the fierce competitive landscaping LED and excess capacity continue to present business challenges. For applications such as backlighting, signage and automotive, with specification now more stringent, we had better success in maintaining a more reasonable emerging profile.

However, we are consciously stepping away from searching highly competitive low end opportunities with pricing pressure would damage our consolidated gross margin performance, and devalue our product at high end. As such we're not expecting to see meaningful progress in this area in the near future. Turning to germanium substrate.

As we expected, we saw a modest improvement in revenue in the quarter with growth coming largely from traditional aerospace applications. While germanium substrate business can be lumpy quarter to quarter, we believe that we have the opportunity to grow and diversify our customer base overtime.

With this reason, we are pleased to be able to leverage harness extensive industry contacts to engage with a wider set of customers. Hong as you know, co-founded EMCORE's photovoltaics divison and led the commercialization of high-efficiency multi-junction solar cell technology for space power applications.

In addition to traditional space applications, we continue to monitor growing industry investment in commercial space applications such as set our internet, with consolation of low and mid-orbit microsatellite will provide universal high-speed internet.

If successful, these applications could drive increased demand for germanium substrates over the next several years. Finally, revenue from our raw material joint ventures were down this quarter following several quarters of healthy growth.

Gallium pricing has continued to drift lower and we do not expect any major changes in the pricing environment in the near term. However, these joint ventures provided us with profitable revenue and additional benefit to our verticular integrated business model. In closing, Q2 was a solid quarter for us.

We continue to evolve our business as the market evolves, and we are investing in the technology that aligns with growth trends in the compound center market. We believe that the Crystacomm acquisition will present great opportunity for us to broaden our capability and strengthen our position in an emerging market.

We're also very excited to continue to attract great industry talent like Hong Hou who could lead and leverage his expertise as we prepare AXT for our next phase growth.

Our transformation was not a curve line but we believe we are making the right investment in our technology ending our operations and management team to maximize our business opportunities and drive increased value for our shareholders. This concludes my prepared comments. I will turn the call back to Gary for our third quarter guidance.

Gary?.

Thank you Morris. Looking to the third quarter, we are expecting some near term lumpiness in our germanium substrate revenues as well as continued pricing weakness in our raw material joint ventures. As a result, we believe that revenues will be in the range of $19.5 million to $20.5 million.

We are expecting the bottom line to be in the range of a loss of $0.03 to a loss of $0.01 per share based on 32.2 million diluted common shares outstanding. This concludes our prepared comments. Morris, Hong, and I would be glad to answer any questions now.

Operator?.

Thank you. [Operator Instructions] We will take our first question from Richard Shannon with Craig-Hallum..

Hey guys, thank you for taking my questions. I guess I've got a few of them. Let's start with the second quarter, Gary; I missed if I cut all your comments regarding the growth profile by segments, and especially as it relates to gross margins which were down couple of hundred basis points.

Did I hear you right that the raw material segment was the only one that was down sequentially?.

Raw material was down sequentially but the general gross margin decline was basically product mix..

Okay.

And then as we get into the third quarter here, it sounds like basin raw materials declining, we could see gross margin similarly to slightly down, is that a fair guess?.

Yes, I think that's a fair guess. We hope it can be better but I think it's wise to be conservative when we have these discussions..

Okay, I agree, that's a helpful effort from that perspective. You gave a nice number for your indium phosphide in the first half of the year, I think you said greater than 50% growth year-on-year.

What do you think that could look like for the second half of the year on a year-on-year basis?.

That's a great question. I think – first of all, I haven't looked at our last year second half numbers. I think safely say, I think year-over-year we do – we definitely expect good growth, 50% could be a good convoy as you asked..

Okay, fair enough. Maybe a couple of questions on your acquisition of Crystacomm, you mentioned you're not expecting revenues here in the near term. Maybe I'll just throw a couple of quick ones at you.

When do you expect the 6-inches wafers to be ready? What kind of OpEx error should we expect here as you bring the group on here? And then, it was interesting that you're dealing with in at least CEO technology here versus your VGF, what are the merits of that, the advantages and disadvantages versus VGF?.

It's a whole bunch of –.

Sorry, Morris..

Okay. I love to answer this question, and I think you know AXT has always been focused on VGF. We were proud of the fact that VGF can deliver great product and with low defect density and in fact, as you know, with VGF we really conquer the world on the gallium arsenide, nobody wants LEC based product no more.

But I think the challenge for VGF sometimes is that it's little bit difficult to make the diameter larger, although we have been very successful in bringing up 4-inch VGF base, the indium phosphide, but LEC definitely gives us another view of delivering larger diameter substrates.

And as you know that wireless things, they already gone to 6-inches I believe is difficult for them to switch back to 4-inch. So we hear rumors out there, they always want 6-inch product. So this will enable AXT not only to provide 6-inch VGF but also give us a crack at 6-inch LEC. So it's a very good compliment to us.

To answer your question, what OpEx is concerned, this acquisition is very, very nice. Let me describe it this way, it has – the first part is actually easy, it has a very unique technology to synthesize indium phosphide material.

And fixes a polymaterial for indium phosphide that actually turns out to be a significant part of our cost of goods sold and with this acquisition we believe we can drive the cost of our indium phosphide poly [ph] and that we expect to utilize that capability, learn from there in the short term.

And we don't expect to spend a lot of money and facility increases to get that done. As far as the crystal growth development is concerned, that's a very evolved process. And believe me, even with Crystacomm's LEC acquisition, 6-inch for wafer development is a tall order. So let me give you an analysis.

When AXT was developing the 6-inch gallium arsenide, actually we got some help from United States government in the tune of $8 million. So make at the time each got $13 million and $18 million to develop a 6-inch gallium arsenide. An indium phosphide is lot more difficult than gallium arsenide can ever see. So that's a challenging job.

I tell you that I won't say it's a very job and we only have to spend a few million dollars to get that into the market but the reward is definitely just as great as well..

Okay, I appreciate those precisely Morris. I will jump out of the line. Thanks a lot..

And we will take our next question from Edwin Mok with Needham & Company..

Hey guys, this is Arthur filling in for Edwin Mok. Thanks for taking our questions; I just had a few quick ones. So we recently heard some data points about some weakness in China Mobil, possibly some excessive inventory.

I was wondering if that had any effect on your gas business and if you could provide some color on that?.

Well, as you know that the wireless business in our total revenue contribution right now is relatively small. I mean although it's still there, but I would not expect it to – I mean we didn't enjoy the write up. So I do expect it to hit us that hard.

I mean, but then of course, as the world economy, we probably got hit more because of the raw material slump. Pricing of gallium is coming down; we are very diversified by the way. So the wireless itself has hurt us as much..

Okay, great. Thanks for that.

And then regarding indium phosphide, can you see any stronger demand pull from any sort of various drivers you had mentioned, whether it's fiber optics, datacenter connectivity or solar, any specific segment providing stronger pull?.

Well, to answer that question I think it's all the above, I mean with the exception of solar, I think solar is slowing down. We are one of the companies which is really driving for the solar application, it has difficulties. So other segment I think – I would say if the optoelectronic application is really the driver now.

I think the datacenter connectivity is emerging application which will potentially be a big driver but it's not a main driver yet. We commented also might up – the mobile application actually is going to be a few years away but you can see – you can start to see development requirements coming soon..

Great. Thanks for that breakout as sort of the timing of how things come in. But did you see any stronger – I just noticed you added Australia and New Zealand as demand markets also for network deployments for your indium phosphide.

Are you seeing similar growth as you would see in China or is it although behind or further ahead? Just trying to get a color on the demand a little bit..

Let me turn this question to Hong. Hong, is really an expert on understanding this driver for the optoelectronic application for indium phosphide.

Hong, you want to take that question?.

Sure. Hi, Arthur. So, for indium phosphide right now the market driver is primarily fiber to the whole. For the US market, the deployment largely completed for the telecom carriers a couple of years ago.

But a deployment in China was primarily for multi-driving units in the past but now with the increase of the internet speed, it's an activity demand, so the optoelectric [ph] is going to each apartment unit and we opt to our customers, they all commented they could not make manufacture enough components to service their customer needs.

And also that you couldn't have manufacturers basically in China, now only it is a service the Chinese market but also the global market, we talk about Australia, New Zealand, and Taiwan, and Singapore, Indonesia.

It is not necessary they have service providers, out there you have equipment manufacturers out there but the equipment manufacturers, basically in China are servicing this market as well. Early on we had a big question about the China mobile slowdown.

We paid attention to that as well but the rumors slowdown is on, the infrastructure build up, but in China the service has largely been 3G, and the migration owned by HAN site [ph], it's just starting. So they build the highway right now and they need to build the current run in the highway to comply with that standard.

I think the demand for power amplifier in the new generation for 4G LTE is going to be increasing. But right now as Morris commented, our market share in that segment is limited, and that means we have potential to grow.

So it's to be a good news for us rather than negative because as I said, the highway is viewed, and now is the time to build the cost in this case in the handset to run at 4G LTE standard..

That's just great. And then just one last question and I'll hop out of the line. Last quarter you gave us some guidance on the target cost structure reducing breakeven revenue down to $21 million to $21.5 million.

Do you think that's still a good assumption going forward and to expect some improvements in the second half?.

I guess you caught me there. In a way I think the fluctuation of the targeted breakeven revenue target for us – it does depend upon several things. For one, we didn't expect the gallium price to keep on eroding, that will hurt us.

Even if we sell all the gallium we can produce, but the price decreases, right now it does hurt us, but on the other hand, the rumors can be true if the gallium price were to increase. Yet, other very, very important factor is obviously indium phosphide, if we grow that segment, product mix thus help us.

The factor where you did the utilization, of course we've already said $21 million, it does depend whether it's coming from raw material or not. So, I would say in general, $21 million to $22 million could be a breakeven point revenue target for us but I think it does still depends upon like few other loose ends we have to close.

Yes, the judgment is predicting a goods variable, so if we knew for sure we would tell you for sure but we have some uncertainty because we are – we don't have full visibility to answer those variables..

Great. Thanks, that's all of my questions..

Thank you, Arthur..

[Operator Instructions] We will go next to Dave Kang with B. Riley..

Thank you, good afternoon. Just two questions regarding first Crystacomm. What was the purchase price, I was assuming it was somebody material? Just trying to figure out where your cash will be by end of this quarter..

Right now we didn't disclose it and it was – as we said, it was mainly a technological and knowhow acquisition, and yes, we got a good deal..

Got it, got it.

And then regarding your decline in gross margin in the second quarter, use of product mix, so it sounds like maybe your germanium and semi-conducting gallium arsenide grew more than the other segments, is that fair assumption?.

Are you seeing projecting out into the third quarter?.

No, no, no, I'm asking what happened in the second quarter.

I mean, is it because of germanium and semi-conducting gallium arsenide grew faster than the others?.

No, actually we think it's the product mix mainly. And also the raw material price decline didn't help us that much either..

Got it, okay..

The leader was raw materials..

Sure. And then it sounds like your indium phosphide is doing well, I mean, can you just give us a rough estimate where that is – about 20% of the sales or just any ballpark figure just so we can understand? I think before it was like 15% maybe high teens, is it 20% now or –.

Yes, Dave, I'm sorry we decided not to break up the product mix almost a year ago. And we did give color that it grew year-over-year, well over to 50%. I think that's a good number to work. And you know how much we did last year first half..

Okay, okay.

And then, which is bigger between SI and SE gallium arsenide?.

Semi-insulating is bigger..

It's still bigger, okay. Got it.

And then lastly on Crystacomm again, what's their end market, it doesn't really – I'm looking at their website, it doesn't have a whole lot of information there, is that still up come or is it some different markets?.

Well, you know Crystacomm is a very interesting technology. George Antypas, who is a very great technologist, he has actually pioneered in the indium phosphide industry, he did own 2-inch, 3-inch, 4-inch first and he was really good at the LEC crystal growth.

But on the other hand, it's not a secret that he trying to keep maintained operation relatively small, so it's relatively a technology acquisition rather than business acquisition..

Because of his engineering background, he had a lot of interaction with universities, as a matter of fact, Hong, you want to comment about the indium phosphide experience with him, George?.

Hi, I graduated with the substrates supplied by George. He is a very specialized – special orientation and it was very hard to grow.

So I think his technology, LEC, certainly complement to our VGF technology, it was a combined technology base, it will be able to address a greater market applications that both up come as we said, and also potential in electronics and solar cell applications..

So Hong Hou's PhD in Material Science at UC, San Diego, basically is substrate that he used for the research was from Crystacomm. So that's the kind of places that Crystacomm have revenue to, it's not huge and that's why we said in reduction that we don't expect any near term big swing in revenue but we think it opens up a lot of doors.

I want to make one other clarifying comment because somebody asked earlier, I think Richard did about operating expense, there really is not going to be any material change in the operating expense lines or because of the acquisition. We're not adding any headcount, Dr.

Antypus will help us as a consultant but we don't have a need to hire more employees because we have employees that can operate the equipment. So it's not going to have a notable impact right now on the OpEx..

Got it, thank you..

And we will take our next question from Greg Roger with Adorandek Funds [ph]..

Good afternoon.

I have a question on Crystacomm in terms of the technology, this LEC based technology, just as curious as to when you would think it could be put into commercial production as it's something that's a year, two years out?.

Well, Greg I think you can say the benefit is this way, we used to say that AXT is using VGF only but now we know even the enemy camp, there is only three indium phosphide provider in the world. We think we're either number one or two, and the second competitor is from Japan who uses LEC.

So I think we're competing with them very well with our VGF but by having the very confident LEC technology will open up the doors for us. And I think that to put it in other way, I'm sure our competitor doesn't have the knowhow of VGF. So that gives us an advantage.

So I think the pieces – but there is other part of the acquisition which is, as I said in the entering article, we can use this technology to synthesize polycrystal material for indium phosphide which happens to be not a trivial technology, and because it's an important part of our cost of good material cost.

So to turn this technology arm to synthesize the material will enable us to lower our cost overall and increase our ability to improve our quality.

On the long term I think with this acquisition we can serve a broader customer, whoever wants VGF we can give it to them and whoever wants a different application where the LEC may have advantage, we can turn that as well. So I think that's the good thing for us.

So I think to answer your question in a short way, I think to turn this sadly coming now is a matter of few months..

Okay.

And in terms of – do you have any guidance on CapEx for the remainder of the year?.

We don't normally give CapEx in any hard guidance. We will continue to invest but I don't think you're going to see any big swings up or down that would be a surprise. But Gary, I think we made a commitment in the past that we said this year's CapEx fee – it's about $6 million rightly. [Cross Talks] Yes, so this could be in the budget..

Okay. And for the future of gallium, you're in this situation, you and your competitors where the industry is just hovering at – I would imagine a breakeven level.

And I'm just curious as to how long that stake can go on – how long you can basically hover around breakeven on gallium and not – there not be really any major action by any of your competitors to reduce capacity or –.

Yes, so I guess this is a very interesting question. I think we have all – as openly said, because of the SOI it hurts the gallium arsenide wireless industry tremendously but thank goodness it's over with, I mean it's now stabilized.

But I think the wireless still needs gallium arsenide for sure but the trade is much smaller now for the three of us to enjoy. But I think obviously it's difficult for us to view into our competitors head but I can only present AXT's case is that, we think we're stabilizing because we have the diversification.

We are into something which is exciting, indium phosphide which is growing, we are investing very heavily there. We have a germanium with Hong coming on board, it's going to be up able to open up some more doors for us. We have some niche markets that we are serving, we want the advantage for AXT compared to our competitor.

I'm sure they are listening now, but we have a lot of customers which are smaller diameter, they have a low location density requirement. And we are using those to breakeven.

I'm not saying it's writing but I think we're getting through this very difficult time and hopefully also to demonstrate to the end customer that AXT is a reliable customer/supplier they can count on in the future. Although they use less gallium arsenide but in the future somebody is going to be supplying this wireless industry with 6-inch capacity.

And so we are – to be honest, we are less relying to revenue from the 6-inch wireless industry now but we are knocking on doors since they don't forget us..

Yes, this is Gary. Let me answer that in terms of the cash balance. So I think there is two ways to answer your question. One is about the macroeconomic deal of the market and the other is about AXT.

So from an AXT standpoint, we are absolutely here for the long run, we have over $46 million in cash, we have very diversified product line, and we are confidently mapping out a road map since business strategy which we believe is going to help us be very successful.

As for the industry on a macro level, I think we would agree with you that some companies maybe feeling the pain and may not have the resources and the diversification that we do and we actually think that's okay that might open up some doors and advantages for us if other people back off..

Thanks, and good luck..

I know but we are not adding capacity for sure..

And this concludes today's question-and-answer session. I will now turn the call back to Dr. Morris Young for closing remarks..

Thank you for participating in our conference call. As always, please feel free to contact me, Gary Fischer, or Leslie Green directly if you would like to meet with us. And we look forward to speaking with you in the near future..

And this concludes today's conference call. Thank you again for your participation. And have a wonderful day..