Wendell Blonigan - President and CEO James Moniz - CFO, Treasurer and Secretary Claire McAdams - IR.

Nehal Chokshi - Maxim Group Mark Jordan - Noble Financial Group Rich Kugele - Needham & Company Brian Alger - ROTH Capital Partners Mark Miller - Benchmark Company.

Good day, and welcome to the Intevac’s Third Quarter 2015 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. [Operator Instructions]. Please note that this conference call is being recorded today, November 2, 2015.

At this time, I’d like to turn the call over to Claire McAdams, Intevac’s Investor Relations Counsel. Please go ahead..

Thank you and good afternoon, everyone. Thank you for joining us today to discuss Intevac’s financial results for the third quarter of fiscal year 2015, which ended on October 3. In addition to outlining the company’s financial results, we will provide guidance for the fourth quarter and full year 2015.

Joining me on today’s call are Wendell Blonigan, President and Chief Executive Officer; and Jim Moniz, Chief Financial Officer. Wendell will start with an update on our businesses and then Jim will review third quarter results and provide our outlook for Q4 and the full year before turning the call over to Q&A.

I’d like to remind everyone that today’s conference call contains certain forward-looking statements including, but not limited to, statements regarding financial results for the company’s most recently completed fiscal quarter which remains subject to adjustment in connection with the preparation of our Form 10-Q, as well as comments regarding future events and projections about the future financial performance of Intevac.

These forward-looking statements are based upon our current expectations and actual results could differ materially as a result of various risks and uncertainties relating to these comments and other risk factors discussed in documents filed by us with the Securities and Exchange Commission, including our annual report on Form 10-K and quarterly reports on Form 10-Q.

The contents of this November 2 call include time-sensitive forward-looking statements that represent our projections as of today. We undertake no obligation to update the forward-looking statements made during this conference call. I will now turn over the call to Wendell..

Thanks, Claire, and good afternoon. On the call today, I will review the recent progress we have made in our strategic growth initiatives in both Thin-Film Equipment and Photonics and provide some commentary on the current business environment.

Today, we’ve reported financial results exceeding guidance with revenues of $18.4 million and a smaller loss in forecast. We are pleased to report that Q3 results included the acceptance in revenue recognition event of our first MATRIX PVD tool for solar cell metallization.

We also saw some upside in HDD upgrades, which raised our results above the high end of the revenue range. We’re also pleased to report that in our Photonics business, we were awarded a $25 million funding vehicle from the U.S. Army as well as the initial grant of funding for the development of our next-generation digital night vision sensors.

The positive results we saw in Q3 allow us to again for the third straight quarter raise our revenue guidance for the year from up 5% to 10% to up 12% to 15% over 2014. In the third quarter, we achieved the highest level of bookings in more than two years, increasing our equipment backlog by $10 million as a result of three non-HDD system orders.

These orders were for our second VERTEX PVD system, a second MATRIX PVD system and our first MATRIX ion implant system all to Tier 1 customers. All three of these tools will ship over the next several quarters and establish our foundation customers for our equipment growth initiatives.

Capacity build out timing by our foundation customers will be a key component in our ability to return to cash flow positive operations in 2016. I will now provide some commentary on the current environment for each of our businesses, starting with Photonics.

Photonics revenues were $9 million in the third quarter, similar to the first two quarters of the year with an operating margin of about 14% favorable to our long-term model.

Our concerns about the sequestration of the military budgets have been reduced now that the government has reached a two-year budget agreement, which was passed by Congress last week and signed by the President this morning. This agreement provides substantial relief from the sequester caps with large increases for national security.

This agreement removes the uncertainty around the prolonged continuing resolution and provides predictability for the defense department as well as the defense industry to invest in programs and technology.

In September, prior to the end of the government’s fiscal year, we were awarded a $25 million funding vehicle, which I mentioned earlier, as well as the initial grant of funding for the development of our next-generation night vision sensors, the ISIE12 and ISIE14. These new sensors expand our opportunity pipeline significantly.

To elaborate, every one of the night vision cameras and ISIE11 sensors we have shipped or will ship now have a future path to be upgraded with an ISIE14 sensor. This significantly expands our revenue opportunity pipeline over the life of the platforms on which we’re already deployed.

Additionally, the development of the ISIE12 sensor adjusts the unique requirements of our ground forces opening up the largest opportunity for our digital night vision technology. In our Apache helicopter program, we continue to execute well in our outfitting squadrons at full production rates.

Recent production contracts and options for foreign military sales along with the upgrade path as enabled by the ISIE14 increased the size of the Apache revenue opportunity from $75 million to now over $110 million.

In our F-35 Joint Strike Fighter program, the $26 million multiyear pricing agreement announced last quarter along with the upgrade path enabled by the ISIE14 have increased the revenue pipeline opportunity for this program as well from $120 million previously to now over $250 million. The F-35 program is the largest in the U.S.

military history and has resulted in nearly $5 million of new bookings in our third quarter and more than $6 million of new bookings in Q4 to-date. In our Striker II helmet monitor display program with partner BAE, we recently received ISIE11 sensor export approval from the U.S.

government for marketing helmet systems to the UK, Germany, Sweden and Australia, expanding the served available market for our night vision technology. The new opportunities with the ISIE14 have expanded our business opportunity pipeline to over $500 million just for the programs, which we are designed in and in production or preproduction.

This is before the ground force application using the ISIE12 sensor as well as other programs we are pursuing, which together expand our future business opportunity pipeline to upwards of $1 billion.

The development of our next-generation night vision sensors will extend our differentiated position as we continue to be recognized as the provider of integrated digital night vision imaging systems for the U.S. military.

Now to discuss our Thin-Film Equipment business, I continue to be very pleased with our growing traction in new markets and execution of our Thin-Film Equipment growth strategy.

Leveraging our core capability in technology into new thin-film deposition applications, we continue to gain momentum in entering new markets outside of the hard drive industry. In my recap of third quarter results, I highlighted some key milestones in our equipment growth initiatives.

These initiatives are protective coatings for display cover panels, plus PVD metallization and implant doping for advanced solar cell manufacturing.

In display cover panel, we have now sold our second system into this market and have built the capability in-house to provide low rate production quantity samples to help accelerate the seeding of our solution into the market.

We have demonstrated that our production tool and engineered thin-film processes deliver outstanding performance as a cost effective, optically transparent scratch protection solution for cell phones, tablets, wearables and more. We believe our thin-film solution holds real commercial promise in a large and growing mobility marketplace.

According to IHS technology, in 2020, over 44 billion square meters of cover glass is forecast to be produced. It would take approximately 400 of our VERTEX tools to coat all of it.

As you can see, even modest initial adoption of our solution in this market can be a significant driver for our business, and we continue to work tirelessly to drive mainstream marketplace adoption.

For solar PVD, we achieved a significant program milestone with the sign off of our first MATRIX PVD system crossing the chasm between a research and development program to a production proven tool record is one of the biggest challenges in any new product introduction.

Our tools demonstrated production performance was a key factor in generating a new MATRIX PVD order booked in the third quarter from our second Tier 1 customer also for metallization of advanced solar cells.

The heart of our MATRIX PVD system is our patented LSMA magnetron source that is now demonstrated in industry leading planar target utilization rate of over 65%, enabling us to offer the lowest cost of ownership for high value metal deposition.

The work we are doing today now with two Tier 1 customers position us as the process tool of record for advanced metallization of high efficiency solar cells. We believe that over time, the winners in the solar industry will all migrate to higher efficiency solar cell devices and architectures.

According to Solarbuzz, installation of high efficiency n-type solar cells are forecasted double over the next three years, and we expect to participate in a significant way in manufacturing capacity build out to support this growth.

In our implant doping for solar cells, the success we’ve had to date in our joint development program culminated in an order of our first MATRIX implant tool.

We plan to ship this system in the second half of 2016 and believe that once we have the system deployed, there will be additional adjacent applications that can be addressed by our implant technology and novel systems architecture.

In total, I’m excited to report the significant progress we have made this quarter in our Thin-Film Equipment growth initiatives. Lastly, an update on the hard drive media equipment business where we are the technology and market leader.

While excess capacity still remains and forecasted needs for new production media tools remains a ways off, there were a few bright spots evident in the recent reports from the hard drive industry.

First, Q3 hard drive units surpassed the drive company’s guidance from July and second, there appears to be a growing mix shift to high capacity near-line drives, which in turn is pushing up the average number of disks per drive or TIE ratio.

We believe the TIE ratio increased for the fourth straight quarter in Q3 from 1.6 in Q3 2014 to around 1.9 Q3 2015. What this means is that near-line drives grows a percentage of the total hard drive market even if the HDD market will remain flat, we would get the full utilization of existing capacity when TIE ratios get in the range of 2.5 to 3.

Continued progress towards this TIE ratio range is an encouraging sign for our HDD systems business. Further, the industry’s estimates for storage shipped on solid-state drives continue to be small compared to hard drives.

At Samsung’s July Global SSD Summit, Samsung’s aggressive five-year estimates for NAND flash memory demand is forecasted triple from 84 exabytes in 2015 to 253 exabytes in 2020.

While this is impressive growth, it was also reported that the SSD demand estimates supports less than 10% of the required storage capacity the industry is forecast to require at that time. The rest will be shipped on hard drives. Given all the estimates in the industry, we continue to believe that capacity HDD equipment will be required.

It is just frustratingly difficult to forecast the timing. Therefore, until we’ve reached the capacity crossover, we have sized the business to operate on strategic upgrades, service and spares and forecasted our resources on the strategic equipment growth initiatives I discussed earlier.

We remain confident in our technology leadership position and our ability to drain incremental market share at the next technology inflection points. As I stated on our previous conference call, the outlook for Intevac has changed dramatically over the last two years.

We now have a profitable Photonics business with a growing opportunity pipeline for very large production programs. We have a core HDD equipment business that is scalable but sized for the current business environment, and we now have multiple customer orders for our production proven MATRIX and VERTEX platforms for new applications and markets.

Given our profitable operation in Photonics and our customers’ current forecast and factory build out plans in our new equipment initiatives, we believe that even without a resumption for capacity HDD system orders, we will return to cash flow positive operations in 2016.

I will now turn the call over to Jim to discuss our third quarter results and provide guidance for the remainder of the year..

Thank you, Wendell. Third quarter revenues totaled $18.4 million, above our guidance range and included revenue for the MATRIX PVD tool that we have ranged in our Q3 guidance. Equipment revenue totaled $9.2 million. Upgrade revenues in equipment helped us exceed the high end of our guidance.

Photonics revenue of $9.2 million included $7.1 million of product revenues and $2.1 million of contract research and development revenues. Q3 consolidated gross margin was 26.7%, slightly lower than guidance.

Equipment gross margin was 17.8%, lower than last quarter due to fewer high margin upgrades and the lower margin on the first MATRIX PVD system shift, which went through a yearlong qualification cycle. Future MATRIX margins are in line with our model targets.

Photonics gross margin was 35.5%, slightly higher than last quarter and lower than the third quarter of last year. The margin profile is normalizing to our long-term model as we have previously discussed. Q3 R&D and SG&A expenses of $8.8 million were below our guidance due to lower levels of spending versus forecast in both R&D and corporate SG&A.

Expenses were higher than Q2 because of the customer-funded NRE benefit reported in the second quarter. Our Q3 net loss on a GAAP basis was $3.8 million or $0.17 per share, better than our guidance range of a loss of $0.21 to $0.26 per share. Total backlog was $52.8 million at quarter end, an increase of over $9 million from the prior quarter.

Equipment backlog of $24.1 million includes one MATRIX PVD system, one VERTEX PVD system, one MATRIX implant system and one R&D implant tool. Backlog in our Photonics business is at $28.7 million.

We ended the quarter with cash and investments, including restricted cash, of $56.1 million, equivalent to approximately $2.57 per share based on 21.9 million shares at quarter end.

During the third quarter, we bought back 331,000 shares for $1.7 million at an average price of $5.01 per share, bringing the total share repurchases to $20.9 million since inception out of a total plan of up to $30 million. Since the end of Q3, we have purchased an additional 32,000 shares for $0.2 million at an average price of $4.98 per share.

Q3 capital expenditures were $667,000 and depreciation and amortization was $1.1 million for the quarter.

Now turning to the full year outlook, the outlook for the full year of 2015 has once again improved and now has between 12% and 15% upside from the 2014 revenue level, due mostly to the benefit of additional upgrades we have seen in the HDD business in the first three quarters.

At this forecasted revenue level, we expect total gross margin for the year in the range of 32% to 33% and operating expenses of between $35.5 million to $36 million. Last quarter, we said our cash burn for the full year, excluding any cash used for the company’s stock repurchase program, was expected to be between $5 million and $6 million.

We are now projecting our cash burn for the full year to be at or below $5 million as we are managing our cash prudently. While the outlook for the year has improved, the equipment business is inherently lumpy and because there are no large system sales in Q4, Q4 revenue will be down sequentially from Q3.

The Q4 revenue guidance range is $15 million to $17 million. Within this revenue range, fourth quarter gross margin is expected to be between 29% and 30%.

Q4 operating expenses are forecasted between $9.4 million to $9.6 million and with minimal tax expense, the resulting Q4 net loss is projected to be in the range of $0.21 to $0.23 per share based on an estimate of 22 million shares. This completes the formal part of our presentation. Operator, we are ready for questions..

Thank you. [Operator Instructions]. The first question is from Nehal Chokshi of Maxim Group. Your line is open..

Thank you for taking my call and congratulations on good results. A few questions.

First, how far are you through the hard drive upgrade cycle that you’ve been experiencing that’s been pushing these positive results?.

Okay. So the answer to that is we’re seeing I would say for first time in a while dialogue with the hard drive makers of looking at some strategic activity upgrading the equipment.

I would say that we’re probably a quarter of the way through one particular upgrade at one customer, but we are in discussions with some additional strategic upgrades that – those aren’t locked in yet but at least we’re having dialogue, which I think is positive and we’ll have more on that as we move through the quarters..

Okay, great. Obviously getting the second order for the cover glass opportunity is huge. Can you just review again, I think last quarter you talked about doing joint presentations with smartphone customers and that you were engaged with one of the top five customers.

Can you review where you are in that end customer engagement and where do you think you can be in terms of orders, say, 12 months out from now?.

Okay. So, where we’re at today, I think one of the things I’ve mentioned in our script is that internally we’ve upgraded our engineering tool to a production version and we built the capability to do small sample manufacturing here.

So we have the entire coating lines, which includes the cleaners, it’s running in a clean environment, the coating machines as well as curing. And where we’re at with our second customer is we’re providing them samples for them to take to their customers as if they already had the machine, because we’re currently building their machine for them.

So we felt this was a logical way for us to get acceleration and exceeding the market. And the conversations are ongoing at this point, but still very good engagement with that customer and we’re driving it..

Okay.

And the rate of buyback, was that a slowdown or an acceleration relative to the prior two quarters?.

I think it was relatively similar. We don’t necessary say exactly what our parameters are but those decisions are made on a quarterly basis of what the rules of engagement are going to be. And they’ve been relatively consistent up to this point..

Okay. Thank you..

Thanks..

Thank you. The next question is from Mark Jordan of Noble Financial. Your line is open..

Thank you. Good afternoon. Wendell, you mentioned obviously the $25 million award from DoD that was released on September 30.

What was the initial funding – what are you carrying currently in backlog for the that contract? And I know from the DoD release that it said revenues – this was to run through 2020 and how should you expect to see that 25 million in R&D funds flow?.

Well, it’s a $25 million vehicle, so it’s how the money gets to us. I think we’re carrying – Jim, you want to get the – do you have the exact number of backlog from that program..

Yes, it was a little than $1 million order that’s in our backlog at the end of Q3..

And I think the funding will go project by project. I don’t know if the white papers is viewable by the public but several separate set of objective milestones in that program, different things we’re doing to the sensor and they’ll be funded piece-by-piece as we make the progress in the milestones..

All right.

And so therefore it will only be reflected in backlog as you get the periodic funding for tests [ph]?.

That’s correct. And it’s programmed project by project and even though we have a budget, we still got to pull the funds and allocate those funds into the budget..

Yes. Earlier in your presentation, you talked about some of the new orders, the second PVD, second MATRIX and the first ion implant orders received. You just mentioned that they should ship in several quarters.

Could you be a little more specific as to when you expect those to ship and when you would expect to realize revenue?.

Yes, a good question. So the VERTEX tool that’s going in display cover, we expect that to ship in the fourth quarter but it won’t revenue until customer acceptance because it’s the second tool. So we would expect that in the first half. The rest of the tools that are going out are shipping in '16.

Again, each one of those are going to require a customer sign off in order to revenue. We expect to see the cash from – we take a down payment and then a payment on shipment. So that’s the timing that we’re wrestling with. We’re not guiding for '16 at this point but certainly Jim and I took a look at it, we made some commentary of what it looks like.

But certainly it’s lumpy like all of our equipment businesses and it’s back half loaded..

Okay. Final question from me, you made what is to me a very positive statement about being cash flow breakeven as you see your model evolving for 2016.

How do you scale or what assumptions are you making on the HDD upgrades for '16 to come to that cash flow breakeven estimate?.

We’re essentially – as Wendell said on the previous question that we expect to see continued benefit of the upgrade. And so we have a similar level at '16 that we saw in '15 from the HDD upgrades but from a system capacity, we still don’t – we’re not counting on a lot of HDD volume.

As Wendell qualified the 2016 cash flow without the resumption of system capacity, we believe we have the ability to be cash flow positive with all the other activities that are going on and with the profitable Photonics business..

Thank you very much..

Thanks, Mark..

Thank you. The next question is from Rich Kugele of Needham & Company. Your line is open..

Thank you. Good afternoon..

Hi, Rich..

Hi.

So I just want to make sure, how many systems do you think on the MATRIX PVD side you would have to actually get sign off before you can have an accounting standard to recognize on shipment?.

Our rules is two per foundry [ph]. So we would say that right now our first tool it went in was the first of its kind. It had an extended sign off where we wrung out all the manufacturing requirements on the tool, so that one is not going to count. So it will be this one plus an additional tool before we get to be per foundry sign offs..

Okay.

And then obviously a very large HDD consolidation has finally been blessed and they’re major customers on your end, so I’m just interested in your perspective if anything has changed on the go-forward opportunity with some of these players?.

I think it’s too early to tell. I think it’s good that we’re all finally moving onward and there’s not that concern that when it will happen and where it will happen and everything can get washed through the P&Ls and synergies can be made. I think that’s all positive.

I think we need to see at least from the WD Hitachi activity of how that – the management teams all play out, what’s their strategy going forward as far as where their capacity is going to be utilized. But I think all-in-all, I think we’re pleased with the way it turned out and I think it’s going to be good for us in the long term..

Okay.

Lastly, Jim, what should we be thinking if this mix continues, with this type of mostly going into non-HDD equipment environments, what should we be assuming for revenue to get to that cash flow mutual status?.

We will probably give guidance for 2016 on the next call but directionally as Wendell said, there’s going to still be lumpiness and we think given the order profile we’re forecasting and the units that are in backlog that will ship in the middle of next year, next year revenue will be backend loaded.

And so it’s difficult for us right now since we’re not giving guidance by quarter, but next year’s revenue will be backend loaded. But certainly it’s our objective and in order to be cash flow positive, we expect to grow next year..

Okay, all right. Thank you..

Thanks..

Thank you. The next question comes from Brian Alger of ROTH Capital Partners. Your line is open..

Hi, guys. Good afternoon..

Hi, Brian..

A couple of follow-ups. Pretty impressive with the Photonics business and some of the increases there, thanks to newer technology upgrades. What kind of timeframe are we looking at as it pertains to the Apache and JSF programs growing by hundreds of millions? I presume that’s not over a short period of time..

That’s correct. I think when we look at those programs, we look at the initial camera cell, we look at a one-replacement cycle on the sensor and then a technology upgrade. So they do go out considerably in time. But it also depends on what the usage of the cameras are.

So depending on how often they’re flown and how many hours the night vision is on, we’ll determine when those replacement upgrade cycles to, but they’re out there several years..

Great.

And is it safe to say that as we look at that business today we would expect the next generation to have similar operating margins?.

Well, we’re always trying to have the best operating margins we can get but I think in a normalized state, you’re going to see the government moving everybody into that kind of a margin profile. It has to do with how good the sensor yields are and how we’ll progress there.

But we go back on a learning curve as far as where our cost should be but not a steeper learning curve as we want on Apache where it was just brand new..

Okay, great. And shifting gears over to the Thin-Film side, can you remind us on the VERTEX and the MATRIX what kind of gross margins should we be expecting? Obviously, the first one out of the gate was an anomaly and I kind of just want to forget about that.

But once we’re up and running here and hopefully these orders start becoming more, I don’t know, fluid, what kind of gross margins should those businesses be running at?.

Our target margin for the equipment side of the business is right at 40% gross margin..

Okay, great. And as we look at specifically the cover glass, it sounds as though there is obviously huge potential there.

How soon will you know from the second customer that’s taken the production material off what used to be kind of engineering line, how soon will you know whether those are going into smartphones and the other devices?.

We hope to have – I would say we just started shipping our samples at the – I think it was last week of September we got the line up and running. So as far as – they ship the material to us, we [coat] it, it goes back. So we’re really in our first cycle of learning there on the samples going out.

But we expect to be a lot – have a better view of what the outlook is as we get into the February call late through the end of the year..

Okay.

My understanding if I remember right, it wasn’t just for smartphones, it was for a number of different smaller displays, correct?.

Yes. You can look at it, we’re actually running samples for watches and camera lenses and cover glass and back casings of cell phones as well. So there’s a number of emerging applications that it could be applied to and we’re going through that process..

Just a nerdy question here, does it have to be glass that you’re depositing it onto or could it be plastic or other materials?.

Fundamentally, we’re doing this now on glass. It can be on other materials, like say for plastic. Plastic is inherently soft, so it’s kind of like ice on a lake. It’s too soft underneath and the ice is not thick enough, it just breaks through.

So there’s a limit to applications on some of the softer materials, but certainly there’s no technical reason why it can’t be put on most substrates..

Great. Thanks, guys. I appreciate the update..

Thank you..

Thank you. [Operator Instructions]. The next question comes from Mark Miller of Benchmark. Your line is open..

Congratulations on your order momentum. I’d like to follow up on the previous question. I’ve recently seen some advertisements for what appears to be kind of OLED display on cell phones and again, I’m assuming that because it’s flexible, it doesn’t break when you drop it.

Does that change your strategy? Is that a challenge or an opportunity or it doesn’t matter if it OLED or if it’s a glass type cover plate?.

Mark, I just saw those advertisements started getting pushed around I think Thursday or Friday of last week and then they were – if you watch Sunday night football, I think they were on there too, right. It appears that that is a multilayer approach, it’s not necessary one piece of cover glass and I would guess some of those are plastic.

I don’t know, I’m just guessing. There’s one video where they have a horse step on it, if you can believe that and the cover glass didn’t crack but it looked like it kind of punched through like plastic would.

So we’re trying to figure out exactly what that is and we’ll just probably go buy one and we’ll know, but it looks like that also the third party cover glass that you buy to protect your phone, it looks like they’ve incorporated that as a function of their phone, so you replace that yourself from them.

As far as it is good or bad or indifferent, I think any kind of publicity is good publicity as far as putting protective coatings on the cover glass. So, again, it’s a big space and it looks like it’s an interesting development..

But would you have to modify your coating process or do you have something that works equally well on plastic or non-glass?.

We’re going to have to figure out exactly what it is. Our films work best on glass for sure..

Last quarter, some of the equipment suppliers in the solar industry said there have been somewhat of a midterm [ph] and a pause.

I was wondering if you’ve seen anything recently to provide more color on that? Is it a pause or is the market contracting or do you expect growth to start up again in solar equipment?.

In solar equipment, I don’t think there is – there certainly was a pause but we just went back out this quarter to China and Taiwan to talk with the solar customers as well. And it seems to me that there’s a lot more renewed interest in putting in some capacity or moving some capacity or changing the technology.

Certainly, I think the [indiscernible] cells, everybody seems to have a roadmap for [indiscernible] and I think we’ve got one of the equipment manufacturers is on allocation right now on their aluminum oxide tools. So we’re seeing some activity in equipment side..

Finally on this funding vehicle, can we assume your R&D sales are going to go up as a result of that, that we unlock now from what was going on?.

I think what we’re looking at is because we’re in a new cycle that we would go back to a little bit more mix on the funding R&D than we have been running the last couple of quarters, mostly product dominated..

Thank you..

All right, thanks, Mark..

Thank you. There are no further questions in queue at this time. I’ll turn the call back over to Mr. Blonigan for closing remarks..

Thank you. Before I sign off, I’d like to take this opportunity to thank our employees for their hard work and dedication as we navigate the current environment, and also thank our customers for their continued partnership and business. Thank you for joining us today and we look forward to updating you again during our Q4 call in February.

Until then, so long..

This concludes today’s teleconference. You may now disconnect..