Good day, ladies and gentlemen, and welcome to Alpha And Omega Semiconductor Reports Financial Results for the fiscal second quarter of 2019 ended December 31, 2018. And instructions will follow at that time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Sonia Jong. Ma'am, you may begin.
Thank you. Good afternoon, everyone, and welcome to Dolphin Omega Semiconductor's conference call for fiscal 2019 second quarter results. This is Soyaan Zheng, Investor Relations representative for the company. With me today are Doctor. Mike Chang, our CEO and Yifan Liang, our CFO.
I would like to take this time to welcome Stephen Chang, who is joining us on today's call as a speaker. Stephen is the Senior Vice President of Marketing and he has been with the company since 2004. Ifon will begin the call with a review of the financial results for the quarter, then Mike will review the business highlights, followed by Steven, who will provide a detailed segment report. After that, Yifan will follow-up with the guidance for the next quarter. Finally, we'll reserve time for questions and answers.
This call is being recorded and broadcasted live over the web and can be assessed for 7 days following the call via the link in the Investor Relations section of our website at www.aosmd dotcom. The earnings release was distributed by Business Wire today, February 6, 2019, after the market closed. The release is also posted on the company's website. Our earnings release and this presentation include certain non GAAP financial measures. We use non GAAP measures in conjunction with the GAAP measures that we provide.
A reconciliation of these non GAAP measures to comparable GAAP measures is included in our earnings release. We would like to remind you that during the course of this conference call, we'll make certain forward looking statements including discussions of business outlook and financial projections. These forward looking statements are based on management's current expectations and involve risks and uncertainties that could cause our actual results to differ materially from such expectations. For more detailed description of these risks and uncertainties, please refer to our recent subsequent filings with the SEC. We assume no obligations to update the information provided in today's call.
Now I'll turn the discussion over to Yifan, our CFO, to provide an overview of the 2nd fiscal quarter financial results. Yifan?
Thank you, so young. Good afternoon and thank you for joining us. Revenue for the December quarter was $114,900,000, essentially flat when compared to the prior quarter and up 10.6% from the same quarter last year. We performed well on the top line and overcame market challenges as a result of growing momentum in our higher value new products. In terms of product mix, MOSFET revenue was $93,300,000, up 1.1% sequentially and up 9.6% year over year.
ROIC revenue was $19,400,000, flat from the prior quarter and up 23% from a year ago. Assembly service revenue was $2,200,000, as compared to $3,400,000 for the prior quarter $3,000,000 for the same quarter last year. Regarding the segment mix, computing segment represented 48.5 percent of the total revenue consumer, 16.2%, power supply and the industrial, 19.4%, communications, 13.8%, service, 2% and others, 0.1%. Non GAAP gross margin for the December quarter was 29.2% as compared to 29.7% in the prior quarter and 27.4% for the same quarter last year. The sequential decrease of 50 basis points in non GAAP gross margin was primarily impacted by the fluctuation of Non GAAP gross margin excluded $500,000 of share based compensation charge for the December quarter as compared to 0.5 $1,000,000 for the prior quarter and $400,000 for the same quarter last year.
Non GAAP gross margin also excluded $3,500,000 of production ramp up costs related to the Chongqing Joint Venture for the December quarter. As compared to $1,100,000 for the prior quarter. Non GAAP operating expenses were $25,100,000 compared to $24,500,000 for the prior quarter $21,300,000 for the same quarter last year. Non GAAP operating expenses excluded $3,900,000 of share based compensation charge as compared to $2,600,000 in the prior quarter and Non GAAP operating expenses also excluded $3,700,000 of pre production expenses related to our Chongqing joint venture. As compared to $4,600,000 in the prior quarter and $0 for the same quarter last year.
Both GAAP and non GAAP operating expenses included $3,100,000 of digital power controller team expenses for the quarter. As compared to $2,700,000 for the prior quarter $400,000 for the same quarter last year. Our digital power controller team continues to work with customers in product designs and is making steady progress toward our product roadmap. Income tax expense was $700,000 for the quarter compared to $600,000 for the prior quarter, and a tax benefit of $2,100,000 for the same quarter last year. Due to a one time tax benefit of $2,700,000 as a result of the US tax reform.
Non GAAP EPS attributable to AOS for the quarter was $0.30 per share as compared to $0.36 per share for the prior quarter and AOS continued to generate positive operating cash flow. In the December quarter, we generated $22,100,000 operating cash flow attributable to AOS as compared to $18,400,000 for the prior quarter and $12,200,000 for the same quarter last year. The $22,100,000 operating cash flow included $5,000,000 customer deposit for securing more future shipment from us. Cash flow used in operations attributable to our Chongqing joint venture was $9,100,000 for the December quarter, compared to $400,000 for the EBITDA for the December quarter was $13,500,000 compared to $15,400,000 for the prior quarter $16,000,000 for the same quarter last year. Moving on to the balance sheet.
We completed the December quarter with cash and cash equivalent balance of $146,600,000 including $53,000,000 cash balance at our Chongqing joint venture as compared to $113,200,000 at the end of last quarter which included $32,000,000 cash balance at the JV company. Our cash balance a year ago was $146,200,000, including 57 point $1,000,000 at the JV company. During the quarter our JV company borrowed a working capital loan of approximately $14,500,000 against the future value added tax refunds. In addition, our joint venture partners contributed additional $24,000,000 cash to the JV company at the end of December 2018. Which changed AOS ownership back to 51% and the joint venture partners ownership to 49%.
Net trade receivables were $33,900,000 as compared to $37,100,000 at the end of last quarter and $24,300,000 compared to 27 days in the prior quarter. Net inventory was $103,000,000 at the quarter end, up from $98,000,000 last quarter and from $85,700,000 in the park. Year. The inventory increase was primarily occurred at the JV company as we on ramping up mass production of assembly and test and preparing inventories for the 12 inches fab. Average days in inventory, 106 days for the quarter as compared to 103 days in the prior quarter.
Net property plant and equipment balance was $380,800,000 as compared to $368,500,000 last quarter and $193,300,000 last year. Capital expenditures were $16,500,000 for the quarter, including $8,500,000 from the JV company $8,000,000 from AOS. Before I turn the call over to Mike, I would like to say a few words on the update of our Chongqing joint venture. We are pleased that both the assembly and pest production ramp and 12 inches fab trial production were on track during the December quarter. We will continue to ramp up our assembly and test production in the March quarter to reach our targeted production level in the June quarter we expect to start the product sampling customer qualification process with our 12 inches fab in the March 2019 quarter.
With that, now I would like to turn the call over to our CEO, Doctor. Mike Chang, who will provide the business highlights for the quarter. Mike?
Thanks, Yifan and good afternoon, everyone. Our solid December quarter results demonstrate the business momentum we continue to build. The year over year revenue increase of 10.6% represent the 12th consecutive quarter of growth. Furthermore, we generate healthy operating cash flow, which is funding our key growth initiatives. The soft market that we had discussed last quarter, namely home appliances and smartphone applications in China, further weakened during the December quarter.
The weakness deteriorated in the March quarter as high end smartphone business conditions have changed recently. Our smartphone customers are reducing their inventories, which has led us to adjust our production plan accordingly. In addition, trade tensions are adding more headwind in the near term. However, We are navigating this business environment challenges by our growing momentum in higher value new products. During the December quarter, we won key strategic customers in home appliances and smartphone applications further expand our market share in computing and increase the share of ARM in high end tablets.
Even after the adjustment, our demand is still ahead of capacity. The Oregon fab run at a full capacity. And we look forward to ramping the Chongqing joint venture so we can build better fulfill the demand. Investors often ask us why we are winning why customers like to work with AOS. Let me take a few minutes to highlight and reiterate our core competencies this and the customer support philosophy.
That are transforming AOS into a preferred supplier in key markets. Our core differentiator versus larger competitors is our highly effective R and D capability. 2, we have over 1800 granted and a pending worldwide patent. But our ability extends far beyond that. We now have the critical building blocks of discretes IC Design, advanced packaging and the silicon processing technology.
In enabling us to serve our customers with the best products in a wide range of applications. We can deliver total solution components in many forms, MOSFETs, IGBTs, and the power ICs. Beyond the components, we are also addressing customers' challenges through our deep system level application know how. Thereby improving the efficiency of our customers' overall systems. What sets us further apart is that we are nimble agile and eager.
We go out of our way to make our customers' products at That can involve working with them in the design process, the speed development, creating a spec that is more efficient, delivering supplies in critical times or simply been present to work with. We always try to offer something above and beyond the ordinary. So that our customers see the significant value we bring to their businesses. The combination of our technology competencies and the customer support philosophies is one of the key traits that underpin our growth. I believe that the same trait will help us better endure current headwinds and manage the challenging times.
This is a winning strategy across all phases of cycle. In summary, sound strategy and the solid execution have enabled us deliver healthy financial results as well as build the foundation for the future with new customers and the design programs. We are further encouraged by the solid business pipeline, driven by our proprietary solutions. We remain focused on delivering on our multidimensional growth initiatives against the near term market challenges, while relentlessly pushing ahead with our long term business plans. This concludes my prepared remarks.
As our business evolves, in line with fast changing market, we think it is helpful to share with you first hand insight from our marketing department with a more direct and comprehensive segment updates. Stephen has his finger on the pulse of fast paced market dynamics and customer requirements. With that, I will turn the call over to Stephen for segment report. Stephen?
Thank you, Mike, and good afternoon. It's my pleasure to be on the call today to give you an update on our results across the major market segments. Let me start We posted a 10.8 We continued to grow our computing business by expanding our bomb content in various computing applications. Our high value driver Moss power IC products continue to gain market share into the Vcore application. We achieved major design wins in the latest graphics card platform and further diversified our business into the add in card market.
In addition, we expanded our footprint we began to ship protection business was originally tied to To better align our product categories with and moved it from the communications segment to the computing segment. The CPU shortage in 2018 did not have a major impact on our business because processors were prioritized to support higher value big core systems. The shortage is expected to affect more PC applications in the March quarter, but it is expected to be resolved in the June quarter. Accordingly, we are adjusting our forecast of computing business marginally down for the March quarter. Now let's discuss which was 16.2% of total revenue.
As expected, this segment declined 12.7% sequentially and 12% year over year. The declines were due to seasonality in TV and weakness in Chinese home appliance markets. Despite the appliance the strength of our optimized devices that increase power efficiency in motor applications. IGBT grew more than 40% in calendar year 2018 and is on track for a similar During the December quarter, we gained market share in refrigerator applications and won new customers in the Chinese home appliance market. For TV applications, we secure design wins in premium TVs, which represent significantly higher bomb content for us.
We are now ramping in the Consumer segment for the March quarter. Now let's turn to the Power Supply And Industrial segment. This segment was 19.4 percent of total revenue, up 2.1% sequentially and up 6.7% year over year. We see continued applications are moving to even higher thereby commanding higher selling prices while leaving fewer players in the market. We believe we are well positioned to benefit from this trend and encouraged by the ongoing share gains of our medium voltage products.
Even with near term softening in the smartphone market, We expect our quick charger business to expand in calendar year 2019 in accordance with our product mix management activity, we expect to Finally, let's discuss the communications segment, which was 13.8% of revenue in the December quarter. Segment revenue dropped 11% sequentially and increased 9.4% year over year. Keep in mind that the new tablet battery protection business was moved into Computing segment, which impacted growth rates. Without it, the December revenue came in line with our expectation. The weakness in global smartphone market is further deteriorating smartphone makers are adjusting their inventories.
During the December quarter, we partially offset the overall slowdown in Chinese smartphone demand with a ramp up production for the new global customer that we added in the September quarter. We also won an additional global smartphone OEM in the December quarter, which will gradually ramp in the March quarter. In parallel, we secured multiple design wins in enterprise telecom equipment for 5G. Our medium voltage products are specifically designed to deliver robust performance So we are very excited about the new opportunities ahead of us as the industry moves forward with the 5G ramp. Demand for our telecom equipment products should grow in the March quarter, thus partially offsetting the smartphone headwinds combined with to trough in the March quarter.
Thank you, Steven. As we look forward to the third quarter of fiscal year 2019, we expect revenue to be between $109,000,113,000,000. Gross margin to be approximately 25.2 percent plus or -1 percent. Non GAAP gross margin is expected to be approximately 28.5 percent plusor-1 percent. Non GAAP gross margin excludes $500,000 of estimated share based compensation charge
and $3,200,000
estimated production ramp up costs relating to the Chongqing Joint Venture. Operating expenses to be in the range of $32,300,000 plus or minus $1,000,000. Non GAAP operating expenses are expected to be in the range of $25,200,000 plus or minus $1,000,000. Both GAAP and non GAAP operating expenses include $3,100,000 to $3,300,000 of estimated expenses related to our exclude an estimated share based compensation charge of approximately $2,700,000 and estimated pre production expenses relating to the joint venture of $4,400,000. Tax expense to be approximately $500,000 to $700,000.
Loss attributable to non controlling interest to be around $4,800,000 on a non GAAP basis, excluding estimated pre production expenses, and production ramp up costs relating to the joint venture. This item is expected to be approximately point $6,000,000. Update this information. With that, we'll open up the floor for questioning.
Thank And your first question comes from Jeremy Kwan with Stifel Nicola Nicholas. Line is open.
Yes, good afternoon and thanks for taking the question. I guess, Steven, if you could, it sounds like you're pretty confident in looking at the March quarter being a bottom for the smartphone business and a nice rebound in June. Can you help us understand how much of it is coming from new program ramps that you talked about and how much of it is the end market itself kind of recovering?
Thank you. So yes, it is a little bit of both. Certainly, the global market, took a turn down starting in the end of last December quarter. And we expect that to continue to drop a bit in going into the March quarter. From what we see at least in our business, the smartphone business is typically usually at a seasonal low in the March quarter.
Of course, this time, it's a little bit lower than typical seasons. So we are already seeing that, that June quarter should begin to rebound at a variety of our customer in the selling into the market today as well as new products being designed in. Right now, we are still more and more in the current cycle of phones. So right now, we're going into Q1 and Q2. We're talking about the existing products that are ramping.
Great. That's very helpful. And question maybe for Mike, stepping back a little bit, you talked about demand continuing outstrip supply. Can you help us quantify this? And maybe in terms of your backlog and lead times, maybe where they are now versus 6 months ago?
And maybe even how you can characterize it in the context of past cycles that you've seen?
Jeremy, this is Yifan. Maybe let me take this question. I mean, overall, on We did see some adjustments in the December quarter in terms of booking and backlog. I mean, I guess, there was several elements in here. One is some double booking clean up, I would say.
In last year, with the tightened global supply in Mars fed and in the power discrete in the areas, we would expect some double bookings there. So actually the clean up actually is good for us. Another element is as Stephen and Mike mentioned, some of our customers and especially in the China smartphone areas, some customers are adjusting their bookings. So we also need to adjusting our production plans accordingly. Another element is when seeing fresh bookings from our new design wins and wins.
So all in all, if you say the net changes, some adjustments right now, after all those adjustments and then our backlog is still ahead of our capacity at this moment.
Thank you, Yifan. I guess, if you can switch gears to the JV, It was nice to see that kind of a $24,000,000 cash infusion from the funds. Is it at this point, given your current cash balance, your CapEx plans, the operating cash burn, and then the wrap up stage. Can you give us is that Is this going to be it in terms of, financing you'll need to to get the JV up and running and and cash flow neutral? And also looking at the lease repayment schedule that's coming up.
Oh, sure. The joint ventures and, ramp right now for the assembly and test and, is on track in the December quarter continued to ramp up and so we'll see similar run profit in the March quarter. So we expect by the June quarter, we can see their assembly and test and production level up to our target range. In terms of 12 inches fab, yes, in December quarter, their trial production was on track and then we expect in the March quarter, we can start sampling products to our customers. So we'll see how that qualification going so expect gradually starting from the June quarter and suddenly into the September quarter, we we expect to see a 12 inches fab ramp.
In terms of the cash, yes, we We are pleased with the additional $24,000,000 contribution from our joint venture partners which definitely showed the confidence from their side. In terms of the overall cash needs, we're currently still in the negotiation process and with local banks to, enter into some loans to support our equipment payment and our working capital. So We will report it as we finalize contracts.
Maybe on that last note, can you give us an idea of how much is left in terms of the equipment that you still need to to purchase and any remaining kind of CapEx for this phase 1?
Phase 1 right now is most of the equipments are in. So, right now, it's got down to the payment stage. So we need to borrow some monies and in order to pay those equipments. So that's the notion is we I don't want to borrow them all in up front a year ago. I have to pay in a big chunk of interestingly along the way.
So right now, we need cash and we'll borrow money from bank. No, sir, currently no sir, investors contributions and then also they own land and the buildings and the equipments and so on. All those things can be used for borrowing capacity. So they still haven't enough borrowing capacities over there.
Great. Thank you very much.
Okay. Thank you, Jeremy.
Thank you. Your next question comes from Craig Ellis with B. Riley. Your line is open.
Yeah, thanks for taking the question. Nice to be in touch again. Mike and Ethan, and Steve, welcome the call. What I wanted to do was just clarify. I think from the prior questioner, I heard that, that the company thought that the fiscal third quarter could be a trough for communications, but was the point that it would be a trough in revenues for the entire business for the calendar year?
Or are there some headwinds that you see forming, in the calendar second or third quarter year of fiscal 4th and first quarter?
What we expect, again, that, it's definitely communications will trough in the March quarter, especially with regard to smartphone and business. But as we mentioned, we expect recovery, not only in the smartphone business, but as well as, as well as the other segments as well. Normally, in Q1, we also, it's typically a lower season for us, especially due to the holidays. So our production is a little bit shorter than other quarters. But from the marketing and demand side, mentioned that the smartphone market will recover.
At the same time, we expect also that the CPU shortage in the PC market will be alleviated in the June quarter. So that is expected also to drive up the June quarter revenue.
That's helpful. And Stephen, what gives you confidence that there will be an alleviation of the shortage issues in June?
Specifically, the main shortage has been with CPUs and, what we've been told, by not only by the CPU maker, but also by our customers, our ODMs in the field is that they expect the recovery to happen within at the latest by the end of June. So we are already expecting our customers to prepare and already for a recovery within the June quarter.
Okay. That's helpful. And then the 5G base station power management opportunity sounds interesting. Couple of follow ups there. 1, how broad is the company's participation across the top 5 makers and and what's your dollar content and what do you think your share will be, with this with this round of devices?
So just to give you some background, as we mentioned in the prepared remarks, We didn't participate that much in the 4G business in the past. Right now, we are starting to enter into that pre 5G ramp up and we are participating on a few programs in a couple of the tier 1 players. So we are really just our to enter into this market. We are, for sure, going to be targeting all the major makers and we already engaged with a few, a couple of them right now at the moment.
And is that with, power management ICs or MOSFETs?
That was mainly right now. For the 1st phase, it's gonna be with a MOS but in the future, we will be offering that total solutions too.
Okay. And then, moving tangentially and perhaps there's some relationship between the product team on the base station side and the team that's working on, server power. But server power expenses in the quarter were about $3,100,000. Yifan, is that the run rate going forward for that team and the initiative or should we expect that quarterly expenses would rise further either to $3,500,000 or potentially higher than that?
At this point, we expect that now with the expense level, but an as the team further developing new products and starting their, typing out and sampling, I would expect some additional engineering expenses would added into there.
And initial product tape out would occur when?
I would say in the summertime or closer to the fall.
Okay. And then, last question from me before I get back in the queue. The company has had an objective to grow revenues 10% in fiscal 2019. That was initially established before we encountered a period macro choppiness and more severe U. S.-China trade issues.
Is it still the hope of the company that you can grow 10% in fiscal 2019? And if so, beyond the fiscal 3rd quarter, what are some of the things that need to happen in the fourth quarter to get there?
Sure, Craig. Right now, not goal is still within our target model. Q1 is the low season seasonality wise and also the current business environment. So you saw on our guidance reflected some cautions there. We expected seasonality growth in the June quarter.
And then, as Stephen mentioned, This CPU for PC area we expect and it can be alleviated in the June quarter. So we're still targeting that model right now.
Yeah, let me just add a little bit more color. By the way, this is Mike Chang. Okay, Yes, okay. The seasonality and also some of the recovery from the our client, okay. But what really center for us is, okay, our newer technology and new products really start to get some benefit there.
Basically, for Malte, that win, okay, the back there, we see the moments appearing up there, okay, of course, now this, you never be able to predict the environment, okay, assuming environment will not further decline in the market economy. Okay. I think that's where it's our confidence.
So the point is you feel good about the products and and the design wins that you have. But, but there may be some uncertainty in this kind of macro environment around a program our time and actual program volumes. Is that the takeaway there, Mike?
Yes. I think basically is the design win, line, the track record, which is what I would base down there. You know, God forbid, okay, and then, hopefully, this trade tension will will be relieved, okay, regardless of the effect of overall economy, not necessarily directly against us, but everybody will suffer.
That's helpful. Thank you.
Thank you.
Thank you. Your next question comes from Ed Roche with Sidoti. Your line is open.
Hi, good afternoon. Could you repeat what you said about the JB ownership at this point after the equity infusion, from your
partner? Right, Ed. This is Yifan, yes, after this contribution, $24,000,000 from our joint venture partners, yes, in equity ownership and for AOS back to 51% joint venture partners and ownership and back to 49%.
Okay. There's no way that your ownership can foreseeably drop below that threshold, right? 51 would be the floor?
Well, that was originally when we negotiated this joint venture deal. So I
think this is a there's a couple of angle, excuse me, this is Mike Chang, okay. The first, okay, because it's our future business expansion based on that, So we need some sudden of assurance or control is one, one angle. The good things that the other side They also see this highly technical and specialized business and they trust that AOS is a better way to manage that. Going forward, okay, when the situation change there, we'll see what's benefit to AAOS. That's what it will be.
Okay. Thanks for that color. And then assuming that, you know, the demand does cover in the June quarter there. Could you just give us an update on quarterly capacity? Is it still about $115,000,000 of production capacity?
And when is the next expected step up in that figure, please?
Yes. This is Yifan. Currently, yes, our capacity is around 100 $15,000,000 range. This quarter, March quarter's guidance reflected some production loss during the Chinese New Year timeframe. So overall, it was still at the $115,000,000 range.
The next wave of capacity increase will depends on the ramp of the Chongqing joint venture. So that 12 inches fab. So that's why
we
want to run for that fab gradually in calendar year 2019 to fulfill the demand and fuel our growth.
Okay. I got it. And then one last one on the computing segment. Which is contending with the CPU shortage. I mean, is it fair to expect that once the CPUs are back on the market and available that that could be just an outsized quarter for you in that end market because there's there's latent demand that needs to be caught up with, that hasn't been fulfilled, you know, in the in the March quarter.
This is Steven. Yes, that is the expectation. The shortages have again been persisting, starting at the at the second half of twenty eighteen. So overall, this market has been under serving the demand that in the marketplace So we are expecting that there is some will be some rebound as a result of that. In addition to the normal seasonality that happens beginning in Q2.
So that is what we, that's what we were seeing from our customers and also from the market.
Okay. Thank you.
I'm sorry. Your next question is a follow-up from Jeremy Kwan with Stifel. Your line is open.
Yes, thank you. I wanted to follow-up on the, I guess, the capacity question. With the $8,000,000 in AOS spending only, if your capacity is fully maxed out, is this kind of just ongoing maintenance costs and things like that? Or is there more to it?
Yes, Jeremy, this is Yifan. Yes, right now, our major capacity expansions in our Oregon fab is pretty much down. So right now, we're in the stage to fine tuned mix and optimize the production line So in that nature, so it would not significantly increase the total capacity. So the additional total capacity we expected will contribute from our joint venture. Along the year this year, this calendar year.
So then for it was only is are you still targeting the 68% range for fiscal 2019?
Oh, yeah. Yeah. That one isn't pretty much in the range for the maintenance for the fine tune operations and optimize our mix.
And last question in terms of the JV, can you give us an idea like how long do you expect the qualification process to be? Is it kind of a 1 quarter thing or is it can you just give us an estimate?
Well, sure. It kind of depends. I mean, some customers may qualify faster. Even right now, we've already received the first order, but from customers. But in order to, ramp out and we still need to, perhaps some time to qualify with customers.
So I would say probably a quarter or 2 and then, you know, we should be able to see some, ramp up.
And as it sorry, the last question, as it does ramp up, do you expect to see a gross margin benefit because of the 300 millimeter or is there some, you know, do you still have to work out some yield challenges?
Oh, yeah. And during the ramp up, time, I would not expect to see a cost benefit actually in this country. Once we ramp up to the 1st phase, capacity, I would expect our 12 inches fab wafer cost neutralized with our 8 inches wafers.
Now this is Mike Chang. I think whenever we talk production, okay, there's one key factor is called economy scale. So in the running case there, okay, all the costs will be there until we get into the equipment.
Understood. Thank you very much.
Thank you.
Thank you. And I am showing no further questions at this time. I'd like to turn the call back over to Managed for closing remarks.
This concludes our earnings call today. Thank you for your interest in AA and we look forward to talking to you again next quarter.
You for participating in today's conference. This does conclude the program, and you all may disconnect. Everyone, have a wonderful day.