Asustek Computer Inc

TWSE:2357

Earnings Call Transcript 2018-Q2

[Unknown Executive]

Good afternoon, welcome to ASUSTeK 2018 Second Quarter Results Conference Call. We have 2 items on our agenda. Firstly, our CFO will brief you on our results and our CEO will talk to you about our strategy and outlook. Afterwards, we will have a question-and-answer session. [Operator Instructions] Now I would like to turn it over to our CFO. Thank you.

[Nick Wu, executive]

Good afternoon. This is the first time that we've shifted to the online mode. We don't have the opportunity to see you face to face, but we are hoping that through this more digitized and more efficient way, we can have better communication with you.

Now please turn to Slide #5. During my presentation, you may submit questions on the bottom right corner on your screen. After the presentation, we will address your questions.

Now let's turn back to our presentation. Slide #5.

In the second quarter, the consolidated revenue came in at TWD 80.5 billion, down by 11% Q-o-Q and down by 7% Y-o-Y. OP profit was TWD 2.82 billion, up substantially Y-o-Y by 62%. Net profit was TWD 13.3 billion, down by 44% Q-o-Q, partly because of non-OP items, which I will elaborate later. Net profit was down by 34% Y-o-Y. EPS was TWD 1.8.

In the second quarter, gross margin was 12.7%. OP margin 3.5%. In the second quarter, our revenue and OP margin were at the lower end of our targets and the expectation of the market. This reflected some market reasons and market changes. First of all, cryptocurrency's demand slid substantially, starting from Q1.

Secondly, we originally expected that new phone models would enjoy really high demand, but we didn't expect that supply chain couldn't catch up with the demand.

Thirdly, the slow seasonality and market competition for PC also had some impact. The OP profit of TWD 2.8 billion and OP margin of 3.5%, although, at the lower range of our expectations, they were still passable.

Moving on to the next page, non-OP items. Major non-OP items, included TWD 390 million in interest income. We had an investment loss of TWD 116 million (sic) [ TWD 161 million ], mainly due to Askey, which had a loss of TWD 610 million (sic) [ TWD 612 million ]. Askey continued to negotiate counter prices with the clients and had a tighter control of component prices. We expect that Askey may be taking a longer time than expected in the adjustment. We may be able to see more meaningful improvements for its operation in Q3 or Q4.

We had exchange loss of TWD 1.4 billion, this was mainly caused by U.S.-China trade war. Many non-USD currencies took a big hit in the second quarter. The euro depreciated by 6%; renminbi also by 6%. The fluctuations of RMB made the biggest impact on ASUSTeK negatively. We will do more simulation and tighter control in hopes of minimizing ForEx impact on us in the third quarter.

Moving on to balance sheet. In the end of Q2, cash and cash equivalents came in at TWD 71.8 billion, which was relatively healthy. Inventories was TWD 79.4 billion, flat Q-o-Q. However, with a lower revenue seasonality, days of inventory increased slightly to 102 days. Average cash conversion cycle was 11 -- 111 days.

Moving on to revenue breakdown by product. In the second quarter, PC's share was 60%; mobile 15%; component, 21%; IoT 4%. Q-o-Q wise, mobile, mainly smartphones, had increases in shipment and revenue shares, however, components had a loss of share due to seasonality and lower demand for cryptocurrencies.

Moving on to region mix. In the second quarter, Europe's contribution was 25% (sic) [ 29% ]; Asia, 47%; and Americas, 24%. Euro's (sic) [ Europe's ] share was down Q-o-Q, this was because of seasonality and also market competition.

Now moving on to Page 11, business outlook. We believe that in the third quarter we will benefit from seasonally strong demand. This will benefit our operations. For smartphones, there will be new product launches and more supply from the supply chain. Shipments and revenue may be benefited. So overall, we expect that PCs will have a growth of 20%, minus or plus 5%. For mobile, mainly smartphone, we expect it to have a 50% growth, minus or plus 5% Q-o-Q. For components, primarily, motherboards and graphic cards, we are expecting a 10% to 15% growth Q-o-Q.

For the third quarter, there are some major sources or challenges that we are expecting. The major challenge will come from U.S.-China trade war, which will worsen ForEx volatility. As we just told you that in the second quarter, euro depreciated by 6%, RMB also by 6%, Russian ruble depreciated by also 9%. These affected price quotes and had negative impact on end-market demand. So between Q3 and Q4, we are seeing these as our major sources of challenges.

In terms of products, originally we expected that in Q3, there will be a bigger volume and more product launches that will help us boost our momentum, however, we are seeing that some chip and solution providers delaying their shipment and availability of their new products. This will affect our Q3 results.

Lastly, in terms of system products. In certain markets, including EMEA, we are facing a larger ForEx fluctuation challenge and some market competition condition and, as a result, we are under larger pressure. Overall, we expect that revenue and shipment will grow reasonably across various product lines. However, we are taking a more conservative view in our OP margin prediction. So we are taking a more conservative stance to predict our OP margin and OP profit. Going forward with the supply of new products and the effect of mass production of our new products, as well as the upcoming holiday season in the year-end, we believe there will be more improvements in Q4.

So this concludes my presentation for the results. Now I would like to turn it over to our CEO, Mr. Shen.

[Jerry Shen, executive]

Good afternoon. I would like to share with you our results in Q2 and our expectations going forward. We still believe that innovation is our key spirit. The market is changing rapidly, so we still have to be very agile. In terms of products, to improve our competitiveness as an enterprise, we still have to be a smart enterprise. That is our core. Our core technologies are ABC: AI, big data and cloud computing. These are our core technologies, core capabilities. They can help our employees to be more productive. They can have IT as their partners. And about smart enterprise, we have new retail. We will shift from the traditional retail mode to new retail.

In addition, user experience is also essential. That is why we will have connected service. It is not traditional kind of service; it is connected, always-on service.

In terms of PC, I have given 3 missions to our PC BU: first, innovation; second, design; third, performance. If we can speed up the refresh cycle, we, of course, need to be very innovative and very agile. In the second quarter, we had higher ASP, however, our revenue lowered, meaning that the volume was lower. This is something that we have to improve on. We have to -- originally, my target is to grow above the industry average, but we didn't deliver that result.

We have a very innovative product, screen pad. This is a new small screen. It is a touchpad. It is actually a smartphone screen we leveraged for the new notebook. We call it screen pad. That is the very first innovative spirit that is shown in this product.

Also, we have Project Precog. It has dual screens. The traditional keypad was replaced with a screen. We expect that between Q2 and Q3 of next year, we will launch this product.

In terms of commercial PC, there are 3 elements: leading, mobile and durable. I hope that our commercial PC BU can work harder on these 3 aspects.

With commercial PC, we have 3 major product lines: desktop, Chromebook and laptop. With desktop and laptop, we have the major focuses in Mainland China and Taiwan and some Asia Pacific countries. And in -- for Chromebook, we mainly focus on U.S. and Europe.

A few more words about commercial PC. We have set up a BU to allow my staff to be more focused and we are also pursuing profitable growth. The hope is to have a profit growth of larger than 15% for ROG. We have double-digit percentage growth in terms of revenue. However, MSI, HP, Acer and many other companies have joined this landscape, so we didn't hit my goal that I've set forth of the profitability of ROG. This is also something we need to work harder further.

Now about pursuit of leadership, it is very thin and light, we called it light lethal. And we used Core i9, and it's also featuring a suite display and thermal features. It also is a futuristic product. With ID thermal display, CPU and performance as well as thin and light, we will continue our leadership. That is for gaming.

Moving on to phone. I have streamlined the models, but we have many -- a lot more volume. With phone, I have said that we wanted to breakeven in Q3 or Q4. But right now, it looks like the -- we have a bigger possibility to achieve that goal in Q4. With our phone, it's about empowering luxury for everyone. We have 3 major segments under phone, the first one is ROG phone. It is a very powerful phone. Second, providing ultimate luxury. Third, providing premium luxury. These 3 models, these may not be many, but like Max Pro, it is selling very well in India. Starting from Q3, the effect really plays out. And ZenFone 5Z is selling very well in Taiwan and India as well. We are about to launch the ROG phone very soon.

Our product strategy is Hero model and channel strategy is Hero country. In terms of quantity, we have achieved double-digit growth. And to become profitable in Q4, that is our determination and it is also a big challenge, but we believe we will be able to achieve that.

Let me talk about motherboard. We have a high market share and as long as we have growth for our motherboard business, that means the entire industry grows. But what's really important is that we actually achieve growth that is above industry average. And this BU has achieved the target that I assigned to them. With motherboard, we still want to be the world's #1 brand. We have many different products, we have best-selling, easy-to-use, stable and trusted products. These are the 4 basic elements that we are looking for with our motherboard business.

Also about our VGA, our revenue growth exceeded that of the industry average and we are seeing growth, both from graphics and the board. The demand for mining has been going down since Q2. But last year, it was a very fruitful year for VGA. This year, we may be encountering some larger headwind. But with VGA, especially in ROG, we have done a lot of things. I still believe that our VGA business is relatively healthier.

Currently, the ongoing U.S. and China trade war has dealt a big impact on many countries and it has especially big impact on ForEx volatility. Within a very short period of time, RMB depreciated by 4% to 5% and the currencies of Indonesia, India and Russia all went down significantly. Around the world, the impact of ForEx fluctuations has been felt. The depreciation of currencies can still be handled or tackled if it's happening in a longer period of time, but a sudden drop would always cause a big problem. Under such a difficult business condition, I decided to discuss with our Chairman, Shih.

We would like to better handle the current competition landscape and also we want to further pursue transformation. Last year, we proposed to transform. Since we're going to be here in the long haul, since we want to be sustainable, we want to have a better succession plan. We will be more aggressive and proactive in our succession planning. As for me, I will provide assistance to help my team develop the succession plan. Our hope is to help our younger generation of talents to be able to excel in our company. In Q4, smartphone business may be able to breakeven and turn profitable, but there is a big challenge ahead. We are now playing in the major league. My hope is to have more profitability from our smartphones business next year. That is a big challenge for myself and I have been spending a lot of time working on the phone business. So this is the dual focus strategy, one is to accelerate our succession planning. The other is to break even for our phone business or turn profitable for our phone business. We will be playing in the major league. There's one feature of the major league. The top 50 players are equally capable, but only those with the strongest mindset can win.

In the short term, although, we may be under a bit more pressure financially, but this is a good direction, this the right thing to do for us in the long term, that is why we will work harder to make things happen. I have been working on the phone business for a long time and I will work harder to bring the phone business to profitability. This may be a difficult time for our business. There are a lot of challenges, but we will stick with our succession plan and we will work harder to transform our business. For the next year, these 2 focuses will be our commitment.

So this concludes my presentation.

[Unknown Executive]

Thank you, Jerry. We will address our questions that were submitted online. Right now, we have already received more than 10 questions. We will spend approximately 30 minute -- 30 seconds to go through these questions because there's some lag between webcasting and our presentations. So please hold on for a second.

We'll go back to the first question, [ Kong Balsany ].

[Unknown Analyst]

ASUSTek is targeting ROG gaming sales to grow by 10% Y-o-Y. What is the share of our new model? The new chips for graphic cards, what about its expected launch time?

[Jerry Shen, executive]

We expect that our gaming to maintain double-digit percentage growth. The challenge this year is to not only grow by double-digit percentage, but also to meet our profitability target. With that, our strategy is to maintain our leadership. As I said in my presentation, there are 5 aspects to leadership: With CPU, with GPU and display thermal as well as ID. As for NVIDIA's GPU, in terms of leadership, under our principle for maintaining leadership, we are preparing to lead the market to launch a product when the new GPU is available. So our strategy is to maintain leadership. And with a good positioning and with leadership, we hope that we can create better profitability.

[Unknown Executive]

The second question comes from [ Phou Phung ].

[Unknown Analyst]

For smartphone, supply shortage has occurred before. What kind of adjustments are you going to make going forward? The second question is on the new chip from Intel. Has there been a delay or a shortage? If so, will ASUSTeK increase the usage of AMD's chips for desktop, for example?

[Jerry Shen, executive]

ASUSTeK has been doing very well in terms of R&D and we've achieved great results for ourselves. Originally, we had our BU and sales to manage the supply chain. So for us, supply chain management wasn't our strength. In view of that, we decided to make some changes and -- because the shortage from the supply chain was specifically severe in Q2. Our hope is to set up a team for supply chain management. This team will -- has the ability on par with our R&D and our salespeople. Our COO is working on supply chain management improvements. COO is not in charge of this permanently, he's just working on it for the moment. Going forward, we will have a designated team, a top team in the entire world to work on supply chain management. The shortage issue has been improved greatly in Q3 and we'll have more improvement in Q4. Going forward, we hope that we will have a really good supply chain management practice. For your second question on CPU, I think you may all be very aware that the shortage for CPU is very severe this time around. At CPU, we -- at ASUSTeK, we are able to deal with it properly. As for whether we will use AMD's product, I think because we are handling it quite well, we may still maintain the same portion going forward.

[Unknown Executive]

The next question comes from Citibank.

[Unknown Analyst]

Originally, you guided growth for your PC business. You guided for positive growth Y-o-Y, but then you have revised downward your target. Could you tell us why?

[Jerry Shen, executive]

I think there are several reasons. First of all, the main reason is ForEx fluctuations, which had a great impact on our profitability. Second, in EMEA market, we had encountered more fierce competition. Third, with innovation and with design, I think ASUSTeK can work harder. With screen pad, Precog dual screen and narrow bezel on 4 sided -- on 4 sides product, I think we may see some positive impact materializing. I think the positive impact from the 4-sided narrow bezel may materialize in Q1. For screen pad, maybe in Q2 and Q3. For the dual screen, we are expecting to see good results for the second half. Under the ForEx fluctuation challenge, we did miss the target for PC, but we will continue to work very hard.

[Unknown Executive]

The second question comes from the Economic Daily.

[Unknown Analyst]

You had been under greater competition pressure with your systems products in the EMEA market. Could you elaborate?

[Jerry Shen, executive]

In terms of the system products, I think in the areas of innovation, in the speed of innovation and design capability, our competitors have improved faster and larger than we expected. There has been larger volumes from our competitors. For ASUSTeK, we mainly relied on our design and our momentum to seek improvements, but we have found that, in the industry, our competitors have been increasing their momentum, that is why the competition has become fiercer. And it is something we need to work on.

[Unknown Executive]

Another question comes from Citibank.

[Unknown Analyst]

If there's a delay in Intel's CPUs shipment, how will you deal with that?

[Jerry Shen, executive]

In terms of the delay, I cannot reveal too much but I think there are 2 parts: One is big core, the other is small core. At ASUSTek, one of them had a more severe delay. For the other, not so much. So we are considering how we can deal with it. With the supply shortage, some of our peers may shift more focus to the commercial segment and the pressure for consumer segment may lessen. Of course, we're still watching this trend closely. I talked about big core and small core. As for how we're going to deal with market dynamics, we have to deal with market changes, the changes with volume and our goals to achieve profitability targets. For all these things, we are working on our game plan.

[Unknown Executive]

There's another from -- for PC. This question comes from Shengshi Investment.

[Unknown Analyst]

This year, the commercial segment seems to have performed better than the consumer PC segment. In the commercial segment, your positioning has been lower than some American brands. So over a longer horizon, are you going to build your positioning in the mid-to-large enterprise market for PC?

[Jerry Shen, executive]

I think you pointed out a very important thing for ASUSTeK. With commercial, we have Chromebook. Although we are not as big as our peers, but we have been growing really fast and we are focusing on the U.S. and European markets for Chromebook. As for desktop and consumer -- desktop commercial, rather, we are focusing more on the markets, the countries that we have a strong consumer footprint, including Taiwan, China and Indonesia. Through the 3 parameters that I mentioned, leading, durable and mobile, we will seek to expand our market share. As for our sales and marketing capability, I think it takes a longer time to enhance the capability. Today, we have a strong team in Taiwan. We are considering whether we would extend the marketing resources to China. Also in countries that we have a high market share, such as Indonesia, we are also thinking about making some changes in terms of commercial strategy. Overall, we have become more aggressive for the commercial segment.

[Unknown Executive]

There's some question relating to the second quarter -- second half or the third quarter's OP margin outlook.

[Nick Wu, executive]

On the Q3 OP margin quarter outlook. I would like to respond to these questions. Due to the limitation of Taiwanese regulations, I apologize that we are not allowed to comment on the numbers directly. But what we can say is that for Q3, we are seeing some bigger pressure and bigger risks. The risks come from mainly ForEx fluctuations and depreciation pressure from U.S.-China trade war. And some chip makers are delaying their shipments as well as the competition coming from Europe in terms of the PC product segment. That is why we are taking a more conservative view for our OP profit and margin prediction for Q3. Our hope is to maintain a more stable positioning for the moment. In the fourth quarter, we expect that price quotes may be more stable. And overall, we hope that they can be a stronger extent of growth for profitability in Q4. But for Q3, we are using a more conservative stance for OP profit and margin prediction.

[Unknown Executive]

We'd like to go over the questions for a moment and we will come back soon. Let's address the questions that we have. This question comes from Morgan Stanley.

[Unknown Analyst]

Could you comment on the competition landscape in the gaming PC market? Are you going to maintain or improve your gaming PC margin?

[Jerry Shen, executive]

For gaming, we have to improve 2 areas. First is product, the other is sales channels. For products, internally our goal is to increase the ratio of ROG. We have ROG versus ASUS Gaming. ASUS Gaming is more of the resi market, so to speak. It is a very competitive market. ROG is a high-end market. We have also found one very particular thing, with ROG and ASUS Gaming, they have to both align -- to be both aligned with channel structures. In terms of channels, we have deal or retail base. This is a resi market segment. The other is the runway base. With runway base, you basically sell your products one after another to the consumers. But deal base usually sells products in bulks. For ASUS Gaming, we will pursue volume growth. This will have a big contribution. And with ROG and with part of ASUS Gaming, we will work through the runway channels, the traditional channels. And the hope is to improve the profitability with gaming. Our goal is to increase the volume and profits within 1 year. And this will take the changes in terms of sales and products and these activities are ongoing.

[Unknown Executive]

We have another question that just came in related to gaming. This comes from KGI.

[Unknown Analyst]

Can you tell about your gaming revenue as a share of your total revenue in Q1, in the second half or the entire year? Do you have targets for your gaming revenues' contribution?

[Nick Wu, executive]

With the gaming products, they account for about -- let me check. 10% to 20% of our total revenue. What is the second question?

[Unknown Analyst]

Gaming products revenue contribution. Will it increase or can you provide a range?

[Nick Wu, executive]

For the second half, our goal is to go from 50 minus percent to 15 plus percent as a share of our total revenue.

[Unknown Executive]

The next question comes from [ Phou Phung ].

[Unknown Analyst]

The demand from cryptocurrency mining has been lower than expected. Will it affect your profitability?

[Jerry Shen, executive]

In terms of the mining demand, I think you all know that when the demand was very high, many companies saw great profits. But starting from Q2, the demand trended down. The lower mining demand mainly -- rather, the mining demand mainly came from ether, because bitcoin is using ASIC from TSMC. The prices of ether will have a big impact on mining demand, and this will affect profitability too. Graphic cards account for a relatively high ratio of our ROG business. I have talked with my colleagues at the GPU team, they told me that this will impact on -- will have an impact on our profitability, but it's within the range that we can still control.

[Unknown Executive]

The next question comes from DIGITIMES.

[Unknown Analyst]

To differentiate your existing products, people are doing various things and a company -- a brand company actually has spinned off (sic) [ spun off ] their gaming peripherals into a subsidiary. Do you have any similar plans? And also can you talk about your strategy and your plan for your gaming team in China?

[Jerry Shen, executive]

In the PC segment, the fastest-growing segment is gaming, followed by commercial and then followed by consumer. Last year, we set up a new BU for gaming. We did so because we believe that a lot of our growth driver will come from gaming. But at the moment, we have no plan to spin gaming business unit off. But if you have a better suggestion, you are more than welcome to share with us. As long as we can grow our gaming business, we are always happy to accept new ideas. What is the second question, again?

[Unknown Analyst]

Do you have any strategic planning and your current plan for your Chinese gaming team?

[Jerry Shen, executive]

Our Chinese -- our eSports team in Mainland China has performed really well and they had made it into the top 5 internationally. They are the #5 in the world with the League of Legends. And in China, they are #2 at the moment. There's a Warriors team in NBA; and with LoL, we have the Rogue Warriors. We have many teams and our fan base is increasing. It is ultimately a different economy than selling products. Although if there is some possibility that a spinoff may happen, but if there's any opportunity, we may not separate our products. Instead, we may have a separate management of the eSports team, because products and eSports teams have entirely different value streams. And there are many opportunities for them.

[Unknown Executive]

This question comes from BNP.

[Unknown Analyst]

How are you going to deal with components shortage? And can you comment on the impact of the shortage on your profitability, especially passive components.

[Jerry Shen, executive]

Firstly, for the components -- passive components, ASUSTek is a design company. From the perspective design, passive components at the MLC level can save us a lot of money. This is actually a design know-how and also a long-term tradition of ASUSTeK. This will have a bearing on motherboard, VGA and many other products. We have noticed this and we have responded to the issue. So I think we are handling quite well.

What's the other question?

[Unknown Analyst]

What about other components, such as DRAM storage?

[Jerry Shen, executive]

I think with memory, there are 2 things I would like to talk about. One is DRAM, the other is storage. The supply has been a bit tight on DRAM and not so tight on storage. When you put 2 things together, I think we are doing okay with the supply. Because one is tighter, the other is not so tight. And with smartphones, you have eMCP; and in PC, you have DRAM and storage. Of course, I'm not an analyst, but I think one is going up, the other may be going down. Whether it's going to be up or down, it will depend on your configuration. But with ASUSTeK, we have been handling it quite well. I think we have covered all of the questions that we already received.

[Unknown Executive]

If you have any further questions, please submit your questions online. We will wait a minute and we will address them later.

We don't have any more questions.

Excuse me, there's just one question that came in. It's from Morgan Stanley.

[Unknown Analyst]

Can you give us an estimate on the gaming market size? And when do you expect to launch your ROG phone?

[Jerry Shen, executive]

In the PC market, the main gaming segment is estimated in various methods and there are many different data points. But I think it has to be more than 6 million units -- the total addressable market is more than 6 million units. That's a more comprehensive perspective, but there are also people talking about 8 million units. For each year, if you include the mid- to lower-end gaming market segments, there may be double-digit growth every year. At ASUS, our goal is to pursue both volume and profitability growth. The availability time of the ROG phone is September, this product has been well received. Originally, we planned to make it available in August, but then we decided to do so in September. Thank you.

[Unknown Executive]

This question comes from JPMorgan.

[Unknown Analyst]

Can you talk about the key for you to turn profitable with your phone business? Do you have to have shipment growth? Or do you have to change your product mix? With your current product mix for the phone business, what kind of shipment volume that you have to have to achieve the breakeven point?

[Jerry Shen, executive]

At the moment, we have 2 categories under the phone business. One is to provide ultimate experience, that is our ZenFone 5 and ZenFone 5Z. The other is the ROG phone. And then we have productivity-centered Max Pro and Max Light. So in total, we have about 6 models. To take into consideration the efficiency factor, I think the breakeven point may be 4 million to 5 million per quarter. This has to do with how you control your inventory, how you create and increase value and how you meet the demand rapidly. These will be the key elements that we have to meet to break even. So inventory control, value creation and enhancements as well as fast delivery. These are the missions that I have assigned to the BU.

[Unknown Analyst]

Could you give us an estimate for the shipment per quarter for the smartphone business to break even?

[Jerry Shen, executive]

I already talked about it, it's 4 million to 5 million.

[Unknown Executive]

This is the last question, coming from Business Next.

[Unknown Analyst]

Could you give us some color on your 5G phone R&D progress? How about your target for shipments of P -- of smartphone in 2019?

[Jerry Shen, executive]

Next year, in Q3 and Q4, there may be some more growth and there will be more significant growth than this year's Q1 and Q4 as well. In terms of Y-o-Y growth, we may have double-digit percentage growth.

[Unknown Analyst]

What about 5G phone? Can you comment on your R&D progress?

[Jerry Shen, executive]

In Korea, in U.S., and in other countries in Europe, they have been very aggressive with 5G deployment. We have been working hard and working for a long time with our partner, Qualcomm. Besides Samsung and Apple and 4 major phone makers in China, very few companies can survive this market condition at the moment and we are one of these companies. There are 6 major companies: Apple, Samsung, Huawei, OPPO, Vivo and Xiaomi from China. Besides them, we want to become the #7 company that can both have the volume and also profitability. We want to become that unique. With our strong collaboration and partnership with Qualcomm, we have been enabled by Qualcomm and I believe we'll be on schedule with our 5G plan with the 5G carriers.

[Unknown Executive]

In the interest of time, this concludes our earnings call. If you have any further questions, please feel free to contact us at ASUSTeK. You may also contact us through sending e-mails to our IR department. Thank you.