Q4 2024 Diodes Inc Earnings Call
Speaker Change: Joining us today are diodes, President, Gary Yu, Chief Financial Officer, Brett Whitmire, Senior Vice President of worldwide sales and marketing Emily Yang and director of Investor Relations for Mcdonald's all I'd like to remind our listeners that the results announced today are preliminary as they are subject to the company finalizing its closing procedures and customary quarterly review.
Speaker Change: The company's independent registered public accounting firm. That's ex dates results are unaudited and subject to revision until the company filed its Form 10-K for its fiscal year ended December 31st 2024. In addition, management's prepared remarks contain forward looking statements, which are subject to risks and uncertainties and management may make additional forward.
Speaker Change: Looking statements in response to your questions. Therefore, the company claims the protection of the Safe Harbor for forward looking statements that is contained in the private Securities Litigation Reform Act of 1995 actual results may differ from those discussed today and therefore, we refer you to a more detailed discussion of the risks and uncertainties in the company's filings with the securities and exchange.
Speaker Change: Commission, including Form 10-K and 10-Q.
Speaker Change: In addition, any projections as to the company's future performance represent managements estimates as of today February 11th 2025 diodes assumes no obligation to update these projections in the future as market conditions may or may not change except to the extent required by applicable law.
Speaker Change: Additionally, the company's press release the management statements. During this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms.
Speaker Change: And in the company's press release are definitions and reconciliations of GAAP to non-GAAP items, which provide additional details also throughout the company's press release and management statements. During the conference call. We refer to net income attributable to common stockholders as GAAP net income.
Gary: For those of you unable to listen to the entire call at this time, a recording will be available via webcast for 90 days in the Investor Relations section of Dow's website at Www Dot diodes Dot com and now I'll turn the call over to diodes, President Gerry you Gary. Please go ahead.
Speaker Change: Yeah.
Speaker Change: Welcome everyone and thank you for joining us on today's conference call.
Bob: Bob You said no revenue results in the fourth quarter reflect the improving momentum that we have seen over the past few quarters after marketing Asia gradually improve especially in China, and South East Asia region.
Bob: We achieved 5% growth over the fourth quarter of 'twenty to 'twenty three.
Bob: Which makes our return to year over year growth following a multiyear market slowdown even though the overall global demand environment that remains challenging, especially in Europe and in North America, we're able to maintain our automotive and industrial mix percentage at 42% of total product revenue.
Bob: She is a testament to the progress we have made on our new products and our content expansion initiatives.
Bob: But I also haven't heard of New York has been strong in Asia for 2024.
Bob: Improved level of channel inventory and a solid balance sheet combined with a committed focus on expanding growth in our target market, especially the automotive and industrial markets and a couple of lighting new opportunities in AI related applications.
Bob: Based on current data are available, we expect 2025 to be a stronger year than 2024.
Bob: In addition to our past ever to lower manufacturing costs and further develop our process technology and the capabilities, we're qualifying and are running more product in our internal facilities to minimize the near term under loading cost until demand improves.
Bob: Our focus remains on prioritizing in past months in the automotive and industrial markets with our analog and power discrete products to further improve the quality and the mix of our portfolio.
Bob: With our revenue contribution from Oh don't and industrial remaining consistently above our target model, we are well positioned for growth and margin expansion as market recovery broadened across our end markets in 2025 and beyond we.
Bob: With that let me now turn the call over to Brett to discuss our fourth quarter and the fiscal 'twenty 'twenty four financial result, as well as our first quarter call me, if 75 guidance in more detail.
Brett: Thanks, Gary and good afternoon, everyone revenue for the fourth quarter of 2024 was $339 $3 million compared to $350 1 million in the third quarter of 2024 and $322 $7 million in the fourth quarter of 2023.
Brett: Full year 2024 revenue was $1 $3 billion compared to $1 $7 billion in 2023.
Brett: Gross profit for the fourth quarter was $110 9 million or 32, 7% of revenue.
Brett: Compared to $118 million or 33, 7% of revenue in the prior quarter and $112 5 million or 34, 9% of revenue in the prior year quarter for the full year GAAP gross profit was $435 9 million.
Brett: Or 33, 2% of revenues.
Brett: GAAP operating expenses for the fourth quarter were $99 million or 29, 2% of revenue and on a non-GAAP basis were $95 5 million or 28, 1% of revenue, which excludes $5 million amortization.
Brett: Amortization of acquisition related intangible asset expenses zero point $6 million restructuring charge $0 3 million in acquisition related costs and $2 $3 million for insurance recovery for a manufacturing facility.
Brett: This compares to GAAP operating expenses in the prior quarter of $96 $1 million or 27, 5% of revenue and then the fourth quarter 2023 of $91.8 million or 28, 4% of revenue.
Brett: non-GAAP operating expenses in the prior quarter were $91 $7 million or 26, 2% of revenue.
Brett: Total other income amounted to approximately zero point $4 million for the quarter, consisting of $4 9 million of interest income $1 $2 million of other income of $3 $7 million of foreign currency loss $1 $6 million in realized losses from investments.
And <unk> $5 million and interest expense.
Brett: Income before taxes and Noncontrolling interest in the fourth quarter of 2024 was $12 3 million compared to $18 $8 million in the previous quarter and $27 $9 million in the prior year quarter.
Brett: Turning to income taxes, our effective income tax rate for the fourth quarter was approximately 16, 6%.
Brett: For the full year 2020 for the tax rate was approximately 18, 9%.
Brett: GAAP net income for the fourth quarter was $8 $2 million or <unk> 18 cents per diluted share compared to $13 $7 million or <unk> 30 per diluted share last quarter, and $25 $3 million or 55 per diluted share in the prior year quarter.
Brett: Full year GAAP net income was $44 million or 95 per diluted share compared to $227 2 million or $4 91 per diluted share in 2023, the share count used to compute GAAP diluted EPS was $46 4 million shares for both.
Brett: Fourth quarter 2024, and the full year.
Brett: non-GAAP adjusted net income in the fourth quarter was $12 $5 million or 27 cents per diluted share, which excluded net of tax $4 $1 million for amortization of acquisition related intangible assets and 1.3 million noncash mark to market.
Brett: <unk> value adjustment zero point $5 million restructuring charges, <unk> 2 million of acquisition related costs and $1 $9 million of insurance recovery.
Brett: This compares to $21 million or <unk> 43.
Brett: Per diluted share in the prior quarter, and $23 4 million or 51 cents per diluted share in the fourth quarter of 2023 for.
Brett: For the full year non-GAAP adjusted net income was $61 million or $1.31 per diluted share as compared to $222 $8 million or $4 81 per diluted share in 2023.
Brett: Excluding non cash share based compensation expense of $5 $3 million for the fourth quarter net of tax both GAAP earnings per share and non-GAAP. Adjusted EPS would have increased by 11 cents per diluted share for the full year, excluding GAAP and non-GAAP noncash share base.
Brett: Compensation expense of $18 million and $17 $4 million, respectively net of tax GAAP and non-GAAP diluted earnings per share would have improved by 40 and 39, respectively.
EBITDA for the fourth quarter was $40 $7 million or 12% of revenue compared to $46 9 million or 13, 4% of revenue in the prior quarter and $58 four.
Brett: $4 million or 18, 1% of revenue in the fourth quarter 2023.
Brett: For the full year, EBITDA was $177 $1 million or 13, 5% of revenues compared to $404 $2 million or 24, 3% of revenue in 2023.
Brett: We have included in our earnings release, a reconciliation of GAAP net income to non-GAAP adjusted net income and GAAP net income to EBITDA, which provides additional details.
Brett: Cash flow provided by operations was $81 $8 million for fourth quarter and $119 $4 million for the full year cash flow.
Brett: Was $62 $1 million, which included $19 7 million for capital expenditures and for the full year free cash flow was $46 $4 million, including $73 million for Capex net cash flow was a negative $2 $4 million, which includes the <unk>.
Brett: Paydown of $3 $8 million of total debt and for the full year net cash flow was a negative $3 $8 million, which includes the net paydown of $7.6 million of total debt as well as total net consideration.
Brett: $52 $6 million for the acquisition of Fort Media, a global company, which operates in Asia that develops high quality solutions and semiconductor products to enhance human human and human to machine voice communications diodes required for media to expand our product portfolio and <unk>.
Brett: Enhanced the company's footprint and advanced voice processing technologies, primarily targeted at automotive and compute markets.
Brett: Turning to our balance sheet at the end of fourth quarter cash cash equivalents restricted cash plus short term investments totaled approximately $322 million working capital was approximately $849 million in total debt, including long term and short term was approximately 52 million.
Brett: In terms of inventory at the end of fourth quarter total inventory days were approximately 193 as compared to 187 last quarter.
Brett: These goods inventory days were 82 compared to 79 last quarter total inventory dollars decreased $7 $1 million from the prior quarter to $475 million total inventory in the quarter consisted of $18 3 million.
Brett: A decrease in raw materials, and $9 $7 million increase in work in process and a $1 $5 million increase in finished goods cap.
Brett: Capital expenditures on a cash basis were $19 7 million for the fourth quarter or five 8% of revenue and $73 million or five 6% of revenue for the full year, which were both at the low end of our targeted range of 5% to 9% of revenue.
Brett: Now turning to our outlook for the first quarter of 2025, we expect revenue to be approximately $323 million plus.
Brett: Plus or minus 3%, representing a four 8% sequential decrease at the midpoint due to Chinese new year holiday, but slightly better than typical seasonality importantly, the midpoint of guidance represents 7% year over year growth and extends our momentum in support of our expectation.
Brett: Our growth in 2025.
Brett: GAAP gross margin is expected to be 32, 5% plus or minus 1%.
Brett: non-GAAP operating expenses, which are GAAP operating expenses adjusted for amortization of acquisition related intangible assets are expected to be approximately 30% of revenue plus or minus 1%.
Brett: We expect net interest income to be approximately $1 $5 million. Our income tax rate is expected to be 18, 5% plus or minus 3% and shares used to calculate EPS for the first quarter are anticipated to be approximately $46 7 million.
Speaker Change: Not included in these non-GAAP estimates as amortization of $5 $8 million after tax for previous acquisitions with that said I'll now turn the call over to Emily Yang.
Thank you Brad and good afternoon.
Speaker Change: During the fourth quarter was above the midpoint of our guidance and slightly better than typical seasonality our global appeal of decrease in the quarter, but the good news is our channel inventory was slower both in terms of dollars and weeks.
Speaker Change: We'll also know P O S. In Asia for 2024 was strong, especially the second half the year, where we saw double digit growth over the same period in 2023.
Speaker Change: Looking at the global sales in the fourth quarter Asia represented 80% of revenue Europe, 12% in North America, 8% in terms of our end markets industrial was 23% with diodes product revenue automotive, 19% compute 25% consumer 18% and.
Speaker Change: Patients 15% of product revenue.
Speaker Change: Our automotive industrial revenue combined total of 42% of the product revenue, which is the same as last quarter, maintaining our product mix above our target model. It reflects our ongoing content expansion and design win initiatives, even though both of this market continue to undergo inventory and demand adjusted.
Speaker Change: Nice.
Speaker Change: A key component of diodes successful increase of content and new and existing customers has been our focus on technology and product development over the past that for all years in 2024 alone. We introduced F 155, new part numbers with 330 of this specifically for automotive.
Speaker Change: Where we have increased our addressable content per car over 30% this past year from approximately $160 to 213.
Speaker Change: Now, let me review the end market in greater details.
Speaker Change: Starting with the automotive market, we maintained a proud a recipe that 19%, even though the inventory rebalancing continues throughout the quarter, we expect inventory adjustments and slower demand to persist into the first quarter.
Speaker Change: Our focus continues to be on content expansion and market share gain to precision dialogue for the graph as the auto market recovers.
Speaker Change: As I mentioned earlier diodes introduced a high number of new automotive compliance product during the year. This products are targeted at our key focus areas of connected driving comfort style safety and electrification applications.
Speaker Change: In terms of product adoption and demand creation, we're seeing strong momentum for our small income PCI Express packet switches USB type C. Retry offers and active cross boxes for the rear seat entertainment and smart home applications.
Speaker Change: Our LDR product family received solid demand for Adas infotainment and wireless charging applications and our SBR products being designed with an auto display applications.
Speaker Change: We also experienced strong growth in the quarter from our switching power D. C. D C product for connected driving applications. Additionally, our power discrete products, including mass power T V. S. SBR and bipolar junction transistors are seeing demand growth across multiple auto applications.
Speaker Change: We have also been ramping up new design wins for our high voltage hall switches being used in the tailgate lift door harness electric steering control across multiple customers around the world.
Speaker Change: Also in automotive our LCD driver business continued to see strong demand in various lighting applications well R. L. E D drivers and Multimode L. E. D driver controllers gained traction in applications, such as Fran Hi, Hello, being as well as rare and a chair.
Speaker Change: Thanks.
Speaker Change: In the industrial market. The inventory correction continues similar to automotive end market. We expect this may last into the second quarter. Despite the demand softness we continue to make progress in our design in design win initiative, our high voltage Hall switches are seeing design win for Wingo.
Speaker Change: Openers D C fan and military applications, while our photocopiers and LDL with are seeing traction in the entire industrial equipment military control offense and power tools.
Speaker Change: Additionally, our protection devices are being designed into battery backup units as well as programmable logic controller units.
Speaker Change: Bridge Rectifier had multiple design wins in the switch mode power supply for surfer power. We also saw several new silicon carbide SPD designing activities in rehab power supply and electric motor as well as tier one inch energy storage applications.
Speaker Change: In the computing market, we continue to see strong growth momentum for the PCI Express packet switches USB signal conditioners, and ultra low trade her crystal oscillators in AI server and data center applications, including 800, G and one six T switches and optical modules.
Speaker Change: Our high speed serial interface logic, Crystal oscillators, and PCI Express clock are being adopted in the Nick N.
Speaker Change: GPU card for their system referenced Fox.
Our addressable content in the AI surfer today, its approximately $90 per box, which compare to a 53 per box last year, but traditional surfaced.
So in the computing market, we received solid demand for our L. D o's across various applications as well as our ideal dialed controllers, MOSFET and compact power switches for input power all rang empower path sequencing control applications. Additionally, our bus switching solutions.
Speaker Change: Enterprise SSD and next generation portable gaming consoles are being well received as they have helped SSD customers double the supported capacity without redesign of their storage controllers and also protect against software piracy for gaming console customers.
Speaker Change: Lastly high bandwidth cameras in the Napoli are driving demand for our mid PT Fi re drivers and we continue to achieve momentum for our shockey and protection products in notebook and docking station applications.
Speaker Change: In the communication market, our USB two repeaters has become the standard interface for Cpus and S. O C processors in the mobile communications, where our one and two channels of E. S. B repeaters are gaining traction.
Speaker Change: <unk> also seen solid demand and our protection devices are winning new designs in the smartphones.
Speaker Change: Also in the communication market, our bipolar junction transistors, Schottky SBR product Athene, new designs for <unk> CPE and five modules. We also saw strong momentum for USB power delivery and AC D. C. P W and controllers products in smart.
Speaker Change: Phone charging applications.
Speaker Change: Lastly, in the consumer market, our SBR and SPD products in chip scale package or securing new designs in pilot terrific Charger and battery pad applications. Additionally, our bridge rectifiers are being designed into gaming applications, while our high voltage.
Speaker Change: Buck converters are being adopted in the smart home Iot applications. We also have new design wins for bipolar junction transistors products in personal care devices.
Speaker Change: In summary, we were pleased to achieve the first quarter of year over year growth in the fourth quarter. Following the multiyear Mark has slowed down.
Speaker Change: Although we have not yet seen a broad market recovery, especially across the automotive industrial markets. We continue to focus on demand creation and executing on our new product initiatives to drive increasing content opportunities as the global market recover.
Speaker Change: With that we'll now open the floor to questions operator.
Speaker Change: Thank you.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone. If you are using a speakerphone. Please pick up your handset before pressing the keys.
Speaker Change: If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star and then two.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
David Williams: And your first question today will come from David Williams with benchmark. Please go ahead.
David Williams: Hey, good afternoon. Thanks for taking my question and congratulations on the growth here.
David Williams: Thank you David.
David Williams: Okay.
Speaker Change: Maybe you could speak a little bit to the seasonality that you're talking to.
Speaker Change: And how that's affecting you in China expected with the Chinese new year and maybe.
Speaker Change: As it relates to automotive and industrial kind of what Youre seeing there are you expecting that to be down maybe further than some of the other segments or just any color around the demand trends in China would be helpful. I think.
Speaker Change: Yeah.
Speaker Change: So first of all I think Chinese new year, I think is pretty much within our expectation we didn't see anything.
Speaker Change: No I think there are some customers with extended shutdown, but not all the customers I think overall, it's saturated within our expectation.
Speaker Change: I think we actually included a new year Chinese new year return.
Speaker Change: Our employees and overall market everything together, we actually guided a four 8% down for the Q1, which is actually slightly better than our usual seasonality in Q1 never was a strong quarter for us because Chinese new year impact I would say all in all it's actually within our expectation.
Speaker Change: Great.
Speaker Change: I appreciate that and then it would be great on the gross margin.
Speaker Change: The sequential improvement there feels a little stronger than I would've anticipated what are what are you kind of see it on the gross margin I guess, given the nice bump sequentially there.
Speaker Change: Yeah. So I think from the gross margin point of view and you know usually revenue goes hand in hand with our gross margin.
Speaker Change: What we really tried to do you know, it's really more on the product mix initiatives in home improvement overall, we continue to focus introducing new products. As an example, I think I just talk about it we released more than 700, new part numbers in 2024 and out of that more than <unk>.
Speaker Change: 330 is actually automotive parts. So you can actually see the commitment and driving all of the new products and new technology continue to expanded our available com.
Speaker Change: Content market.
Speaker Change: Market expansion overall, so that will continue to be the focus right. So a couple of things is really drive the margin improvement. So one is on the product.
Speaker Change: Improvement.
Speaker Change: Product mix improvement initiative. The other side is actually on the under loading situation.
Speaker Change: Gary mentioned right, we continue to actually minimize the impact continuing to pour additional products into our own internal fab as an alternative right.
Speaker Change: Fortunately it that takes time, but slowly we are going to see some of the results I would say thats at least that you're actually seeing probably better than your expected margin gross profit margin overall based on our guidance.
Speaker Change: Okay, well is there a way to think about how far you are through that porting over process is there a threshold or maybe just a way to think about the magnitude that's having to the gross margin at this point.
Speaker Change: I think that would be ongoing quarter by quarter effort right I think not only we need to qualify the process. The technology. The devices. We also need to work with our customers to qualify that device onto therefore, so I would say, it's an ongoing process and it's probably going to take you know other number of quarter.
Speaker Change: <unk> continued to improve over time, but I strongly believe that with the believe 2025 is actually going to be a better year. So that also going to drive some of the revenue at the same time driving some of the loading so we actually pretty confident that offer all you're going to see improvement throughout the quarters within 2020.
Speaker Change: Five.
Speaker Change: Great. Thanks, so much.
Speaker Change: Okay.
Speaker Change: And your next question today will come from William Stein with <unk> Securities. Please go ahead.
William Stein: Thanks for taking my question first I'm, hoping you might give us some clues as to how you expect.
Speaker Change: The revenue the performed in each of the end markets in Q1.
William Stein: Okay.
William Stein: Alright, So you know automotive.
William Stein: It's still going through inventory rebalancing and coupled with weaker demand over all right, especially from the Europe territory. So we think Q1 is still going to be a challenging quarter overall.
William Stein: You can see I mean, even with Q4 of challenging and we try to maintain the 19% over all of the product revenue. So I think that will continue to be the focus is to actually focus on the content expansion.
William Stein: The market share gain overall, so oh for industrial market, we're still seeing ongoing inventory rebalancing some customer situations worst than the others definitely some are better so not everything equal, but all in all we see that will continue probably linger through the second quarter and.
William Stein: <unk> markets that meant for Q1, we expect it probably be slightly down.
William Stein: Also Chinese new year manufacturing a lot of that is in Asia. So that will be impacted overall and the consumer was never a strong quarter in the first quarter. So we don't expect consumer to be a growth quarter as well as communication I think on the communication side on the enterprise traditional networking.
William Stein: We are actually seeing some of the inventory rebalancing improving overall, so that might give us some of the upsides, but the smartphone is actually going to probably be challenge in the first quarter. So I will say all in are still going to be a down quarter. So as a conclusion right. So we guided for.
William Stein: 8%.
William Stein: For the whole quarter.
William Stein: But that's still better than the seasonality first quarter, Yeah mhm.
William Stein: Hey.
William Stein: Well, let me ask about operating leverage.
Speaker Change: Compared to the December of 2022 quarter is two years ago, but your revenue is down 32%.
William Stein: Your Opex is only down 10%.
Speaker Change: Which is.
Fine.
Speaker Change: Sumit means the significant fixed cost in your opex, but as your revenue recover versus assuming we.
Speaker Change: Even if we don't get back to that exact level, but as you grow.
Speaker Change: Should we think theres going to be sort of similar positive operating leverage on the way up or hadn't added costs that make the.
Mike: Mike make the leverage less.
Speaker Change: Severe less significant as it was on the way down.
Speaker Change: I would say that you.
Speaker Change: Will that we have there's no real structural things that we've added across that window.
Speaker Change: We basically had picked up.
Speaker Change: The on Sydney, and the <unk> instruments factory across the last number of years and then what we've done as you saw that across the last couple of years, we brought down overall opex spend.
Speaker Change: <unk> 22 to $23 23 to 24, I think what you'll see is there's a.
Speaker Change: Good bit of leverage to that as we go forward.
Speaker Change: I think we get.
Speaker Change: A lot of that will we have.
Speaker Change: Talked about the leverage we get in our margin not only as we start to grow we get the benefit of pulling those some of the sourcing of those products inside versus out.
Speaker Change: That infrastructure, obviously is inside the company now versus outside in terms of some of the manufacturing footprint, but I think youre going to see the leverage is good.
Speaker Change: There's not I don't expect that to scale back up actually think that what youre going to see is.
Speaker Change: That opex as a percentage of revenue.
Speaker Change: Coming back down.
Speaker Change: <unk> and then start coming back down as revenue starts to growth, which we feel strongly that <unk>.
Speaker Change: Fourth quarter was year over year growth first quarter, we're guiding year over year growth and we expect that to continue.
Speaker Change: Through the year, we don't guide out further officially but that's that's.
Speaker Change: That's our feeling thats, our expectation and that's what you'll see on the Opex side as it will continue to kind of come down across the quarters.
Speaker Change: Yeah.
Speaker Change: Great.
Speaker Change: Thanks, guys.
Speaker Change: Thank you.
Speaker Change: Again, if you have a question. Please press star and then one.
Speaker Change: Yeah.
Speaker Change: And your next question today will come from David Williams with benchmark with a follow up. Please go ahead.
David Williams: Hey, Thanks for taking the follow up and forgive me if I missed this my line dropped out but I wanted to ask maybe on pricing trends, what youre seeing there have you seen erosion greater than you would typically see or does that seem to come down a bit just from a pricing perspective.
David Williams: Yeah, David I think the pricing is pretty stable.
David Williams: Remember I talked about one 5% or 2% deal intra quarter, they're still within that range. So I wouldn't say the overall environment changed.
David Williams: We see more price competition from the commodity and commodity area. That's also the area, where we have been strategically be focusing and so I would say all of them all is actually stable.
David Williams: And another important thing is where you're probably going to emphasize that a lot of on the old product portfolio has been.
David Williams: Introduced a lot of new products, not only limited to automotive, but also for the different kind of segment enjoyed.
David Williams: Enjoyed it much better ESP that GP percent on those kind of new product we introduced at market. So we can balance it looks like the commodity loss, even though in some market mhm.
Speaker Change: Okay, Great and then just one last one if I may on the AI side, you're seeing some really nice growth. This year per box. As you mentioned is that driven more by just greater sockets available or is it your product portfolio or what's really driving that that opportunity within that server kind of market.
David Williams: I think it is combined of up off right. So we are expanding our product portfolio.
David Williams: We have a some of the newer products are supporting the surfer or the AI surfer applications.
David Williams: Also see.
David Williams: With the AI surfer application with certain chipset. There is additional PCI express port required and we actually have this PCI express packet switch portfolio, that's very well suited to really support this kind of application with the requirement of additional pcie porch.
David Williams: So I would say combination of quite a number of different things of course, you know that.
David Williams: The volume and the change overall market, that's all beneficial to our overall growth.
Okay.
David Williams: Great. Thanks, again, certainly appreciate it.
David Williams: This concludes our question and answer session I would like to turn the conference back over to Gary Yu for any closing remarks.
David Williams: Thank you everyone for participating on today's call. We look forward to reporting our progress on next quarters Conference call. Operator, you may now disconnect.
David Williams: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
David Williams: [music].