Earnings Transcript for SCPL - Q1 Fiscal Year 2022

Operator: Hello and welcome to SciPlay First Quarter 2022 Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator instructions] Now let me turn the call over to Jim Bombassei. Please go ahead, sir.

Jim Bombassei: Thank you, operator, and good afternoon everyone. During today's call, we will discuss our first quarter 2022 results and operating performance, followed by a question-and-answer period. With me today are CEO, Josh Wilson; and Interim CFO, Daniel O'Quinn. Our call today will contain certain statements that include forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements involve certain risks and uncertainties that could cause actual results to differ materially from those discussed during the call. For information regarding these risks and uncertainties, please refer to our earnings release issued today and our filings with the SEC. We will also discuss certain non-GAAP financial measures. A description of each non-GAAP measure and a reconciliation of each non-GAAP measure to the most directly comparable GAAP measure can be found in our earnings release posted in the Investors section on our website. In addition, please that KPIs discussed on today's call referred to in-app purchases only unless otherwise noted. As a reminder, this conference call is being recorded. A replay of the webcast and accompanying materials will be archived in the Investors section at our website at sciplay.com. And now I'll turn the call over to Josh.

Josh Wilson: Thanks, Jim. Good morning everyone and thanks for joining today. We're going to keep today's call relatively short giving our upcoming Investor Day, which will take place Tuesday, May 17th in New York, which will also be available via webcast. That said we have a lot to be excited about after another incredible strong quarter of above market growth. Let me run through a few highlights. We are very pleased with our team's performance as we are building upon last year's momentum and continue our record strong core operations. The first quarter of 2022 was the second highest revenue quarter exceeded only by the second quarter of 2020 a quarter that of course we saw dramatic growth in revenue because of what happened with COVID. How have we done it? First and foremost, with the great core games that continues to perform better and better. Goldfish hits six consecutive quarterly records. Quick Hit also hit new revenue records with double-digit sequential and year-over-year growth. Jackpot Party delivered one of the highest quarterly revenue records continuing to grow year-over-year. MONOPOLY had a very strong quarter as well with revenues and ARPDAUs increasing double digits, reflecting the fact that players are spending more and more time in the game. Another key dynamic is the increased investment in marketing, we told you about last quarter, is paying off as planned, outperforming its expected payback by 3% this quarter. We are seeing more new players and record monthly paying users demonstrating that we are succeeding and expanding our reach. As we start monetizing these new users, we will see a ramp in the average monthly revenue per paying user. Over time this will provide another leg of growth on top of the strong monetization generated in the current quarter. Another big development this quarter was our acquisition of Alictus. I'll talk more about Alictus in a moment, but its strong initial performance both financially and operationally have been a real highlight for us. In addition, we have recently added new members to our board of directors, increasing the size to nine. It was very important to us to bring in leadership that had deep industry knowledge and strategic expertise to enrich the board and provide the right mix of perspective as we embark on the next phase of our growth. Last but not least, our board has authorized a 60 million two-year share repurchase program. We are in strong position to invest in growth as well as return capital to our shareholders. This demonstrates our commitment to driving shareholder value in generating the highest return for our investors by deploying capital, wherever we see the best opportunity, whether that's investing in our growth initiatives, executing on disciplined acquisitions or returning capital to our shareholders via share buybacks. So to take a step back, we outpaced the social casino market in the first quarter in line with our expectations, but for us the top-line coming out of this quarter isn't just growth. It's momentum. The momentum we continue to generate quarter-over-quarter as we execute on our suite of strategies to expand our market share. And that's what makes us so excited, not just about the results we saw in the first quarter, but also the results we anticipate going forward. Indeed our success reflects the successful execution of the plan that has been in place for some time. I mentioned, for example, our success of our increased investment in marketing, which was made possible by our record LTVs we began to see and we are just getting started. We are continuing to invest in our SciPlay engine with the goal of continuing to increase reach, improve retention, provide enhanced value to the players and ultimately deepen our player engagement monetization and we saw great results this quarter. Monthly paying users and monthly active users improved sequentially while our payer conversion rate remained at record levels. Also ARPDAU was strong at $0.74, up from $0.67 in the first quarter of 2021. As we continue to product size our core capabilities, centralizing project All-Star to benefit across all portfolio of games. We're creating the next catalyst to enable, to accelerate revenue growth and drive sustainable profitability. Concurrently, we continue to invest in our direct to player platform, which will further enhance revenue growth, customer LTV and margins. All of the investments are already beginning to deliver returns and we couldn't be happier about what all of these initial returns look like. That's why we are confident in achieving our 2022 revenue growth target of 10% we provided last quarter and we'll remain on pace to achieve 29% full year 2022 AEBITDA margin. Before I turn it over to Daniel for more detail on our financial performance, let me just briefly speak to the early success of the Alictus acquisition. Integration is proceeding extremely well and both teams are delivering solid results. We are on target and have great news to share. Alictus executed successfully on the product roadmap in the first quarter, releasing two new games, one of which achieved number one free games on the U.S. Google Play and number five free games on the iOS U.S. App Store. In acquiring the company, we added 28 million monthly active users. More importantly, we added the opportunity to achieve increased synergies. I'll give you one example. Alictus' in-app advertising technology allows us to diversify our revenue by giving us flexibility to design games that get both monetized through in-app advertising, in-app purchasing or a hybrid revenue model. And we are already seeing a perfect opportunity to take advantage of this new capability with Solitaire Pet Adventure. On top of that, we're going to be able to cross-sell between social casino and casual helping us maximize the LTV across the entire portfolio. I had a chance to visit with the whole Alictus team in Turkey and I came back even more excited about the acquisition. We have a lot to look forward to as we scale this high growth profitable business even further. You'll hear more about the strategy and business next Tuesday, May 17th, at our Investor Day, including sneak preview of Project X, which is on track for launch in the second half of 2022. Trust me you won't want to miss that. And now let me turn it over to Daniel.

Daniel O'Quinn: Thanks, Josh. I too will try to keep things short. I will just run through some financial highlights quickly and then we'll open up the call to take your questions. Let me start by reiterating what Josh said. This was an extremely strong quarter building off the strong momentum from fourth quarter to achieve our second highest revenues ever. Total revenues increased 5% year-over-year to $158 million and excluding Alictus revenue growth was about 3% year-over-year. Coming off those excellent results, we're on target to achieve our target of 10% full year revenue growth and 29% full year 2022 AEBITDA margin. And I will note again, this outlook reflects our expectations that margins will scale over the course of the year and next year, as the investments, Josh talked about drive revenues. Net income for the quarter was $32 million and our net income margin was 20%. Both were impacted by our investments in growth initiatives. You can see the scale of those investments in the numbers, but also the initial impact of their returns. We generated AEBITDA of $44 million including investments we made during the quarter. Our first quarter AEBITDA margin of 28% is consistent with our expectations and we continue to expect margins will scale in the second half of the year. However, as we've said today, the initial returns on those investments are reason for excitement. As Josh mentioned, our engagement and monetization metrics are very strong. Players are spending more time and money in our games and we achieved record revenues for Goldfish and Quick Hit. Player LTV and retention is at all-time high. We're already generating attractive returns on our ad spend as we increase the funnel of new players and continue to grow our business. And even as we grew, our user base, payer conversion matched our record results from the fourth quarter, 2021, standing at 8.9%. This is 80 basis points above our conversion rate of 8.1% in the first quarter of 2021. As we look forward, we expect to benefit from the investments in our growth initiatives in the second half of 2022. And the impact of the top and bottom line will accelerate into 2023 and beyond. You can see why we're excited about our future. Now turning to cash flow. We generated $37 million in operating cash flows in the first quarter, resulting in strong conversion rate. And even after paying $106 million for the Alictus acquisition, cash on our balance sheet only declined $72 million sequentially and stands at $292 million. The strength of our balance sheet and our highly cash generative business, provides us with financial flexibility to execute on our vision while returning capital to our investors. To that end, we are pleased to launch our first share repurchase program, reflecting the capacity to execute on our growth strategy while concurrently returning excess capital to shareholders through stock repurchases. And given our current valuation, we believe this is an opportune time to buy back our shares. So to sum it up, we're thrilled about where we are and where we're going. First quarter 2022 saw us reach our second highest quarterly revenue ever. And we generated $37 million in operating cash flows. As we continue to invest, we are creating the foundation for sustainable top line growth and profitability. We have a lot of exciting initiatives and look forward to continue to generate shareholder value as we execute on our plan. With that, I will open it up for questions. Operator?

Operator: Thank you. [Operator Instructions] Our first question comes from the line of Ryan Sigdahl with Craig-Hallum. Your line is open.

Ryan Sigdahl: Good afternoon guys. Congrats on the results and the newly authorized buyback.

Josh Wilson: Thank you very much.

Ryan Sigdahl: Curious on the contract you have with Light & Wonder it was a three-year contract when you guys IPO and I believe it expires in May. But any update on plans and new arrangements there?

Josh Wilson: Yes. So Ryan first, thanks for the question. It's great to get to talk to you. As we know the contract is coming to the end here in May and we have been under negotiations for the past few months to strike a new deal. Both companies are very excited about the relationship. We've been working very well together and we've even put together some shared roadmaps. So I feel very confident that we're going to head towards a new deal. The great news is there is zero impact to the business in the short term, if the deal isn't done in the next few days because we still have 100% access to all of the slots that were released or that we have access to before May 2022. So excited for the new deal. And can't wait to continue the partnership.

Ryan Sigdahl: Great. Then just as you consider evaluating the potential for in-app ads as far as legacy side, play games go, any updated thoughts there kind of as you've had a chance to digest the Alictus acquisition and what that brings.

Josh Wilson: Yes. Yes, for sure. The Alictus acquisition has just opening up another doorway to, a much large a much larger $13 billion in-app advertising. We're learning every day. We immediately see a home for the in-app advertising in our Solitaire Pet Adventure game which we went back to redesign to include it as part of the core part of the Meta itself. So it'll increase the reach. We are currently evaluating whether or not it would make sense in any of the other games inside the portfolio. And as soon as we have a clear path there, we'll make sure that we share it. But we are super excited that it does open up that huge market for us. And as we have our plan to continue expanding in casual, it gives us a much needed leg up.

Ryan Sigdahl: When exactly did you get do the redesign on Solitaire Pet? Any initial read-throughs albeit probably early end reaction from,

Josh Wilson: Yes. So after the acquisition of Alictus and we had access to the technology we reevaluated, the Solitaire Pet Adventure game, which we would have built having an ad monetization arm to it, but we didn't have the technology. So we left it out. With the close of Alictus, we immediately said, hey, if we're going to do it, it makes the most amount of sense to do it right now. Turning it into a hybrid economy that gives us the ability to get the full reach of ad modernization, but also include the stickiness and engagement of IAP. We started that design and development. Let's call it in the last four to six weeks. We're hoping to relaunch the game with the ad monetization in it. Let's call it late third quarter, early fourth.

Ryan Sigdahl: Got you. Good. Last one for me, just on the buyback, any extra commentary you can give, is it planning to be kind of programmatic or opportunistic? Thanks. Good luck guys.

Josh Wilson: Yes, as we look at how we're going to continue to give value to the shareholders, we always look at organic inorganic different ways to drive value. We looked at the stock buyback, especially around the fact that we believe that our share price is very undervalued right now. And so, voted on the actual buyback in the last board meeting and we plan on executing on it, no matter what is happening, as long as the value of the stock is undervalued.

Ryan Sigdahl: Helpful. Thanks, Josh. Good luck guys.

Josh Wilson: Yes. Thank you, Ryan.

Operator: Thank you. Our next question comes from the line of Benjamin Soff with Deutsche Bank. Your line is open.

Unidentified Analyst: Hi, this is Spencer [ph] in place of Ben here. With the market backdrop getting a little bit more choppy, how would you assess your exposure to a macro-economic downturn? Do you think the impacts from recession might be different for social casino versus other forms of video games and entertainment?

Josh Wilson: So, first thank you for the question Spencer, it's great to meet you. The great thing about video games, especially mobile video games is they are very inexpensive forms of entertainment that you are able to basically have at the palm of your hands all the time. And they are also low forms, low payment forms of entertainment. So we don't expect to see any real downturn happen because of inflation or the market. And as of today, we've seen, actually increase in engagement and KPIs for our different games. So with that said, we're going to continue to evaluate to see if there is anything one way or another, but right now we actually are very bullish in the fact that our games continue to grow. We continue to have record quarters and we don't see that stopping anytime soon.

Unidentified Analyst: Great. Thank you.

Operator: Thank you. Our next question comes on of David Karnovsky with JPMorgan. Your line is open.

David Karnovsky: Hi, thank you. Dan, just a follow-up on the 10% revenue growth guide. Can you just confirm the same underlying guidance you provided on the prior quarter call in terms of outperforming the social casino sector?

Josh Wilson: Yes. So let me jump in and then I'll have Daniel kind of follow it up. So as we know, according with [indiscernible], they talked about a 4.7% for the year. We have consistently as a company been able to outperform this market and we're still very –we're very positive that we will continue to do it. Our quarter ended up almost exactly on plan with many highlights to it with Quick Hit having a quarter, an all time quarterly record. Gold Fish having its sixth consecutive. Jackpot Party after setting another yearly quarterly record had one of its top five quarterly records. And so we feel very, very confident about the health of the business and how it's going and continuing to beat the market of the entire social casino, Daniel, anything you want to add?

Daniel O'Quinn: Yes. A couple things on the 10% year-over-year growth. Remember that we're going to have like 10 months of Alictus revenues included in that guidance. Right now what we're seeing in the social casino market is approximately 4.7% growth for the full year. So we believe this is definitely a revenue number that we'll be able to hit.

David Karnovsky: And then Josh, you…

Josh Wilson: Oh, go ahead, David.

David Karnovsky: No, no.

Josh Wilson: I was going to say we feel very good with the guidance that we gave and we feel like we're going to continue on the path that we have that we set early this year in Q1.

David Karnovsky: Okay. I think Josh, you touched upon it a little bit in your prepared remarks, but would be interested to hear more about how you're thinking about leveraging the Alictus player base over to the core social casino portfolio?

Josh Wilson: Yes, yes, for sure. The hyper casual market is one that generates a lot of installs. In fact, it's like 40% of all the installs of the entire casual market. And inside of there is a large portion that overlap with our core demographics throughout all of social casino. And so as we get them into the Alictus games and we are understanding the players, we will start cross platforming them or cross gaming them to the higher LTV games in our – in the rest of our portfolio in order to extend the lifetime value of each individual. Now, with that said, we're two months from the close of the acquisition and we're still doing the early integration. So it will take some time before we start actually moving people over. I think you'll start seeing the actual movement happen call it Q4, Q1 of 2023.

David Karnovsky: Thank you.

Operator: Thank you. Our next question comes from the line of Eric Sheridan with Goldman Sachs. Your line is open.

Eric Sheridan: Thanks so much for taking the question. I want to come back to some of the comments you made in the opening remarks around marketing investments, and you seem like you're seeing pretty good returns on deploying money in marketing channels. That seems a little bit in contrast to others in the broader industry that are talking about compressed ROIs or pricing inflation or the elements of maybe lower returns, given some of the privacy changes that have made more broadly in advertising, just wanted to go a little bit deeper on what you're seeing maybe some of the channels where you're finding some success on the marketing side and maybe following up on the last question, how do you think about elements of mining existing user and gamer bases from a first party standpoint to build maybe a marketing engine that could drive higher ROI just beyond the short-term comments in the prepared marks. Thanks.

Josh Wilson: Yes, so, first and foremost, I'm going to give the credit to our extremely talented growth team. They put together a plan for this year and expected paybacks returns and they are exceeding all of the expectations. So, we went into the year with the highest LTVs across our portfolio and with having the highest LTVs that allowed us to look at potentially spending more for user acquisition or CPIs for each individual. We came in with assumptions of a little bit of growth quarter-over-quarter, but not that much for CPIs. And it held actually underneath what our original projections were and the LTVs ended up being higher. So this is how we ended up at out beating our own expectations by about 3% for the quarter. We've seen this across most of the major channels. And I want to give again, once again, the credit goes to the growth team and the game teams, the growth team and finding the right people and the game teams for building a product that is really engaging the users and then giving them the experience that is causing more and more of them to become payers which is what you saw with our highest number of payers that we've had as a company ever, including the height of COVID. With the first party data, I will say we are talking about this all the time. And one of the advantages of the Alictus acquisition is it gives us a lot more first party data to a lot of installs per – in per year or per call it per month. I don't know that we're looking at getting into the advertisement business, but keeping this first party data so we can use it across our entire portfolio is actually something we're talking about today. We are planning on utilizing as a company, as we start doing the cross platform, because as we all know, it's getting harder and harder to reach new users. And this is an advantage that it will give us as we continue to expand our into casual.

Eric Sheridan: Great, thanks for all the color and look forward to the Analyst Day next week.

Josh Wilson: Yes, us too, Eric.

Operator: Thank you. Our next question comes from the line of Aaron Lee with Macquarie. Your line is open.

Aaron Lee: Good afternoon. Thanks for taking my question and congrats on the quarter.

Josh Wilson: Thank you so much, Aaron.

Aaron Lee: Yes. Nice surprise to see monthly users and payers up so much. Once to dig a little deeper on that, was that a function of your decision to extend the payback period or certain features or developments you introduced in the quarter? Just curious if there's anything you call out there.

Josh Wilson: Yes, it is literally a mixture of both. So, we had the perfect of being able to increase more because of the height and LTVs, we were able to bring in more users. The health of the games has us at the top of the retention we have had. And then the legacy users are also more engaged than they've been, which is why we're seeing such an increased [indiscernible] monthly paying users because they're so engaging, we're seeing a decrease in churn. So it's actually all three of them together is what drove the increase in Q1.

Aaron Lee: That's fantastic. As a follow-up in your prepared remarks, you noted to look this launch two new games in the quarter, can you share how many games are in the pipeline and what the roadmap looks like for the balance of the year?

Josh Wilson: Yes, so, I can't share the exact number because it will fluctuate quarter-over-quarter, mainly based on market opportunities and development, I would say they're normally going to release somewhere between three to call it six games a quarter. And the difference between the three to six are sometimes, the amount of development, if it's a shorter development two, if there's a due trend that is coming, that we want to take advantage of or just three, we have more bandwidth than we originally thought, and we are able to create more. So, I wish I could give you an exact number, but it really does fluctuate quarter-to-quarter based on the opportunity.

Aaron Lee: Okay. That's helpful. Thanks so much and see you guys next week.

Josh Wilson: Yes. See you.

Operator: Next question comes from the line of Franco Granda with D.A. Davidson. Your line is open.

Franco Granda: Hi, good afternoon everyone. I know that you said you were trying to keep the call short but it seems like we're just making it difficult for you. Just following up on a question earlier can you please break out what your ad revenues for the quarter were, and then can you talk about what your expectations for ad revenues essentially like this as a percentage of the growth you're seeing for the full year?

Josh Wilson: Yes. So first, anytime I get a chance to extend the phone call talking to you, it's definitely worth it. So good for all of us, because the acquisition happened in March, so it was a very small part of Q1. We did not break out the ad monetization and we decided not to disclose it for the quarter. We are evaluating how to do this and looking at implementing a new breakout at the end of Q2 or maybe Q3 depending on, and the timing but also a breakout of the KPIs. Daniel, how would you like, any color you'd like to add?

Daniel O’Quinn: No, I just want to make sure you've covered the KPIs.

Josh Wilson: Okay. Yes. So hopefully that's okay.

Franco Granda: Yes. Hey that makes sense. And then from another question earlier, let's see you talked about 9% conversion and that's, one of the highest seen on the industry. So congrats on that. But I guess to me, the logical question is how sustainable do you think that is moving forward for you guys?

Josh Wilson: And so we believe it's extremely sustainable. It is really goes to show, we're functioning as a company, we're hitting on all cylinders when we're bringing in the right people into the game, our live ops and events are engaging the users on a day to day basis, as well as they ever have the new meta features coming in the game are changing behaviors. And we're using the data analytics in order to keep tailoring and morphing the game for people. All of this is driven through our project All-Star and I think we're just seeing the beginnings of this. And as we take the learnings of project All-Star and get it embedded into the SciPlay engine and hook it into the rest of our portfolio. I honestly don't know what the upper bounds are, but I can tell you that I believe it'll continue going up for sure.

Franco Granda: Excellent. That's very encouraging. And then lastly I guess, should we expect to hear some type of long term financial model next week?

Josh Wilson: So as of right now, we're not going to talk about exactly what's going to come into the Investor Day for next week. I do believe, there are a lot of exciting news and there's a lot of things that'll be worth coming in there. So I think I'm going to tell you, you're going to have to wait to see.

Franco Granda: All right. Sounds good. Well looking forward to that

Josh Wilson: All right.

Jim Bombassei: Operator, we have time for one more question.

Operator: Our final question comes from the line of Matthew Thornton with Truist Securities. Your line is open.

Matthew Thornton: Hey, good afternoon guys. Thanks for squeezing me in. Josh, I joined late, so I apologize. I'm going to ask a couple questions that have probably already been answered. So I apologize. It sounds like you guys are reaffirming the same revenue guides. I think you had talked about, doing better than the 4.5% for core social casino than when you layer in the elective, so you get to 10%. I just want to make sure that I heard that right. And any update on the full year EBITDA margin outlook, I think it kind of triangulated to about 29 spot 2%. Is that still kind of how you're thinking about the full year? I'll stop there and then I've got a couple follow ups.

Josh Wilson: Yes, no exactly. Right. We felt like our Q1 was really exactly on plan. We're actually seeing head of expected on our ad revenue and our KPIs and our core titles look really good. electives performed almost to the – of the model. And so from our side, we are 100% on plan for the year.

Matthew Thornton: Perfect.

Daniel O’Quinn: Yes, the one thing I would add is, from the step down we had margins in Q1, you're probably going to see some of that coming into Q3 or Q2, and then we'll start to see it ramp into Q3, into Q4 to get to that full year 29% EBITDA margin.

Matthew Thornton: So think about something maybe flattish into 2Q before it starts to upward trajectory.

Daniel O’Quinn: That's fair.

Matthew Thornton: Okay. Got it. And then just a couple of the initiatives I just wanted to touch on quickly. You talked about Solitaire Pet Adventure a little bit earlier. I think we were getting to the point where maybe we were getting close to really starting to lean into to UA. I'm just kind of curious where we are in that path. Are we leaning in yet or are we still kind of trying to figure things out? And then similarly Project X, are we still on track for the back half of the year?

Josh Wilson: Yes. So and this, so the spot one or the Solitaire Pets Adventure, we did talk about a little bit earlier. So, as we were finishing developing the game, we also closed on electives. And when we closed on electives, we got access to ad monetization technology that we all believe is a good technology to integrate into Solitaire Pet Adventure. To be honest, if we would've had that technology up front, we would've done a hybrid design of the game up front, but we didn't. But since we're looking at the long term of the game and making sure that we, can create the best games that we possibly can. We’d actually decided to take a step back redesigned it a little bit to add the ad monetization element into it. We're doing the development on that right now. And I would expect to see the game relaunch, but relaunch with the inclusion of IAA and late Q3, early Q4 as far as Project X goes, we are a 100% on plan with our milestones and the game is looking amazing. I can't wait to reveal more next week. So please join on the 17th because we are going to give more information and even show some pretty cool stuff with it.

Matthew Thornton: Awesome. Maybe one last stuff, I can flip it and then, I'll let you go. The DTC platform, I think you had talked about as early as late this year, but probably more 2023. Is that still how you were thinking about it?

Josh Wilson: Yes. We're also on schedule there. I mean, it's kind of a process to get through it. We cannot be more excited with, it kind of, it's going to allow us to become closer with our customers as we're going to own the actual platform that they're going to play on. We're going to be able to tailor the experience a little bit deeper and, it's going to allow us to be able to push some users directly to our own platform. I expect to see the platform relaunch at the end of this year. Not starting ramp until 2023. I really wouldn't expect it to be meaningful though, as far as contributing to the margins until probably 2024.

Matthew Thornton: Got it. That's great. Thanks everyone.

Jim Bombassei: Great. Thanks. I'm going to turn it back over to Josh for some final comments.

Josh Wilson: Thanks Jim. Thanks. I'm going to close by thanking our team members, who made the strong reports like todays possible. Their execution of our strategy is a testament to the culture that emphasizes high performance, collaboration and teamwork across the organization. A culture, that continues to attract best-in-class talent, so we can deliver fantastic games even when we maintain a keen focus on our bottom line. We'll provide more details insights, and insights on the road ahead and upcoming opportunities to enhance shareholder values at next week's Investor Day. I hope to see all of you there.

Jim Bombassei: Great. Thank you everyone for joining our first quarter earnings call. I'll turn it back to the operator.

Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation.