Victor Allgeier - Mark B. Weinswig - Chief Financial Officer and Principal Accounting Officer Hong Q. Hou - Chief Executive Officer, President and Director.

Dave Kang - B. Riley Caris, Research Division Alexander B. Henderson - Needham & Company, LLC, Research Division.

Good day, ladies and gentlemen, and welcome to the EMCORE Corporation Second Quarter 2014 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Victor Allgeier. Please go ahead..

Thank you, and good afternoon, everyone. Before we begin, we would like to remind you that the information provided herein may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934.

These forward-looking statements are largely based on our current expectations and projections about future events and financial trends affecting the financial condition of our business.

Such forward-looking statements include, in particular, projections about our future results, statements about our plans, strategies, business prospects, changes in trends in our business and the markets in which we operate.

Management cautions that these forward-looking statements relate to future events or future financial performances, and are subject to business, economic and other risks and uncertainties, both known and unknown, that may cause actual results, levels of activity, performance or achievements of our business or our industry to be materially different from those...

[Technical Difficulty] With us today from EMCORE, Dr. Hong Hou, President and Chief Executive Officer; and Mark Weinswig, Chief Financial Officer. Mark will review the financial results and Hong will discuss business highlights before we open the call up to questions. I'll now turn the call over to Mark..

Thank you very much everyone. Thank you, Vic. Today I'm going to focus my discussion on our second fiscal quarter operating results and our balance sheet. Consolidated revenue for our second fiscal quarter totaled $42.2 million, which is a decrease of $2 million or 4.4% over the previous quarter. The decrease was due to lower Photovoltaic revenue.

Our Q2 revenue guidance was $40 million to $44 million. On a segment basis, our Photovoltaic business accounted for $18.6 million or 44% of the company's total revenue. This represents a $2.3 million or 11% decrease from the prior quarter.

As we have said previously, while we remain confident in the long-term prospects of the Photovoltaics business, our revenue in any given quarter may be a bit lumpy. The Fiber Optics segment accounted for $23.6 million, or 56% of the company's total revenue. This represents an increase of roughly $0.3 million or 1% from the prior quarter.

Hong will discuss the outlook for the Fiber Optics business later in the call. On a segment basis, Photovoltaic gross margin decreased almost 10.5 percentage points to 26.5%. The primary reason for the decrease was due to lower shipments in the quarter and a less favorable product mix.

We continue to believe that this business' target gross margin is at roughly 30%. Fiber Optic gross margin was 8.2%, 2.1 percentage points lower than the prior quarter, primarily due to an increase in warranty costs associated with already divested products.

Excluding the $1 million in warranty costs, the Fiber optic gross margins would've reached roughly 12.5%. Over the next 2 quarters, with the launch of the micro-ITLA, we expect our margins to be under a little pressure.

On a positive note, we have seen significant improvement in the 4,000 gig coherent market, and we expect our overall gross margin for our telecom products to improve in the future quarters as our revenue increases.

Consolidated gross margin was 16.3%, 6.6 percentage point decrease from the prior quarter, primarily attributable to lower solar and Fiber gross margins. Excluding the $1 million Fiber warranty charge discussed earlier, our gross margins would've been roughly 19%.

Total operating expenses for R&D and SG&A were $12.1 million, we saw higher R&D expenses in our Fiber Optics segment from investments in our new platforms. On a GAAP basis, the consolidated net loss for the second quarter was $5.4 million. Our GAAP net loss per basic and diluted share was $0.18.

Our non-GAAP net loss, after excluding certain adjustments, all of which are set forth in the non-GAAP tables included in today's release, was a loss of $2.6 million versus $0.5 million in the prior quarter. The deterioration was primarily due to lower financial performance within the Photovoltaics business.

Please note that we have included additional information regarding amortization, stock comp and other items in today's release to provide further clarity on our results.

Now onto order backlog, which we defined as purchase orders or supply agreements accepted by the company with expected product delivery and/or services to be performed within the next 12 months. At March 31, the company had a Space Solar order backlog of approximately $51 million versus $55 million at the end of the prior quarter.

As Hong will discuss later, we are working with customers on finalizing certain long-term agreements. Moving onto the balance sheet. At the end of March, the company's cash and cash equivalents balance was $18.2 million. The increase in the prior quarter was primarily due to lower investments in inventory.

The line of credit remained roughly flat at $17.6 million. Overall, the solar financial results showed continued strength in the quarter. The Fiber Optics segment experienced some revenue growth in the telecom area, although the broadband cable TV business fell slightly.

With that, I will turn the call over to Hong, who would discuss the company strategic and operating initiatives and provide revenue guidance for the third quarter..

Thanks, Mark. Good afternoon, everyone. As Mark discussed, we achieved the consolidated revenue of $42.2 million in the March quarter, which represents a $2 million or 4.4% sequential decrease from the December quarter. The decrease resulted from expected seasonal lower revenue within the Space Photovoltaics segment.

While the revenue from the Fiber Optics increased slightly by about 1.4%. Now, let me give you an update on our businesses and their market conditions. First, I will start with the Space Photovoltaics business segment. Revenue for our Photovoltaics segment was $18.6 million, a sequential decline from the previous quarter.

This quarter represents a more nominal revenue of run rate at the current state of our business. We are expecting a record level of the revenue for the entire fiscal year. The lower gross margin of 26.5% is due to the lower revenue and a less favorable product mix compared to the first quarter.

While we may experience some variability from quarter-to-quarter, we continue to execute on our plan for this business to achieve 30% targeted gross margin in the future. The net profit for the Space Photovoltaics division for the March quarter was $2.1 million.

In the past quarter, Space Photovoltaic division was awarded or authorized to begin work on a total of 12 separate contracts. This award had a total value in excess about $10 million. The backlog for this division, as of March 31, for delivery over the next 12 months, is $51.4 million at the end of March.

During the quarter, we finalized the negotiation of large, multiyear purchase agreement with the 2 major aerospace clients, and we expect to finalize those contracts this quarter. The associated orders should significantly increase our 12-month backlog, and to increase our backlog to an all-time high.

We are also pleased to note that one of our major customers with whom we have a long-term exclusive supply agreement, have secured several new satellite orders year-to-date. This has increased the optics rate of our products to this customer. Our Space Photovoltaics business remains robust.

We continue to rigorously manage this business for cost reduction, with a robust outlook for our future business, we were able to renegotiate some supply contract with our suppliers. Because of the reduced rate we expected and approximately 150 basis point improvement in gross margin in the future quarters.

In addition, we are pursuing cost reductions through automation. Our solar cell manufacturing process is already highly automated. In close collaboration with our lead customers, we have made a concerted effort to automate traditionally manual manufacturing process for solar panels.

The success of this conversion will allow us to reduce manufacturing costs and also to capture more businesses through offering a higher level of the integrated products. We'll continue to look for ways to further improve our gross margins. Now, let me discuss our market positions and business outlook in our Fiber Optics business segments.

In the broadband cable TV business, revenue was down slightly compared to the December quarter. We experienced some recovery of the cable TV infrastructure spending at the beginning of the year. However, the announced merger between 2 of the largest cable service providers in February stalled the recovery momentum.

As a result, the cable TV revenue and booking activities in March quarter was slow. We have been closely monitoring the CapEx spending plans of the major MSOs as disclosed on their earnings calls.

2 key MSOs announced last week, that it's spending in the March quarter was lower than their projection, especially for the equipment purchases related to our businesses. However, they were still holding the same CapEx projections for the entire year of 2014, as they have given early on.

If those projections don't materialize, we would expect the demand for our products to pick up in the back end of the year. In addition, one of our major customers announced yesterday, in the cable TV space in their earnings calls, that they expect an increase in demand on optical transmitters which is very encouraging to us.

We continue to support our customers on transition to new standards to protect and expand our customer base. We are deeply engaged in product design and qualification to address new standards in DOCSIS 3.1 and CCAP, and finish the several product releases.

We anticipate MSOs will begin to operate to DOCSIS 3.1 in early 2015, rather than late 2014, due to the delay in the IC chipsets necessary for the upgrade. During the March quarter, we demonstrated to all our key customers, a fully integrated transmitter based on our disrupted linearized semiconductor laser technology, called MELM -- LEML.

This technology offers high-power modulation and transmission with a linearity performance similar to the externally modulated transmitters, but with a greatly reduced cost profile and power consumption.

Both service providers and the equipment manufacturers have been very impressed with the performance, and expect that our solution will play a key role in their future network design.

In general, our broadband business has an extensive technology base with a high barriers for competition, we will continue to [ph] invent and expand our leading position in cable TV area. In the meantime, we plan to pursue a higher margin growth opportunity in selected niche markets by leveraging our core competency and infrastructure.

Moving onto our business in telecom division. During the March quarter, the shipment of 100 gig coherent product with a another record level. The revenue from the business increased approximately 24%, compared to the December quarter.

We continue to see a strong demand in the 100 gig coherent product, and the book-to-bill for the coherent products in the March quarter was over 1.7. This is largely driven by the strong CapEx spending of telecom carriers for coherent, and also, favored market share shift.

The order activity for this quarter it was very strong, and our backlog is at a record level. We have viewed a strong backlog on micro-ITLA, a smaller form-factor Tunable laser for our 100 gig coherent applications as well.

Some of our customers are projecting steep ramp up in the shipment of line cards and transponders using the micro-ITLA in the second half of the calendar year. We clearly welcome this trend and the signals of the beginning of the coherent application in a much larger metro market. We believe our micro-ITLA will be a market-leading product as well.

We continue to make tremendous progress in Tunable XFP products, with our solid design wins and respectable demand from our customers. As we mentioned before, we produced both Tunable XFPs and micro-ITLAs using the same production lines.

With the expected strong demands from micro-ITLAs, we'll focus on the production ramp of micro-ITLA, and ship the production capacity to the fast growing coherent component. During the OFC Show in March, we demonstrated our 100-gig integrated coherent transmitter, or ICT, for CFP2 transceivers.

We believe that was the first demo in the industry, and it was very well received. The comments from carriers is that, it is the right product for their planned expansion of coherent transmission into the metro market. We're allocating more engineering resources to accelerate the introduction of this product.

In summary, the strong bookings for existing products and tremendous attention to our new product and their development we are experiencing evidence the alignment of our product portfolio with the growth opportunities in the telecom space. We believe our Broadband Fiber Optics business has a long-term growth potential, once current headwinds abate.

While we expect our topline growth potential remains robust, our business can now be profitable at its current revenue levels.

We have started implementing a solid plan to improve the financial performance in the future periods, effective cost reductions, operational efficiency improvements and aggressive targeting of higher growth near-term revenue opportunities. During the March quarter, our book-to-bill for the Fiber Optics segment, altogether, was 1.3.

So we do expect the Fiber Optics business to grow from the current levels. Based on our current expectations, we would expect to reach breakeven at a consolidated revenue -- total revenue level of approximately $47 million.

Turning to guidance for the third quarter of fiscal year 2014 ending June, our revenue expectation is in a range of $40 million to $44 million, which represents a flat consolidated revenue sequentially with the improvement from Fiber Optics and sequential decrease from the Space Photovoltaics segment, which is consistent with the historic quarterly trends in the Space Solar industry.

The strong growth in our telecom business will offset a relatively flat performance in broadband in our Fiber Optics business segment.

In summary, we feel that our technology and product are well positioned to address the fast growth areas of marketplace, we'll be focusing on improving operational performance, including driving revenue growth, cost reduction and new product introductions. We're working diligently to improve the company's financial performance.

With that, I will turn the call over to Q&A..

[Operator Instructions] Our first question will be from coming from the line of Dave Kang from B. Riley..

I just wanted to make sure, you said that book-to-bill for 100 G was 1.7, not 1.07, correct?.

That's right. The 1.7 for coherent 100 G, and the consolidated Fiber Optics, including broadband, altogether, book-to-bill is 1.3..

1.3, got it.

So very strong bookings, but what are you doing about it, because I -- you can't really accommodate all that bookings because of your capacity constraints, right?.

Yes. But you're right. So the ITLA line is almost -- reached its capacity limit, and but this shows the strong demand from the customer, and their commitment to our business for both ITLA and micro-ITLA for a current period and also, future periods, so. . ..

So are you sort of like an allocation right now, or?.

We're not use the allocation word, per se, but we are prioritizing for the project from our customers so that -- we're working with them very closely that we don't cause delay for their project.

In the meantime, we do have our limitation on the ITLA capacity, because we see the momentum of the coherent product demand is shifting to micro-ITLA, and we do have capacity there as Mark provided remarks..

Right.

So actually that was my follow-up -- was that, so 1.7 includes both the regular ITLA and micro-ITLA, or?.

Yes..

Okay.

So we should be able to see some nice growth, not necessarily this -- well, obviously not this quarter, but next quarter when micro production comes in?.

Yes, that's absolutely right..

And then on Tunable XFP, so it sounds like you are shifting the TXFP production and capacity to micro.

So are you kind of implying that you're kind of beginning the excess strategy for Tunable XFP, and anymore color on that?.

So certainly, we supporting in our customer base on both fronts, but with a faster drilled activity -- opportunities in the micro-ITLA area, we can definitely place our priority in the micro-ITLA and then the Tunable TXFP..

Okay. So let me rephrase that question.

So assuming some of that TXFP production gets filled by micro, then what will be the drag on earnings? What was the first -- first of all, what was the drag on earnings on Tunable XFP for the March quarter, and then when micro starts to fill up, what do you think the drag will be from Tunable XFP, say September or December quarter? I just want to see the relative numbers..

Dave, thanks for the question, it's Mark. We are still seeing very low margins on the Tunable XFP product. In addition, as I mentioned in my script, for this quarter and the next quarter, we are expecting to see lower gross margins also on the micro-ITLA, as we start to ramp that product.

We believe that the micro-ITLA will have a very significant opportunity. We see the metro market for 100 gig coherent really growing, and we believe that the micro-ITLA will be in a very good position. So over the next couple of quarters, there's going to be a little bit of noise.

As we start to fill up the manufacturing line for micro-ITLA, but as Hong mentioned in his remarks, we are seeing a very bright future for 100 gig in the metro, especially as we go forward over the next couple of months -- quarters..

Got it. Okay, I guess we'll talk more offline. But just moving onto cable TV.

So the customer you talked about yesterday, obviously, their numbers were strong and actually, talked about strong optical transmitters, I mean isn't that, you guys? So why are we still kind of struggling? And then, also you talked about M&A, MSO -- M&A but then certainly that didn't impact your customers, I don't know why you're using that as a factor.

So I just wanted to get more color on that situation..

Certainly. Dave, I'm just trying to provide some background. The 2 big service providers in the U.S., they do have combined market share at this point, about 40%. So -- but the 40% is not the entire market, look at the growth from the equipment manufacturers; they may be to them, they may be to some other service providers as well.

Yes, and it's strong earnings from our one of our key customers as announced yesterday, it's very encouraging. But our -- we supply to other customers. And I don't know if everyone has the same level of the book-to-bill and strong outlook for their future quarters.

So we're still trying to, 1, the turn is going to start, but I can tell you so far, it had not been good until we hear encouraging news of they need more optical transmitters..

It sounds like then with PV kind of you're saying, that 18, 19 is your sort of a -- or 18 to 20 is your sort of a run level -- regular run level.

And then cable TV on the 14 to 16, so incremental growth, basically, will be coming from ITLA going forward then, right? And so how strong can this ITLA and micro-ITLA provide growth for you? If the other 2 segments are kind of flatlining?.

Well, Dave, I think the important thing to note is, the solar business is currently, for us, it's the $70 million to $75 million a year business.

It is a little bit lumpy because we do have -- we do ship the program, it's a nice profitable business, we do think if there's real opportunities for growth in some adjacent markets as we talked about in previous calls.

On the Broadband business, I think that our belief on that business is that, there are some opportunities in some adjacent markets that could be quite lucrative for us. We've been investing over the last year in some of these markets and due to areas such as sequestration and other challenges we've not seen ramp. But -- I'll turn it to Hong.

But I think we do believe that the broadband business have some opportunity for growth..

Okay. And then, can I just get a couple of numbers, Mark.

Depreciation, amortization and CapEx, and what the budget is for the year?.

Yes. On the depreciation and amortization, it was $2.1 million for the quarter that just ended. Our CapEx was $0.4 million, so we have relatively low CapEx in the quarter..

Is that kind of be around the $0.5 million level going forward?.

No. Our CapEx per year averages typically right around $4 million to $5 million a year. In the first half of the year, we've seen a little bit of a lower CapEx spend.

But due to some of the market opportunities that Hong, can talk about in terms of whether it's ICT, some areas in the broadband side, we do expect then that there could be some additional spending to kind of get up to more of our normal run rates for CapEx..

[Operator Instructions] Our next question will be coming from the line of Alex Henderson from Needham..

A couple of questions for you.

First up, congratulations on the orders, but I was wondering if you could talk a little bit about what the embedded margin is on some of those orders? Was that mostly orders for the micro-ITLA, or is that mostly orders for the macro-ITLA? And if the micro-ITLA, I assume that the margins on that are still going to stay fairly low, is that correct?.

Yes. Alex, thanks for the question. So the backlog strong -- backlog is strong, booking happened on both micro-ITLA and the ITLA front. So the ITLA came out of the annual price negotiation. We do have some challenges immediately on the margin, but we also have been working on the cost reduction opportunities.

So that will be translating to above 10% spend or margin improvement, and we expect to cut in, in July-August timeframe. So engineering qualification is all done in the phase of customer signoff.

Micro-ITLA, as Mark said, initially it's going to be margin challenged, because we have never run that volume that hard yet, so fundamentally, the process have been optimized. But it just have to go through the regular ramp up process. So the yield will be -- the challenging initial [ph] ramp up phase.

But we have achieved, what level of the yield, respective level of yield in the past. So we are optimistic with the ramp -- we'll eventually get the margin for micro-ITLA has improved..

So if I could, the issues on the recognition of revenue for the micro-ITLA, is that a function of finished goods qualification still needing to be worked through, or is it a function of simply ramping the production volume and getting the yields up on the production volume?.

This simply -- ramping the production volumes..

So can you give us some sense of what the schedule is, or what the plan is for reaching material revenues on that product? I assume that right now, it's sub $1 million kind of run rate for at least another quarter or so, is that accurate? And then -- and when do we start to see that coming 25% or 30% of your volume in the ITLA space?.

Yes. So our line capacity for the micro-ITLA that the current line support up to 11,000, 12,000 units per quarter. But the ASP [ph] ranges pretty widely between the different customers because of the specification and power lower level requirement. So at this point, we are poised for ramp up and that customers are ready for that as well.

But I think it's really -- it's going to be between this quarters to start ramping to the next quarter really seeing significant revenue contribution. It's a -- they need multiple components, and not only just the micro-ITLA for this. So it's -- we are not exactly keeping the pace for the ramp.

We have the capacity to support the near-term projection as they provided in -- up to -- all the way to the end of this year. And further than that, they haven't provided, I think that sooner or later, we need to add capacity to the micro-ITLA line..

That's great. But can you talk to us a little bit about what's that capacity would imply in terms of revenues? Because right now you have extraordinarily cryptic about what you mean by available capacity.

Is it going to -- can we think of 2014 as achieving 25% to 50% of your volume coming from micro-ITLA by the end of the year? Is it very slow ramp, and then a big pop in the end of the year? How -- what's the slope look like? Can you give us the granularity around this thing, obviously the most important product you're ramping....

Yes. Al, maybe we can help clarify some of this. So with the line that we have right now, we believe that we can support between $5 million and $8 million a quarter of micro-ITLA depending on how much of Tunable XFP revenue we have coming out of that line.

We believe that for the remainder of this year, that majority of our business is going to be still in the ITLA. But by the time we get to the end of the calendar year, we should start to see micro-ITLA become a much more significant part of the revenue base.

We believe that we won't really see the cut over right now from ITLA to micro-ITLA, so sometime beginning early next year.

It's still debatable, meaning if you had asked us where we thought we'd be 6 months ago, I think we would've probably told you, we expect the micro-ITLA to ramp a little bit faster, and we've actually been surprised by the fact that ITLA has actually been kind of the growth engine over the last couple of quarters in terms of the demand, as Hong mentioned on the book-to-bill.

So i think that we can see a lot of opportunity coming up, but we think micro-ITLA will kind of be a story that's more towards the end of this calendar year, towards early next calendar year..

So what I'm hearing you say is that, the customers are not willing to take large volumes of that product until we get into the year back half of 2014, and it's not a production ramp problem per se, it's more of a timing of when they want the product that's driving your production rate.

Is that correct what you just said?.

Yes. So we've been talking about the broad-based customer dynamics to be starting from the latter part of this year. But a couple of customers, they will be start ramping from this quarter, even the back end -- back half of this quarter for micro-ITLA demand.

So right now for example, 20-some customers we have, they all have pretty strong demand on ITLA but the micro-ITLA right now is a couple of customers -- 2, 3 customers, I think their opportunity is they're ahead of their competition in addressing the demand in the micro market..

And we really see the micro-ITLA being primarily focused on the metro market as we go forward. We think that's going to be really, the best opportunity for us with that product. And at this point we're seeing that really ramping up as we go towards the back half of this year..

Going to the Tunable XFP, I was under the impression that you had virtually no shippable orders for that product line.

Are you suggesting that you have more than $1 million worth of quarterly demand in that product?.

Yes. We're actually seeing an increased demand. But we've not necessarily producing a whole lot more. We have a good inventory for it. And to me, the customer demand is so -- the increased of the demand is really more like a demonstrated customer's commitment.

And when they would like to get more product than the higher priority for their ITLA shipment, we're also getting orders for Tunable XFPs.

Okay. So just to be clear, you're talking about sub $1 million, $1.5 million. What kind of numbers are we talking about in terms of micro-ITLA revenues here ? I mean Tunable XFP, excuse me..

It shifted from quarter-to-quarter, it changes [ph] from $0.5 million to $1.5 million. So it's about $1 million level..

Okay.

And are you still losing $1 million, to $1.5 million, $2 million on that product, or?.

No, we don't. We don't -- the yield is much better. But some of the products we introduced early on, so we do have a higher cost base..

Okay. And then going back to the ramp up cost on the micro-ITLA, if your production ramp is going to happen over the next 2 -- 2 or 3 quarters.

How should we be parsing the ramp up cost for that, what's the number we're talking about following to absorb in the maybe, June quarter and then the September quarters to get that ramp up going and cost overruns, or yield issues or things of that sort, what net should we be following?.

Yes. There are some yield impacts as we start to ramp up the product. We believe that in the June quarter, we'll see some yield levels are below our expectations. We're still able to produce significant products to meet customer demand.

But the yields are a little bit less where they'd like to be, which is very, very common when we're ramping up a brand-new product that in being the one first to market.

We believe that the ramp up cost will be somewhere right around $0.5 million, perhaps, a little bit more over the next couple of quarters, as we start to ramp that up and we start to see some of those lower yields in the first quarter or 2.

But the nice thing about this product line, is that we have a significant amount of history on the ITLA, which is really the guts and the technology behind this product. So working up some of the normal yield related challenges that happens with new products, it's something that we feel comfortable with..

And at this time I'm not showing any further questions. I would like to turn the call back over to management for any closing remarks..

Thank you very much for dialing in today. The company plans to present in the 15th Annual B. Riley Investors Conference in Santa Monica, California on May 21. We look forward to talking to you soon. But before we end the conference call, I'd like to turn back to Mark. He's going to be providing addition -- some of the additional information..

So apologies at the beginning of the call, there was -- seem to be some voice quality issues, so I'm going to re-read the -- our disclaimer real quickly.

We would like to remind you that the information provided herein may include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act of 1934.

These forward-looking statements are largely based on our current expectations and projections about future events and trends affecting our business.

Such forward-looking statements include, in particular, projections about future results, statements about our plans, strategies, business prospects, changes in trends in our business and the markets in which we operate.

Management cautions that these forward-looking statements relate to future events or our future financial performance and are subject to business, economic and other risks and uncertainties, both known and unknown, that may cause actual results, levels of activity, performance or achievements of our business or our industry to be materially different from those expressed or implied by any forward-looking statements.

Neither management nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements. We caution you not rely on these statements without also considering the risks and uncertainties associated with these statements and our business that are addressed in our filings with the U.S.

Securities and Exchange Commission that are available on the SEC's website located at www.SEC.gov, including the sections titled Risk Factors and our annual report on Form 10-K and our quarterly reports on Form 10-Q.

We assume no obligation to update any future forward-looking statements, to conform to such statements to the actual results or the changes in our expectations, except as required by applicable law or regulation. Thank you very much for participating in today's call. Have a good day..

Ladies and gentlemen, thank you for participating in today's conference. This does conclude the program and you may all disconnect. Everyone, have a great day..