Welcome to this morning's conference call. This call is being recorded today, Tuesday, August 22nd, 2023. At this time, all participants are in a listen-only mode. I will now turn the call over to Mr. Stephen Ferranti, MACOM's Vice President of Strategic Initiatives and Investor Relations. Mr. Ferranti, please go ahead.
Thank you, Catherine. Good morning, and welcome to our conference call to announce MACOM's acquisition of Wolfspeed's RF business. Before getting started, I would like to remind everyone that our discussion today will contain forward-looking statements, which are subject to certain risks and uncertainties as defined in the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those discussed today based on these risks and uncertainties, which include the ability of MACOM to realize anticipated benefits and synergies of the transaction, successfully designing, supplying, marketing, and distributing its products, and other business effects, including the effects of industry, market, economic, political, or regulatory conditions. For more detailed discussion of the risks and uncertainties associated with the transaction, we refer you to MACOM's filings with the SEC.
Management statements during this call may also include discussion of certain adjusted non-GAAP financial information associated with our recently reported fiscal Q3 financial results. A reconciliation of these numbers back to GAAP can be found in the slide deck posted to the investor relations page of our company website. With that, I'll turn over the call to Stephen Daly, President and CEO of MACOM.
Good morning, and thank you for joining our call. As you may have seen from our press release issued this morning, I am pleased to announce that MACOM has entered a definitive agreement to acquire Wolfspeed's RF business. I will summarize the transaction, Jack will review the financial details, and then we'll be happy to answer your questions. As previously discussed, MACOM's strategy is to be a leading supplier of high power, high frequency, and high data rate semiconductor products and solutions. We believe focusing on technology and products that have these attributes will enable us to achieve consistent, best-in-class financial results. Our strategy relies on developing innovative technology and products that have high barriers of entry based on proprietary semiconductor processes, advanced packaging, circuit design, and system knowledge.
Our strategy also relies on using a combination of internal and external semiconductor manufacturing to create differentiation, scale, manufacturing leverage, and operational efficiencies. Last year, we became aware that Wolfspeed was considering to divest its RF business. After a thorough analysis, careful financial modeling, and a review of our strategy, we concluded Wolfspeed's RF business would be a perfect fit with MACOM. Today, we are excited to introduce this compelling transaction to employees, customers, suppliers, and investors. Wolfspeed's RF business has a long history of innovation with silicon carbide materials, gallium nitride epitaxy, process development, circuit design, and advanced packaging. Additionally, in 2018, Wolfspeed, then known as Cree, acquired Infineon's RF power business, which added LDMOS products, additional engineering talent, and manufacturing capabilities. Today, Wolfspeed's RF business is a diverse portfolio with hundreds of products for top-tier aerospace, defense, industrial, and telecommunication customers.
This acquisition includes design teams and associated product development facilities in Arizona, California, North Carolina, as well as back-end production capabilities in California and Malaysia. At closing, approximately 280 employees from these organizations are expected to join MACOM, including 160 engineers. The acquisition also includes Wolfspeed's 4-inch GaN wafer fab facility in Research Triangle Park, North Carolina, which is currently a Category 1A accredited Trusted Foundry with the Department of Defense. The fab and its associated employees will convey to MACOM in approximately two years after Wolfspeed removes certain production lines and equipment that are unrelated to the RF business. Last, as part of the transaction, MACOM will be assigned or licensed a portfolio of over 1,400 patents and patent applications associated with the RF business. Why is this acquisition strategic for MACOM?
First, Wolfspeed has developed leading GaN-on-silicon carbide technology for RF applications, which simply put, is the gold standard in the industry. Wolfspeed's technical teams are world-class, extremely experienced, and they will strengthen our product and process development capabilities. Second, Wolfspeed is in production with a wide range of low frequency, high voltage GaN semiconductor processes, which we do not have, and it would take us years to develop equivalent processes. Recently, we have been focused on adding very high frequency GaN processes to our portfolio. To be clear, their process technologies and products are complementary, not duplicative. Third, Wolfspeed's GaN product portfolio is broader and more mature than MACOM's. They are a trusted and established GaN supplier to the industry, and this acquisition immediately enhances MACOM's ability to access, compete, and win in the RF power product space.
Fourth, we believe combining our respective portfolios, engineering and sales teams will significantly increase MACOM's competitiveness in the market. Combining our broad CMOS, BiCMOS, SOI, and gallium arsenide product portfolio with Wolfspeed's narrower GaN RF portfolio should create new and exciting growth opportunities. Finally, we estimate the RF GaN market size today is approximately $2 billion, split evenly between commercial and defense applications, and it is expected to grow to $3 billion by 2027. This acquisition enhances our ability to compete for and win market share in what are attractive, performance-driven markets. As Wolfspeed has stated publicly, they currently support a wide range of critical applications, including radar systems and commercial communication systems. In addition to the strategic rationale, we believe the acquisition's financial attributes are compelling for three reasons. One, the transaction is expected to be immediately accretive to our non-GAAP earnings.
Two, we expect to achieve 100% return on capital in about 3 years. Three, it enables expanded growth opportunities while maintaining our long-term gross profit levels above 60%. All our wafer fabs have one thing in common. They are relatively small with low capital intensity, run very efficiently, and can deliver low, medium, and high volumes of unique high-end processes. Wolfspeed fab has similar attributes, and we are confident it will meet our operating and financial metrics. Jack will now say a few words about the details of the transaction.
Thank you, Steve. Because this is a carve-out, we have structured the transaction as an asset acquisition. The transaction includes multiple design centers with associated R&D equipment, back-end assembly and test manufacturing capabilities, and the RTP wafer foundry, which is expected to convey after Wolfspeed relocates certain equipment used for other parts of its business. As part of the transaction, we are also entering a variety of agreements, including supply agreements, which will ensure MACOM has a secure and strategic supply of silicon carbide substrates and GaN epi. Wolfspeed's RF business most recently generated annualized revenue of around $150 million. Through certain actions to be taken prior to close, as well as post-closing synergies, we expect the RF business to be immediately accretive to MACOM's non-GAAP earnings.
This acquisition does not change MACOM's long-term gross margin targets in the 60% range, as Steve highlighted, we expect 100% return of capital employed or return of purchase price in around 3 years. The RF business will be acquired for $125 million, including $75 million of cash paid at closing and $50 million of MACOM common stock issued with certain restrictions. We will be using cash on hand of approximately 700,000 shares of stock for the purchase, taking on no additional debt and only 1% share count dilution. As a reminder, our cash and short-term investment balances at the end of June 2023 were $588 million.
We expect to have between $400 million and $450 million in cash and short-term investments after closing of the transaction, subject to its timing. As a reminder, earlier this month, we repaid $121 million outstanding on our term loan debt, and we expect to be in a net cash position by the end of the calendar year. We believe the transaction's stock component has strategic value and aligns MACOM's and Wolfspeed's goals to have a smooth transition, long-term collaboration, and ultimately, the creation of further stockholder value. Finally, closing of the transaction is subject to U.S. regulatory approvals, customary closing conditions, and is expected to occur in the first half of our fiscal 2024. Now I'll turn the call back to Steve.
Thank you, Jack. In summary, Wolfspeed's focus on scaling its power device and materials business, and our focus on growing our RF and microwave portfolio with proprietary technology and products, creates the opportunity for a mutually beneficial transaction. We have tremendous respect for Wolfspeed's management team, and we look forward to working together as we manage the complexity of a business carve-out and a fab transition. Our long-term goals are aligned, and we believe the structure of the deal creates a win-win. For additional information, please visit macom.com and download our one-page strategic rationale tear sheet. With that, operator, we're happy to take a few questions.
Thank you. To ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please limit yourself to one question and one follow-up. Please stand by while we compile the Q&A roster. Our first question will come from Thomas O’Malley with Barclays. Your line is open.
Good morning, guys. Congrats on the acquisition, thanks for taking my question. I guess my first one is, Steve, you went through and talked about the different components of the business. Can you talk about, of the revenue you're getting, how much of that is GaN, and how much of that is LDMOS? The second part of the question is, you know, if you look at the financials of Wolf, you know, the gross margin profile is in the thirties, maybe even in the high twenties. Could you talk about, one, is the gross margin of the products that you're getting different than that profile? Two, how can you help improve that, so you can keep your gross margin profile above 60? Thank you, guys.
Thank you for the questions, Tom. As you know, we haven't closed the deal, and so it wouldn't be appropriate for us to comment on details associated with the revenue stream that Wolfspeed is currently generating for this business. I really can't comment on that breakout per se. Then your questions about the gross margins, I, I think is a good one, and I think we want investors to focus on a few things. First, this is a tremendous opportunity for MACOM to combine portfolios and create a leadership position in the market. We also believe we're uniquely qualified to do this and to support Wolfspeed and their goal to essentially exit the RF business.
We believe we're able to improve the profitability, of the business by some of the things that Jack referred to, including, pre-closing and post-closing synergies, which, effectively means right-sizing the business, to be profitable on its, on its expected revenue run rate. We need to be clear about that. Additionally, when we add all the, ways we run the business in terms of adding synergies associated with backend manufacturing and scale, we believe we can also, improve, the gross profit margins of the business. Of course, that all has to wait, we have to wait to see that, be delivered, but we're confident we can do it.
Helpful. You're saying it's accretive at close, but you've also mentioned on the call some post-close synergies. Is there any way you could kind of size those synergies for us, or at least in these early days, give some sort of boundaries for what you would expect to be able to do? Thank you.
We, we won't detail out any post-close synergies, and those will be developed, you know, in concert with the, the management team that's joining MACOM. I think the real hard work and the heavy lift will be done pre-close, where we are working with Wolfspeed to essentially restructure the organization and the way the business will be run, and all that work will be done prior to close.
Thank you. Congrats again, guys.
Thank you. One moment for our next question. We have a question from Quinn Bolton with Needham & Company. Your line is open.
Hey, guys. Congratulations on the transaction. I guess, Steve, was hoping to follow up on Tom's question. Just any sense you could give us, you know, how large the LDMOS portion is? Is that gonna be a strategic focus? Will you continue to look to provide LDMOS into the 4G, 5G base station infrastructure, or are you really gonna focus this business on sort of the more exciting and probably higher growth opportunities in GaN-on-silicon carbide?
Well, I, I think certainly, we're very excited about the silicon carbide element of the portfolio, and the trends in the industry would suggest that more and more applications are moving from gallium arsenide and LDMOS to GaN-on-silicon carbide. We do recognize that trend. We do believe that over time, customers that care about efficiency, especially at the higher RF frequencies, will be most likely selecting silicon carbide. With that said, we still believe that there are significant opportunities for LDMOS, and even today, in our own business, we sell MOSFETs as well as GaN components and gallium arsenide components. Oftentimes we have customers, perhaps in avionics or certain military applications, that prefer a silicon approach.
We, we will now be in a, a very strong position to effectively offer the best process technology for that application and work with the customers, to really select the best for their application.
Got it. Then just, you, you sort of touched on it in the prepared script, but maybe spend a minute talking about the complementary nature of the two product portfolios. I think you mentioned the Wolf RF business tends to be perhaps a little bit lower frequency, and I think you said higher power, but maybe it was lower power. Then just contrast that to what, you know, where, where MACOM is focused with its MACOM PURE CARBIDE and, and the new high frequency GaN on silicon carbide process that, that you're beginning to ramp now.
Sure. I, I think it's important to recognize that over the past 3-4 years, we've been dramatically increasing the size of the portfolio. We've been doing that not only using external foundries, but also adding new process technologies in our existing fab here in Massachusetts, as well as the recent acquisition of a facility in France, which we now refer to as MACOM European Semiconductor Center. After this deal closes, what you'll have with MACOM is essentially 3, 5 fabs. The Lowell fab here will be running all of our discrete diodes, which are both gallium arsenide and silicon. We run HMIC technologies, which are glass-based circuits. We also have all different varieties of GaAs, pHEMT and MESFET.
Of course, we have our 0.14 GaN-on-silicon carbide process, which we've been bringing up, and we also run indium phosphide lasers. We have a very high-mix fab here in Lowell. When you compare that technology set to our European Semiconductor Center, what you see there is a small fab that is very, very focused on very high frequency applications. Their gate lengths start at basically 100 nanometers and go down. Their technology set is gallium arsenide, mHEMT, and also GaN. That is very complementary to what MACOM had prior to that acquisition. Then when you bring in the North Carolina fab, you now have added to our portfolio, GaN processes that have gate lengths of 0.45 down to 0.15.
What's interesting about these process technologies is they're high voltage technologies, so they run between 20 and even 50-55 volts. We find that very attractive for very high power applications. Our strategy, as you can see, is to develop a leading portfolio of unique, custom, high-end processes. With this technology, we will launch unique, high-end products, which will support the margin structure that we're targeting.
And Quinn, this is Jack, and, and just to clarify, the RTP or the North Carolina fab, that's not expected to convey until two years from now.
Yeah, I guess, Jack, just to follow up on that, how, how does that work? Will you sort of enter into a foundry services agreement then for the first 2 years as that fab is still owned and I guess operated by Wolf, until they can get the equipment out and transfer it? Or is there some other arrangement for that fab in those first 2 years?
No, I think, I think what you described, is, is accurate. We've, we've entered into some supply agreements, with Wolfspeed, leading up to the conveyance of the fab.
Got it. Okay. Thank you.
Thank you. Our next question comes from Karl Ackerman with BNP Paribas. Your line is open.
Yes, thank you. Good morning, gentlemen. I suppose you wouldn't have bought the Wolfspeed RF business if you weren't confident in your own 0.14-micron GaN-on-SiC process for MMICs. Could you discuss the design wins of your GaN business today and address the size of that business relative to your industrial and defense segment?
Sure, I think you're referring specifically to the 0.14-micron process we are running here in Lowell. As, as you know, we've recently just released that to production. We don't typically talk about, you know, design wins or filling an order book per se. What I would sort of signal is that that process is just being released, and we are just in the stage of sampling customers and approaching customers with the technology. It's very, very early with regards to that process's contribution to revenue.
Got it. Thanks for that. I guess, I suppose it dovetails on the second question, which is: Does the OMMIC acquisition and the acquisition of Wolfspeed's RF business today suggest you're more focused on a foundry model, or will you be exclusive for internal manufacturing of GaN and compound semiconductor manufacturing? As you address that question, how much of your recently closed OMMIC acquisition is split between GaAs versus GaN? Thank you.
A lot of, a lot of questions or points in that question. At a high level, we support a foundry business model. Even, historically, MACOM has had a select number of customers we've allowed to come in and use our fab as, as sort of pure play foundry customers. We do embrace that. The facility in France has a history of also servicing foundry customers, primarily in the space and defense industry across Europe. As people may know, Wolfspeed has also embraced a foundry business model. We, we will continue to support foundry.
We think it's an opportunity to create growth for the business, and so we will continue to embrace and service the historical foundry customers that not only the French fab had, but also the, you know, the Wolfspeed customers in the future. In terms of the breakout of GaN versus GaAs for the French facility, we, we wouldn't typically break that out in detail. I would say also that MACOM, and this was part of my prepared remarks, that we do target a balanced approach for external foundries and internal foundries. In a perfect model, that would be about a 50/50 split in revenue. I would say today, today, we're probably pretty close to that, and over certain years, it will swing one way or the other.
Recognize that a lot of our high-performance analog products are highly integrated, you know, components using various large U.S. and international foundries. We will continue to invest in that part of our business as well.
Thank you.
Thank you. We have a question from David Williams from Benchmark. Your line is open.
Hey, good morning, and congrats on the acquisition. Just wanted to see if maybe you could give a little more color. You talked a little bit about the on the the the cost synergies. How about on the, the sales synergies? What do you expect there, just kind of given the workforce, and then, I had a follow-up on, on just maybe some of the financials. Thank you.
Yeah, we really, don't wanna get into any level of detail on the overall approach with synergies in terms of organizations and whatnot. What I will say is, we're very happy with the team that's coming over. It not only includes product development, design engineering, process engineering, it also includes a very strong and focused sales force, we absolutely embrace that. They're, they're in locations where we don't currently have sales coverage, and they are targeting large OEMs, not only on the commercial side, but also on the defense side. We see that that's gonna really allow MACOM to hit the next level. By the way, these same salespeople will now be able to sell not only the Wolfspeed portfolio, but also MACOM's entire portfolio.
Great. Thank you. Maybe, maybe, Jack, just kind of thinking about how, how we should be modeling the OpEx going forward, just given those, those new employees, is there any, any, any kind of maybe early indication you could provide for us?
At, at this stage, we haven't, we haven't broken that out. You know, we typically don't break out, you know, that level of detail within, within our existing product lines, so, you know, we wouldn't, we wouldn't have that level of detail. I think as you, as you look out, you know, over the longer term, you know, we would see this business as it gets integrated, you know, to converge with MACOM's overall margin profile from a gross margin point of view, as well as from an operating margin point of view.
Great. Thank you.
Thank you. One second. I'm sorry. Our next question comes from Harsh Kumar with Piper Sandler. Your line is open.
Yeah. Hey, guys. Congratulations on the deal. Sounds like a really good deal for MACOM shareholders. I did have a couple of questions, though, on gross margins. My understanding is the RF business is coming to you probably in the twenties or even maybe best case, mid-thirties gross margins. That, that'd be best case. My question to you is, what would you do that the business, when it comes to you, is at a significantly higher gross margins to make sense for where your corporate margins are? I know you, you kind of vaguely talked about it, but I was hoping you'd give us one or two key things that are involved that would help us get comfortable with the margin profile.
Sure. First, I think you have to just take a step back and recognize that we're comparing apples and oranges with the with that question, in the sense that we are going to run the business completely differently. We'll have a completely different cost structure going into the deal. We will be making significant, significant changes on the back end in terms of OSAT and overall manufacturing efficiencies, given our scale within the RF space. I really think it's not a direct comparison. We are gonna run the business differently. We're gonna focus on not only the markets that they're currently focused on, but expand that. In our mind, this portfolio, if we compare it to our current portfolio, should carry the same gross margins.
These, these technologies are targeting high-end, high-performance applications, and MACOM will bring, bring certainly the full weight of our technical and manufacturing capabilities to optimize the performance of the business. There's no doubt that will take time, but we think coming out of the gate, we're gonna be in a very strong position. As Jack highlighted, the deal structure is important. We, we look at ourselves very much as a partner with Wolfspeed, helping them achieve their goals, which are to provide a smooth transition to, to MACOM to support the, the current customers. Also, I'll highlight the structure of the deal supports a win-win, whereas we start to create shareholder value, they'll be the beneficiary of that. We have aligned our goals from a long-term investment point of view.
There's a lot of moving parts that we have to engage on, certainly after the deal, but the way we have, looked at restructuring, let's say, going into the deal, we're confident with our, our models.
Got it. Then one more for me. Roughly how much of that, I think, $150 million business that you mentioned on an annual basis, how much of that, roughly, would you have to insource some key materials, so let's say silicon carbide or something else, roughly, how much would that be that you're dependent upon other people?
I'm not sure we wanna break that out at this stage, Harsh. You did raise a point that I think I'll add to. Part of our current portfolio, the MACOM portfolio, we are doing some outsourcing of GaN on silicon carbide wafers. This transaction brings an opportunity to bring that business in-house, which will also add lift to the margins associated with those products.
Thanks, guys. That's it for me.
Thank you. Our next question comes from Vivek Arya with Bank of America. Your line is open.
Thanks for taking my question. I'm curious, what is the growth driver here now that we are on the other side of 5G? You know, what were the lessons when we were on the second half of the 4G cycle? Did we really see much growth in base station amplifiers? Now we seem to be on the other side of 5G, their business did not really grow in the last year. I'm curious, Steve, what gives you the confidence that this is a growth asset that you're acquiring?
The markets that we're addressing with our overall portfolio, including aerospace and defense and industrial, are certainly core growth drivers over the long term. When we look at just the aerospace and defense area, there's an increased usage of radars, whether they're shipborne, ground-based, or airborne. There's upgrading of communication systems, including high-power radios. Of course, many countries, including the U.S., are updating their electronic warfare capabilities, given all the lessons learned in, in, in the recent couple of years, which now means more high-power EW equipment, including EMP and high-energy type platforms that require very high power, high-voltage technology. There's movement towards hypersonics weapons, which also require high-performance ICs, and that can, that can survive extreme temperatures. That's just on the A&D side.
When you flip over and look at the commercial side, the 5G market is certainly an interesting market for, for us. It's a very big SAM. We like the products within the 5G platform. For today's, you know, MACOM's revenue today, we supply components on the receive side, as well as on the front haul portion of the network. We have been chipping away at the transmit side, and this is an area where Wolfspeed is very strong. We believe by combining their strength on the transmit side with our strength on the receive and on the optical side, we're gonna be a compelling supplier to some of the leading telecom companies in the world.
In terms of other applications that are commercial, certainly there's also commercial radars, there's a whole wide range of wireless radios, whether they're private networks or unlicensed networks, that this product line can support. Then on the industrial side, there's a whole range of test and measurement, heating, medical, cooking, laser welding, type applications that do require high-voltage, amplification. We do, we do think it's a target-rich environment. These are all high-end areas. Some of them are very high volume, some of them are low and medium volume. The, the, the markets and the, the product set fits very comfortably in MACOM and makes us stronger as a company.
All right. Does it surprise you that they are willing to sell this for only 1-time sales, which is less than the market price of most semiconductor assets? Or, or is the interpretation, or, or is the conclusion that it is a better fit with your business than it was with their business? Is that the right way to interpret the sale price?
Well, I think that, I'm not sure that's how I would interpret the sales price. I think this is, as both Wolfspeed and MACOM recognize, this is, this is a complicated transaction. We have to do a carve-out, we have to transfer a fab, and during that period, before the fab is transferred, we need to work together so that Wolfspeed can successfully address their material and RF device business and move the equipment they need to support that, that goal out of the fab. This is very much a win-win situation, and I don't think benchmarking this transaction to, let's say, standard metrics of other deals would be appropriate. The other point I'll make, as, as Jack mentioned in his script, there's a stock component to this.
In fact, it will put Wolfspeed, I think, in the top 25 shareholder list of MACOM. So we think that that's a great opportunity for the Wolfspeed shareholders to benefit from the growth and appreciation of our stock. The last thing I'll add regarding the strategic portion of this, is this absolutely locks down our access to not only GaN substrates, but also GaN epi. Or, I should say silicon carbide substrates and GaN epi. So there are so many strategic elements to this deal that looking at and focusing on the headline number is just not appropriate.
Understood. Thank you, Steve. Good luck.
Thank you. We have a question, one moment. From Harlan Sur with J.P. Morgan. Your line is open.
Hi, good morning. Thanks for taking my question. You know, the team has been really trying to build out its portfolio this year. You talked about OMMIC, and I apologize if I missed this, but on the linearizer acquisition you did this year, it's very complementary with your amplifier products. You get more content uplift because now you have predistortion and amplifier together. Gives you somewhat of a competitive advantage, I think, going forward, because you can better optimize your amplifier now that you have predistortion in-house as well. Is there a fit here between predistortion capability that you have now with the RF team at Wolfspeed?
Well, there is, and the type of predistortion work that Wolfspeed is doing is mostly Digital Pre-Distortion for communication systems, as well as working with their defense customers, most likely on pulsed, pulsed, power-type applications for radar, where you have to do a lot of work on the, you know, driving the circuitry, let's say. Their expertise is very complementary to our expertise. Certainly our RF power business unit or engineering group also has expertise in DPD, so I think both teams will be able to collaborate together and make us even stronger and a better resource for our customers. You highlight something that I think is important to note, which is MACOM is choosing to address certain parts of the market with modules and subsystems.
The Linearizer acquisition is focused primarily on Satcom transmitters, as well as satellite payloads, and then a third part of their business is Microwave Photonics. Two of the three parts of that business would benefit from having this relationship and having access to this technology.
I appreciate that. I know that the MACOM team has been focused on building out your catalog business. Is the RF business at Wolfspeed more catalog or ASIC focused? If it's biased, one or the other, are there potential opportunities to scale up into the, let's say, smaller segment of the target market?
I think Wolfspeed has a wonderful website, and they have an online catalog of hundreds of products. Of course, they also have products which they don't advertise, and they're more strategic. Very similar to the way MACOM goes to market, we lead with our standard products, and then we offer customization, and engage directly with the large OEMs to optimize the solutions for their applications. Very similar to the way we go to market. They also have distribution channels that they use in various parts of their portfolio, as well as direct business. There are many, many similarities to the way we run our business and the way they run their business. For that reason, I think that portion of the integration will go quite smoothly.
Yep. Perfect. Thank you.
Thank you. I'm showing no other questions in the queue. I'd like to turn the call back to Mr. Stephen Daly for closing remarks.
Thank you, Catherine. Again, thank you everybody for attending today's call, and have a nice day.
This concludes today's conference call. Thank you for participating. You may now disconnect.