WORCESTER Nov 3, 2015 (Thomson StreetEvents) -- Edited Transcript of American Superconductor Corp earnings conference call or presentation Tuesday, November 3, 2015 at 3:00:00pm GMT TEXT version of Transcript ================================================================================ Corporate Participants ================================================================================ * Brion Tanous CleanTech IR, Inc. - IR * Dan McGahn American Superconductor Corporation - President and CEO * Dave Henry American Superconductor Corporation - EVP, CFO, and Treasurer ================================================================================ Conference Call Participants ================================================================================ * Jeff Osborne Cowen and Company - Analyst ================================================================================ Presentation -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- Good day, everyone, and welcome to AMSC's Q2 FY15 investor conference call. This call is being recorded. (Operator Instructions). With us on the call this morning are AMSC's President and CEO, Daniel McGahn; Executive Vice President and CFO, David Henry; and Manager of AMSC's Investor Relations, Brion Tanous. For opening remarks, I would like to turn the call over to Mr. Brion Tanous. Please go ahead, Sir. -------------------------------------------------------------------------------- Brion Tanous, CleanTech IR, Inc. - IR [2] -------------------------------------------------------------------------------- Thank you, Tanisha, and welcome to our call to discuss our second quarter of fiscal 2015 results. Before we begin, I would like to note that various remarks management may make on this conference call about AMSC's future expectations, plans, and prospects constitute forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including those discussed in the risk factors section of our annual report on Form 10-K for the year ended March 31, 2015, which we filed with the SEC on May 28, 2015, and subsequent reports that we have filed with the SEC. These forward-looking statements represent our expectations only as of today, and should not be relied upon as representing our views as of any date subsequent to today. While AMSC anticipates that subsequent events and developments may cause the Company's views to change, we specifically disclaim any obligation to update these forward-looking statements. I would also like to note that we will be referring on today's call to non-GAAP net loss, or net loss before stock-based compensation, amortization of acquisition-related intangibles, restructuring and impairment charges, consumption of zero cost basis inventory, change in fair value of derivatives and warrants, non-cash interest expense, and other unusual charges, net of any tax effects related to these items. Non-GAAP net loss is a non-GAAP financial metric. A reconciliation of our non-GAAP to GAAP net loss can be found in the press release we issued and filed with the SEC this morning on Form 8-K. All of our press releases and SEC filings can be accessed from the Investors page of our website at www.amsc.com. And now I'd like to turn the call over to CEO, Dan McGahn. Dan? -------------------------------------------------------------------------------- Dan McGahn, American Superconductor Corporation - President and CEO [3] -------------------------------------------------------------------------------- Thanks, Brion, and good morning, everyone. I will begin today by providing an overview of our accomplishments and financial results for the second quarter of fiscal 2015 which ended September 30, 2015. Dave will then provide a detailed review of our financial results and guidance for our third fiscal quarter, which will end December 31, 2015. Following Dave's comments, I will provide an overview of our activities and future expectations. And after that, we'll open up the line to your questions. In the second quarter of fiscal 2015, we increased revenue by more than 50% year-over-year, as a result of strength in our wind business. We also delivered significantly improved gross margin as compared to the same quarter a year ago. At the beginning of the fiscal year, we outlined several near-term business objectives we expected to achieve in the first half of fiscal 2015. Those included identifying an additional US utility to perform a deployment study of our REG system; announcing a large wind order; and announcing new D-VAR orders. I am pleased to announce we have achieved all of these objectives. During the second quarter, Pepco, in Washington, DC, joined Boston's Eversource as an additional US utility performing a deployment study of our REG system. We also began shipping to Inox under the new $40 million order we received from them during the second fiscal quarter. Inox is growing its market share and its order book. And we believe that we are well positioned to support their growth plans this fiscal year and beyond. Within our Gridtec business unit, we've announced multiple D-VAR orders so far this year. We are encouraged by the activity we've seen for our D-VAR product for both renewable energy as well as industrial applications. We see the need for power quality and reliability increasing among utilities and commercial customers alike. In addition to achieving these near-term objectives, we made progress on our Resilient Electric Grid, or REG, solution for the electric utility market; and our Ship Protection Systems, or SPS, product line for the US Navy. We're now tracking activity for our REG product at about a dozen US utilities. And we are working to increase the opportunity pipeline for our Gridtec products through our new and growing network and sales channel. During the quarter, we received a $3.7 million contract modification from the US Department of Homeland Security to fund the purchase of certain long-leadtime components for the REG system, as well as further engineering activities. I will talk more about the contract modification, our roadmap, and our business development activities with utilities and the US Navy, later in the call. Now I'll turn the call over to Dave Henry to discuss our financial results for the second quarter of fiscal 2015. Dave? -------------------------------------------------------------------------------- Dave Henry, American Superconductor Corporation - EVP, CFO, and Treasurer [4] -------------------------------------------------------------------------------- Thanks, Dan, and good morning, everyone. AMSC increased its revenues 53% to $19 million for the second fiscal quarter compared to $12.5 million in the year-ago quarter. Wind revenue increased 82% year-over-year, driven by higher ECS shipments to Inox, while grid revenue grew 9% year-over-year due to increased D-VAR revenues. 12-month backlog as of September 30, 2015, was approximately $62 million compared with $39 million as of June 30, 2015. The increase is primarily the result of the large follow-on order from Inox Wind we received and began shipping under in the second fiscal quarter. Shipments under the new order from Inox are expected to be completed early in the first quarter of fiscal 2016. This expected shipment schedule represents an accelerated pace of deliveries compared to the prior orders, which were completed over roughly four to five quarters. Looking at the P&L in more detail, gross margin for the second fiscal quarter was 15.8%, which compares with negative 11% in the prior-year quarter. The year-over-year increase in gross margin resulted from higher revenues; improved mix, primarily in our D-VAR product line; and improved factory utilization. R&D and SG&A expenses for the second fiscal quarter were $9.8 million as compared with $11.1 million for the same period a year ago. The decrease was primarily due to lower stock compensation and lower legal expenses. Approximately 13% of this R&D and SG&A spending in the second fiscal quarter was non-cash. Other expense was $400,000 in the second fiscal quarter compared to other income of $700,000 in the year-ago quarter. The increase in other expense was primarily driven by foreign currency losses, particularly the weaker euro, compared to the prior-year period. We incurred approximately $900,000 in income tax expense in the second fiscal quarter. In addition to the usual tax provision in our foreign jurisdictions, we [patriated] cash to the US, and paid foreign dividend withholding taxes in the quarter. Our net loss in the second quarter of fiscal 2015 was $7.7 million or $0.57 per share. This is a decrease from $25.4 million or $3.12 per share in the year-ago quarter. Prior-year results included a one-time charge of $10.2 million for settlement of an arbitration award, and $3.7 million in restructuring and impairment charges. Excluding the aforementioned charges and other items, the Company's non-GAAP net loss for the second quarter of fiscal 2015 was $8.7 million or $0.64 per share compared with a non-GAAP net loss of $11.8 million or $1.45 per share in the same period of fiscal 2014. Please refer to the non -- to the financial table below for a reconciliation of GAAP to non-GAAP results. We ended the second fiscal quarter with $36.6 million in cash, cash equivalents, and restricted cash. This compares with $42.6 million as of June 30, 2015. Cash burn in the second fiscal quarter was approximately $6 million, consisting of an operating cash burn of approximately $4.7 million, and $1.3 million from investing in financing activities which was primarily debt service. Excluding financing proceeds received in the first fiscal quarter of $22.3 million, the cash burn in the first half of the year was approximately $10 million. We expect our cash burn in the second half of the fiscal year will be lower than the first half. As of September 30, 2015, the principal balance of our debt arrangements, excluding the debt discount, was $6.2 million compared to $7.2 million as of June 30, 2015. We have two outstanding term loans. The first term loan has a remaining principal balance of $4.7 million and matures on November 1, 2016. The second term loan has a remaining principal balance of $1.5 million, under which we will pay interest only, on a monthly basis, until maturity on June 1, 2017, when the entire outstanding amount will be required to be repaid in full. Turning to our financial guidance, for the third fiscal quarter of 2015, we expect that our revenues will be between $19 million and $22 million. We expect that our net loss for the third fiscal quarter will be less than $5.5 million or $0.40 per share. Our net loss guidance for the third fiscal quarter includes a gain of $2.5 million as a result of proceeds received from the sale of Blade Dynamics to General Electric in October. Assuming no post-closing purchase price adjustments, and the maximum earnout payment, AMSC may be entitled to receive up to $1.6 million in additional proceeds over the next three years. Excluding the gain on the sale of our investment in Blade Dynamics, and other items, our non-GAAP net loss for the third fiscal quarter is expected to be less than $8.5 million or $0.62 per share. With that, I'll turn the call back over to Dan. -------------------------------------------------------------------------------- Dan McGahn, American Superconductor Corporation - President and CEO [5] -------------------------------------------------------------------------------- Thanks, Dave. I'll start today with our Windtec business unit. Through our Windtec Solutions, we provide our wind turbine licensees with fully integrated electrical control systems, or ECS. The ECS consists of the electric [pick] system, converter system, power distribution cabinets, and various turbine control cabinets, as well as our SCADA solution and software. By using our integrated electrical control systems, we believe our customers' wind turbines provide higher availability, reliability, and optimized energy output. We have been exploring new wind turbine licensing opportunities with a number of potential partners in Eastern Europe, Russia, and Brazil. If we identify the right opportunity with the right partner, we certainly will see if we can expand into these other emerging wind markets. Focusing specifically on India, the wind market in India looks bright for Inox. According to the Global Wind Energy Council, the Indian wind energy sector had a total installed power capacity of 23.5 gigawatts as of March 31, 2015. In terms of wind power installed, India is a major player in the global wind energy market, and ranks fifth in the world in cumulative installations, according to industry analysts. Policies such as accelerated depreciation benefit and generation-based incentives seem to be having a positive effect on the Indian wind market. Additionally, multiple states in India now have multi-year tariff policies. Stakeholders are bullish about the future of the Indian wind energy sector. The government has announced an impressive target of having 60 gigawatts of wind energy capacity installed by 2022, which is more than double the existing installed capacity. Inox has benefited from supportive government policies, as well as a strong business model; and during its recent quarterly earnings call in October, announced that it had an order book of about 1,200 megawatts as of the end of September. In fact, Inox has indicated that they expect to be at manufacturing capacity for the next 12 months. Inox is currently in the process of increasing its annual manufacturing capacity to 1,600 megawatts, which is double their current capacity of 800 megawatts. In the second quarter, our revenues to Inox more than doubled year-over-year. We expect to continue to support Inox's roadmap for the future, including the supply of 2 megawatt ECS units, and to provide design support for next-generation turbines as well. Internally, we are now fully supporting Inox's demand out of our manufacturing facility in Romania. Our facility in China is supporting our Chinese customers, and it can provide surge capacity to support our other wind customers as needed. To be clear, we remain committed to our Chinese customers. And we will continue to provide ECS as well, as service and spare parts, for the Chinese market. Let's move on to our Gridtec business unit. Our Gridtec business consists of power electronics for renewable utility and industrial customers, as well as high temperature superconductor or HTS-based systems for electric grid and military applications. Our D-VAR STATCOM product addresses three primary end markets: renewable energy interconnections; electric utilities; and industrial installations, such as semiconductor fabs. In renewable energy interconnections, AMSC's D-VAR product enables seamless connections to the power grid and eliminates voltage surges and sags. For electric utilities, the D-VAR solution can help utilities carry more power through their existing transmission and distribution assets. It can also enhance transmission system performance and prevent widespread blackouts. Industrial applications, such as semiconductor fabs, require high power quality. This is because that even the slightest variation in voltage can compromise and operation and result in significant costs. D-VAR systems can mitigate these types of issues and ensure high-power quality for both the industrial customer and the grid operator. While we continue to see a lot of activity in renewable applications for the D-VAR, we are also actively working to expand sales into utilities and industrial markets through our expanding sales network. We have been encouraged by the order flow of our D-VAR product so far this year. In the third quarter, we expect to generate our highest D-VAR revenues in nearly 3 years, due to expected shipments to customers in Asia and Africa. Also within the Gridtec segment are our HTS system products, which serve the primary target markets of the US Navy and electric utilities. AMSC has been working with the US Navy for many years on the development of HTS systems for the fleet. We believe HTS systems could play a significant role in future Navy vessels, enhancing ship protection systems, shipboard power systems, and eventually propulsion systems. As we discussed on the last call, we have received an $8.5 million order from the US Navy for ship protection system components. We expect revenues under this contract starting in fiscal 2016. We're continuing to work with the Navy and shipbuilders to understand their unique needs and how our ship protection systems can integrate into existing and future vessels. The US Navy views our ship protection systems as enabling technology for a number of ship protection applications. One, which we have discussed many times, is degaussing. However, we believe that there are additional ship protection applications where HTS-based systems can play a significant role. We are developing products with the aim of increasing are available market of ship protection products with the US Navy. In fact, we are already underway with design work for the next ship protection system application. As I mentioned earlier, our product roadmap with the Navy goes beyond ship protection systems. During the second quarter, we received another order from the US Navy to develop HTS power cable hardware for shipboard power applications. This order is in addition to the $8.5 million order I just mentioned. This is the next step in our product roadmap with the Navy. We are pleased with our progress, and I look forward to reporting additional progress in the coming quarters. Let's turn now to our REG product, Resilient Electric Grid. The benefits from REG are simple. Our REG system can deliver more power, help to prevent power failures, and take up less physical space, all much-needed features in today's dense and busy American cities. REG can enhance the capacity and the reliability of the grid. Our REG system is based on our high-temperature superconductors, which, in addition to being much more power dense than traditional copper, are able to automatically and instantaneously adapt to power surges and disruptions from lightning strikes, heat waves, traffic accidents, and even sabotage. Let me step back and explain how the REG system works. Electrical substations take electricity delivered over the transmission and distribution lines, and lower the voltage so that that it can be used by homes and businesses. Even if power is lost to an individual substation, by creating multiple redundant paths for the electric current, our REG systems allow quick power restoration to all the surrounding power loads. Our REG product can be configured into loops or branches. AMSC's power loop solution leverages the unique fault current limiting capabilities of our HTS wire to provide a resilient and efficient interconnection of substations. Our power loop solution could allow substations that have been intentionally isolated from one another in the past, for fear of cascading failures, to be interconnected in order to share power and assets. Many of our most recent conversations with utilities have focused on AMSC's power branch solution. For applications focused on capacity improvement, our REG solution can be designed into a branch configuration. In this application, the REG system connects an existing large urban substation with a new, much smaller and more simplified substation within the city at a lower cost. The smaller urban substation does not need large power transformers, and takes up much less space, thereby significantly reducing real estate, construction, and other related costs in the urban area. This represents a value to utility beyond reliability and redundancy. In the next few months, we expect to complete the detailed deployment plan with ComEd in Chicago for a permanent operational installation of our REG product in Chicago's central business district, which is being funded in part under a cost-sharing arrangement with the US Department of Homeland Security, or DHS. Under this cost-sharing arrangement with DHS, we were required to partner with at least two additional cities in the US to perform deployment studies for the REG system. Following the announcement by Boston's Eversource in April, in July we announced that Pepco, Washington, DC's electric utility is undertaking a deployment study of our REG system as well. Pepco, in Washington, DC, has expressed a high level of interest. And we are currently working with them on system design for a REG solution to substantially increase the reliability at several key substations in Washington, DC. The high-level design of the solution is substantially complete. And work is currently focused on choosing among possible operational approaches for the solution. This plan is aimed at substantially increasing the reliability of the distribution system by reducing both the frequency and duration of outages. As we mentioned last quarter, the design for Pepco looks to be, in some scenarios, potentially larger than the design for ComEd. Let's talk more about the project with ComEd in Chicago. In the second quarter, we received a contract modification from DHS for $3.7 million. These monies were allocated from the original $60 million funding expectation to be provided by DHS, bringing total authorized funding under the project to $5.2 million. These funds bridge our efforts between the deployment planning and construction phases of the project, and provide for the purchase of certain long-leadtime equipment, and to perform engineering activities which are required prior to construction. This contract modification is expected to extend funding through May of 2017. As I mentioned earlier, this funding is a bridge between the $1.5 million deployment planning phase -- which we expect to complete by the end of the third fiscal quarter -- and the construction phase. I want to make sure we are clear on timing. We will begin working soon on the engineering activities, funded by the $3.7 million contract modification. We expect to recognize revenue from this work during fiscal 2016. According to the contract modification, those efforts must be completed by May of 2017. We cannot provide an estimate, at this time, as to if and when the construction phase of the project will begin. Our work during the deployment planning phase has identified some new issues to be resolved before the parties can proceed with construction. I do want to say that these issues are not related to the product, the technology, or the value proposition. We believe these issues can and will be overcome. I'm pleased that DHS continues to support the program through additional authorized funding to allow time to further the project and resolve these issues. To be clear, it is not anticipated that completing the work under this new engineering phase will be a prerequisite to beginning the construction phase. In other words, these tasks could occur concurrently. All three parties -- DHS, the utility in Chicago, and AMSC -- still have to agree, in order to go to the next phase. I'm encouraged by the progress we're making with REG. Over the past two quarters, our conversations with other utilities have matured and have become more substantial. Through these conversations, we believe that REG is a near-term solution for the complex challenges that utilities are facing today. In summary, in wind, we are optimistic about the wind market in India and believe we are well positioned to support Inox's capacity expansion, going forward. Our Gridtec segment has its sights set on growth. We are working hard to further penetrate renewable energy applications, as well as industrial and utility opportunities for our D-VAR product line. And our focus on deploying complete HTS systems is paying off. We expect increasing opportunities within the US Navy and the electric utility market for HTS system technology. We achieved the near-term business objectives we set for ourselves during the first half of fiscal 2015. Credit for that goes to our employees for their hard work and their dedication. This hard work is paying off, as we expect higher sequential revenues in the third quarter, and continued improvement in our financial results. I look forward to reporting back to you at the completion of our third fiscal quarter. And with that, Tanisha, I'd like to open up the call to questions. ================================================================================ Questions and Answers -------------------------------------------------------------------------------- Operator [1] -------------------------------------------------------------------------------- (Operator Instructions). Jeff Osborne, Cowen and Company. -------------------------------------------------------------------------------- Jeff Osborne, Cowen and Company - Analyst [2] -------------------------------------------------------------------------------- Thanks. I just have one clarification and two questions. On the clarification, I missed in the 10-Q what the R&D expense was in cost of revenue. I was wondering if you could provide that number. And then the two questions I had was just can you talk about the 3Q strength in D-VAR, and then what visibility you have into that? Is there any visibility for the fourth quarter? Or just as we look out to the fourth fiscal quarter, should we think about the grid revenue trailing down? And then I had a question also on Inox. It sounds like things are accelerating there. Can you just talk about your working relationship with them, and what type of visibility they are providing? It seems like the past couple quarters have been pretty lumpy with -- on the revenue line, but you seem pretty confident with the commentary you provided on the call. So I'm just trying to get a sense of what's changed there. -------------------------------------------------------------------------------- Dave Henry, American Superconductor Corporation - EVP, CFO, and Treasurer [3] -------------------------------------------------------------------------------- It's Dave Henry. I'll take the first one on the revenue. We actually -- for the longest time, we made that -- we did that disclosure, sort of that non-GAAP measure in R&D in our MD&A to talk about the fact that when we were doing so much government program work and such, that sometimes you could have all of the Company's R&D expense up in COGS because that's all -- that's the only place revenues were coming from. And as we've matured and such, we felt that that exposure really -- it wasn't really needed anymore so we -- effective with this quarter, we stopped the -- we stopped providing that calculation that shows what R&D would've been as if there were nothing in COGS. So we just compared in our MD&A GAAP R&D, to GAAP R&D, year-over-year. And that's what we'll continue to do going forward. -------------------------------------------------------------------------------- Jeff Osborne, Cowen and Company - Analyst [4] -------------------------------------------------------------------------------- Got it. Thank you for the clarification there. -------------------------------------------------------------------------------- Dan McGahn, American Superconductor Corporation - President and CEO [5] -------------------------------------------------------------------------------- On the third quarter in D-VAR, we expect to generate our highest revenues for D-VAR in nearly 3 years. And these are due to expected shipments to customers in Asia and Africa. I think also you are seeing, at the end of the calendar year, perhaps customers getting work done in calendar 2015 in preparation for milestones that they need to achieve by going into 2016. We are not providing any additional color in the future, Jeff, for Q4. I think we will get at that, as we get into the next call, and the call after that. -------------------------------------------------------------------------------- Jeff Osborne, Cowen and Company - Analyst [6] -------------------------------------------------------------------------------- But generically speaking, the visibility in D-VAR is less than 3 to 4 months out. Is that fair? Or are people placing orders multiple quarters in advance, and you have that kind of line of sight? -------------------------------------------------------------------------------- Dan McGahn, American Superconductor Corporation - President and CEO [7] -------------------------------------------------------------------------------- Kind of, D, all of the above. The line of sight for D-VAR can be between three and nine months, typically. In many cases, it could be six months. We could get calls this month that would require delivery within the fiscal year. But in general, as we look at the health of the pipeline, we kind of track looking out three, six, nine months at a time. We are seeing that overall pipeline is being quite healthy. We are seeing a diversity in that pipeline among many of the markets we physically [did], not only from a user base -- be it industrial utility or renewable customer -- but also the countries that we see future order flow coming from. So we think that D-VAR right now is looking quite strong in the near-term. We've been able to successfully transition manufacturing of that product from Wisconsin to Massachusetts. And we've talked a little bit in the call about we have an effort within the Company to expand our sales channel and our channels to market. So we are looking squarely to position Gridtec for growth. And we hope to be able to report on that in future calls. -------------------------------------------------------------------------------- Dave Henry, American Superconductor Corporation - EVP, CFO, and Treasurer [8] -------------------------------------------------------------------------------- So on the D-VAR, I can give you a little bit more color. I mentioned 12-month backlog, $62 million. Obviously, there is D-VAR in that backlog. But most of the 12-month backlog for D-VAR is really shippable in fiscal 2015. So, there's not a lot yet that's booked into the first six months of fiscal 2016, but we wouldn't really expect it to, at this point in time. I think starting now and in the coming months, we'll be looking to build backlog for fiscal 2016 in D-VAR. On Inox accelerating, I think you are right. You do see some lumpy revenue, and it really gets down to their timing and their management of their inventory and their cash. You know, we mentioned coming out of the March quarter that we were basically at a run rate that is equivalent to their current capacity. We are watching, as well, as you probably watching, their public announcements about their progress with their capacity expansion. They are looking to go from 800 megawatts, which would translate into about 100 sets a quarter for us, to something that's double that. Their visibility that they are showing to us, and they are showing publicly, is they have an order book for about 1,200 megawatts and that their manufacturing time is pretty much 100% occupied for about the next 12 months. So, they are trying to be able to manage their business well, and also expand their capacity in parallel. And our hope, as we look to support them, is as the market helps move them along, and as we are able to continue to support them, that should mean in the near-term, for us, continued revenue with Inox. From a growth standpoint, I think it's challenging to make that call, because of the lumpy nature that we see sometimes quarter-to-quarter with Inox. -------------------------------------------------------------------------------- Jeff Osborne, Cowen and Company - Analyst [9] -------------------------------------------------------------------------------- Great. I appreciate the detail, as always. Thank you. -------------------------------------------------------------------------------- Operator [10] -------------------------------------------------------------------------------- (Operator Instructions). -------------------------------------------------------------------------------- Dan McGahn, American Superconductor Corporation - President and CEO [11] -------------------------------------------------------------------------------- I think for those of you on the call, one of the challenges that we are going through as a Company is -- I think our analyst community is kind of going through some change. So we are appreciate, Jeff, of your attention, and the others that are on the call. I think we will move now to close down the call. I want to go, and I want to re-highlight again the accomplishments so far in the first half of the year. So we said we would do three things, and we did them. We received an order for $40 million from Inox and we began shipping under that order. We delivered on $9 million in new D-VAR system orders that we've announced. We were able to enter into a contract vehicle with the US Navy for ship protection equipment, to the tune of $8.5 million. We've been able to sign up Eversource in Boston, and Pepco in the nation's capital, to conduct deployment studies. We've been able to double revenue year-to-year. And we are showing you today sequential quarter-to-quarter growth from our Q2 ending in September, to our Q3 ending in December. D-VAR backlog growth shows what we believe will be a record quarter, at least in the near-term, for D-VAR. In the longer-term, we continue to work with the US Navy on supporting their needs, and also developing these different product offerings for the Navy. And we're looking forward to be able to demonstrate and report on continued progress with the project in Chicago. I think we are very happy with the progress we've already been able to make to date with Washington, DC. The Company is in a very good position. We are focused on the near-term here to be able to deliver growth quarter-to-quarter. But we have, in our basket, a bundle of products that we believe have extraordinarily large opportunities for our Company to take advantage of. And with that, I look forward to reporting our results again in three months' time. And thank you for your attention, and specifically Jeff for the questions. Thank you. -------------------------------------------------------------------------------- Operator [12] -------------------------------------------------------------------------------- That does conclude today's program. We'd like to thank you for your participation. Have a wonderful day, and you may disconnect at any time.
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