CalAmp Corp. (CAMP) on Q4 2021 Results - Earnings Call Transcript
Operator: Welcome to CalAmp’s Fourth Quarter 2021 Financial Results Conference Call. As a reminder, this call is being recorded. I would now like to introduce your host for today’s conference call, Joel Achramowicz, Managing Director of the Shelton Group, CalAmp’s Investor Relations firm. Joel, you may begin.
Joel Achramowicz: Good afternoon and welcome to CalAmp’s fiscal fourth quarter 2021 financial results conference call. I am Joel Achramowicz, Managing Director of Shelton Group, CalAmp’s Investor Relations firm. With us today are CalAmp’s President and Chief Executive Officer, Jeff Gardner; and Chief Financial Officer, Kurt Binder.
Jeff Gardner: Thank you, Joel. Welcome, everyone and thank you for joining us today. We finished fiscal 2021 on solid footing, with revenue for continuing operations in the fourth quarter, increasing 6% year-over-year primarily due to robust customer demand in support of the global 3G to 4G upgrade cycle, which continues to accelerate and was the key driver of our results as well as our largest customer, Caterpillar, setting another quarterly record. We saw some of our smaller TSPs, resuming more normal ordering patterns, both because of this industry upgrade and also due to the gradually improving global conditions as more businesses and regions reopen. We also continue to see sustained demand in our SaaS solutions in the quarter, which exceeded 42% of total revenue from continuing operations. All in all, it was a solid finish to our fiscal year. As we look back over this past fiscal year, I wanted to take some time to review the progress the CalAmp team made since I assumed the CEO role in March of 2020. Over that time, it has, of course, been very challenging for companies across the globe due to the COVID-19 pandemic. But I’m very pleased with the accomplishments we have been able to achieve against this backdrop and the progress we have made as a company. As you may recall, one of my key strategic priorities was to improve the performance metrics across the organization, including improvements to our EBITDA by focusing on our efforts on the most profitable markets. 2 key actions we took to help drive these efforts were: first, the decision to transition out of the automotive vehicle finance business as part of our efforts to improve the quality of our overall SaaS revenue, while increasing margins and profitability within the business; second, and more recently, we announced the sale of the LoJack U.S. and Canada business to Esperion, which was a very positive development both for our customers and the company following our earlier decision to wind down this business.
Kurt Binder: Thank you, Jeff. Today, my commentary will include reference to the non-GAAP financial measures of adjusted basis net income, adjusted EBITDA and adjusted EBITDA margin. A full reconciliation of these non-GAAP measures with the closest corresponding GAAP basis measures is included in the press release announcing our fiscal 2021 fourth quarter and full year earnings that was issued this afternoon. Also, as indicated in our press release today, the financial results of our LoJack North America business that was sold to Esperion in March are being accounted for as discontinued operations. Unless indicated otherwise, these financial results reflect our continuing operations, and we have revised prior periods for historical comparison purposes. Quarterly revenue, together with revenue from discontinued operations increased sequentially to $89.5 million, including $7.6 million from LoJack North America. Revenue from continuing operations increased 6.3% year-over-year to $81.9 million. For the full year 2021, total revenue from continuing operations declined 4.1% to $308.6 million from $321.8 million, due mainly to the impact from the global pandemic. International revenues totaled $27.5 million or 34% for the quarter, and $107.9 million or 35% for the year. For the full year 2021, revenue by region was $6.2 million for the United States and Canada combined $58.5 million from EMEA, $27.1 million from LATAM, and $16.8 million from the Asia Pacific region. The revenue breakdown by vertical market for the year included $142 million from transportation and logistics, $69.3 million from industrial heavy equipment, $57.1 million from connected car and $40.2 million from government and municipalities. Software and subscription services revenue was up slightly from the prior quarter at $34.7 million and represented approximately 42% of consolidated revenue from continuing operations. For the full year, software and subscription services revenue rose 5.2% to $129.9 million from $123.5 million and represented 42% of the total. In today’s earnings announcement, we provided additional performance metrics related to our software and subscription services business. This was done in an effort to help investors track the progress in our transformation to a global SaaS solutions provider. In preparing these metrics, we excluded our automotive vehicle finance business, which we decided to exit earlier in our fiscal year. The first metric, annual recurring revenue, or ARR, represents revenue from recurring application subscriptions, which excludes revenue from the hardware device in a bundled arrangement with the customer that is recorded at a point in time or upon installation. ARR was up 15.1% in fiscal 2021 to $87.4 million from $75.9 million in the prior year. Another key metric, remaining formats obligations, or RPO, is all contracted revenue, including deferred revenue and contracted but unbilled revenue related to bundled contracts with customers. RPO rose 18.6% to $136.5 million at the end of 2021 compared to $115.1 million in the prior year.
Jeff Gardner: Thank you, Kurt. I am pleased with the progress we have made, but look forward to raising the bar in the New Year as our CalAmp team continues to execute on our strategic initiatives across the organization. Our efforts are squarely set on driving our SaaS business to a level where will be the driving force of our growth, profitability and cash generating potential. With that, now I would like to open the call up to questions. Operator?
Operator: Thank you. Your first question comes from the line of Mike Walkley from Canaccord. Your line is open.
Mike Walkley: Great. Thanks for taking my questions and congrats on the strong results and margins. First question for me is just on the 3G to 4G upgrade cycle. Any way you can help us think maybe about longer term organic growth post the cycle? And particularly for Caterpillar, I know you have extended your agreement, have a strong relationship there. But any way to segregate what’s a 4G upgrade cycle versus maybe a sustainable annual amount of revenue you think you can generate from your long-term Caterpillar relationship?
Jeff Gardner: Yes. Thanks Mike. This is Jeff. Thanks for the question. Yes, we – there is no doubt that the 3G to 4G upgrade cycle has really helped on the Caterpillar side. But at the same time, we are seeing increasing demand as their business. If you think about their business early on in the pandemic, their outlook was affected and they are really delivering more product today. So, I think the mix will change over time. But our – we are pretty bullish on Caterpillar over the next 12 months as we look at all that we have to do with them. And I think it’s a great opportunity for us.
Kurt Binder: And Mike, just to highlight on the 3G to 4G. I mean, it’s broader than Cat, obviously, and we have seen the demand come in more recently from a lot of our small to medium-sized customers that are rebounding after the pandemic, probably about close to 95% to 97% of all of our orders right now are for the LTE product, which is evidence that we are building momentum coming into the 3G, 4G sunset. So, I just wanted to highlight that. And additionally, we also are seeing increased demand internationally. And so we tried to highlight some of the markets that we are selling into for just that purpose. Because as we look at it, although the current sunset opportunity resides primarily in the United States, most of our customers outside of the U.S. are just starting that transition as well, which we think is another wave of demand.
Mike Walkley: That’s helpful. It sounds like there is still quite a tail to go. Jeff, maybe just switching gears for my follow-up question here. Just lots of progress on your end, your team transforming the business model to higher ARPU recurring revenue subscription services. With the iOn family of telematics solutions, and you are adding more and more capabilities such as low-temperature monitoring, etcetera. Can you share with us kind of what areas you are most excited about in terms of new growth opportunities for the company? And with these low-temperature solutions, is cold chain an area that you are really aggressive going after and with like being acquired, does that maybe open up the market and create even a new opportunity for your solution set? Thanks.
Jeff Gardner: Thanks. Yes. We are really pleased with the way – with what we have done this year in terms of I think, Mike, what you talked about focusing the business on those verticals that are most promising. As we look forward, I think with the rollout of our new iOn suite product with the new user interface, puts us in a very good position to compete in a number of areas, and the team is making good progress. So, in terms of areas I am most excited about, I mean, I think we are going to continue to do very well in the government and municipal sector. Our connected car business internationally is strong. But overall, when you look at transportation and logistics and our announcement around the cold chain today, we think there is a ton of opportunity. That’s a very big market today. And there is very few companies that bring the full package to market. The device, the platform and the end solution like CalAmp can do. And so that’s really where our team is focused. We are investing there, not only on the R&D side, but also on the sales and product side. So – and we have already proven ourselves in those spaces. You look at our customer list across the board, and we can demonstrate very clearly that we can serve very large complex markets. So, that’s what I would say about that.
Mike Walkley: Okay. And just a follow-up on that, and I will pass the line. Just with sharing ARR and RPO, and potentially those new metrics, but some of these opportunities in these new areas are – it can take quite a long time to close. I know you are not providing guidance, but should we expect just steady growth in subscription services revenue going forward or are there any seasonality or any trends Kurt we should think about in the short-term that might slow that growth trajectory?
Kurt Binder: Well, thanks, Mike, for highlighting the SaaS metrics. We feel pretty confident right now that those metrics are good indicators of showing how we, as an enterprise are transforming to a global SaaS enterprise. So, we felt like this was the right time to highlight those metrics. In terms of the growth coming in this upcoming fiscal year and beyond, a couple of things are in play. Obviously, we are coming out of the lows of the pandemic, and that has impacted principally our telematics services – our telematics device business. So that’s a big driver of growth. And additionally, obviously the move to 4G. As we have talked about in the past, one of the key things to our strategy is as we move from 3G to 4G is working with our customer base to transition them out of onetime transaction, onetime sales transaction of hardware into those subscription arrangements. And the first step in that overall strategy has been trying to deploy enterprise agreements and work closely with our customers to bring a package solution or bundle of services to play. We believe that we can do that effectively. So, I think it’s a combination of factors that are in play here, which should allow us to ride that momentum of growth into fiscal ‘22.
Mike Walkley: Okay. Thank you.
Operator: Your next question comes from the line of George Notter from Jefferies. Your line is open.
George Notter: Hi guys. Thank you very much. I guess, also I will add my congrats on the results and thank you for providing additional metrics on ARR and RPO. I guess I wanted to kind of ask you more about the lack of guidance. You guys cited, I think, lack of visibility and then also obviously, component issues. But at the same time, I think you said record backlog or near record backlog, and obviously, we have got a higher mix of recurring in the business now. So I guess I am hoping you could kind of square those statements and kind of give us some more color on why no ongoing guidance? Thanks.
Jeff Gardner: Yes. George, it’s really about – it’s more driven by this global supply chain issue related to semiconductor shortages across the world. Really, when you look at it, you have seen companies like big automotive companies. We have problems with some of our components. And so that’s really – the good news is we have got a great backlog and that we are – our customers are really interested in our products, and that will be good. But that’s really the only reason that we are hesitating on guidance going forward. And Kurt and I will take a look at that. We are not saying that’s going to be the case for the whole year, but we will look at that each quarter as we kind of play through. Right now, there is pretty – I would say, the uncertainty is just at a level where we just feel more comfortable not providing guidance at the time. But as I said, we will take a look at it going forward.
George Notter: Got it. And then just as a follow-up.
Kurt Binder: Well, the other thing I will add is just, George, since you highlighted the visibility and predictability into our SaaS business. And although that’s true, I mean, the one challenge we have, like any telematics service provider is in order to activate our SaaS services, we have to have the device, and we have to transact on that installation. So that, in combination with the supply chain, obviously, creates some uncertainty. So, but as Jeff pointed out, I think we are going to evaluate it quarter-to-quarter and I don’t think it’s very far off that we will be back to providing guidance.
George Notter: Got it. And then just as a quick follow-up. Could you talk about the impact you may have had in the quarter in terms of COVID impact on installations? Is there some amount of revenue that you could point to that was held up because of installation issues or even component shortages? Anything you can give us just metric-wise, you could help us understand how much revenue is getting held up. And then any impact on gross margins?
Kurt Binder: Sure. So I will just highlight a couple of things. It’s very hard to give specifics. But what I would say to you, and we have talked about this a bit in the past is, as you look at our MRM business, that business has historically been on a quarterly run rate that’s been in the low $30 million to $35 million range. And we are still working through some of the challenges around the pandemic in that space. But I think it’s a combination of not only the impact of the pandemic, but also some of the supply chain challenges. So that’s why we felt it was really important to highlight our backlog. And if you look at the current backlog, as we presented in our 10-K from a hardware perspective, we are right now at about $65 million to $66 million in the quarter, which I think from a historical perspective, is a near, if not a record level.
George Notter: Okay. Thank you.
Operator: Your next question comes from the line of Jerry Revich from Goldman Sachs. Your line is open.
Jerry Revich: Yes. Hi, good afternoon.
Jeff Gardner: Hi Jerry, how are you?
Jerry Revich: Doing well. Thank you. And congratulations on the strong progress here. I am wondering if we could talk about the cadence of subscriber growth that you folks are seeing thus far in the quarter. Can you just talk about whether the year-over-year growth run rate, excluding vehicle finance has continued in the quarter? Any comments on cadence there would be helpful.
Kurt Binder: Well, right. So Jerry, in terms of the new metrics that you see, that we have presented. Obviously, the one key to that will be increased subscribers. And we want to highlight that or we will continue to highlight that as we give quarterly information, financial information. Year-over-year, you are correct. We grew within our core businesses, about 8% was our overall subs growth. That 8% has come out of both the, what we call tracking and monitoring our services that we provide primarily to fleet, transportation and logistics as well as within connected car services, which we referenced internally as our recovery services. So it’s broad based. We think that trend in subscriber growth can expect to be – continue. So we are very optimistic about that. Additionally, what we also saw was close to an equivalent increase in our overall monthly ARPU rate. And I do want to highlight that when we gave information in those new metrics, we were focused on just the application subscription services. So that doesn’t incorporate, as you know Jerry, that there’s a hardware element to all of our arrangements. But we think that, that subscriber growth and ARPU growth can expect to continue into fiscal 2022. But we are at this point, not going to provide any specific guidance.
Jeff Gardner: Jerry, what the whole team is focused on is, I mean, especially after we have simplified the business with the transactions that we did this year is 3 key metrics; subscriber growth, ARPU from continuing to deliver value added services in our stack of software and then managing attrition. So, we hang on to our customers. And so I feel like when you look at this overall, the story is going to be a lot simpler going forward. And really in businesses that we feel are growing. We have got great sales team, great product people and R&D people on each of these verticals. So yes, we are optimistic about growth in the future and driving improvements in those three metrics.
Jerry Revich: And in terms of the cadence of revenue per subscriber growth on the new definition that excludes vehicle finance. Can you help us understand the cadence of that ARPU growth over the course of the quarter and into the new fiscal year here as well?
Kurt Binder: Yes. So Joe, I think our intention is to continue to provide similar metrics each quarter. If – in terms of our cadence, we would expect to bring some of our guidance or information each quarter.
Jerry Revich: Yes, sorry, Kurt, I meant what’s the year-over-year sequential performance on that ARPU metric, excluding vehicle finance. In other words, have you folks built momentum into the New Year on that metric.
Kurt Binder: So Jerry, I think overall, our ARPU growth year-over-year was 7%. And that ARPU growth, we would expect to continue into fiscal 2022. As it relates to sequential growth, I don’t have that number on the top of my head.
Jerry Revich: Okay. I appreciate the color. And then in terms of – within telematics systems, can you just talk about what the first quarter is looking like based on shipments to date, obviously, demand is very strong on one hand, but their supply chain shortages that we all know about on the other hand. So are we at a point where we can see year-over-year shipment growth in the quarter? Or can you just calibrate us on the magnitude of the supply chain shortages?
Kurt Binder: Well, all I can say right now is that our backlog right now within the telematics device base is that $65 million to $66 million, which is a near record high for us. In terms of our ability to ship for the first quarter, we’re not in a position to give guidance given the supply chain challenges that we’re working through.
Jeff Gardner: Yes. And our team is doing everything possible, you might imagine as it relates to that, to deliver for our customers, but it’s been a really challenging environment. We covered most of that in the fourth quarter. And so I think that’s just going to be a battle we’re going to fight probably for the next couple of quarters.
Jerry Revich: Okay. I mean…
Jeff Gardner: The great news, Jerry, is the backlog. And customers are they want our products. They understand that the 3G to 4G transitions taking effect. And so that business is there for us.
Jerry Revich: Okay, got it. And lastly, you mentioned the margin headwind from the supply chain issues. Was that a comment about the fourth quarter? Or is that the current magnitude of headwind that we can expect until the supply chain shortages are relieved?
Kurt Binder: Well, we were extremely pleased with the margin performance in the fourth quarter. We were over 42% for the fourth quarter. And as we look to fiscal 2022, there are a couple of areas that do give us pause that, as I mentioned, could result in some downward pressure of 100 to 200 basis points. Obviously, the component shortage and a number of the spot buys that we’re being forced to execute on in order to try to meet customer demand. Those two factors we expect to impact us over the next two quarters. We are seeing some signs that in the second half of our upcoming fiscal year that may subside. But for right now, we felt like it was important given the strength of Q4 to highlight that there is a bit of risk out there, and we think that risk will reside for probably the first half of fiscal ‘22.
Jerry Revich: Okay. I appreciate the discussion. Thank you.
Kurt Binder: Sure. Thank you.
Operator: Your next question comes from the line of Scott Searle from ROTH Capital. Your line is open.
Scott Searle: Hey, good afternoon. Thanks for taking my questions. Nice quarter, guys.
Jeff Gardner: Thank you.
Scott Searle: Hey, just a couple of quick clarifications. Given the reporting of continuing operations, so the OpEx now is fully reflective of the sale of LoJack to spray and the OpEx that goes along with it, is that correct? So going into the first quarter here, is this a normalized OpEx number that we should be working off of or are there any one-time events in either direction that we should be modifying that going forward?
Kurt Binder: Well, hey, Scott. So yes, so because of the fact that we’ve been able to classify the LoJack business in discontinued operations. And because of the fact that we have a transition service agreement with Esperion, we have been able to reduce our OpEx to a level which is in what I would characterize as a more normalized level going forward. That being said, there are some, what I would characterize as indirect costs that we are still going to have to carry for a little bit longer until the relationship with Esperion ends at the conclusion of our transition services agreement. The way we had executed that agreement was that all of the direct costs of that business would be carried by them. And then additionally, the indirect cost, a portion or, I should say, a reasonable portion of those costs would be carried by them, but we will continue to have to absorb some of those costs. I would expect that over the next fiscal year and into fiscal ‘23, we’re going to continue to work on optimizing our OpEx. Our focus is really on reducing G&A and moving that cost really up to where it matters, which is sale market in R&D. And so we’ve embarked on a number of to make that happen. And I’m pretty optimistic on the progress we’ve made so far, but there is still a little bit of work to do there.
Scott Searle: Got it. Very helpful. Just to clarify though, Kurt. So any of those indirect costs over the next couple of quarters, are you going to be netting them out in terms of one-time charges or otherwise? Or are we going to just expect to see that rolled into normalized OpEx?
Kurt Binder: Yes. So I think it would most likely be normalized into our typical OpEx for a period of time when we’re being held to servicing the transition service agreement with Esperion.
Scott Searle: Got it. And if I could, Caterpillar front, record quarter for you guys. Sounds like the book of business and the backlog is very strong there. I’m not sure if you commented specifically on them in terms of the outlook for the year, but I’m wondering without component constraints, what your visibility is to Caterpillar this year? Is it kind of in the ballpark of flattish? Or is it something that actually grows, given the 3G to 4G upgrade cycle? And then extending the 3G to 4G upgrade cycle to the rest of the MRM business. I’m wondering what you saw in the quarter as it relates to the non-network OEM business. Was there a big component of that was going through the upgrade cycle as well? Because it still looks like it’s at relatively depressed levels. So there is room for growth there. Any color you could provide on that front would be helpful.
Jeff Gardner: Yes, Scott. On Caterpillar, I would just say that we’re bullish on – as we look at the year, we’re continuing to work very closely with them. We’re improving our quality with them. We’re so I talked about in my script that they are one of the customers that we’ve really, I think, is a great example of we’ve gotten a lot closer to our customers. So the outlook is positive there. I don’t want to give any specific direction in terms of – but you can see the trend is very good and relationships in a very good spot. So we’re going to continue to focus on them going forward. For the balance of the business, I think our backlog really reflects the fact that some of these smaller TSPs are really now starting to understand that they need to move more quickly with respect to the 3G to 4G transition. So I feel like that it’s more broad-based now, no, because we’ve seen it with our large customers throughout the year. But now you’re seeing it kind of show up in our backlog. I think that’s one of the reasons we’re – Kurt talked about a $66 million backlog, which is a record for us.
Scott Searle: Got it. But Jeff to clarify that backlog as opposed to fourth quarter revenue. So you’re starting to see it, but we didn’t actually see it in the numbers in the just reported quarter?
Jeff Gardner: That’s fair.
Scott Searle: Okay. And lastly, if I could, starting to broaden the mix of the business on the SaaS side in terms of the iOn product portfolio, etcetera, and some of the announcements related to cold gain. Historically, this has been a connected car, right, with LoJack and Synovia business. But I’m wondering, if you look at that sub base of 950,000 subs, if we look at a year or 2, how do you kind of expect the composition of that business to be across some of the different end markets? And if I could just to on the back end there as well, Jeff, any thoughts related to 5G? Are customers talking about? Are they concerned about it? You’re seeing interest there, whether it’s in in industrial or private networks, that kind of cropping up? And where is CAT M fit into the overall discussion these days? Thanks.
Jeff Gardner: Yes. And so as we look at our end markets, you talk about connected car, gov muni, transportation and logistics, we see the outlook is positive for all of those. We’ve had very good growth in our connected car business over the last few years. So I mean, I feel like what we’ve done with the company is we’ve kind of focused on the verticals that we think can provide us growth in the future. So I feel good about all of our verticals in terms of their potential to deliver both subscriber growth and ARPU. As it relates to 5G, we do – we are talking to our customers about that. It’s not really generated anything meaningful in the business yet. But I mean, CAT M is all about that, right? It’s what enables that. And so our engineering team and product team has done a great job delivering CAT M products across the world. And so that’s been a focus of ours throughout 2021.
Kurt Binder: And Scott, one of your first part of your question was just around the mix of subscribers. So as you look at the subscriber mix, for fiscal ‘21. It was probably about a 60-40 split with 60% coming from recovery services or closely aligned to our connected car services and 40% coming from tracking and monitoring services, which is really fleet and govern municipalities. We do see that going into fiscal ‘22 and into 23, that, that mix shifting a bit. It’s important for us because it has an impact on the overall ARPU because mix impacts our monthly ARPU. So we are working hard to increase the number of subscribers in our tracking monitoring space and not necessarily decrease the recovery, but make sure that we’re accelerating growth in the key areas. In those key areas, from an end market standpoint, our transportation, logistics, government municipality and industrial heavy equipment.
Scott Searle: Great. Thanks so much.
Jeff Gardner: Thanks, Scott.
Kurt Binder: Thanks, Scott.
Operator: Your next question comes from the line of Mike Latimore from Northland Capital. Your line is open.
Unidentified Analyst: Hi, this is Aditya on behalf of Mike Latimore. So could you talk about the opportunities you see around the school? I mean, are there more greenfield or replacement prospects around the school?
Jeff Gardner: Yes. Thanks for the question. Yes. I think that we’ve seen good strength in our K-12 business all year-long despite the pandemic and that market, although many of the large districts have telematics equipment, there is still quite a few that don’t. And we’re doing very well. The team has done a nice job this year innovating in that space with adding some new features, particularly ones that were real relevant during the pandemic. So we continue to be very excited about that business. We’ve got a great sales team there, a great support team there. We’ve got a very nice pipeline going into 2022 – our fiscal year 2022.
Unidentified Analyst: Alright. Alright. Fine. And regarding the restrictions in Europe, in countries such as Italy and UK, so how much does it affect in terms of revenue for this particular quarter?
Kurt Binder: In terms of the fourth quarter?
Unidentified Analyst: Yes.
Kurt Binder: Well, yes. Okay. In terms of the fourth quarter, fourth quarter from the international recover connected car space is typically – there is seasonality in it. And we did see a bit of a dip when you looked at Q3 going into Q4. Relative to last year this time, I think it was fairly consistent. But if you recall, we started to feel the impact of the pandemic in our fourth quarter, which is really that in the January-February time frame. We are seeing some, I would say, limited, but some limitations on installations, but nowhere near the magnitude that we experienced back in March, April, May time frame. So as we look forward, I think we’re feeling pretty good about that business. We think that we’re still not totally out of the woods as it relates to the COVID-19 pandemic. The UK, our office there has indicated that there are some things that we have to be aware of and just be sensitive to. But I think, generally, we’re feeling that we should be beyond this in the beginning of Q2 and throughout the remainder of fiscal ‘22.
Unidentified Analyst: Alright. Alright. Thanks. That’s it. Thank you.
Jeff Gardner: Thank you.
Operator: There are no further questions at this time. I’ll turn the call back over to Mr. Jeff Gardner.
Jeff Gardner: Yes. Well, thank you for joining us on the call today and for your continued interest in CalAmp. One final note, we will be attending the upcoming Needham Virtual Tech and Media Conference on May 19. If you’d like to request a meeting, please contact Needham or the Shelton Group, our Investor Relations firm. I look forward to discussing our continued progress during our fiscal first quarter call in June. Thanks for joining us today. Operator, you may now disconnect the call. Thank you.
Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.
