Cohu Inc
NASDAQ:COHU

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Earnings Call Transcript

Earnings Call Transcript
2017-Q4

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Operator

Greetings, and welcome to the Cohu Incorporated Fourth Quarter and Full Year 2017 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to your host, Mr. Jeff Jones, Chief Financial Officer. Thank you, Mr. Jones. You may begin.

J
Jeffrey Jones
executive

Good afternoon, and welcome to our discussion of Cohu's most recent financial results. I'm joined today by our President and CEO, Luis MĂĽller.

Following our opening remarks, we'll provide details of our performance for the fourth quarter and the full year 2017 as well as our outlook for the first quarter of 2018. If you need a copy of our earnings release, you may obtain one from our website, cohu.com, or by contacting Cohu Investor Relations.

Before we begin, you should all be aware that during the course of this conference call, we will make forward-looking statements, reflecting management's current expectations concerning the company's future business. These statements are based on current information that we have assessed, but which by its nature, is subject to rapid and even abrupt changes. Forward-looking statements include our comments regarding growth and market share expansion through our PANTHER and Solstice products, specific share gain goals, increased test contactor sales, first half 2018 sales growth, our Cohu500 midterm model and associated goals, revenue recognition on increasing Korean customer sales, future results including Q1 guidance and any other comments we make about the company's future in response to your questions.

We encourage you to review the forward-looking statements section of the earnings release as well as Cohu's filings with the Securities and Exchange Commission, including the most recently filed Form 10-K and Form 10-Q.

Our comments speak only as of today, February 15, 2018, and Cohu assumes no obligation to update these statements as a result of developments occurring after this call. Further, our comments and responses to any questions will not make reference to any specific customers as we are precluded from disclosing such information by our nondisclosure agreements.

Finally, during the call today, we will also discuss certain non-GAAP financial measures. Please refer to our earnings release for a reconciliation to the most comparable GAAP measures.

And now I'll turn it over to Luis.

L
Luis MĂĽller
executive

Thanks, Jeff, and good afternoon, everyone. In today's call, I'll review Cohu's fiscal 2017 performance and business highlights in the fourth quarter. I will conclude with our views for 2018 and discuss our strategy. Cohu delivered another year of solid sales and profitability growth in 2017, highlighted by market share gains in test handlers and accelerating growth in the test contactor market. Orders were at record levels with full year, increasing 41% over 2016. Sales were up 25% year-over-year to $352.7 million and non-GAAP earnings per share increased 126% to $1.54. We generated $39 million in operating cash flow and in the year with approximately $156 million in cash and investments and a strong balance sheet.

Cohu returned $6.6 million to shareholders through quarterly cash dividends. We're off to a strong start in the first quarter. We forecasted book to bill above 1 and growing traction in the automotive and mobility markets. As we look at the results in more detail, our test handler business grew 18% year-over-year as we capitalize on a strong industry environment and benefited from market share gains. Our test contactor business grew 131% year-over-year, as we delivered on our strategy to expand in this adjacent market by selling these consumable products into our large installed base of handlers. Additionally, the acquisition of Kita has proven to be a great success, with an over 450% increase in the number of Kita probes incorporated in our contactors and several design wins combined with Cohu handlers. Looking in more detail at full year orders, 59% were systems and 41% recurring, and by device segment, digital and mixed signal represented 21% of system orders, applications processes were 16%; mix signal and RF were 15%; small signal discrete were at 12%; power management in discrete were 11%; sensors were also 11%; and computing processors and LED were each 7% of system orders.

In 2017, we introduced 2 new major products, the PANTHER Prober for test and inspection of singulated wafer-level chip scale packages and bumped dies and Solstice, Cohu's solution for system level test automation. PANTHER has been deployed at 5 different customers, targeting mobility applications. And as previously mentioned, we also received a new customer order in early fourth quarter for test and inspection of automotive, power management devices. Both PANTHER and Solstice will be major components of our market share expansion strategy as they address key test requirements aligned with technology trends in advanced packaging for integrated semiconductors. Last year, we also announced a new vision inspection module for enhanced micro-crack detection on wafer-level chip scale packages, called Aquilae. This product has been installed in several Cohu handlers and has been used to improve vision inspection quality of bare silicon and LED devices.

Transitioning now to the fourth quarter. Orders increased 46% over the prior year and established a new record. Sales were in line of our guidance in non-GAAP gross margin at approximately 42%, once again, exceeded our forecast. This was a strong quarter in the applications' processer segment, as we received a large order for thermal subsystems to support next-generation product launches in 2018. Along with continued momentum in the automotive market for power management in MEMS sensors. We also saw increase in demand for Cohu handlers in the computing segment that included capturing new business at a leading foundry for testing high-end processors with forecasted volume expansion in the second half of 2018.

As we look to the coming year, we started 2018 of a strong backlog, share gain momentum and customer traction as evidenced by our recently announced design win of a major European automotive customer with the MATRiX pick-and-place handler, combined with our multi-beam test contactors. We expect this win to be key to supporting our handler share gain objectives in 2018 as well as increase test contactor revenue. Additionally, we have been making excellent progress with a major Korean customer who continues to provide repeat orders for a new handler model. As a result, we have been increasing investments to support business prospects with this customer, which is expected to be an important contributor to meeting current projections for about 10% growth in the first half of 2018 over the same period last year.

To close off my remarks, I would like to confirm our strategic objectives in support of the Cohu500 midterm model, which includes growing share in handlers, expanding in the test contactor market and making disciplined investments in probe and inspection. We expect the combined handler and test contactor markets to grow by mid-single digits year-over-year, and Cohu's plan is to outperform with another 1 to 3 points of share gain in each market.

As our model indicates, we're targeting to grow annual sales to $500 million, with 45% gross margin and 20% EBITDA, both non-GAAP.

Our increased confidence and excitement about the future of Cohu is driven by the successful implementation of past strategic actions, including the streamlining of our operations and cost structure with over 90% of systems shipments, now originating from our Asia operations. Increased share in our core handler markets, successful expansion in test contactors with the acquisition of Kita, early last year, and now representing over 11% of 2017 revenue as well as new product developments with the introduction of PANTHER, Solstice and Aquilae. Collectively, these initiatives have improved our operating model and margins, positioning Cohu to deliver continued profitable growth, cash flow and shareholder returns.

Now I'll turn it over to Jeff for details on the fourth quarter and full year financials in our Q1 guidance.

J
Jeffrey Jones
executive

Okay, thanks, Luis. Cohu's Q4 was in line with our expectations as we generated non-GAAP operating and adjusted EBITDA margins of 11.2% and 12.9%, respectively, on sales of $84.1 million.

Full year 2017 operating and adjusted EBITDA margins were 14.4% and 15.8%, respectively. On record sales of $352.7 million, non-GAAP gross margin for 2017 was 41.2%, that's up 560 basis points from 35.6% in 2016. We generated $39 million of cash from operations in 2017, contributing to an increase of approximately $28 million in our cash balance, net of $12 million used to acquire Kita Manufacturing and ended the year with cash of approximately $156 million. Our contactor business was 11% of sales for both the quarter and the year. For Q4, the GAAP to non-GAAP adjustments include approximately $1.7 million of stock-based compensation expense, $1 million of purchased intangible amortization expense, $1.2 million of costs related to the reduction of a tax indemnification receivable recorded in connection with the Ismeca acquisition in Q1 of 2013, $797,000 of other acquisition-related costs, primarily related to the valuation earn out from Kita and $2 million related to the impact of U.S. tax reform.

My comments that follow, including the Q1 guidance, are all based on Cohu's non-GAAP results, which exclude the impact of these items. Sales for the quarter were $84.1 million, consistent with our guidance of approximately $84 million and reflecting expected seasonality. 2 customers in Q4, each exceeded 10% of sales, 1 customer in the automotive market represented approximately 13% of sales and 1 customer in the computing market represented 15% of sales. For the full year, 1 customer in the automotive market represented approximately 16% of sales, and 1 customer in the computing market represented 11% of sales.

Q4 gross margin was 41.9% and above our guidance, primarily due to product mix, including higher recurring sales than forecasted. Operating expenses for Q4 were $25.8 million and higher than our guidance, due mainly to increased investment to support the growth prospects with our large Korean customer that Luis mentioned previously, combined with a $300,000 foreign currency loss and the timing of certain audit and other outside service fees.

As you know, the U.S. Tax Cuts and Jobs Act was enacted on December 22, 2017, and introduces significant changes to U.S. income tax law. Due to the timing of the enactment and the complexity involved in applying the provisions of the tax act, we have made reasonable estimates of the effects and recorded provisional amounts in our financial statements as of December 30, 2017. These provisional amounts totaled a net benefit to GAAP income tax expense of $2 million and included estimates of the onetime transition tax, net of foreign tax credits and operating losses on earnings of foreign subsidiaries that were previously differed from U.S. tax law, the impact of the U.S. tax rate reduction and changes to net operating loss rules on our net deferred taxes and the accrual of foreign taxes in the event certain funds are repatriated to the U.S.

As we complete our analysis of the tax act and incorporate additional guidance that may be issued by the U.S. Treasury Department, the IRS or other standard-setting bodies, we may identify additional effects, not reflected as of December 30, 2017, that would be recorded in 2018.

The non-GAAP effective tax rate for Q4 was 15.1% and consistent with our previous estimate. Our tax rate continues to benefit from profit generated outside the U.S. in countries with lower-statutory income tax rates and in certain countries where Cohu has income tax holidays. The tax rate also benefits from profits generated in the U.S., which do not currently incur a tax provision because of our valuation allowance.

Looking ahead, we expect our full year 2018 effective tax rate to be approximately 17% and slightly higher than 2017, as a result of the expiration of a portion of our tax holiday in Malaysia. Accounts receivable declined sequentially by $5.4 million and DSO improved by 4 days to 75. Inventory increased by $5.7 million, sequentially, with inventory days increasing by 26 to 120. Accounts payable days increased by 22 days to 72 days due to a $7.6 million increase at the end of the quarter. Overall, the cash conversion cycle was flat quarter-over-quarter at 123 days. Fixed asset additions were approximately $1.4 million for the fourth quarter and $6.1 million for the full year 2017. Fourth quarter depreciation was $1.4 million and $5 million for the full year. Deferred profit at the end of December was $6.6 million compared to $6.7 million at the end of the third quarter. The related deferred revenue at the end of Q4 was $10.4 million, up $500,000 sequentially. Cohu's Board of Directors approved a quarterly cash dividend of $0.06 per share, payable on April 13, 2018, to shareholders of record on February 27, 2018.

And now moving to our guidance for the first quarter. As stated in today's press release, we expect Q1 sales to be approximately $89 million. For several aspects to -- that are factored into our Q1 guidance, first as many of you know, new revenue recognition rules went into effect on the first day of fiscal 2018. For Cohu, this resulted in approximately $1.3 million of deferred revenue and profit at the end of 2017, that will not be recognized in Cohu's 2018 income statement, but rather will be recorded as a cumulative effect of adoption adjustment within equity in Q1.

Additionally, as Luis mentioned, we entered 2018 with a strong backlog and record orders, with delivery expected over multiple quarters in 2018. This positions us well for continued growth with the timing of revenue contingent on the quarter, in which the backlog ships and if applicable, when customer acceptance is received.

Additionally, we continue to receive orders and a shipped product to our large Korean customer and expect our first revenue recognition from those shipments within the first half of this year.

As a result of these factors, we expect first half 2018 sales to increase approximately 10% over the same period last year. Gross margin in Q1 is expected to be approximately 50 basis points higher than Q4, operating expenses for the first quarter are expected to be approximately $2 million higher than Q4, reflecting the continued investments in support of our large Korean customer.

That concludes our prepared remarks. And now we'll take your questions.

Operator

[Operator Instructions] Our first question comes from the line of Edwin Mok of Needham & Company, LLC.

Y
Y. Edwin Mok
analyst

First, I want to understand the -- rather than focus on a technical or accounting, I guess, I want to understand like this 10% growth in the first half of '18, with this quarter being flattish, sequentially, if I do my math correctly, your second quarter is going to have a pretty decent growth rate year-over-year, so that's sequentially, is it just a timing of shipment more back in the June? Or is it revenue recognition that cost that caught delay into June quarter?

J
Jeffrey Jones
executive

Edwin, yes, it's more about the timing of the shipments. There is also an aspect of revenue recognition, but I would say the primary driver is the timing of the shipments and then, secondarily, revenue recognition.

Y
Y. Edwin Mok
analyst

And then if I look at your backlog, there's pretty big maths [indiscernible] exiting last year, right? How much of that is -- will be shipped in this first half? Or is that a way to think about it? Just roughly, is it the half in the first half? What was it in the first half? Maybe kind of give us some color around the backlog.

J
Jeffrey Jones
executive

Yes, most of it will be shipped in the first half. We do have some that extends out into Q3 and Q4, but 80%, 85% of that will ship in the first half of the year.

Y
Y. Edwin Mok
analyst

Okay, great, that's helpful. And then maybe can you provide us some color on the European auto customer win, you guys talk about can qualify there. Any way you can kind of size that opportunity? And what type of product you want there, would be helpful?

L
Luis MĂĽller
executive

Edwin, this is Luis. As we announced here, what we did capture was a business for our MATRiX pick-and-place handler, which is the most commonly used product today in the industry for automotive device test. In conjunction with -- we also capture business for our multi-beam test contactors that go with that pick-and-place handler. As far as the size of the opportunity, it's part of that 1, 2, 3 points market share gain that we have projected for 2018, along with the Korean customer that we're still working on in getting a new product acceptance.

Y
Y. Edwin Mok
analyst

Okay, great. That's helpful. And then on the inspection side, just a quick question in terms of -- you guys provide some comment around that. Just want to kind of understand your progress. It's a pretty sizable market, you guys are coming with a still with a relatively small share in that space, right? How do you see kind of the cadence of that growth? Is that just block and tackle? Or you see some opportunity to a sizable contract or award once you win certain customer anyway, you can help provide some color on that?

L
Luis MĂĽller
executive

Okay. Well that market, as we said before, is about $140 million, $150 million for package inspection. We are participating today in the space, via our turret handlers. In fact, to the tune of about 20 -- a little over $20 million a year in sales, and that is more narrowly focused on small packages, small devices. And so the efforts that we have here are to develop solutions that expand the field of view for larger, perhaps more digital in nature, semiconductors as well as solving some of the challenges that people have today, that customers have today, such as the one we did last year with the Aquilae module, that we are currently shipping with our turret handler. So there will be sort of a steady progression into that market that's how we projected today.

Y
Y. Edwin Mok
analyst

Okay, great. That's helpful. One last question, and I'll let the other guys ask. OpEx, I noticed, non-GAAP OpEx went up quite a bit this quarter, and you guide that fourth to go up a notch, any way you can kind of talk about kind of how you think for OpEx -- well, first what happened in the fourth quarter, is just this investment you talking about? And then long term, is that a way to think about how much you think you will grow your OpEx?

J
Jeffrey Jones
executive

Yes, okay. In Q4, Edwin, it was mainly driven by the support of the large Korean customer that we talk about from a product development standpoint, but also sort of an on-site support perspective as well. So when we look at Q2, we're expecting OpEx to be closer to the Q4 rate and it's about $25 million a quarter. So expect that beginning in Q2, for Q3 and Q4 as well. For R&D, we're modeling baseline cost to be about where they were in Q4, likely to grow little bit with the revenue as we developed some of these new products in line with the plan that Luis articulated. But on a full year basis, we're expecting R&D to be approximately 12% of sales. And then for SG&A, that's a remarkable baseline there, quarterly baseline of about $13 million to $14 million. And again, that will grow as sales grow, but the rate of growth there is about 1% for every $3 million increase in sales. So for the year, we're looking at SG&A in the 13% to 15% of sales range.

L
Luis MĂĽller
executive

I am just going to add here to what Jeff stated, the momentary increase in R&D spending for this Korean customer, it's actually to some degree, we're very happy to see the activity picking up earlier than we had originally anticipated for 2018, obviously, adds more stress to the organization but the pulling up of the opportunity has been a very good thing for our projection here for the first half of the year.

Operator

Our next question comes from the line of David Duley of Steelhead.

D
David Duley
analyst

Yes, just -- I think you mentioned it guys, but could you remind us -- did you say that you thought the handler market would grow 8%? Or what was the number that you used?

L
Luis MĂĽller
executive

Dave, this is Luis. What I said is that we expect the combined handler contactor market to grow about mid-single digit in 2018.

D
David Duley
analyst

Okay. And the -- I guess, I've seen projections of overall unit volumes of semiconductors growing in the 9% or 10% range, and it seems like you're forecasting a lower growth rate than that. What is -- are you just being conservative? Or do you think the growth rate isn't going to be that high as far as units go? Or help me understand how you came to that mid-single digit kind of projection?

L
Luis MĂĽller
executive

David, the way we do it is, we poll our customers for a projection for the year and sort of a collective information we get shows, like I said, about mid-single digit growth in the market for 2018, and along with that, we plan our 1, 2, 3 points of share gain ahead of the -- on top of that market growth, and that's essentially how we derive our projections for this coming year.

D
David Duley
analyst

Okay. And as far as the -- your 1% to 3% market share gains, help us understand where you saw the overall handler market was in 2017 as far as size goes and what the size of the contactor market was last year as well?

L
Luis MĂĽller
executive

Yes, we don't have -- we have not yet compiled the full data set for 2017, but I will tell you, preliminarily that we believe the market was about 800 in -- $7,880 million dollars for handlers in 2017, and probably, on the order of $720 million for contactors.

D
David Duley
analyst

Okay, great. And as far as -- could you help me understand, you've mentioned this new Korean customer a couple of different times. What sort of application will you be addressing with that customer? And then I think you mentioned a foundry win. Could you help us understand what that application is as well?

L
Luis MĂĽller
executive

Sure. The initial application in this Korean customer is for small power management semiconductors. These are used in mobile products, and I believe also in consumer products, general consumer products. But those applications are going to be expanding over time, so that's just the starting point. As far as the foundry customer, that is a computing application, a high-end processor application, which we forecast to pick up volume towards the second half or sort of beginning of the second half of this year.

D
David Duley
analyst

Is that driven by a transition to 7 nanometers or 10 nanometers, or something like that? Is there some sort of -- tied to the end market as far as technology transition goes?

L
Luis MĂĽller
executive

No, I don't believe this one is tied to -- this one, in particular, I don't believe it's tied to a no transition. More so of the complexity of the device that we have captured, but I don't think so much driven by no transition on this particular case.

Operator

Our next question comes from the line of Craig Ellis of B. Riley & Co.

P
Peter Peng
analyst

This is the actually Peter Peng, calling for Craig Ellis. Can you give us the -- probably gives and takes as you think about the business on a sequential basis on an end market basis?

L
Luis MĂĽller
executive

Peter, this is Luis. So we have had a very strong -- I think, I would say a very strong end market in the fourth quarter across all segments, I would say, with the exception of the solid-state lighting or LED segment that I would say was a weaker than expected in the fourth quarter, but the other markets have been very strong. And now getting into Q1, continue to see strength across all those same markets, so much so that as I stated, we're looking at again a book to bill of above 1 for the fourth quarter and the momentum -- sorry, for the first quarter and the momentum continues from last quarter.

P
Peter Peng
analyst

Great. And it seems like there's some high bandwidth memory ramping up. Can you talk about Cohu's participation in that market?

L
Luis MĂĽller
executive

Sure. Cohu is not really participating in the memory market today. We have some applications on high-performance memory, but that's fairly limited in size and scope and not really a substantial portion of our revenue today.

P
Peter Peng
analyst

And on the contactor business, it seems like that business declined kind of in line with the general handler business. Can you kind of talk about that business and the seasonality and what you expect in the first quarter?

L
Luis MĂĽller
executive

Well, that business has -- let me just start there -- that business actually grew 131% year-on-year, but obviously, within that, there has been an acquisition, as you know, of Kita in Japan. Kita has achieved the growth objectives for 2017 and organically, postacquisition, the whole business has grown a little over 20% year-over-year. On a seasonality basis, we do tend to see a lower consumption of pins -- spare pins in the fourth quarter and then, again, a pickup on the balance of the -- for the balance of the year, the first 3 quarters of the year. So that's a seasonal pattern that we have observed. But with that said, we continue to see growth in the business, new design wins, opportunities, new product launches and continue to model a 20% organic growth rate for 2018 for the total contactor business that we run.

P
Peter Peng
analyst

Okay, great. And on the gross margin, it seems like it's ticked up, is that due to new product? Or is that just the Osaka plant ramping up to contactor sales?

J
Jeffrey Jones
executive

Peter, it's a combination of things. First, it's leveraging more out of our Malaysia operation and so providing a lower fixed cost or lower product cost. And part of it does have to do mix as well. So contactors is a contributor to that increase in margin. And as we look forward to 2018, we'll see new products that we've talked about also contributing to expansion of gross margin.

P
Peter Peng
analyst

Okay. And one question before I pop back into the queue. That $1.3 million in deferred revenue, is that rev rec-ing? And second quarter, is this going to be going below the line? How should we think about that?

J
Jeffrey Jones
executive

Yet, as I stated it, it will not go through the income statement. So we will not have the opportunity to recognize that as revenue or profits in 2018. We will make an adjustment in Q1 to take the deferred revenue or deferred profit off of our balance sheet -- or excuse me, take the deferred revenue and deferred profit and move it into equity, straight into equity. So again, we won't benefit in 2018 on the income statement or EPS from that $1.3 million.

Operator

[Operator Instructions] Our next question comes from the line of Patrick Ho of Stifel.

P
Patrick Ho
analyst

Luis, first off in terms of the PANTHER and Solstice products, in terms of revenue recognition and the ability to recognize revenues this year, are you going to set any targets for this year? And what are, I guess, some of the final I guess hurdles you need to get through to get the revenue recognition on the systems you have out on the field?

L
Luis MĂĽller
executive

Okay, Patrick. So taking one at a time here. For Solstice, we have already recognized a couple of units -- I have to go back and look, I think it was in the third quarter of last year, when we had our first revenue recognition for Solstice. For PANTHER, we do have revenues from PANTHER included in our Q1 guidance and as far as the full year, we're not going to be giving product-specific revenue targets for the year, but they're definitely included in what we're modeling for 2018, including the growth for the first half of this year, relative to first half of last year of about 10%.

P
Patrick Ho
analyst

Great, that's helpful. And my follow-up question in terms of the contactor business. I think one of the things you mentioned when you acquired Kita was the leverage your handler business and even your own emerging contactor business could provide that. The Kita business, how much of it from a customer perspective have you seen that pull to date? And is that the biggest driver of growth for the Kita solutions as we look at 2018 as a whole?

L
Luis MĂĽller
executive

Yes. Just start from the end here, the answer is yes. And we're seeing a very attractive opportunity as our customer base for handlers, particularly pick-and-place handlers, because the Kita pins are predominantly used on digital, some mixed signal applications that go in our pick-and-place products, and more specifically, we're seeing very good evidence of the thermal requirements in test at the interface layer where the contactors are going, in -- we have solutions and products coming out, specifically on that front that have been already qualified at one of our major customers that we're working to promote and get on the floor at some of the other customers, that really ties very nicely the contactor thermal performance with the handler thermal performance, as an augmented solution for -- like I said, for our digital mixed signal customers. So yes, this is a very good tie between the Kita pins and contactors that we build surrounding that with our own pick-and-place handler customers.

Operator

We have a follow-up question from the line of Edwin Mok of Needham & Company, LLC.

Y
Y. Edwin Mok
analyst

So just a quick follow-up here. For the year, I think you guys talk about you expect the market to grow around mid-single digit in Asia and you expect to outperform the market by 1 to 2 points, right? So that will imply you expect your business to grow like high single digits, if you will, right? Is that a fair way to think about it? Or am I missing something there, just want to kind of understand that? And the first half growing at 10%, does that mean that second half, we will see some slower growth rate? Just kind of understand that mechanics?

L
Luis MĂĽller
executive

Yes, just one quick corrections. You said 1 to 2 points share gains. We're actually modeling 1 to 3 points share gain on each of the markets. Frankly, just given our sheer size in handlers, it's more likely that handlers would be towards the high end of that target, meaning towards the 3 points share gains on the total market. And from a contactor perspective, simply by the fact that, our size in the contactor market today, we're looking at about a point share gain, which would represent about 20% organic growth. They're also correct about the projected growth for the first half of the year of about 10% relative to last year. No, we're putting any number out today for the second half of the year. We're not prepared to do that today, Edwin.

Operator

There are no further questions over the audio portion of the conference. I would now like to turn the conference back over to Mr. Jeff Jones for concluding remarks.

J
Jeffrey Jones
executive

Thank you for joining us on today's call. We look forward to speaking to you at upcoming investor events or when we report our first quarter 2018 results. Have a good day.

Operator

This concludes today's conference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful rest of your day.