Stephen Ferranti - Vice President, Investor Relations David J. Aldrich - Chairman & Chief Executive Officer Donald W. Palette - Chief Financial Officer & Executive Vice President Liam K. Griffin - President.

Rick Schafer - Oppenheimer & Co., Inc. (Broker) T. Michael Walkley - Canaccord Genuity, Inc. Vivek Arya - Merrill Lynch, Pierce, Fenner & Smith, Inc. Blayne Curtis - Barclays Capital, Inc. Toshiya Hari - Goldman Sachs Japan Co., Ltd. Craig A. Ellis - B. Riley & Co. LLC Atif Malik - Citigroup Global Markets, Inc. (Broker) Edward F.

Snyder - Charter Equity Research, Inc..

Ladies and gentlemen, good afternoon, and welcome to Skyworks Solutions' Second Quarter Fiscal Year 2016 Earnings Call. This call is being recorded. At this time, I will turn the call over to Steve Ferranti, Vice President of Investor Relations for Skyworks. Mr. Ferranti, please go ahead..

Thank you, Kathy. Good afternoon everyone, and welcome to Skyworks' second fiscal quarter 2016 conference call. Joining me today are Dave Aldrich, Don Palette, and Liam Griffin. Dave will begin today's call with a business overview, followed by Don's financial review and outlook. We will then open the lines for your questions.

Please note that our comments today will include statements relating to future results that are forward looking as defined in the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially and adversely from those projected as a result of certain risks and uncertainties including, but not limited to, those noted in our earnings release and those detailed from time to time in our SEC filings.

I would also like to remind everyone that the resulting guidance we will discuss today are from our non-GAAP income statement, consistent with the format we have used in the past. Please refer to our press release within the Investor Relations section of our company website for a complete reconciliation to GAAP.

With that, I'll turn the call over to Dave for his comments on the quarter..

Thanks, Steve, and welcome everyone. Well we delivered another solid financial performance for the second fiscal quarter of 2016, posting year over year growth in revenue, profitability and earnings, even as we navigated through a combination of inventory adjustments and forecast reductions at one of our major customers.

During the quarter we delivered revenue of $775 million. That's in line with our guidance. We posted gross margin of 50.8%. That's up 410 basis points year over year. We generated operating income of $285 million. That's up 10% year over year. We produced operating margin of 36.8%, and we provided $1.25 in earnings per share.

That's up 9% versus the prior year. For the first half of fiscal 2016, we generated roughly $383 million in free cash flow, redistributing over 60% or $234 million to shareholders through our dividend plan and our share repurchase activity. Q2 was a solid quarter, highlighting the strong execution of our team and the robustness of our financial model.

Our gross margin initiatives and operating expense discipline enabled us to both expand margins and earnings in a seasonally down quarter. The market environment remains challenging entering the third fiscal quarter.

The June quarter is normally a transitional period in our sector, bridging the March quarter seasonal trough with a stronger second half of the calendar year.

This year, inventory drawdowns and slower sell-through trends at our top customer are providing a drag on overall demand levels, impacting our Q3 guidance despite our strong growth in broader markets and with other OEMs. As we navigate through these customer-specific dynamics, our competitive position and our financial model remain quite strong.

We continue to improve our gross margins and our overall financial returns, while investing aggressively in innovation and in capacity. It's also worth emphasizing a couple of important points. First, among our top customers, we see complexity and increasing performance requirements driving content expansion across the board.

As an example, our overall content on Samsung's flagship Galaxy S7 platform is up 20% versus prior models. We've also secured more than $9 of content within Huawei's new flagship smartphone platforms, helping to drive over 40% year over year growth with this customer.

Secondly, we continue to be highly successful in leading the market transition toward integrated solutions, and we're consolidating share while extending our technology leadership. And third, we continue to see significant traction with the Internet of Things, as evidenced by our 18% year over year growth in our broad markets products segment.

These factors give us high confidence in our longer term growth prospects, and before providing more specifics on the market environment, I'll turn the call over to Don for a more in-depth review of our financial results..

Thanks, Dave, and thanks for joining us everyone. We appreciate it. Revenue for the second quarter was $775.1 million, and that's in line with our guidance, and up 1.7% versus the year-ago quarter. Gross profit was $393.6 million, or 50.8% of revenue, in line with our guidance, and up 410 basis points from the second quarter of fiscal 2015.

Operating expenses were $108.6 million consisting of R&D expense of $73.1 million and SG&A expense of $35.5 million. We generated $285 million of operating income, up 10% from the year ago quarter, and that translates into a 36.8% operating margin.

Our cash tax rate was 14.3%, resulting in net income of $242.3 million, or $1.25 of diluted earnings per share, and that's $0.01 ahead of our guidance and represents around a 9% year over year earnings growth. Turning to our second quarter balance sheet and cash flow statement.

We invested $37 million in capital expenditures with depreciation of $53.6 million. We generated $154.5 million in cash flow from operations and we exited the quarter with roughly $1.2 billion in cash on hand and no debt. We also repurchased 2 million shares of our common stock during the quarter at an average price of just over $67.50 a share.

Given our confidence in our long-term business trends, we expect to continue to be very active with our share repurchase activity at current levels. Moving to product mix. For the second quarter of fiscal 2016, power amplifiers represented 17% of revenue, integrated mobile systems was 58%, and broad markets was 25%.

We saw healthy growth in both integrated mobile systems and broad markets. We're quite pleased that our broad markets portfolio grew over 18% year over year in the second quarter.

We continue to expect IMS to remain our strongest growth segment, followed by broad markets, while power amplifier products continue to decline as a percentage of our revenue as the market shifts towards higher value integrated solutions. Now for our third quarter business outlook.

We expect third quarter revenue to be approximately $750 million with softness at our largest customer being partially offset by strong year over year growth at Samsung, in China and across the broad markets. At this revenue level, we suggest modeling gross margin at 51% with operating expenses flat to Q2 at approximately $108.5 million.

It is worth noting that our Q3 gross margin guidance implies a 200 basis point improvement versus the prior year. Our strong gross margin outlook in the face of current market conditions highlights the benefits of our higher value integrated systems, along with our scale and flexible manufacturing operations.

Looking ahead, we see opportunity for additional margin improvement, as we continue to ramp our custom solutions and leverage our recent capital investments. As a guideline, we recommend modeling a 60% incremental gross margin off of the third quarter baseline.

We continue to target a goal of at least 53% gross margin for the company and have a number of initiatives in place to accelerate our progress towards achieving this goal. And below the line we anticipate around $1 million in interest and other expenses and a cash tax rate between 14.5% to 15%.

We project our tax rate to remain in this range for the remainder of our 2016 fiscal year and we expect share count to be around 192.5 million shares, which results in a third quarter EPS of $1.21. And with that, I'll turn the call back over to Dave..

Thanks, Don. Well, I'm very pleased by the resilience of our financial model in spite of the well-publicized market challenges to our near term top line growth. And even more importantly, I'm highly confident that the underlying technology themes fueling our long-term growth remain quite positive.

And we're fortunate to be levered to powerful secular technology trends and we've spent the last decade aligning the company to capitalize on these. And with that in mind, I want to take just a moment to reiterate a couple of the more significant drivers that we see fueling our growth in the coming years. First is the Internet of Things.

This opportunity is measured in the tens of billions of units, and projected to grow at an 83% CAGR through 2020. And our success here has been borne out by a broad and a growing list of wins in new markets like automotive, medical, industrial, wearables and the smart home.

Today we participate in all of these verticals through our suite of connectivity solutions, which now includes support for low power, for wide area networking, for Wi-Fi, ZigBee, Bluetooth and GPS standards. Our design win pipeline provides a number of tangible examples of our success in this market.

In fact, in this quarter alone, we landed new opportunities which include a vehicle-to-vehicle communication systems with Cadillac's 2017 platform, GPS-based industrial tracking devices for Iotera, a new connected home hub for a leading online retailer, Cat-M solutions for machine-to-machine applications in a variety of end markets, connectivity modules in set-top boxes for ARRIS, temperature control systems for multiple smart home solutions, analog IC supporting new smartwatch platforms, and 16 Skyworks devices in Cisco's latest large enterprise access point systems.

The second major growth theme for us is the skyrocketing demand for data, wireless data, which is being fueled by a growing number of new applications like streaming media, like mobile advertising, virtual reality, and cloud-based services across consumer and enterprise applications.

These services are all in their infancy, and they consume a tremendous amount of bandwidth, drastically increasing demands on networks and on devices. As sophisticated as today's devices are, they're simply not good enough to support the immense data requirements of these types of new applications, which will be rolling out over the next few years.

To address this performance gap, OEMs today are implementing techniques like carrier aggregation, receive diversity, MIMO and ultimately 5G, which require dramatically higher levels of analog performance at the semiconductor level.

As a technology enabler to these system upgrades, our addressable content per device is rising, driving TAM growth well in excess of the broader semiconductor space. Both of these secular growth themes are playing out for us in real time.

And we're capitalizing by combining a strategic focus on higher value added integrative solutions with unrivaled scale, advanced manufacturing capabilities, and a deep system level knowhow. This is the key reason that we are consistently delivering among the best financial returns in the semiconductor sector, in a variety of market conditions.

In closing, looking past the near-term volatility, we've created a unique and a robust business model, fueled by the proliferation of connectivity, and combining above market top-line growth, healthy cash flow, and the financial returns of a best-in-class diversified analog company. That concludes our prepared remarks.

Operator, let's open the line, please..

Thank you. Given time constraints, please limit yourself to one question and one follow-up. And our first question will come from Rick Schafer with Oppenheimer. Go ahead, please..

Yeah, thanks guys. My first question is, I guess basically, how do you see revenues trending through the quarter, through the June quarter? Maybe what the shape of that revenue curve is.

Do we expect to see a V at any point during the quarter, or does that come in the July timeframe.?.

Hi, Rick. As we mentioned in the prepared remarks, I think June is normally a seasonal and a transitional period for us. Now it's a little bit challenging this year for a couple of reasons, and it's with our largest customer, right.

Unlike prior years, units will be down year over year really for the first time, and they're also absorbing some excess inventory, which adds a headwind. So I think as we absorb that issue outside of this, we expect all other areas of the business to be very strong. We think our revenue will be up over 10% when we exclude this customer.

We're seeing strength at Samsung on G7, growth in China. Our broad markets business will be up 15% to 20% on a year over year basis. So we're obviously not immune, though, to significant reductions from this customer. But I think we'll fare better than most, and we'll continue to focus on return to the business..

Okay, and then maybe a related question, Dave.

If you look at how your internal capacity, today how does it line up with the current demand? And I guess, can you quantify? Or is there a discernible impact on gross margin today that we'll see a natural or a noticeable uptick in the second half as volumes improve?.

Yeah hi, Rick, this is Don. I mean one of the things if you looked at what the forecasts continued to change in this quarter. And one of the things you see that in is our inventory is up a little bit more than normally would be up for us. And that's you're seeing there where we discontinued the product.

It was a lot easier to do that in the short term than to worry about taking labor out and making changes, so that all made sense for us. So as far as going forward, so our fabs and our Mexicali facility, we're pretty much at utilization, and we don't expect that to change a lot going forward.

So the margin improvement you're seeing is just the normal improvements that we would build off of the product mix that we're shipping. So I wouldn't expect a big change because of that..

Thank you. Our next question will come from Mike Walkley with Canaccord Genuity. Please go ahead..

Great, thank you very much. Just on a big picture, if you look at the RF TAM market for 2016 and 2017, obviously with Apple going through its product transition and softer demand and the premier tier weak, that's impacting the growth for 2016.

Do you still see this growth in this market as a mid teens CAGR and do you think it would reaccelerate in 2017? And do you think the industry could be below 10% growth this year? Thank you..

Sure. Well I think, Mike, there's some positives and negatives going on in the current environment, right. On the positive side, answering the growth question, we continue to see our content go up with each and every new generation. This year is no different, no different.

We're pulling more functionality into our integrated mobile systems, we're expanding our footprint with more functionality. And in fact, we're continuing to see fewer competitors, so we're able to consolidate share.

Our IoT business, as we mentioned in the prepared comments, is up both sequentially and year over year and these are very positive tailwinds.

I think 2016 is a little bit of a unique year because I think you're going to see some high level smartphone softness given global macroeconomic choppiness, and of course as we discussed with our top customer, there's overall unit sales decline in the second half of the year, which gives some unfavorable comps.

And of course, they're aggressively ramping down the legacy models, which creates an inventory burn. So I think 2016 we have to look at as a unique phenomenon, and I suspect as you go through the second half of 2016 it will be much more positive. We'll start to see strong sequential growth in 2017.

I do absolutely see growth in the overall RF and analog TAM being double digits year over year..

Okay, was that all, Mr.

Walkley?.

Yes, thank you..

All right, thank you. Then we'll go next to Vivek Arya with Bank of America Merrill Lynch. Please go ahead..

Thanks for taking my question and good job on the execution. I know there are headwinds that the industry is facing.

So as my first question, Dave, how should we think about the back half and what the visibility looks like in terms of content growth and if there are any differences, if your flagship customers go with an Intel baseband versus a Qualcomm baseband?.

Well, I think we answered it. I think you're going to see this inventory headwind with our large customer, as well muted overall year over year growth. That's an issue we're going to deal with here in 2016. I would expect that in September you'll see double digit sequential growth, so I think that's going to be no different.

We'll see a very strong back half of the year, moving into 2017 on the backs of more content, a larger target for our newer products, broad markets being up. Maybe, Liam, you could add..

Sure, Vivek. With respect to the baseband partitioning that you may have mentioned there, I mean certainly we do quite well with both Qualcomm as well as Intel.

And let me give you some confidence that we fully expect in the second half of the year to be launching with our flagship models with incremental gains year over year, significant incremental gains, regardless of baseband, well diversified across both and also well diversified across our product reach..

Very useful. And then as my follow-up, Dave, what are your latest thoughts on M&A? Because I understand you do have very good organic growth prospects, but the volatility around your largest customer is not going away any time soon, but you do have a very good balance sheet. You have a good record of operational consistency.

You have good packeting assets.

So how do you leverage those aspects to diversify? And as part of that, if you could also sort of roll in what were the learnings and feedback from the PMC bid that might inform you as you think about any potential M&A?.

Yeah, Vivek, thanks for the question. We think of diversification in two ways. First of all, we have been consistently diversifying our business. We've used M&A each year since we formed the company to continue to look for more functionality, more relevance in the broad market sector, more content in both mobile and our broad markets business.

And the most recent addition was filters, prior to that power management, Wi-Fi and the like. And so we view acquisitions as an important element of our growth where we are selective. We don't need to buy growth. What we need to do is continue to look for ways to differentiate ourselves in our target markets.

So you should look for us to continue to add strategically acquisitions that make sense and they'll primarily be as you mentioned in diversification and driving diversification into new markets and more content in new markets..

Thank you. We now have a question from Blayne Curtis with Barclays. Go ahead, please..

Hey, guys, thanks for taking my question. Don, I just wanted to make sure I understood. You built inventory in the March quarter these on sales levels, and then I guess you're down into June's. It sounded like you were going to keep utilizations the same.

And so does that mean inventories go up? And then the second part is, can you just talk about your visibility? You said new products should have higher margins. Just as you look into the second half, that's the other put to gross margin.

Are you seeing a drag on utilization? And then what is the new products? What's your visibility into the uplift there?.

Yeah, keep in mind, and thanks for the question, because it sort of needed to fill in a piece there, that we do have the high remodel. Recognize that we outsource some wafer supply. We outsource some assembly and test, so we're able to modulate that.

But as far as running our internal operations, we're going to keep that utilization relatively high, so that will in fact allow us to continue the margin story. And we're not going to be building inventory levels that really are far ahead of demand.

We'll flush through what we've seen at the end of this quarter, and we would expect that to get to a more normalized rate as we move forward. As far as the margin expansion in the back half of the year, it's been a consistent story.

And you see it in our margin gains quarter over quarter, that as we release new products, we're seeing better margins on those products, that whether it be in emerging markets like China, or whether it be large OEMs. So there's nothing in that story that's going to continue to slow down.

It's more about integration adding value, and customers are paying for it..

Great. Thanks, guys..

Yeah..

Thank you. Our next question is from Toshiya Hari with Goldman Sachs. Go ahead, please..

Hi. Thank you for taking my question. My first question is regarding the pricing environment. Clearly, your customers are experiencing pressure in their gross margins.

Have you sensed any change in how you guys price product, and the amount of pressure that you're seeing from them?.

Sure. Well, there's always going to be a dynamic there, where suppliers and customers negotiate. But I'll tell you what's happening. As Don alluded to, gross margin invariably, our technologies have become more and more unique as we wrestle with customer complexity.

So the engines that we provide, the solutions that we provide, tend to be very, very elegant, integrate lots of technology, are a perfect fit for a specific baseband, a specific application, and they're very different than what our suppliers do. So it's really about differentiation and delivering performance, number one.

And from there, we can command better pricing and margins..

Okay. Thank you. And as my follow-up, just a question on your long-term gross margin target of 53%. You mentioned how you have a number of initiatives in place. Maybe if you can elaborate on what the initiatives are, what the timeline is going forward, that would be helpful. Thank you..

Yes, if you step back, and you look at the things that we do on a quarterly and annual basis, first from an operations standpoint, it's about the CapEx investments we make and the productivity improvements and driving the operational improvements, the things like yield.

It's focusing on our material sourcing, and being able to deliver year over year annual reductions that support that. That's a piece of it. That's kind of the blocking and tackling on margin improvement.

Then where you get the step function for us is when you talk about the new products, the releases and the integration, and maybe Liam could talk a little about the things we're doing as we move forward. But those two pieces together are really what drives margin for Skyworks..

Thank you. We'll go next to Craig Ellis, with B. Riley. Go ahead, please..

Thank you for taking the question. I wanted to go back to the comments that you made, Dave, regarding some of the new product activities. SkyBlue seemed to be quite successful in the first half with one of your big customers in terms of contributing to significant content.

As we look at the back half, do you expect SkyBlue to broaden out across your broader customer base? Can you talk a little bit about some of the other developments that might be occurring within the product portfolio that would add further to content, as we look at the second half of 2017?.

Thank you, and I'm glad you brought up that particular platform. The customer is Huawei in their flagship model. And we have over $9 in content, and I'm particularly pleased by the fact it's low, mid, and high band PAD. There's power management. There's Wi-Fi. There's pretty sophisticated switching architectures.

We're using an architecture that's allowing us to control power management levels and voltage across all bands. We're starting to see the ability to take a very sophisticated module and integrate using different approaches, much lower current-consuming functions.

And we're incorporating things like temperature-compensated SAW, regular SAW, bulk acoustic devices. And it's an architecture that our customers see simply as being elegantly easy for them to use in the sense that it's very highly integrated. It tunes up at the antenna and saves them point of current and size.

And we absolutely will see that in other customers, architectural approaches that will be customized for different markets that you'll see continue to contribute to our gross margin, but a bit of a more of a winner take all capability, because it's so easy for our customers to use and far fewer competitors..

Thanks for that. And the follow up is for Don.

Don, as we look at the other part of the target financial model below gross margin at the $8 in annualized earnings, can you just walk us through your thinking in terms of the timeframe with which you think we could get to that earnings level?.

Yeah, I mean, when you step back and you look at the core elements of the financial model, that's gross margin expansion, that's top line growth, that's managing OpEx, they continue to strengthen. And you see that, for instance, on the margin line what we just guided at 51%, so we're up sequentially in margin even though we are down some in revenue.

So the assumptions underlying the new target model are very, very solid. The gross margin, our ability to manage OpEx, we know how to do all those things. As far as handicapping when it happens, right now we're in a little bit of a tough backdrop that we're working through.

So as you model growth opportunities off of let's say the September quarter, or December, pick a quarter, you apply whatever annual growth rate you want to that. The 60% drop through, you'll see that the model is still in place, and that'll get you there in a reasonable timeframe.

But you have to model that and make your own assumptions to get to that timeframe..

Thank you. Our next question is from Atif Malik with Citi. Go ahead, please..

Hi. Thanks for taking my question. A question carrier aggregation. David, you guys have talked about ramping a BAW filter next year. If you can kind of share the update on what are the latest plans on how you kind of plan to ramp that? Are you looking to licensing technology or do you have it in house? And then I have a follow up..

Yeah. Thank you, Atif. I'm glad you asked that question, because I'm going to take maybe a two prong approach to it.

First, the details are that when we look at the carrier aggregation requirements with the advanced switching, with the tuning, with the module capabilities that you require, different band aggregation and combinations that are quite challenging to our customers, there's a lot of content expansion.

And so what we've been doing is we're leveraging a lot of in house filter expertise. You asked specifically about filters and intellectual property. We've been making investments in foundry partnerships to support bulk acoustic technologies.

Of course, we have our own increasingly relevant at mid/high frequency temperature-compensated SAW, so you'll continue to see wins at the higher frequencies. And the SkyBlue system architecture allows for more content, because we're able to control all the system parameters in a way that they get the current consumption and they're able to do it.

And we're tuning it in a quite sophisticated way between the amplifiers, the switchers, the filters, and obviously the antenna on the transmit side. But if you take a step back, our customers truly don't care what the process technology is in those filters. What they want is current. They need size. They need time to market.

Obviously they need overall performance. And so I think over time, the question of what filter technology is chosen, which band will be less relevant and what will be relevant will being able to have a system architecture that provides the kind of current that they need to add the functionality that their customers demand..

Very helpful. Thanks. And then a follow up, when I look at the tier down, the product tier down, the Galaxy 7 versus Galaxy 6, I see RF sockets getting swapped among suppliers. And then I look at iPhone SE, it seems like there's a lot of reuse going on of iPhone 6s components.

And so the question is, has anything changed with respect to the sockets being more kind of specific to each phone? And its impact on maybe pricing going forward..

Sure, yeah, well every customer has a different way to go to market, and Samsung has been traditionally a high SKU company where they have potentially regional SKUs where you may open up a regional SKU, we have low content, global SKU we have very high content on Galaxy.

And at Samsung where they may have eight or nine SKUs, our blended content is up about 20% to 25% generation to generation. Our revenues at Samsung will be up about 20%. Our largest customer, similar story. There can be some partition changes, but here again, our ability to engage early. We are agnostic with baseband.

By the way, let me just clear that up. There's no issue with us relative to Qualcomm, whether relative to Intel or internal basebands at Huawei, Hisilicon, Samsung, LSI. We're with all of those players. And we have the ability to work with our customer to make sure we have the right solution.

And fortunately, as Dave was outlining, customers really want complexity solved. And we do it in unique ways, and we're continuing to gain share on the leading flagship models across all the major accounts and we'll continue to do that this year and next..

Thank you. Our next question is from Edward Snyder with Charter Equity Research. Please go ahead..

Thanks a lot. Dave, there are a lot of reports of strength in China, especially in the low and mid tier. MediaTek was talking it up on Monday. Qualcomm was even bragging about it last week.

Can you kind of characterize how that affected you? I know you were very big in phase two at MediaTek, but it sounds like things are moving more to the five mode and I know there's a little bit of a share giveback there.

So, I'm interested in how much of an offset China was, specifically in the white box area, where you're dealing with these reference designs. And then, Don, you're sitting on a record high inventory while your largest customer is winding down the flagship model.

With the big declines in the demand that that model is going to go through here, what gives you confidence you can work through that inventory? The parts I would assume are not interchangeable with the new model coming up in the fall.

So I'm a little confused here because you're talking about running the fabs near – and your pad facility at relatively high utilization rates, but then also burning off inventory. So, I'm just trying to figure out what I'm missing here. Thanks..

Sure, Ed, this is Liam. I'll start with the China piece. So China, actually the story has been getting better for us with China, kind of consistent with your remarks. The open market or the white box China, which not only serves the domestic market, but also is a catalyst for serving emerging markets thoughts.

So China, for example, in Q2 we were up about 14% sequentially. We think year over year when we finish FY 2016, China will be up about 20% to 25%. So we have great traction with OPPO, Vivo, Xiaomi and a number of other white box players. But really today what we're seeing is nice, nice content gains and real material revenue gains from Huawei.

Talked about it earlier, but that's a customer that's adopted high, mid, low band solutions, receive-side solutions, Wi-Fi as well as some of our power solutions. So we're really pleased with that. That's a customer that's a clear number three now for Skyworks.

We expect solid growth there next year, and also continuing to do the work with MediaTek and others to ensure we pick up the white box players..

Yeah, and on the inventory question, remember we said we're going to keep our internal facilities relatively high utilization, but we're pulling back capacity from outsourcing. So that's a big piece of that equation. And all of the inventory that we've completed to date, we're very comfortable is going to get consumed.

There's going to be no issue there..

Okay, thank you then. Ladies and gentlemen, that concludes today's question-and-answer session. I'll turn the call back over to Mr. Aldrich for any closing remarks. Thank you..

Okay, thank you everyone for listening and we'll see you at upcoming conferences..

Okay, thank you ladies and gentlemen. That does conclude today's conference call. We thank you for your participation. You may now disconnect..