Ouster, Inc. (NYSE:OUST) Q2 2023 Earnings Call Transcript

Ouster, Inc. (NYSE:OUST) Q2 2023 Earnings Call Transcript August 10, 2023

Ouster, Inc. misses on earnings expectations. Reported EPS is $-3.19 EPS, expectations were $-1.45.

Operator: Good afternoon, and welcome, everyone, to Ouster’s Second Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After today’s presentations and remarks, there will be an opportunity to ask questions. [Operator Instructions] The call today is being recorded, and a replay of the call will be available on the Ouster Investor Relation’s website an hour after the conclusion of this call. I’d now like to turn the conference over to Ms. Sarah Ewing, Director of Investor Relations. Ms. Ewing, please go ahead.

Sarah Ewing: Thank you, and good afternoon, everyone. Thank you for joining us for our 2023 second quarter earnings call. I’m joined today by Ouster’s Chief Executive Officer, Angus Pacala; and Chief Financial Officer, Mark Weinswig. Before we begin the prepared remarks, we would like to remind you that earlier today Ouster issued a press release announcing its second quarter 2023 results. The company also published an investor presentation, which is available on the Investor Relations section of ouster.com. I’d also like to remind everyone that during the course of this conference call, Ouster’s management will discuss certain forward-looking information regarding the company, including forecasts, targets, statements from its press release, potential future customer orders, and shipments, near and long-term revenue opportunities, strategic customer agreements, market share trends, anticipated synergies from the company’s merger with Velodyne, ability to recognize the benefits of cost savings initiatives, future products and release states, anticipated benefits and applications of new product releases, manufacturing expectations, technological advancements and commercial paths, potential future market opportunities, customer traction and the company’s business outlook and third quarter 2023 financial guidance and trajectory are forward-looking statements that are intended to be covered by the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements.

There is no guarantee that such plans, estimates, and expectations will be achieved. Thus, while these statements represent management’s expected future results, and performance, Ouster’s actual results are subject to several risks and uncertainties that may cause actual results to differ materially from current expectations that we may share with you today. In addition to any risks highlighted during this call, you should carefully consider other important risk factors and disclosures that may affect Ouster’s future results as described in its most recent annual report on Form 10-K and other reports that the company files with or furnishes to the SEC. Except as required by law, rule, or regulation, the company undertakes no obligation to update any of these forward-looking statements for any reason after the date of this call.

Information discussed on this call concerning the company’s industry competitive position, and markets in which it operates is based on information from independent industry and research organizations, other third-party sources and management estimates, which are derived from publicly available information, released by independent industry analysts and other third-party sources, as well as data from the company’s internal research and are based on reasonable assumptions and computations made upon reviewing such data, and its experience in and knowledge of such industry and markets. By definition, assumptions are subject to uncertainty and risks, which could cause results to differ materially from those expressed in the estimates. During this call, we will discuss certain non-GAAP financial measures.

These non-GAAP financial measures should be considered as a supplement to and not a substitute for measures prepared in accordance with GAAP. For a reconciliation of non-GAAP financial measures discussed during this call to the most recently comparable GAAP measures, please refer to today’s press release. I’d now like to turn the call over to Angus.

Angus Pacala: Good afternoon, everyone, and thank you for joining us today. Following our merger with Velodyne in the first quarter, we set out to expand our product offering to broaden our serviceable market, strengthen our overall financial position and build an operating model for Ouster that would enable us to viably scale and catalyze growth across the business. Ouster exited the second quarter 2023 with record revenues of over $19 million, record bookings of $43 million, increased average selling prices of approximately $6,300 per sensor on shipments of over 3,000 sensors and a sustainable cash balance of $224 million. That, coupled with a meaningful reduction in expenditures across the business, and our cutting-edge product roadmap positions the company for long-term success and puts us on an achievable path to profitability.

Last quarter, we shared our four strategic priorities for the business in 2023 as we build Ouster into a global leader in autonomy solutions and digital Lidar across our diverse end markets. Number one, drive new business through a targeted sales approach to deliver near-term growth; two, execute on the digital Lidar roadmap for OS and DF Series to expand our serviceable market. Three, develop a robust software ecosystem to accelerate Lidar adoption; and four, build a financially strong business to support our long-term growth. Ouster had a record quarter with increased sales of REV7 sensors. Our REV7 sensors now account for the majority of our OS sensor revenue and bookings. We also shipped VLS-128 sensors to Motional and May Mobility, coinciding with new and expanded multiyear customer agreements in the first and second quarters.

Additionally, we expanded the number of customers licensing with the Ouster Gemini and BlueCity software solutions. Turning to execution on our product road map. Our ability to improve sensor hardware through custom silicon CMOS chipsets will continue to set Ouster apart and keep our OS scanning sensors on the front end of innovation and performance. We have demonstrated this through multiple chipset tape-outs over the years, including the L3 chip last fall. We intend to do it again with the tape-out of our next-generation custom silicon, the L4 chip later this year. We also completed the integration of our early B sample solid-state digital flash or DF sensors. At only 40 millimeters all and fully solid state, these final form factor sensors can detect 10% reflective objects, at up to 200 meters range with camera like resolution.

The DF advantages are key for automakers looking to integrate reliable sensors that can be manufactured affordably and at scale in high-volume production vehicle programs. Our early B samples will be sampled to leading automakers in the third quarter of 2023, which is a critical milestone in our automotive roadmap and in our commercial engagements with automakers. Next year, we will upgrade our B samples by integrating our next-generation silicon, the Chronos chip, which is also expected to tape-out later this year. Turning to software. Ouster has made major product and commercial strides since the start of the year as we now offer our flexible Gemini smart infrastructure platform, and our highly optimized BlueCity traffic actuation and control solution to an ever-expanding set of customers.

We now have over 200 active deployments of our software solutions running an array of in-house developed machine learning algorithms that make real-time observations of the environment around them. These AI-enabled sensor solutions allow companies and governments to solve a range of challenges involving logistics, security and transportation. Where cameras have been used in the past, our line of hardware and software solutions to provide more actionable and reliable data in all manner of low light and environmental conditions to detect and track objects for people in real time and aggregate analytics in the cloud. We are on track to complete the full unification of BlueCity with Ouster Gemini in the third quarter to pave the way for more features and a unified technology stack for faster development of both platforms in the future.

I expect the demand for Lidar hardware and software solutions across the smart infrastructure vertical will be a major growth driver for our business over the coming years. I spoke at a White House event in June to formally launch the Advanced Research Projects Agency for Infrastructure, or ARPA-I, a new agency within the Department of Transportation to foster the development and adoption of technologies that can improve the safety, sustainability and efficiency of our transportation infrastructure. The U.S. government’s recognition of Lidar as a critical transportation technology, combined with accelerating adoption of sensors at the state and municipal level, make me confident that we’re on the cusp of the wide-scale deployment of this technology.

And Ouster is well positioned to supply that demand. And finally, all of this progress is backed by an increasingly strong operating model with an eye on profitability. This is why Ouster took decisive steps in the second quarter to further reduce our expenditures across the business. As a result of those actions as well as additional steps to streamline our operations, we are now targeting over $110 million in cost savings exiting the fourth quarter of 2023 compared to our original goal of over $75 million at the close of the merger, as base-lined against the stand-alone cost structures of Ouster and Velodyne after the third quarter of 2022. As part of these efforts, Ouster also continued to execute on its outsourced manufacturing strategy for the former Velodyne products.

We completed the transition of the VLP-32 sensor to Fabrinet in Thailand following the full transition of the VLP-16 in the first quarter of 2023 and remain on track to fully transition the VLS-128 by the end of the year. We look forward to providing the market with more information on how these actions fit into our detailed financial plan next quarter. I’ll turn the call over to our CFO, Mark Weinswig, to provide more context on our financial results for the second quarter and outlook for the third quarter.

Mark Weinswig: Thank you, Angus, and good afternoon, everyone. The second quarter marked continued commercial traction and strong ASPs of our REV7 product family as well as significant progress towards completing our merger integration efforts and realigning Ouster’s business model with our expected growth trajectory. Starting off with our second quarter 2023 results, we recognized a record $19 million in revenue, a 13% increase over the first quarter. Industrial and robotics customers continued to drive the majority of our revenue in the second quarter, accounting for approximately 56% of sales closely followed by sales in the smart infrastructure vertical. In the second quarter, we booked $43 million in business with new and existing customers, up from $33 million in the first quarter 2023.

This represents a book-to-bill ratio of over 2% in the second quarter. In the first half of this year, we have already booked a combined $76 million in business, up from a total of $70 million in the fiscal year 2022. Similar to the first quarter, we saw continued commercial traction driven by strong demand and improved average selling prices for our REV7 sensors. In total, we shipped over 3,000 sensors in the second quarter. Our ASPs increased to 6,300 from 5,700 per sensor in the first quarter, primarily due to the strength of REV7 and a positive mix shift within the VLP product category. We believe Ouster is in a strong position as we move through the remainder of 2023. We have the most performant family of sensors on the market, one of the broadest customer bases in the industry and a strong balance sheet with $224 million in cash, cash equivalents and short-term investments as of June 30.

As anticipated, Ouster saw slightly improved GAAP gross margins in the second quarter. The second quarter gross margins of 1% included certain expenses outside of our ordinary operations, including excess and obsolete costs, and losses on firm purchase comments of $3.8 million associated with the consolidation of product lines and manufacturing transition to the REV7 OS sensors. Ouster’s non-GAAP gross margins were 26% in the second quarter of 2023. Given the transient nature of integration-related activity, we will continue to breakout merger integration, product transition and other expenses outside of our ordinary operations in an effort to provide a clear delineation between infrequent or unusual impacts in the fundamentals of the business to help baseline future operating performance.

In an effort to meet customer demand, reduce costs and ultimately expand long-term gross margins, we made further progress in our efforts to transition all Velodyne sensor production line to a contract manufacturer in Thailand. We have completed the full transition of the VLP-32 sensor following the full transition of the VLP-16 in the first quarter, and we remain on track to transition the VLS-128 by the end of the year. As a result of these efforts, we expect to see improved gross margins in the second half of 2023 as these activities are completed and the savings begin to be realized. Turning to our cost reduction efforts. We took additional actions in the second quarter to reduce our cash burn rate and align our cost structure with a path to profitability.

Building off the actions already taken in the first quarter, the company reduced annual run rate costs by an additional $40 million in the second quarter of 2023. We implemented further cost reductions across the organization, which resulted in a one-time cash expense of over $3 million. With these cuts, we are now on track to exceed our previously announced cost savings target of $80 million to $85 million, increasing our estimate to over $110 million in annualized cost savings exiting the fourth quarter of 2023 as baselined against the stand-alone cost structure of Ouster and Velodyne as of the third quarter of 2022. During our third quarter earnings call, we expect to present a long-term plan for the business as well as greater detail on our combined company cost structure on a go-forward basis.

The actions we have taken have been difficult. We believe they put us in a great position to improve our financial results, providing us with strong operating leverage as we grow the business. We are working to position Ouster for long-term success and are taking the necessary steps to grow top line revenues while also containing costs and improving margins. Now turning to guidance. For the third quarter of 2023, Ouster is targeting between $20 million and $22 million in revenues. We are pleased that our growth rate over the past couple of quarters, driven by the strong bookings activities and key design wins. We expect to see continued progression on our gross margins over the next two quarters as we complete the merger integration work, outsourced manufacturing of Velodyne Lidar sensors and migrate more of the business to our more performant REV7 sensors.

As we continue to make progress on these activities, we do expect our GAAP gross margins and non-GAAP gross margins to start to converge in the second half of the year. Overall, the second quarter performance saw a number of financial improvements over the first quarter, including higher bookings and revenues, a strong book-to-bill, higher gross margins, lower operating expenses and an improved adjusted EBITDA. And with that, I would like to turn the call back over to Angus.

Angus Pacala: Thanks, Mark. Ouster is now the largest U.S. producer of 3D Lidar. We have a proven ability to manufacture at scale with positive gross margins and have demonstrated strong growth with record revenue and bookings in two consecutive quarters. Increasingly, we provide AI-enabled sensor solutions to companies and governments worldwide to solve a range of challenges involving logistics, security and transportation. By leveraging Moore’s Law and our silicon roadmap, we continue to release new sensor products and capabilities annually and have typically increase the performance of our devices substantially with each release. The success of our REV7 sensors is the latest example of the effectiveness of our digital-first strategy.

This quarter, we had another major milestone, completing the integration of our first DF sensors, our line of affordable, low energy, quiet, extremely high-resolution Lidar sensors tailored for the global automotive industry. With our continued product and commercial advancements and recent actions to reduce costs across the business, I believe we can achieve the revenue growth, margins and cost targets necessary to become a highly profitable supplier of Lidar sensors and solutions. And with that, I’d like to open it up for Q&A.

Q&A Session

Operator: Thank you, Mr. Pacala. [Operator Instructions] We’ll go now to Andres Sheppard at Cantor Fitzgerald.

Andres Sheppard: Hi. Good afternoon, everyone. Congratulations on the quarter. And thank you for taking our questions. I want to start by maybe asking about gross margins, maybe particularly on a GAAP basis. It’s great to see that you’re back in positive territory there. I think that was a surprise, at least to us. Curious on how you’re thinking about it, throughout the rest of the year. I know there was some commentary in the prepared remarks, but maybe just to expand from there, what might we expect from margins throughout the rest of the year? Thank you.

Mark Weinswig: Thank you for the question. And gross margin is something that we’re very passionate about. Gross margins for the quarter were 1%, and that included a number of nonrecurring unusual and frequent items, including our excess and obsolete costs and certain losses on purchase commitments that totaled about $3.8 million. These were mainly associated with the consolidation of product lines and the manufacturing transition from the REV6 to the REV7 sensors. Our non-GAAP gross margins were up to 26%, which was sequentially up and reflected both higher revenues and the higher ASPs associated with our REV7 sensors. We do believe looking forward into the second half of the year, that with continued commercial traction, and higher revenues, the cost reduction efforts we’ve undertaken and also our move to outsource manufacturing that we should see our margins expand in the second half of the year and with our GAAP gross margin starting to get more aligned with our non-GAAP gross margins.

Andres Sheppard: Got it. Okay. That’s super helpful. And then maybe just a quick follow-up. In terms of the $43 million in bookings, which you alluded to, it’s a combination of business with new and existing customers – just remind us how quickly does that translate into revenue? Is that all reported in the quarter or is that maybe spread out throughout the few quarters that are left? Thank you.

Mark Weinswig: Yes. Thanks for the question, Andres. So – it’s good to highlight. The vast majority bookings, first of all, encompasses all business that we closed, that’s binding in the quarter, whether we recognized some of that business in the quarter as revenue or whether we push it off as backlog into subsequent quarters or in the subsequent years. I would say that the majority of what we book is for the same year that we book it in. But with a book-to-bill of over two this quarter, you can imagine that there’s actually a multiyear component to a certain percentage of the bookings that we do make. And we highlighted that really well Motional as a good example of this, where we announced a multiyear through 2026 supply agreement with Motional.

And that booking obviously has a near-term component, but that is layered in over the next couple of years. So not – the majority of our bookings are not that long at length. I’d say the majority of bookings tend to be within the year or the two years following the booking. But overall, the takeaway there is that it’s a very strong forward indicator of the business. And again, we closed $76 million so far in bookings in the first half of this year compared to $70 million in bookings for all of 2022. So we’re off to a great start.

Andres Sheppard: Got it. That’s super helpful. That’s it for me. Thank you so much. Congrats again. We’ll pass it on. Thank you.

Operator: Thank you. We’ll go next now to Kevin Garrigan at WestPark Capital.

Kevin Garrigan: Yes. Hi. Good afternoon, guys. And let me echo my, congrats and thanks for letting me ask the question. I think you noted you’re in 200 active deployments with BlueCity and Gemini. Can you give us a sense of how much revenue came from these – from the software? Or is it still kind of too minimal? And then does the combination of both come with higher pricing?

Angus Pacala: Thanks, Kevin, for the question. This is a really interesting area of the business. It’s one that I believe – and think it’s a major growth driver for us in the future of the company. And so just to reiterate, the smart infrastructure – the software that we’re selling is focused on the smart infrastructure vertical. We’re selling into security, logistics and transportation networks with our Gemini and BlueCity solutions. It’s still the early days. We announced Gemini in the first quarter of this year. BlueCity was a product that we have now incorporated from the Velodyne merger and have two quarters of that under our belt. But the early progress with these 200 deployments is incredibly compelling. In terms of breaking this out, we’re going to wait until this is a significant enough part of our business that we start breaking this out as a separate metric to kind of show the momentum that we have in the software side of the business.

And absolutely, I expect that we’ll be driving higher ASPs or higher gross margins in our combined kind of software attached sales. Because keep in mind, with every piece of software that we sell or every software license, we’re also selling hardware, we are selling Lidar sensors as well. So this software attached sale is a really, really positive new dynamic that we’ve built into the business. And from every indication we’ve seen from customer feedback to the government response to just the raw product performance, this is off to a great start.

Kevin Garrigan: Okay. Great. I appreciate that color. And then on ASPs, congrats on the strong growth there. Can you give us a sense on how you kind of think about ASPs as we kind of head into the second half of the year? And should we expect kind of the typical seasonal effects in Q4?

Angus Pacala: Well, it’s hard to anticipate exactly where ASPs will go. But what we’ve seen so far is a very positive trend in the upward direction. And as for one main reason, it’s the REV7 release. So if you recall, we started — we had $5,600 ASPs last quarter. That was a rebound from the fourth quarter of 2022 for Ouster, and it was really driven by the REV7 release. Why is it commanding higher ASPs is because we built fundamentally more capability and performance into L3 chip that went in those devices, boosted the performance of the sensor and commanding premium ASPs as a result and having this kind of outsized impact on the entire business. We saw that continue this quarter with $630 ASPs versus $5,600 last quarter. So the trend is in the right direction.

And I’d say that while now we announced the majority of our sales for REV7, the majority of our OS sensor sales are now for REV7 sensors. But that doesn’t mean that all of them are. So, we’re still seeing more uptake from the customer base. And we’ll see how that plays out with the ASPs for the second half of the year, but I have a lot of confidence in where we’re going.

Kevin Garrigan: Okay. Perfect. I appreciate the detail. Thanks guys.

Operator: Thank you. We’ll go next now to Greg Pendy at Chardan.

Greg Pendy: Hi guys. It’s Greg Pendy in for Brian Dobson. Thanks for taking my question. Just real quick, trying to frame how much left is on the gross margin upside from transitioning to Thailand. So could you just kind of help us understand how much of an impact to VLS-128 will have just assuming your gross margins on a non-GAAP basis were 27% in this quarter and how we should be thinking about that maybe as a tailwind in the second half?

Mark Weinswig: Yes, thank you for the question. So our non-GAAP gross margins for the quarter were 26%. We do believe that there is a significant amount of expansion opportunity due to both the cost reductions that we’ve put in place that we’re executing on over the next couple of quarters and also the transition of the manufacturing over to our contract manufacturer. In terms of individual product lines and the margins on either, we typically do not disclose what those are. But I can tell you, as you have seen the increase in our ASPs. And obviously, as our ASPs continue to be robust, we would expect that, that should flow right through to the gross margins and give us additional operating leverage down to the bottom line.

Greg Pendy: Okay. That’s helpful. Thanks.

Operator: Thank you. We’ll go next now to Kevin Cassidy at Rosenblatt.

Unidentified Analyst: Hi. This is [Madison De Palette] from Rosenblatt Securities calling for Kevin Cassidy. Thanks for taking my questions. Could you give me a breakdown of the end markets for bookings?

Angus Pacala: Hi Madison. And thanks for the question. We don’t give a breakdown and never have given really a breakdown for the bookings side of the business by vertical. But I can point to the revenue breakdown where Mark Weinswig mentioned that we had driven the majority of our revenue from the robotics and industrial sector. That’s become a trend for Ouster. And we see a lot of strength in that side of the business. Our products really drive to the cost centers of industrial businesses and where our warehousing and logistic customers. It’s one of the reasons why we’ve had so much success in things like automated forklifts and automated ground vehicles that are operating in warehouses and manufacturing facilities. So yes, the majority of business driven right now in industrial and robotics, but I’ve also made a lot of comments on this call about my expectations for smart infrastructure and how much traction we’re seeing.

Now that we have some mature software offerings in that space to kind of spur the adoption of that technology.

Unidentified Analyst: Okay. Great. Thank you so much.

Operator: Thank you. We’ll go next now to Richard Shannon at Craig-Hallum.

Richard Shannon: Hi guys. Thanks for taking my questions as well. Mark, I may follow-up on the gross margin question. Clearly, understanding you see some upside potential from a number of different factors. And I guess I’ll ask specifically if you can quantify or give us a kind of a range of where you think this can go assuming, of course, the same mix year, obviously, automotive may change that. But you’ve got some manufacturing transitions, some other cost reductions and certainly a mix shift towards REV7 happening here. So I wonder if you can give us a sense of where it can peak out? And this is a number that’s going to start with a 3 or possibly higher? Just any way you can quantify a range that would be great, please?

Mark Weinswig: Yes. I appreciate the question and great hearing from you, Richard. Ouster prior to the merger had been to be able to attain margins that were north of 30%. And obviously, our goal is to even strive that even for — even higher as we go forward through the year. There are a couple of levers for us to do that. One is obviously revenue is a key thing. We have to – we’re going to need to grow. The great news is that as – you heard from Angus in our prepared remarks. The bookings have been very strong. The book-to-bill being over 2%. And just the bookings through the whole fiscal year have been – give us a lot of confidence that we can actually grow the business. So obviously, increasing revenue is one aspect. The other one is just getting higher ASPs and having an ability to actually bring some of those higher ASPs down to the gross margin line.

And finally, it’s the cost reduction. So, we previously talked on the call just in terms of overall cost reductions, the efforts that we’ve taken, both in the first quarter and in the second quarter. And in addition to that, the transition over to our contract manufacturing. But one aspect that I think is important that Angus also mentioned and that we have probably not given enough time to at this point is the software-enabled products that we actually are going to be providing as part of the smart infrastructure should give us an additional leverage as those become a higher part of our revenue. That’s not going to be tomorrow. That’s not going to be probably this quarter, but we start to see that breakout, but we are making very, very good progress there.

So, I think that this is something where we hope that we should be able to start seeing some type of quarter-on-quarter expansion of gross margins throughout this year and hopefully into 2024.

Richard Shannon: Okay. Helpful, Mark thanks for that. And I guess my follow-up question is on the automotive market. You’re really looking at your digital flash products. Maybe you can quantify the number of engagements that you have timeframes by which you might expect some sort of decision and ultimately, the SOP that you’re targeting there? I assume it probably is in the 4.26%, but just want to get your sense of the progress there?

Angus Pacala: Yes. Thanks for the question. I was hoping you were going to ask about DF, because we’re doing some really special there. And I’m looking forward to providing a more fulsome update. It’s been a lot of hard work for a couple of years to bring together the incredible technology that’s driving this sensor. And so in this quarter, we finished the integration of the world’s first long-range truly solid-state flash Lidar sensor based on this digital technology. There’s really nothing like it in the world other than this device. And we’re putting an automaker’s hand this quarter. So I’m going to be out on the road meeting with a number of automakers. We have a team doing worldwide – worldwide tour getting this in the hands of OEM customers at the very first time.

What makes it special is a couple of things. But first of all, we’re building a technology that we think can win the majority of this industry long-term. And we’re building to meet the market, right? It’s – you don’t need to be first as long as you’re building the thing that’s going to be sustainable long-term. And that’s an integrated self-state digital technology. And so the DF shines because it’s low cost, it’s all state, it’s digital, there’s a multi-sensor platform that is required to really get into all the vehicle makes and models that make this a saturated technology. And it’s high performance. So, we’re hitting 200-meter range at 10% with a flash Lidar. This is something that physicist five years ago said couldn’t be done. And we’re doing it in a form factor that’s incredibly slims this thing is only 40 millimeters [ph] tall.

So yes, we’ll be providing a more fulsome update next quarter, but we’re tracking on our progress. We said we get this thing out into automakers hands this quarter, and we’re doing it. So I couldn’t be more pleased.

Richard Shannon: Okay. Well, great. Thanks for the update. Angus, that’s all for me.

Operator: Thank you. [Operator Instructions] And it appears we have no further questions this afternoon Mr. Pacala, I’d like to turn things back to you for closing comments.

Angus Pacala: Well, I want to thank everyone for joining the call today. I did want to highlight, it’s been a quarter since we completed the merger with Velodyne. I’m incredibly pleased that we have delivered so far on the thesis of the combination of the two companies. We have significantly growing revenues, expanding product portfolio, record bookings and the trajectory on cost, margin and bookings that really is speaking to the bright future for the company. So thanks again for joining the call.

Operator: Thank you. Ladies and gentlemen, the conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.