Ichor Holdings Ltd

NASDAQ:ICHR

Earnings Call Analysis

Company's Mixed Q3 Results and Q4 Outlook

The company's Q3 earnings per share hit the midpoint of their guidance at $0.07. Net earnings were impacted by decreased cash flows, primarily due to net debt reduction, resulting in a cash total of $76 million and a $1.6 million free cash flow, which was lower than expected. Inventory levels stayed flat, whereas accounts receivable increased by $8 million. For Q4, revenue is expected to be between $190 million to $205 million with better gross margins around 14%. The company projects a $7 million net tax benefit for fiscal 2023, higher than previously forecasted, and a 5% to 10% non-GAAP effective tax rate for 2024. Revenue is expected to level out in 2024 with potential growth in the second half and strong performance predicted for 2025. Q3 faced inventory reserving headwinds but expects these to normalize towards the year-end.

Steady Revenue Growth with Optimistic Forecasts

The company reported a solid quarter, with revenues reaching $197 million, representing a 6% increase from the previous quarter, hitting the upper end of their expectations. This was attributed mainly to the recovery of their core gas delivery business, signifying a rebound in the semiconductor process equipment sector. Earnings per share matched expectations at $0.07. For the upcoming fourth quarter, they anticipate similar revenue performance as observed in Q3, with full-year revenue outlook remaining consistent with the expectations set out earlier in the year.

Challenges in the Memory Segment and Focus on Diversification

Despite a generally positive outlook, the company faces headwinds in the NAND memory segment, where they have observed spending drops of up to 75%. This dramatic decline caused memory WFE (wafer fabrication equipment) to comprise only about a quarter of the company's total revenues in 2023. However, they are targeting growth in other market segments, such as EUV, lithography, and newly secured customer design wins, including for silicon carbide systems. A notable development is the anticipation of adding a third 10% customer, which would diversify the company's revenue sources and potentially strengthen resilience against segment-specific downturns.

Investment in Proprietary Products to Enhance Gross Margin

The company is progressing with strategic investments, having qualified their gas panel for three process applications, and they are looking forward to shipping gas panels supporting five additional systems for customer evaluations. Moreover, with the anticipation of production shipments in late 2024, they are upbeat about the impact of their next-generation gas panel, which contains primarily their proprietary technology. This product evolution is expected to significantly enhance their gross margin profile, underscoring the company's commitment to innovation and profitability.

Financial Prudence Amidst Gross Margin Pressure

The third quarter was challenging for gross margin, which fell to 13.1%, lower than expected due to additional inventory provisions and an unfavorable product mix. Despite this, the company was able to reduce operating expenses to $21.3 million, ultimately achieving an operating margin of 2.2%. For the fourth quarter, they foresee gross margins improving to approximately 14%, with positive effects expected from a better product mix and a reduction in inventory reserves. Looking forward, they express confidence in returning to a 25% flow-through on gross margins at revenue levels comparable to the second quarter performance as they enter 2024.

Robust Balance Sheet and Free Cash Flow Management

The company's cash and equivalents stood at $76 million, a decrease due to deliberate net debt reduction. The generated cash flow from operations was $4 million, although free cash flow for the quarter, at $1.6 million, was lower than anticipated. This shortfall was attributed to an increase in accounts receivable due to the back-end loaded revenue profile of the quarter. The company is focusing on reducing net debt further, amidst an environment of rising interest rates, with a net debt coverage ratio of 2.6x. They also provided Q4 guidance with anticipated revenues ranging between $190 million to $205 million and an improvement in gross margins to about 14%. Operating expenses are expected to be closely managed, and R&D investments maintained to support future revenue growth.

Earnings Call Transcript 2023-Q3

[Operator]

Good day, ladies and gentlemen, and welcome to Ichor's Third Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference, Claire McAdams, Investor Relations for Ichor. Please go ahead.

[Claire McAdams]

Thank you, operator. Good afternoon, and thank you for joining today's third quarter 2023 conference call. As you read our earnings press release and as you listen to this conference call, please recognize that both contain forward-looking statements within the meaning of the federal securities laws. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control and which could cause actual results to differ materially from such statements.

These risks and uncertainties include those spelled out in our earnings press release, those described in our annual report on Form 10-K for fiscal 2022 and those described in subsequent filings with the SEC. You should consider all forward-looking statements in light of those and other risks and uncertainties.

Additionally, we will be providing certain non-GAAP financial measures during this conference call. Our earnings press release and the financial supplement posted to our IR website. Each provides a reconciliation of these non-GAAP financial measures to their most comparable GAAP financial measures.

On the call with me today are Jeff Andreson, our CEO; and Greg Swyt, our CFO. Jeff will begin with an update on our business, and then Greg will provide additional details about our results and guidance. After the prepared remarks, we will open the line for questions.

I'll now turn over the call to Jeff Andreson. Jeff?

[Jeffrey Andreson, executive]

Thank you, Claire, and welcome to our Q3 earnings call. Our third quarter revenues came in at the upper end of our expectations at $197 million, up 6% from Q2 due primarily to a rebound in our core gas delivery business, reflecting that the trough quarter for semiconductor process equipment is behind us. Earnings of $0.07 per share were aligned with our expectations, as we were able to offset some headwinds in gross margin during the quarter with lower OpEx and higher net tax benefit, which Greg will discuss in his remarks.

After 2 quarters in a row of revenues at the upper end of our expectations, at this time, our Q4 revenue forecast is fairly similar to Q3 levels and therefore, our revenue outlook for the full year remains consistent with the expectations we've shared throughout the year. Last quarter, we described the factors that are causing our expected revenue decline in 2023 to be a bit steeper than the overall market versus our relative customer and end market exposure, which is more weighted towards the areas seen in the bulk of the softness this year, especially process tools for the NAND memory segment.

As the year has progressed, it has become increasingly clear that the strong growth witnessed in etch and deposition over the last few years has been largely fueled by the capacity expansions underway at the 5 leading manufacturers of 3D NAND. And in 2023, this segment has witnessed spending declines of as much as 75%. We estimate that memory WFE has declined to represent just about 1/4 of our total revenues in 2023.

Furthermore, the component side of our business has witnessed deeper and more prolonged cuts as our customers work to reduce their inventory levels. The bright spots for us this year are definitely within the growing market segments of WFE, such as EUV, lithography and new customer design wins such as the 4 epi systems for silicon carbide, we continue to expect to add a third 10% customer for fiscal '23.

As we look ahead to a relatively stable demand environment in our served markets for the next few quarters, we are also just beginning to see the emergence of new technology drivers and process inflections that require an increasing use of applications that are more highly dependent on the accuracy and repeatability and of the gas delivery system. These include etch and deposition techniques such as atomic layer deposition, selective etch and [ Lok ] and nitride films.

In lithography, we see opportunities to expand our gas delivery role in next-generation platforms, including high NA. As EUV adoption continues to proliferate across multiple device types, our process tool customers are also witnessing the need for more etch and deposition steps to help create smooth patterns and reduce line width roughness. Additionally, expectations for WFE growth had reflect a significant expansion in the industry's deployment of advanced packaging techniques, which have their own particular process challenges. These require better film stress management, improved defectivity enhanced uniformity and increased material selectivity, all of which are enabled by more precise control of gas and fluid delivery.

Outside of semiconductors, specifically for our IMG business, we are also driving cross-selling opportunities at our historical gas panel customers as well as opportunities to offer Ichor's various fluid delivery products and capabilities to IMG's customer base in medical, aerospace and defense. As these new technologies and drivers evolve and proliferate, we see opportunities for Ichor to expand our revenue potential and continue to add breadth and diversification to our customer base. All of these factors build a strong story for Ichor's revenue growth as the industry recovery accelerates.

Furthermore, our business model and financial profile tend to generate significant operating leverage as revenues grow. Current expectations are the Q4 industry spending levels to stay fairly consistent through the first half of 2024, followed by the beginning of a revenue ramp in the second half in advance of an expected strong recovery year in 2025. We expect to be able to deliver significant earnings growth as revenue volumes increase, which is why we continue to make critical investments in our business in support of our future growth.

We are maintaining our focus on driving share gains for our proprietary products and making investments in new offerings that support our customers' long-term technology road maps. These periods of lower demand provide both Ichor and our customers the ability to work on new qualifications. We continue to make very good progress in our key focus areas. These include our next-generation gas panel qualifications of our proprietary machine components and our silicon carbide gas panel.

I'm very pleased with our progress in customer evaluations of our new gas panel. As a reminder, the new gas panel contains about 75% proprietary Ichor content compared to just 10% today, which could drive significant expansion of our gross margin profile. We have completed the qualification of our gas panel for 3 process applications and in the next 2 quarters, expect to ship gas panels that will support 5 additional systems for end-user customer tool evaluations. This is a major milestone for the program.

Our best estimate of when production shipments will begin as late 2024, which is when we would expect the end customer evaluations to be successfully completed. We continue to work with 3 additional customers that are evaluating our technology. In our Ichor proprietary machine components, we continue to win new qualifications across our customer base. In Q3, we completed several new component qualifications and expect to begin initial shipments later this quarter. We also expect to integrate incremental proprietary components into our existing gas panels but this will take some time as our customers continue to work through the existing inventory on hand.

Similar to our next-generation gas panel, all of these qualifications and new customer wins will be margin accretive. And lastly, we continue to ship production volume gas panels for the silicon carbide market and have now been qualified on the next-generation systems as well. We estimate the silicon carbide for gas delivery to be around $60 million in 2023, but a decent tailwind for our revenue growth as the overall industry rebounds in the latter half of '24 and 2025.

In summary, I'll remind everyone here today that our revenues tend to recover more sharply when industry spending rebounds. And our business model enables earnings growth well in excess of revenue growth. In the meantime, we are managing through the lower demand environment by focusing on delivering solid financial results as the business recovers, improving our operational capabilities, qualifying our internally developed products and developing new products that align with our customers' need for both technology and cost.

With that, I'll turn it over to Greg to recap our Q3 results and provide further details around our Q4 outlook. Greg?

[Greg Swyt, executive]

Thanks, Jeff. To begin, I would like to emphasize that the P&L metrics discussed today are non-GAAP measures. These measures exclude the impact of share-based compensation expense, amortization of acquired intangible assets, nonrecurring charges and discrete tax items and adjustments. There is a useful financial supplement available on our Investors section of our website that summarizes our GAAP and non-GAAP financial results, as well as summary balance sheet and cash flow information for the last several quarters.

In the third quarter, our revenues were $197 million at the upper end of guidance and increased 6% from the second quarter. Our Q3 gross margin was 13.1% which was lower than our expectations, primarily due to the additional inventory provisions recorded during the quarter as well as a less favorable product mix compared to our forecast. With close control of spending, Q3 operating expenses of $21.3 million declined from Q2 levels. The resulting operating margin for Q3 was 2.2%. Our net interest expense was $5 million and our non-GAAP net income tax benefit for the quarter exceeded our forecast at $2.9 million. Consequently, our net earnings for the quarter came in at the midpoint of Q3 guidance at $0.07 per share.

Now turning to the balance sheet. At the end of the quarter, our cash and equivalents totaled $76 million a $9 million decrease from Q2, primarily due to our net debt reduction of $12 million. We generated $4 million in cash flow from operations and after deducting $2.4 million of capital expenditures, our free cash flow for the quarter was $1.6 million. This was below our expectations for free cash flow given the back-end loaded revenue profile of the quarter, which drove an $8 million increase in accounts receivable.

Inventory remained flat at $267 million, day sales outstanding increased by 1 day to 48 and inventory turnover stood at 2.6. We are continuing to reduce our net debt levels given the higher interest rate environment and our net debt coverage ratio currently stands at 2.6x.

Now let's discuss our guidance for the fourth quarter. We anticipate revenues in the range of $190 million to $205 million. We expect that our gross margins will improve to approximately 14% plus or minus 50 basis points. Our fourth quarter gross margin expectations reflect somewhat more favorable product mix as well as some improvement in the level of inventory reserves forecasted. As we enter 2024, we expect to be solidly back on track with our 25% flow-through at similar revenue levels when compared to our second quarter gross margin performance.

We plan to carefully manage operating expenses to $21.4 million level, give or take $200,000 as we continue to prioritize our R&D investments for new product programs and maintain the essential infrastructure that will enable us to ramp revenues in response to more significant upticks in customer demand in the quarters ahead. Net interest expense is expected to be approximately $5 million. The non-GAAP income tax benefit we expect at the midpoint of Q4 guidance is approximately $1 million.

For fiscal 2023, we expect to recognize a net tax benefit of approximately $7 million which is higher than our previous forecast. Looking ahead to 2024, we anticipate incurring a nominal non-GAAP tax expense each quarter and for modeling purposes, you should assume a 5% to 10% non-GAAP effective tax rate.

Operator, we are ready to take questions. Please open the line.

[Operator]

[Operator Instructions] Your first question comes from Charles Shi with Needham.

[Yu Shi, analyst]

I want to start the first question in terms of the first half '24. I heard you talk about the first half '24. Maybe that's an industry comment you're expecting consistent level -- I mean, consistent with the Q4 level for the first half '24. I wonder what do you see at the Ichor business going to '24? And I think it's tied to this question that how much inventory do you think your customers are still holding point of your products and whether they have depleted or soon to be depleted, which actually could made to slightly higher steadier growth for Ichor business going to first half '24.

[Jeffrey Andreson, executive]

All right, Charles. Thanks for the questions. And if I miss any piece of it, just remind me. I think what we see looking into 2024 are very similar levels of revenue kind of bouncing along the bottom here. I think in outlook for WFE, I would say, in general, I think that kind of mirrors what most people are expecting, I think, in the market with an inflection beginning in the second half.

In general, it's going to have to inflect sometimes near the fourth quarter, unless the 2025 outlook changes materially. But I think most people are looking at a very strong 2025 similar. Now your question around inventory, how much -- we don't know. We don't have that visibility, but we can tell from the order patterns that we're still at -- I'll call it, muted levels. versus where we would have expected to be through this quarter and probably will last and be a bit of a headwind as we go even into next year. And the reason we can stay relatively flat, I think, over the next couple of quarters is we are bringing in some incremental share gains to offset some of that. Did I miss any other pieces?

[Yu Shi, analyst]

No. Yes, thanks very much, Jeff. That was a very good answer. So maybe the next question, I want to ask a little bit more about the gross margin performance over the last quarter because you did highlight, right? That if I heard you correctly, there are 2 items there. One is the -- well, maybe the product mix was not as favorable, but you actually pointed out -- pointed to the rebound of gas panel business, some with a rebound. But the other thing is about inventory reserve. I just want to ask what was that inventory reserve that you took in Q3? Why was it a little bit higher? sounds like it's a little bit higher than you previously expected. Why did you take that action? And what's behind that?

[Jeffrey Andreson, executive]

Can I start with the product mix, and I'll let Greg answer the reserve level. With the product mix, I would say, as we entered the quarter in our machining side of the business, we expected some relatively decent growth, not super, but it just stayed relatively the same and actually declined slightly. So this is what leads us to believe that we still have inventory in the channel that has to get burned off before we start to see an inflection. And that's primarily where you saw the mix. We offset that, obviously, with the gas panel integration business, which comes in at lower margins versus our machining margins.

And then I'll let Greg talk a little bit about inventory reserves. And it's a complex subject [indiscernible].

[Greg Swyt, executive]

Okay. Thanks, Jeff. Charles, regarding the inventory reserves in Q3, we saw some headwinds in our various business units of inventory using our normal E&O inventory reserve process. And as we do our look backs, we had some inventory roll off from prior quarters that we had to take some additional reserves for. That was predominantly the driver for Q3. And we do expect to see some benefit in Q4 as we work down some of that inventory that we had reserved but we do expect it to return back to some level of normality as we exit the year for '23.

[Yu Shi, analyst]

Maybe a quick follow-up, Greg. I know that's a complex subject. But how should we think about what's normality? Is there anything quantitatively you can point out, [indiscernible]

[Greg Swyt, executive]

No. I think, Charles, that's a bit more complex. We have a very complex model that we look at and use various things to look at demand and historical activity. So there isn't a normal number that we could point to. But as we manage that inventory and we start turning it, then we should see the reserves come back to what we would expect to be normal, not some predetermined amount, but what we expect it to be from an ongoing run rate standpoint.

I'm not sure I answered that, but it is a complex model, and there isn't really a normal number that we could point you to.

[Operator]

Next question, Craig Ellis with B. Riley Securities.

[Craig Ellis, analyst]

I'll just follow up on a little bit of slide of inquiry. Can you help us understand the relative magnitude of the mix and the inventory reserve items that impacted the calendar third quarter's gross margin and somewhat relatedly, Am I interpreting your comments correctly, Greg, in inferring that the reserving issue should exhaust itself by the end of the fourth quarter? Could some of that carry into calendar '24?

[Greg Swyt, executive]

So Craig, so the excursion we saw from what we had guided to, about half of the miss was tied to the inventory reserve that we took and then the rest of it is really product mix and some other -- some minor changes in the factory. But half of the miss that we guided to was driven by the reserves. And as I said earlier, we don't expect it to be at that same level of reserve in Q4. So we do expect it to pop back as we manage through that bubble of the inventory.

[Jeffrey Andreson, executive]

Yes. And I think -- Craig, it's Jeff. Just to follow on. I think that's why we offered some color on even in a similar quarter in Q1 that we think we would be back to that flow through at 25%. So in Q1, it should more normalize. I should say it's never -- it always has some flexibility or variability in it. But I think we can get back. And if you do the flow-through based on Q2, you'll see it'll be kind of in the low 15s again. .

[Craig Ellis, analyst]

Got it. That's really helpful. And I missed that comment on 1Q. So thanks for clarifying that, Jeff. And then, Jeff, I wanted to follow up on a comment that you made in the early part of the Q&A, when you talked about some share gain potential that you had coming into the model that would be beneficial in calendar '24. Can you talk a little bit more about that? And when do we expect it to start? How material could it be through the year, et cetera?

[Jeffrey Andreson, executive]

Yes. If you look into 2024, it's -- I'd say it's difficult to size, but it's -- I'll size it in the tens of millions kind of in a full run rate -- there's a couple of things that I can point to. Obviously, we've been working to add machine content. We're getting it qualified. But between our inventories and other in the channel, we have to work through that before they go in. I think you'll start to see some of that margin accretion, which is why we talked about the 25% flow through going into Q1.

We get a full year of the silicon carbide gas delivery systems that we're delivering to our initial customer in that space that are going to, actually get the full year where, in fact, we had about half a year, so it's going to more than double, and you'll start to see that runway kind of increase a little bit. And those are some areas where we're seeing some new wins in weldments, but we're still working off some of the inventory in [indiscernible]

[Operator]

Next question, Krish Sankar with TDC.

[Sreekrishnan Sankarnarayanan, analyst]

First one, Jeff, I just wanted to ask you a question. I understand the NAND weakness, it's kind of well understood. So that's kind of a negative thing. If you look at your customers, all the semi-cap OEM customers are shipping a lot to China. And obviously, they can charge a higher ASP, even though it's mature nodes. Do you get any benefit from that? Or is it neutral? Or is it even negative for Ichor because if mature notes or the gas boxes are smaller, it's a lower ASP product you sell. I'm just trying to get your thoughts on how China impacts you because it's clearly a huge benefit for your customers, but it doesn't seem like it's impacting you as much.

[Jeffrey Andreson, executive]

Well, I think if it's a new tool that ships into China at 300-millimeter, we benefit just like any other tool that goes into China. What we don't benefit is we don't sell anything directly to any China OEMs, process tool manufacturers like Enara or anything like that. We don't participate in that level. I would say our participation at the 200-millimeter level is a little bit lower than it is at 300-millimeter.

Some of that is still done in-house. And so I don't know that it's a huge headwind for us, but it's obviously not a we benefit as though our customers do, anything that they ship into China at 300-millimeter, we'll get a piece of if that's market share that we're a part of.

[Sreekrishnan Sankarnarayanan, analyst]

Got it. Got it. And then I have 2 other quick questions. #1, you kind of mentioned your revenues hanging around these levels in the first half of next year. do you really need to see a NAND inflection for these revenues to grow? Are you banking on anything Yes?

[Jeffrey Andreson, executive]

Well, that is a great question, Krish. NAND inflection would be fantastic. I mean, obviously, I think, as you know, our customer base well. NAND for us is a reflection of what our customers are seeing. And NAND is down as much as 75%. So any inflection there is tremendously helpful and would drive kind of the memory spend. I would say this year, we're going to be 75% foundry logic. So obviously, it would definitely help. I would say -- we don't see that inflection in the next 2 quarters in the first half of 2024. We don't see any indication of that yet.

[Sreekrishnan Sankarnarayanan, analyst]

Got it. And then a final just a clarification. On the silicon carbide side, you still have only 1 customer or you have more than one?

[Jeffrey Andreson, executive]

We have 1 customer in that space. We haven't said who it is. But we're on multiple platforms there now. And as they continue to iterate -- were the, call it, the tool of record there. There's a -- we talked about the market being $60 million. And I would say that this 1 customer has got a reasonably good share of that market, but there's still 3 or 4 other players that can address this market over time. We see this market as kind of doubling in the next 4 or 5 years. So it's an area of focus for us. And this is what I would say is these are deposition tools.

[Operator]

Our next question comes from Brian Chin with Stifel.

[Brian Chin, analyst]

A few questions. Maybe, Jeff, first question. With with EUV litho delivery sort of flattening out plus or minus next year, have you already seen an adjustment from your customer? And are there any inventory headwinds to consider moving forward? .

[Jeffrey Andreson, executive]

I don't think there's any inventory headwinds with our EUV customer. I think that what I've said in the past, they're very transparent. We don't really see a deviation from what they're telling the external world. The only thing I would remind you of is -- we deliver about 5 months before they can deliver a tool. So anything in the first half of the year, we've already addressed in our back half of the year shipments for them. So and they're remaining relatively flat. I think, as you know, that customer is expected to cross 10% of our revenue this year.

[Brian Chin, analyst]

And you gave a bit of an update in terms of the evaluations and qualifications of some of the new gas panels with significant content -- Ichor content and it sounds like -- can you -- I didn't catch all of the discussion, but it seems like there's additional evals going out in the field. And so maybe more activity than you might have imagined in sort of first revenue kind of steered towards the latter stages of next year. Is that the right way to characterize it? Can you also maybe -- if you didn't hire to go over sort of like the number of customers, maybe the number of platforms again, that you're involved with?

[Jeffrey Andreson, executive]

Yes. So the first 3 qualifications are -- again, they're all deposition applications, 3 different applications. We haven't said how many customers and specifics we're working on, but it's 3 or 4 that are pretty active right now. So this initial wave of evaluation units, most of those customer evaluations. So we've delivered gas panels that might go in their application lab, get tested, get qualified, and then they go out with their new products and platforms with our gas panels on them and then the next 5 months or so, we're going to have about 5 full tools go out that we would expect to be a customer evaluation.

So at the device manufacturers. Those take 6 to 9 months. And so that's how the first wave would be kind of the back half of 2024. And then we're working with several other customers along the way and but they have not yet finished their internal qualification. So it's hard to set a time line, but obviously, probably qualifications complete at some point for some of '24 and then '25 is the -- would be the production tool rollouts.

[Brian Chin, analyst]

Got it. Maybe 1 last one, maybe for Greg and kind of tying some of this together. But thinking about some of the those hopefully successful qualifications, thinking about some of the content that you're designing into existing gas panels. And I understand kind of it'll stage in some of that revenue at parts of last year. But maybe '24 into 2025. Does it start to make sense that you could have gross margin flow through somewhere north of 25% when you think about sort of the accretion of some of those revenue opportunities provide.

[Greg Swyt, executive]

Yes. In regards to that, as those gas boxes and those new content start to move their way through the revenue stream, we do expect that we should benefit in our margin and that those specific margin profile should see a better than 25% flow-through. And as that takes more percentage of the revenue, we should see a better benefit on the overall margin going into '25.

[Jeffrey Andreson, executive]

Yes. I mean, Brian, I think we've talked about this in the past. We need this level of content to get us into the 20% kind of corporate-wide gross margins and you don't need like $100 million of this given the fact that the margins are much more like our machining margins. with the shift from kind of 90% procured to 75% internally manufactured. So it's part of our road map to get into a 20% gross margin in our business model.

[Operator]

There are no further questions. I would like to turn the floor over to Jeff Andreson for closing comments.

[Jeffrey Andreson, executive]

Thank you for joining us on our call this quarter. I'd like to thank our employees, suppliers and customers for their ongoing dedication and support as we continue to navigate this highly dynamic business environment.

Our upcoming investor activities include the New York City Summit on January 30, December 12 and the Needham Growth Conference in January. We also look forward to our Q4 conference call scheduled for early February. Operator, that concludes our call.

[Operator]

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.