Materialise NV  (NASDAQ: MTLS) Q1 2020 Earnings Call Transcript

Materialise NV  (MTLS) Q1 2020 earnings call dated Apr. 30, 2020

Corporate Participants:

Harriet C. Fried — Investor Relations

Peter E. Leys — Executive Chairman

Johan Albrecht — Chief Financial Officer

Analysts:

Troy Jensen — Piper Sandler — Analyst

Jason Celino — KeyBanc — Analyst

Presentation:

Operator

Good day ladies and gentlemen, and welcome to the Q1 2020 Materialise Financial Results Conference Call. [Operator Instructions] Later, we’ll conduct a question and answer session and instructions will follow at that time. [Operator Instructions].

I would now like to turn the conference over to your host Ms. Harriet Fried of LHA.

Harriet C. Fried — Investor Relations

Thank you for joining us today for Materialise’s quarterly conference call. With us on the call are Fried Vancraen, Founder and Chief Executive Officer of Materialise; Peter Leys, Executive Chairman; and Johan Albrecht, Chief Financial Officer. Today’s call and webcast are being accompanied by a slide presentation on the Investor Relations Section of the company’s website. The earnings press release issued earlier today can also be found on that page.

Before we begin, I’d like to remind you that management may make forward-looking statements regarding the company’s plans, expectations and growth prospects, among other things. These forward-looking statements are subject to known and unknown uncertainties and risks that could cause actual results to differ materially from the expectations expressed, including competitive, dynamics and industry change.

Any forward-looking statements, including those related to the company’s future results and activities, represent management’s estimates as of today and should not be relied upon as representing their estimates as of any subsequent day. Management disclaims any duty to update or revise any forward-looking statements to reflect future events or changes in expectations.

A more detailed description of the risks and uncertainties and other factors that could impact the company’s future business or financial results can be found in the company’s most recent Annual Report on Form 20-F filed with the SEC. Finally, management will discuss certain non-IFRS measures on today’s conference call. A reconciliation table is contained in the earnings release and also at the end of the slide presentation.

And now, I’d like to turn the call over to Peter Leys. Go ahead please, Peter?

Peter E. Leys — Executive Chairman

Thank you, Harriet, and thank you, everyone for joining us today. You will find us always in the agenda for our call on slide three. I’ll begin with a brief recap of our results for the quarter. I’ll also give a summary of some of the key measures that we have taken to protect our people and our business against the impact of the corona crisis. Then Fried will come on and he will give you an overview over the short-term initiatives that we have taken in response to COVID-19.

And he will also talk of what we believe may be the longer term impact of this crisis on the additive manufacturing industry as a whole. After that, Johan will go through our first quarter numbers in more detail and finally, I will come back on to reflect on our financial guidance for 2020. When we then have completed our prepared remarks, we will be happy to answer to any questions that you may have.

So turning to slide four, you will see the highlights of our first quarter results. In the first quarter of 2020 where we only start to feel the impact of the crisis in the course of the month of March, total revenue decreased by 1.8% to EUR46.2 million, while adjusted EBITDA declined from EUR5.8 million to EUR3.6 million. In the period, our software and medical segments continue to grow their revenues by respectively 5% and roughly 15%, while revenues of our manufacturing segment decreased by almost 14%.

In the unprecedented circumstances of today, it is definitely worthwhile to highlight a few key indicators pertaining to our financial resilience. At the end of the first quarter of 2020, we have cash and cash equivalents for a total amount of about EUR127 million and short-term debts as of the end of the first quarter of EUR17.2 million. Our total net cash position at the end of the first quarter was EUR2.4 million and increased by EUR1.5 million as compared to December 31 of last year.

In response to the worldwide spread of the coronavirus and the associated government restrictions imposed in the many jurisdictions where we are present and active, we took a number of measures that were first and foremost focused on the protection of our employees, and secondly on adjusting the way we work to the new reality. Here are just a few examples of what we have done so far.

We started implementing a work from home policy before governments required this to do so. All people who were not encouraged to work from home were enabled by our IT departments in a matter of days. Those people who cannot work from home such as employees in our production, work were appropriate in two shifts, with a view to allowing them to work in the safest possible circumstances, and to prevent one team from infecting the other.

Since April 1, we adjusted salaries to our employee’s effective workload, avoiding as much as possible, however, the loss of health insurance benefits and the reduction of income below a certain minimum. So far, we have avoided large scale layoff programs. We did hold recruiting and hiring new staff.

Business trips in both the organization and attendance of events have been reduced to a strict minimum. On the other hand, our digital marketing efforts and investments have gone up significantly. They also increased the digital support that we offer to our customers including through the organization of many more webinars than usual. So we also offer flexible licenses now, offer software to accommodate the work from home policies that apply to many of our customers.

Importantly, we continue to invest in most of our ongoing research and developments, and business development efforts. As we believe that this crisis will be temporary, and as the economy gradually exits from the crisis, the additive manufacturing industry as a whole, and Materialise in particular, will be well placed to offer solutions that are perfectly suited to deal with the challenges of the post-corona economy.

With that, I would like to turn the call over to Fried, who is in undoubtedly better place than anyone in the industry to go into more detail on the short and longer term opportunities that this unfortunate crisis has created for the additive manufacturing industry. Fried?

Harriet C. Fried — Investor Relations

Good morning, or good afternoon everyone. Thank you for joining us today. Since our previous earnings call on March 4, the world has changed dramatically. In the beginning of March, we saw only a limited impact of the corona crisis on our Asian operations mainly in China. At that time, we were still expecting an overall relatively normal 2020.

As of the following week however, the situation deteriorates dramatically in Italy, and the COVID-19 virus spread quickly over Europe. The same week, Materialise implemented measures to protect its employees and in doing so we detected multiple new meaningful 3D printing applications.

First, we applied social distancing rules for those people who could not work from home as Peter indicated, before they were even imposed by governments. But there were still contamination risks, especially those caused by surfaces stored by many people, such as door handles, or light switches.

In response, the engineering team of Materialise manufacturing invented hands free door openers. Door openers were installed and tested at Materialise. As we believe, we should share our innovations with all those in need. The files were made available both for free download and for purchase by Materialise to our 180,000 3D printing contacts over the next weekend. Within five days, our team went from ID to testing multiple concepts to distribution of a cost effective stable solution with a full risk analysis, documentation and instruction videos.

Given the vast experience of the Materialise engineering team with AM technologies, the file was printable on small extrusion based home printers, as well as on industrial systems such as those from HP, self-assisted 3D systems in US and others. In the following days, we receive pictures of 3D printed door openers being installed all over the world. Our preventive devices, has now been downloaded nearly 100,000 times from the Materialise website account that excludes downloads from other websites and copies of the concept.

A example is a striking testimonial of the power of additive manufacturing, and how it can contribute substantially to distributed manufacturing. Distributed manufacturing was already a buzzword before the COVID-19 crisis. However, this crisis has demonstrated how the global supply chain for preventive devices collapsed, and how swiftly additive manufacturing could come to the rescue both from a design and production perspective.

Let me assure you that a hands free door opener was not a lucky shot. In the weeks following its launch, multiple completely different preventive device products based on 3D printing were introduced as innovations or to fetch failures on the traditional supply chain. Being focused on meaningful innovations, Materialise introduced new corporate badge holders to operate light switches, copiers, elevators, coffee machines et cetera, all without touching them by hand.

We designed an FFP2 or N95 mask frame that turns failed, low quality FFP2 face masks into more comfortable and fully compliant FFP2 masks. This frame can turn millions of unusable FFP2 mask on short notice into save devices for healthcare workers.

We also produced and spread the production of clips for surgical masks that can be made without suing. And on top, we did transparent face shields. The homepage of our website shows the entire range of preventive devices Materialise is offering, and it also has a video of the Materialise health and safety engineers demonstrating an overview of the measures we took in our facilities with most of those devices.

Our focus on meaningful applications was also demonstrated by close collaboration between Materialise medical and our manufacturing divisions that concentrated on a number of very specific needs that were brought to our attention by our customers and partners. While we actively participate in multiple ventilated production or ventilated splitting projects by supplying components and subcontracting, we soon found out that invasive ventilation is a therapy of last resort.

According to our information, approximately half of the patients that receive ventilation with intubation do not survive the treatment. Contacts with [Indecipherable] surgeons in our customer base and research on CT images of patients by our partner, the company Fluidda indicated that the COVID-19 mechanisms that induce lung failure are different from the normal acute respiratory distress syndrome that is treated with intubated ventilation.

In coordination with Fluidda, the Materialise medical engineering team invented, patented and tested a new kind of respiratory masks. The passive non-invasive PEEP or in short NIP masks. These masks allow oxygen to be provided to patients very efficiently without ventilation. It provides a positive and acceleration pressure, which opens the lungs for optimal oxygenation without providing the air pressure inhalation, which can make ventilators harmful for the lungs.

The therapy with this mask is already in clinical study in multiple hospitals, and we hope it to many more health professionals shortly. Once again, Materialise years of experience in 3D printed medical devices and our unique position in the medical ecosystem has enabled an innovative and quick response to the crisis.

Our global presence allows for the rollout of our NIP device on short notice in countries all over the world in the event that the clinical study results confirm the positive effect we sincerely expect.

Note, and importantly, medical specialists are indicating that the passive NIP mask approach has potential as a therapy in applications beyond COVID-19. This might result in a new product line for Materialise, which could complement whether it’s very early stage initiative we are taking in the pulmonology fields.

At the same time, the corona crisis has had a devastating impact on the business climate for which Materialise is not at all immune. Several key sectors for Materialise, such as aerospace, automotive, but also medical, where all elective surgeries are cancelled and been hit hard. We now notice that people are focusing on what really matters. Staying healthy, getting the best preferably personalized treatment kit, using digital technologies to digitize supply chains that plans surgical interventions.

People avoid unnecessary travel. They have reduced waste by shortening supply chains without giving in on quality or price. And they show flexibility to adopt travel specifications and designs to unexpected situations. These are all examples of real people driven needs. We believe this will become the new normal in a world that focuses on sustainability beyond the current crisis. Through the examples just mentioned, Materialise has demonstrated its readiness and ability to make valuable contributions and to thrive in this new model.

While we do not expect our industry to grow exponentially during this crisis, or shortly thereafter, we are picking up many signals that this crisis, however devastating it may be for those who are personally affected is putting industry 4.0 initiatives in general, and in particular, higher on the agendas.

And now I pass the call to Johan.

Johan Albrecht — Chief Financial Officer

Thank you, Fried. I’ll begin with a brief review of our consolidated revenue on slide six. As a reminder, when refer to sales in our presentation, we mean revenues plus deferred revenues. Also, please note that unless otherwise stated, all comparisons in this call are against our results for the first quarter of 2019.

As Peter mentioned in his opening remarks in this year’s first quarter, revenue decreased 1.8%. COVID-19 began having impacting all segments, especially during the last weeks of the quarter. Our Manufacturing segments started the year in a continued tweak macroeconomic environment, and so revenues decreased by 13.9%.

Our Software and Medical segments however, continue to increase their revenues by 5% and 15.3% respectively, the growth that excludes the increase of deferred revenues from annual and especially medical software sales and maintenance fees of EUR2 million. For the quarter, Materialise Software accounted for 21% of our total revenue. Materialise Medical for 24%, and Materialise Manufacturing for 45%. Gross segment revenue from software products accounted for 32% of our total revenue.

Moving to slide seven, you’ll see our consolidated adjusted EBITDA numbers for the first quarter. Consolidated adjusted EBITDA declined 38.2% from EUR5,829,000 to EUR3,603,000. Our EBITDA margin decreased from 12.4% to 7.8%. The revenue decrease in our Manufacturing segment continued costs of capacity, small increases in operating expenses and increased sales from annual software licenses, and maintenance fees that we had to classify as deferred revenue led to this EUR2.2 million lower result.

Slide eight summarizes the results of our Materialise Software segment. Here, revenue grew by 5% or EUR0.5 million. The 19% growth of recurring revenue was partially offset by a decrease of non-recurring sales of 11%. The recurring was mainly due to delayed sales from the automotive and aerospace industry in the context of COVID-19. The segment’s EBITDA decreased EUR316,000 to EUR2,645,000 compared to last year’s quarter as a result of expansion of sales and marketing capacity in Q2, 2019. Operating expenses remained flat during the past three quarters, and EBITDA margin now was 26.9%.

Moving now to slide nine, you will see the total revenue in our Materialise Medical segment grew 15.3% for the quarter to EUR15.6 million. Revenue from Medical Device solutions rose 18.2%, 7.2% excluding Engimplan, accounting for 68% of the total segment’s revenue. These positive numbers announced the show performance at the start of the year, as COVID-19 began impacting this business line including Engimplan in the second half of March as distributors delayed orders.

Medical Software sales grew 23.6% driven by strong Mimics and autoview software licenses although this quarter’s deferred revenue from licenses and maintenance fees of EUR1.8 million target revenue growth to 9.8%. Revenue from our Medical Software accounted for 32% of the segment revenue. As a result of higher revenue combined to the moderate increase of operating expenses, EBITDA for the Medical segment, increased EUR682,000 to EUR2.4 million, the EBITDA margin increased to 15.7%.

Now, let’s turn to slide 10 for an overview of the Q1 performance of our Materialise Manufacturing segment. Their revenue was down by 13.9% or EUR3.4 million reflecting a decrease in our ACTech business. This was particularly affected by the macroeconomic environment in the automotive sector. Our traditional additive manufacturing businesses still showed a small revenue increase, but was also affected negatively by the initial impact of COVID-19. Gross profit was affected negatively because of the fixed cost of capacity. Operating expenses increased 3.3%. As a result EBITDA decreased EUR2,577,000 to EUR1,118,000 while EBITDA margin decreased to 5.4%.

Slide 11, provides a highlight of our income statement for the first quarter. Revenue decreased 1.8% and gross profits decreased 3.7% compared to last year’s period. Gross profit increased in our Software and Medical segment but was offset by manufacturing costs of capacity. As a result gross profit margin decreased 12 percentage point to 53.3%. In total sales and marketing, G&A and R&D spending rose 3.9% over the prior year period.

Sales and marketing rose by 4.5% due to the capacity expansion in our software segment. G&A decreased 5.3% and R&D costs rose 14.8%. This R&D costs increase excludes expenditures in Q1, 2020 of EUR385,000 to capitalize as intangible assets of which EUR234,000 from our tracheal splint initiative. Net operating income decreased to EUR683,000 compared to EUR1,259,000, including a negative trading of doubtful receivables position.

As a result of these elements, the Group’s operating result was negative EUR1,037,000 compared to a profit of EUR1,461,000 in last year’s period. Net financial result decreased to a negative EUR1,321,000 from EUR592,000, mainly due to an unrealized exchange difference on an intercompany loan position in Polish zloty. Income tax expense amounted to EUR457,000 compared to an income tax of EUR1,065,000 in the first quarter of 2019. Net loss for the first quarter was EUR2,853,000 compared to a loss of EUR304,000 for the same period in 2019.

So please turn to slide 12 for the recap of balance sheet and cash flow highlights. Balance sheet remains strong with cash of EUR127.1 million, compared to EUR128.9 million as of December 31, 2019. Because of borrowings position decreased EUR3.2 million to EUR124.7 million, our net cash position increased by EUR1.5 million to EUR2.4 million.

Equity decreased EUR7 million to EUR125.7 million, as a combined result of the net loss of the period amounting to EUR2.9 million and other conversion differences of the equity values of affiliated companies amounted to EUR4.1 million of which EUR3 million reflects the effects of the region’s Brazilian real on pension plans equity position.

Capital expenditures for the quarter amounted to EUR3 million and were not financed. Cash flow from operating activities for the quarter increased to EUR7.3 million from EUR4.1 million in last year’s periods. This cash flow amount includes an improvement in working capital of EUR3.9 million. Total deferred revenue amounted to EUR34.9 million, as compared to EUR32.7 million as of end last year. Of the EUR34.9 million, EUR29.7 million were related to annual software sales and maintenance contracts versus EUR27.7 million as of end last year.

Before I turn the call back to Peter, I would like to mention that in the COVID-19 context, also several actions have been taken from an operational and financial perspective to guarantee efficient back office and supply chain continuity.

Finally, we closely monitor the COVID-19 impact on our businesses in order to plan timely appropriate measures to aligning costs and expenditures such that our balance sheet remains healthy and strong, and to have a solid platform for future growth after the crisis. Peter?

Peter E. Leys — Executive Chairman

Johan, thank you. As I indicated earlier, before giving the floor to you for questions, we want to actually — we have to come back to our financial guidance for this year. As a reminder in early March, we expected to report for fiscal 2020 consolidated revenue between EUR202 million and EUR260 million, adjusted EBITDA between EUR27.5 million and EUR30 million, and an increase of deferred revenues from software licenses and maintenance by EUR3 million to EUR5 million as compared to the end of last year.

The impact of the corona crisis on all three of our segments I believe there is no other option, but to withdraw that guidance. And because no one has visibility on how long the crisis will last, we are currently not in a position to provide any alternative financial outlook. What we can do is give you some qualitative indications of our current outlook. Albeit with the exclusive caveats that’s our current view may be outdated in a matter of weeks, if not days in function of the developments. Our second quarter will be materially impacted by the crisis. Our first quarter results should by no means be viewed as an indication on how Materialise could perform during the rest of the year. Let’s have a look segment-by-segment.

Our Medical segments, which has performed extremely well in recent years, including scope in the last quarter will because of the nature of the solutions that we offer, be seriously impacted. As Fried already indicated, elective surgeries which includes the majority of the orthopedic and craniomaxillofacial interventions for which we offer solutions are almost all being discovered, as a result of travel restrictions for patients and more importantly with a view to freeing up hospital beds for COVID-19 patients. This obviously impacts our partner business, as well as our direct device sales, which represent as Johan just mentioned roughly together two-thirds of our medical business.

Our Medical Software business will be impacted less, including because a significant portion thereof is recurring revenue. Still, the hospital market, which is a very high growth markets for our software business has other priorities in the short-term.

Let’s look at our Software segments, and a large portion of the revenue of that segment is again recurring. And we also have quite a few upselling opportunities in the pipeline with existing customers, that’s the good news. However, many of our customers they have other priorities than upgrading their software at this point or simply COVID.

In addition, our Software segment is also dependent on new system sales. About the usage of existing 3D printers may go up in certain hit cases, the purchase of new systems will again in many instances, at least that is what we expect to be strong, which will again slowdown the short-term growth of our Software segments.

Finally, our Manufacturing segment serves as you know well as Fried already reminded you, key industries such as automotive and aerospace, which are both particularly badly impacted by the crisis currently. Now, while we expect for the reasons just mentioned, a very tough second quarter we currently anticipate that the industry will surely get back to the new normal in the course of the second half of the year.

When business does come back to normal, we expect to be able to recover in a number of instances, large portions of the sales that have been postponed in the midst of the crisis. These expectations in particular with respect to timing may of course turn out to be too optimistic.

Finally, I would like to remind you that the focus of Materialise is not to simply bring our costs down as much as possible, in line with the short-term decline of our revenues. While we are obviously cutting many costs as much as we can by aligning for instance, the remuneration of people in sales or production with their revised workloads, our strong balance sheet currently allows us to continue a number of our investment and research program such as our cardiovascular and wearables initiatives.

So we decided to continue those initiatives and investments. While circumstances may force us to revisit this investment strategy at some point, as long as we maintain our level of investment in these programs, this will clearly impact our short-term EBITDA disproportionately.

And with this, I would like to conclude our prepared remarks. So operator, the three of us are now ready to open the call to questions.

Questions and Answers:

Operator

[Operator Instructions] Your first question comes from the line of Troy Jensen with Piper Sandler.

Troy Jensen — Piper Sandler — Analyst

Hi, gentlemen. Congrats on good results. And I’m glad to hear all of you are doing well. Maybe for Peter or Johan, I just be curious if you guys could give us any kind of comparison how the first month of the quarter has been versus maybe a year ago, right. April over April sales and how much – I don’t know if you have that information available if it’s something you’d be able to address?

Peter E. Leys — Executive Chairman

Hello Troy, yes, it’s Peter answering. You mean the first month of the second quarter?

Troy Jensen — Piper Sandler — Analyst

Exactly. Yes.

Peter E. Leys — Executive Chairman

Yes, well at this moment, we can only say that the auto level has dropped to approximately 50% of last year.

Troy Jensen — Piper Sandler — Analyst

Really, okay, all right. So and I guess, I want to get into Fried addition, see a lot of opportunities with COVID out there. And I do appreciate all the efforts that you guys and Materialise have made to kind of help out here. But specifically then other parts and facemask and nasal swabs and whatnot. So does feel like there’s some opportunities for growth in healthcare but clearly you guys are exposed to a lot of elective. I guess within elective – within healthcare I’ll be curious to know what is your non-elective, it seems like CMF probably wouldn’t be or – with hips and knees probably are, but just some thoughts on the opportunities on COVID and kind of how much exposure you have to elective medical?

Peter E. Leys — Executive Chairman

Yes, unfortunately CMF is also 90% elective. There are a couple of cancer related cases that need to be executed on relatively short notice. But even in most of the cancer cases, the fact is that yes, the first removal of the tumors is very often not combined instantly with reconstruction. And there is some period passing between the cancer surgery and the actual final reconstructive surgery. So it’s really a small minority of cases that are still going ahead.

Troy Jensen — Piper Sandler — Analyst

Okay. How about just shifting gears a little bit? Just be curious on the manufacturing business, I know you guys have a lot of auto exposure, a lot of aerospace exposure. So anyway you could kind of quantify how much you have there, versus maybe other verticals that may be less impacted with kind of some of these COVID shutdowns?

Peter E. Leys — Executive Chairman

What we can tell you Troy is that the negative results of our manufacturing segment are this quarter to a very large extent, attributable to ACTech, which is as you know very, I mean 80% plus exposed to the automotive industry. Actually our traditional additive manufacturing business, if you want, that is also exposed to automotive but has a much broader exposure to many other sectors. This in the first quarter of 2020, actually very well, and even in spite of our traditional business also being hit by the COVID crisis towards the end of March actually did better than the first quarter of 2019.

So, it’s really the part of our manufacturing segment that was very focused on automotive that was only hit, and it is to a large extent responsible for the results that we’ve posted in the first quarter within our manufacturing segment.

Troy Jensen — Piper Sandler — Analyst

Okay. It’s tough times out there. I wish you the best of luck and stay safe.

Peter E. Leys — Executive Chairman

Thank. All the best.

Operator

[Operator Instructions] Your next question comes from the line of Jason Celino with KeyBanc.

Jason Celino — KeyBanc — Analyst

Hi, guys. Thanks for taking my question. I know that you didn’t do any, large layoffs with your workforce but did you — can you maybe talk about the average salary reductions across the company or any other, blanket cost reductions?

Peter E. Leys — Executive Chairman

Yes, it’s — any information that we pass on obviously is average. And we need to be fine-tuned team-by-team, segment-by-segment, jurisdiction-by-jurisdiction, but I think overall, it’s definitely so that work has reduced by at least 20% and remuneration has been adjusted accordingly.

Jason Celino — KeyBanc — Analyst

Okay, great. Thank you. And relative to the shifts and production that you mentioned having the two shifts, I guess when did you begin to implement that and then are you – is that still the case?

Peter E. Leys — Executive Chairman

Yes, we started implementing in the second week of March so, around the 11th of March and the – currently this is still ongoing. There are actually, I just mentioned it’s a dynamic process. For instance, the elective surgeries went gradually down because a lot of the – yes, on average lead time for those surgeries is between one up to six weeks for the most complicated implants. So in the month of April, the occupation rate has been gradually going down, and we adjusted the workforce accordingly.

Jason Celino — KeyBanc — Analyst

Great, thank you. And one last question from me. And, I apologize if you already mentioned it, but relative to your software businesses, the software segment and also the medical software segment. How much is recurrent?

Johan Albrecht — Chief Financial Officer

Yes, I would say it’s again, variable between the two segments you’re mentioning but on average, I would say 65%.

Jason Celino — KeyBanc — Analyst

Great. Thank you and I appreciate the question.

Peter E. Leys — Executive Chairman

Sure. Thank you Jason. Stay safe.

Operator

I’m showing no further questions at this time. I would now like to turn the conference back to Peter Leys, Executive Chairman for any closing remarks.

Peter E. Leys — Executive Chairman

Thank you, Krystal. So thanks again all for joining us today. Today’s environment is as I already said earlier unprecedented. But importantly the morale here at Materialise is and remains good. Our employees are committed and heartwarmingly enthusiastic about opportunities to contribute including through some of the new products that Fried discussed earlier.

Obviously, we do not have any trips or conferences scheduled at the moment that could bring us physically closer to you. However, we are only in phone calls, Skype, zoom or teams call away. So if you have any questions or concerns, please feel free to reach out because we do believe that it is important to stay in touch with the investment community as together all of us weather this storm. Thank you and goodbye for now.

Operator

[Operator Closing Remarks]