Kulicke and Soffa Industries Inc

NASDAQ:KLIC

Earnings Call Transcript 2020-Q3

[Operator]

Hello, and welcome to the Kulicke and Soffa Third Quarter Fiscal 2020 Financial Results Conference Call. At this time all participants are in a listen-only mode. [Operator Instructions] A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

It's now my pleasure to turn the call over to Joe Elgindy, Senior Director, Investor Relations and Strategic Initiatives. Joe, please go ahead.

[Joe Elgindy]

Thank you. Welcome everyone to Kulicke & Soffa’s third quarter fiscal 2020 conference call. Joining us on the call today are Fusen Chen, President and Chief Executive Officer; and Lester Wong, Chief Financial Officer. For those of you who have not received a copy of today’s results, the release, as well as the latest investor presentation, are both available in the Investor Relations section of our website at investor.kns.com.

In addition to historical statements, today's remarks will contain statements relating to future events and our future results. These statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Our actual results and financial condition may differ materially from what is indicated in those forward-looking statements.

For a complete discussion of the risks associated with Kulicke & Soffa, that could affect our future results and financial condition, please refer to our recent SEC filings, specifically the 10-K for the year ended September 28, 2019 and the 10-Q for the period ending March 28, 2020.

With that said, I would now like to turn the call over to Fusen Chen for the business overview. Please go ahead Fusen.

[Fusen Chen, President and Chief Executive Officer]

Thank you, Joe. Considering the increasing dynamic environment we are operating in, we wanted to start today’s call by highlighting three specific points that may help to clarify our position and strategy. First, our manufacturing facilities are operating at nearly full capacity and the development progress are continuing to progress as planned. Last quarter, we specifically identified supply chain concerns associated with regional shelter in place and the movement control orders, which constrained capacity at several suppliers. These supply chain issues were resolved by early May and that we no longer anticipate supply-chain challenge in the near-term.

Secondly, although U.S. re-opening challenge may adversely affect near-term macro and industry related dynamic. We continue to anticipate a robust recovery and semiconductor unit growth is inevitable. With over 80% of global semiconductor package utilizing wire bonding process, our core market is clearly correlated with the semiconductor unit growth. Total semiconductor unit production in calendar year 2018 was estimated to be about 5% higher than unit expectations in calendar year 2020. This decrease in production is unique historically and has impacted demand for our core products.

Currently, recent semiconductor forecast from Gartner support our view that semiconductor unit count will grow by 10% to 11% annually for both calendar year 2021 and also 2022. Again, this anticipated return to unit growth is expected to directly and positively trigger capacity investments for our core products.

Last, our visibility and longer-term road map within the fast-growing next-generation LED market has improved. We are technically executing on our production ramp in the near term and are also very focused on next-generation tool to increase our competitiveness and drive more share gains in this rapidly developing new market opportunity. I will provide additional detail on our broadly advanced innovative business after the financial review.

During the June quarter, revenue came in at $150.5 million. We generated $69.4 million of gross profit, $11.2 million of net income and $0.18 of earning per share.

Capital equipment revenue decreased by 1.6%, while aftermarket product and service revenue increased by 4% sequentially into the June quarter. Within capital equipment, we experienced softer sequential demand in the general semiconductor, memory and automotive end markets. This softness was largely offset by improved sequential demand for our systems, supporting technology transition within the advanced packaging and advanced LED market.

While we believe we are approaching an inevitable unit-driven market recovery, I want to remind investor that our entire organization remains extremely committed to fundamentally expand our served market and the market share through ongoing development efforts.

Organizational improvements over the past few years have allowed us to introduce several new and competitive systems, which are providing new assets to advanced packaging, automotive and the display opportunities. Specifically, within advanced packaging, we recognized revenue on our first Katalyst high-accuracy free chip systems and also recognized revenue with the new APAMA thermocompression customers during the June quarter.

Within the LED space, we are especially excited for the technology transition within the display market. During the June quarter, we recognized revenue on 25 Pixalux systems, our largest quarterly shipment, of our advanced LED tool. Some level of cyclicality will always persist in our business, although we expect ongoing product adoption and share gain within this new high-potential market to provide added diversification and also to create a meaningful and sustainable value for shareholders over the coming years.

I would now like to turn the call over to Lester Wong, who will cover this quarter’s financial overview in greater detail. Lester?

[Lester Wong, Chief Financial Officer]

Thank you, Fusen. My remarks today will refer to GAAP results, unless noted. Net revenue for the quarter was $150.5 million, gross margins of 46% generated $69.4 million of gross profit and net income of $11.2 million, or $0.18 per diluted share. On a non-GAAP basis, we generated net income of $12.9 million, or $0.21 per diluted share.

Operating expenses for the quarter came in on the lower end of our long-term target range, as expected. This was due to ongoing cost-control efforts, reduced travel and also some local-government assistance. We continue to be very focused on cost control in the near-term and we also continue to be very focused on development.

We are anticipating GAAP operating expenses to fall back into our target range, within the September quarter. This target range consists of $53 million of fixed quarterly expenses, plus 5% to 7% of variable expenses tied to revenue.

Turning to the balance sheet, we ended the June quarter with a total net cash and investment position of $515.8 million, or $8.21 per diluted share. During the June quarter, we also paid down our overdraft facility as we repatriated a portion of our cash balance to the United States. We intend to maintain some capacity within the overdraft facility, which provides additional flexibility on U.S. related expenses, such as ongoing development, dividend and the share repurchase programs.

Considering our long-term perspective on the repurchase program, we continue to view the recent market dynamics as an opportunity. Through the June quarter, we further increased our repurchase activity and deployed $22.4 million to repurchase just over 1 million shares. While we intend to create meaningful and sustainable value through fundamental market expansion and market share gains, we strongly believe our long-term share repurchase program provides an additional lever to further maximize and efficiently deliver this value to shareholders.

In early July, we announced an increase and extension to our current repurchase program. This marked the third $100 million increase to the current program since its inception in August 2017. Including this recent authorization extension, at the end of the June quarter we would have had approximately $151 million remaining under the share repurchase authorization. On a book value per share basis, we closed the June quarter with $11.93, a slight sequential improvement. Working capital, defined as accounts receivable plus inventory, less accounts payable, increased slightly to $260 million.

From a DSO perspective, our days sales outstanding decreased from 119 days to 117 days. Our days sales of inventory increased from 117 days to 127 days and days of accounts payable decreased from 56 days to 55 days.

This concludes the financial review portion of our call. I will now turn the discussion back over to Fusen for the September quarter business outlook. Fusen?

[Fusen Chen, President and Chief Executive Officer]

Thanks, Lester. Despite the limited visibility and the challenging operating environment throughout the semiconductor capital equipment space, we were able to maintain our development roadmap, expand our repurchase program, and most importantly, we have maintained or increased our outlook consistently for five sequential quarters.

Looking into September quarter, which over the past five years, has shown an average 19% reduction from the June quarter. We are again increasing our outlook and anticipate September quarter’s revenue to be $165 million plus/minus $10 million. Our steady business and outlook improvement since March 2019, is a reminder that our business is more diversified and now operate very differently than it has in the past.

While our end market has not improved in lockstep, and occasionally offset each other, they have all collectively improved. Despite this gradual improvement, we are still operating below what we view as a sustainable level of capital expenditure to support long-term semiconductor unit growth. This growth rate has averaged 6.5% over the long-term, which is expected to support our core annual revenue of approximately $700 million.

Again, average semiconductor unit growth from calendar year 2018 through calendar 2020 is expected to decline, which is historically abnormal. This unique environment has created clear demand challenges for our core products. With that said, we anticipate a return to more normal growth next year. As I mentioned earlier, this expectation is shared with external marketing forecasts, which anticipate unit count growth to exceed 10% in each of the coming two calendar years.

While there are clear challenge associated with the U.S. re-opening, and we are entering a seasonal period with historically limited visibility; a return to normal, or an above normal level of semiconductor unit growth, will have a direct and meaningful impact to demand level for our core products.

In parallel with this expected recovery, our new product deliver new capability and increase access to fundamental technology transition within advanced packaging, automotive and display. These three specific markets are becoming increasingly dependent on technology transitions, which we expect will continue to provide additional layer of diversification over the long-term.

Within each of these categories we have competitive and the proven products that are already in high-volume production and are very well-positioned to support the underlying technology transitions. Specifically, within Advanced Packaging, current opportunities are providing new and value-additive techniques, which are offsetting the well-known challenge of technology node shrink. We continue to target several new customer engagements, which are providing access to the high-performance logic applications that were dominated by traditional free-chip applications.

Transitions within the Automotive market are increasing the requirement for high-reliability and efficient power-control, power-storage and power-distribution applications, especially for Electric Vehicles. Our current products, development roadmaps and customer relationships are very aligned with the evolving opportunities within this dynamic automotive space.

Finally, our recent entry into the display market has a significant potential to enable the adoption of high-volume, cost-effective mini and micro-LED solutions. Over the course of June quarter, clarity on longer-term prospects and the roadmaps supporting advanced, micro and mini-LED applications have improved, and I would like to provide a few additional details to why this new business is important for us.

Under conservative expectations, we anticipate mini and micro-LED diode shipments to be over 100 billion units this year and will potentially reach over 1 trillion units by 2024. Over the same period, we anticipate our mini and micro-LED served available market to grow at a compound annual growth rate exceeding 40% through 2024. We continue to expect demand for our current system to grow more significantly through our next fiscal year. We have prioritized our focus on developing, qualifying and ramping production of our mini and micro LED systems, which targets the final placement step within this fast-growing market.

We wanted to remind investors that there are also several additional advanced LED process steps, which can leverage our platform’s unique high-throughput capabilities. These include processes such as sorting, mixing, re-positioning and re-calibration.

Over the near-term, we have a clear roadmap to extend our reach into these other process steps and are also very focused on pursuing additional customer engagements. We are very focused on executing this strategy and look forward to sharing our progress, and additional opportunities, over the coming quarters.

While the near-term environment is clearly uncertain, we are confident that unit count will eventually return positive as it has in past cycles. As this underlying core-market condition improves, we intend to further diversify the business by enabling meaningful technology transitions within the advanced packaging, automotive, and display markets.

This concludes our prepared remarks. Operator, we will now be happy to take questions.

[Operator]

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Krish Sankar from Cowen & Company. Your line is now live.

[Krish Sankar, Cowen & Company]

Hi, thanks for taking my question. I have a few of them. Fusen, one thing is, in terms of your guidance, when you look into the September quarter, which verticals are driving the strength? Is it primarily semis? Or are you seeing even strength in the memory, packaging, LED? Any color on that would be helpful.

[Fusen Chen, President and Chief Executive Officer]

For September quarters?

[Krish Sankar, Cowen & Company]

Yes.

[Fusen Chen, President and Chief Executive Officer]

So Krish, I think our current market view of bright spot and also have some feasibility issues. Let me give you a few bright spot. Number one is our mini and the micro LED business are in high-volume production. And we also see 5G is expanding and the memory is recovering. And also, I mentioned, in the past two years, 2019 and 2020, the semi unit count growth rate was actually negative. And we believe, and also many people believe, unit count growth will tend to be positive, not only positive, would be over 10% for the next two years. So that is really a bright spot, along with we still have some challenge associated with the COVID-19. But I think we just need to deal with that, right? Just like a U.S. reopening and the inventory level throughout supply chain. But compared to last quarter, we are much actually confident compared to a quarter ago. I wish I answered your question, Krish.

[Krish Sankar, Cowen & Company]

Yes, absolutely, that does. Thanks for that. Then as a follow-up, I had like a two-part question on the Pixalux. Number one is, I was under the impression the Pixalux was a much higher-margin product. At what point will you start seeing that drop through? Because it looks like, compared to March and June numbers, you had incremental Pixalux sales, but the margin profile was pretty much similar.

So at what point will the drop-through kick in as you ship the Pixalux? And also, is it being used – I mean I was under the impression that Pixalux was used mainly for mini LED, not micro LED, because the pick-and-place sands are in that fast for micro LED. So I just wanted to get some clarification on that.

[Fusen Chen, President and Chief Executive Officer]

Sure. We have Lester to answer your question.

[Lester Wong, Chief Financial Officer]

So Krish, hi. How are you? So let me answer the last question first. Yes, the Pixalux is for mini LED. As far as the margin is concerned, the margin is consistent what we’ve always said. It is one of our highest-margin products. The overall margin actually got pulled down a bit because there was significant amount of LED bundles in the quarter. So Pixalux actually pulled it back up as well as our other APMR. So that’s why basically the gross margin was flat for the quarter.

[Fusen Chen, President and Chief Executive Officer]

So Krish, if you remember, I think, our last quarter, Lester mentioned, we have a lot of LED bundle. And Pixalux was a low gross margin, low gross margin. And he actually guide would be slightly below 45% but with the mini and micro LED Pixalux, actually pull up above – closer to 46%.

[Krish Sankar, Cowen & Company]

Got it, got it. That’s very helpful and very informative. Thanks, Fusen and thanks, Lester.

[Lester Wong, Chief Financial Officer]

Thanks, Krish.

[Operator]

Thank you. Our next question comes from the line of Tom Diffely with D.A. Davidson. Please proceed with your question.

[Tom Diffely, D.A. Davidson]

Yes. Good morning, good afternoon. So I guess following up on your comments about a recovery in 2021 and 2022 to 10% growth plus in each year. I’m curious, on a near-term basis, based on what you’re seeing from utilization rates of your tools in the industry, have we hit the bottom at this point? Or do you expect the bottom to come over the next couple quarters? Or what is the near-term outlook for just the core unit-driven business?

[Fusen Chen, President and Chief Executive Officer]

Okay. So Tom, historically, you’re talking about a quarter beyond September. That will be December quarter, right? So December quarter, historically, I think we – when we went into Christmastime and the Chinese New Year, we have less visibility. And September – I’m sorry, October – December quarter was a low quarter for us. So actually, we are seeing two factors pulling each other. One is some bright spot, I mentioned. 5G actually expanding and the memory is recovering. And we also believe recovery is on the way. And we also have a negative factor. This reopening and the other country part of the second wave of infection, right? So but I think that we are quite hopeful. And maybe the recovery can be stronger after Chinese New Year. And maybe if you count the whole year, it’s 10%. And we are in the fiscal year ended at – in September, right? So probably, we will benefit half of this more than 10% of unit growth count, right? That’s what we are seeing right now.

[Tom Diffely, D.A. Davidson]

Okay. So what are the actual utilization rates you see in the field right now?

[Fusen Chen, President and Chief Executive Officer]

I’ll let Lester answer it.

[Lester Wong, Chief Financial Officer]

Tom, so utilization rate mainly for bundle because that’s what we track, right? It actually has remained quite strong in June even though it reduced slightly sequentially. We expect utilization rates to remain that way through the September quarter for most of the end markets. We think maybe memory and general semi is going to improve the most. Automotive, probably the least. And also within regionally, I think we think there will be more improvements in Southeast Asia, Taiwan and Korea through the September quarter.

[Tom Diffely, D.A. Davidson]

Okay. And then, Fusen, when we look at the likely near-record levels of WFE spending this year, how much of that will ultimately translate into your business? And what is the time frame do you think before turning that capital equipment purchase into unit growth?

[Fusen Chen, President and Chief Executive Officer]

I’m sorry, if I can ask you to repeat again?

[Tom Diffely, D.A. Davidson]

Sure. Yes. When you look at the near-record level of WFE spending this year, I’m just curious how much of that spending because it’s advanced packing or advanced nodes, how much of that translates into your business over time? And what is the lag between capital spending and then the unit growth that you would benefit from?

[Fusen Chen, President and Chief Executive Officer]

Well, I think front-end capacity inventory will come to back-end, right. So probably, few quarters, be higher. But for our back-end, we also see our driving force. For example, the increase in transitive packaging not only can be done by more slow, right? This can also be done by advanced packaging. And by using advanced packaging, you can increase package level overall transition packing capacity. So, they are something correlated with the front-end. But I think the end is also very unique. We have different type of driving force. So, I think next year; overall, I think it will be also very positive for back-end.

[Tom Diffely, D.A. Davidson]

Okay. Thank you.

[Operator]

Thank you. Our next question today is coming from Carlin Lynch from B. Riley FBR. Your line is now live.

[Carlin Lynch, B. Riley FBR]

Hey, guys. This is Carlin on for Craig. Two quick questions for me. One, you had mentioned – or you detailed kind of previously how the traditional and kind of core semi business can do $700 million to $800 million in a normalized environment. As we look into 2021 and onto 2022, do you guys have a sense of when we can kind of get back to that level on a run rate, given what we’ve seen this year with COVID and the 10% unit recovery next year? Is that something that might happen in calendar 2021? Or is really a calendar 2022 item?

[Lester Wong, Chief Financial Officer]

Well, I think, as Fusen said earlier, in response to Tom’s question, right. We believe that the semiconductor unit growth of 10% is going to kick in probably in the second half of calendar 2021, right. So, it will be – as you said, it will be part of our fiscal 2021, part of our fiscal 2022, because we are September quarter year-end. So, we definitely think the recovery, again, subject to the uncertainty around COVID and some of the other macros. But based on historical patterns, two years in a row down is unusual. And usually, there’s a pickup after that. And again, Gartner is calling for 10%, 11%, semiconductor unit growth over the next two years. So, we think there will be some in 2021.

[Carlin Lynch, B. Riley FBR]

Got it. And then I guess just for my follow-up, in the auto segment, and I apologize if I missed this. We’ve seen from a variety of kind of people in the auto semiconductor chain, things are maybe less bad than feared. Things are maybe picking up a little bit quicker than expected. Are you guys seeing any of that? Or is that kind of something that maybe you would see next quarter just due to a delay?

[Lester Wong, Chief Financial Officer]

Yes. So we are still seeing auto as relatively soft. Right now, our June quarter revenue is roughly at a 36% five-year run rate. So we think auto will take a little bit of time to get back. We think that the improvements in the EV space will probably pick up first in the next couple of quarters.

[Carlin Lynch, B. Riley FBR]

Got it. All right. That’s it from me. Thanks, guys.

[Operator]

Thank you. Our next question today is coming from Christian Schwab from Craig-Hallum. Your line is now live.

[Christian Schwab, Craig-Hallum]

Yes, great. Thank you. Just a follow-up on the automotive question, if you could put some numbers to that. I think most people are talking about automotive business bottoming in the September quarter with a gradual recovery from there, at least on units and equipment that we talk to. That being the case in kind of a 36% run rate, can you just quantify that as a number for us quick, what that business is doing a quarter and if things normalize in the semiconductor, unit recovery at some point in 2021, how big that business could recover to on a yearly basis? Can you give us any color around that?

[Lester Wong, Chief Financial Officer]

Sure, Christian. So, for the June quarter, we do auto industrial together. So it – basically, it went down quite a bit. It's only about $8 million to $9 million. So you talk about on a normalized rate that will give you some idea. And previously, in the high quarters back in the strong years of 2018, I mean auto and industrial is over $25 million.

[Christian Schwab, Craig-Hallum]

Okay, perfect. And then on the memory side, with the – listening to everybody last night, I think it's crystal clear, if it hadn't been already, that memory is going to have a strong CapEx here in 2021. Is there any type of number that you can kind of walk us through with an increase in spending and technology transitions with some new wafer starts, et cetera? Is there the same type of math you can give us for a recovery in the memory business?

[Fusen Chen, President and Chief Executive Officer]

Well, I think, Christian, we start to see the strength for us actually in the September quarters. Probably this is the first quarter we start to see a more significant recovery. But last quarter, I remember, I think memory is less than half of our historical run rate. And we start to see a positive sign, I think start from second quarter. And I think on Friday you probably will see a stronger recovery than us.

[Lester Wong, Chief Financial Officer]

Yes. So Christian, to use the same metric, June quarter memory revenue is roughly about 30% of the five-year run rate.

[Christian Schwab, Craig-Hallum]

Okay. Perfect. Okay. Great. And outside of memory and industrial and automotive, is there any particular applications given the fact that 80% of chips use wire body? Is there any other big pockets or markets that investors should be paying attention to get more confident in 2021 unit growth of being 10% plus for the industry outside of – well, I'll let you just answer that question, if you can. Sorry.

[Fusen Chen, President and Chief Executive Officer]

I think 5G is expanding right now, right? As in wearable device is doing very well. These are two area I think the market is doing well.

[Christian Schwab, Craig-Hallum]

Okay. Fabulous. And then my last question, there seems to be a lot of enthusiasm about mini and micro LEDs. And I think you guys have one of maybe the only machines out there functioning. Can – if some of those big – there's some really large expectations for that marketplace. Is this something that could – if growth rates kind of prove out, I mean could you kind of paint us a picture of how big that market potentially could be for you three to four years out?

[Fusen Chen, President and Chief Executive Officer]

Okay. So Chris, I think our own mini and micro LED, what we are focusing right now into two applications, one is a big lighting, one is a direct view, right? So whole big lighting, we expect the penetration rate will be about 15% in 2024, right? And for the direct-view, we've got initial display, really a large display. I think the penetration rate will be lower, maybe like 5% to 10%.

But I want to give you example how big is the opportunity? One very large display – and if we are in direct-view TV market, we need to transfer about $25 million at a time from one place to the other place, right? And the traditional transformation is very, very low. So just one display and will provide a huge opportunity. So we believe this is really a very, very huge market. At this moment, I think we only work on one other process that we call final placement. And there are many, many processes, right?

So we actually want to have a conservative just for us. I think this year, originally our guidance is $14 million for the whole calendar year. But actually, in the short-term, we are seeing more positive. So we probably can have a $14 million revenue just for our 2020 fiscal year.

I think, next year we are looking at fiscal year to fiscal year, right? So I know we probably can do 60 to 80. And then another year, depend on if we actually push to other space, like I mentioned: sorting, mixing, reposition and recalibration. If we get to other process, actually, it's going to be much bigger. If not, just on the final personal step, we expect probably more than $100 million. Another year will be much, much more significant growth of the lot. So maybe in few quarters, we'll provide you more clarity, but we do believe we are very excited. And this is really a huge, huge market for us.

[Christian Schwab, Craig-Hallum]

Great. I don’t have any other questions. Thank you.

[Operator]

Thank you. [Operator Instructions] Our next question is coming from Qiqi Shi from Fenghe. Your line is now live.

[Qiqi Shi, Fenghe]

Hi, management. Thank you for taking my question. I’ve two questions, but first is regarding our mini-LED equipment. So when I was doing the supply chain checks in Asia as kind of the LED companies about pick-and-place, which is one of the more – most important process in this technology. And then some of them will come back and say, "Oh, we have proprietary pick-and-place technology."

So I'm just wondering for our pick-and-place transfer equipment, is it a universal platform? Or so is our competitor kind of the in-house of those companies? Or those company render it proprietary? They're really buying our equipment and then modify it and then use for mass production? That would be my first part of the question. Is the universal platform? And how should I think about the market share in kind of the – other kind of opportunities rather than kind of this big customer we are engaging now. Yes. That would be the first part of my question. Thank you.

[Fusen Chen, President and Chief Executive Officer]

Okay. Actually, what I can tell you is our technology are really not traditional pick-and-place. So a lot of market share you mentioned are really hard to answer you. But all we can tell you is the product we are having has a probably current high throughput in the market, and it's not pick-and-place [indiscernible]. So, I will not be able to provide you more color with your questions. Okay, thank you.

[Qiqi Shi, Fenghe]

Okay, sure. Got it. And then my second part of the question is about the product road map. Because I think one of the key barrier for mini and micro LED, of course, one is throughways and the other is kind of the cost. So just on our transfer side, do we have a very clear kind of throughput improvement road map in the next two, three years? Kind of we are targeting a particular kind of throughput improvement or kind of what kind of LED sizes we can do to, like, I don't know, up to like 70 microns or like 30 microns in next couple of years? Can you give more color on our technology road map? Thank you.

[Fusen Chen, President and Chief Executive Officer]

Okay. Again, I think we have a very, very different technology compared to other company. So this is a really huge market. But in the meantime, I think this is also very challenging. At this moment, probably we'll have more than 20 kinds of mass transform matter, right? So the successful leader, I think, need to be very dynamic, continue to develop a next-generation system. And our normal pick-in-place, I think we are talking about maybe 10 to 20 hertz. But I think the requirement will continue to increase. And depending on different company, I think they will need different road map. Okay, thank you very much.

[Operator]

Thank you. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to Joe for any further closing comments.

[Joe Elgindy]

Thank you, Kevin. Thank you all for the time today. Also, we'll be presenting at several upcoming virtual conferences throughout August and September. As always, please feel free to follow up directly with any additional questions. Have a great day, everyone. Kevin, this concludes our call. Thanks.

[Operator]

Thank you. That does conclude today's teleconference. You may disconnect your lines at this time, and have a wonderful day. We thank you for your participation today.