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Date

Monday, July 28, 2025, 4:45 p.m. ET

Call participants

  • Executive Chairman — Clarence Granger
  • Chief Financial Officer — Sheri Savage
  • Vice President, Investor Relations — Cheryl Knepfler

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Risks

  • Clarence Granger stated during the fiscal Q2 2025 earnings call that although customers "claim they're gonna pay us another $2 million" in tariff-related reimbursements, only $300,000 has been paid to date, reflecting delayed cost recovery and potential working capital risk.
  • Clarence Granger estimates administrative and operational costs associated with tariffs to be "$2 to $3 million a year" on an annualized basis. This could reduce annual earnings by approximately six cents a share.
  • Indicating that market-driven valuation adjustments resulted in a non-cash charge.

Takeaways

  • Total revenue: $518.8 million (non-GAAP) for fiscal Q2 2025, a slight increase from $518.6 million in the previous quarter (non-GAAP, fiscal Q1 2025).
  • Product revenue: $454.9 million (non-GAAP) for the quarter, down from $457 million in the prior quarter.
  • Services revenue: $63.9 million (non-GAAP), up from $61.6 million (non-GAAP) in fiscal Q1 2025.
  • Gross margin: 16.3% (non-GAAP), compared to 16.7% in fiscal Q1 2025 (non-GAAP).
  • Product gross margin: 14.4% (non-GAAP), versus 14.9% in fiscal Q1 2025 (non-GAAP).
  • Services gross margin: 29.9% (non-GAAP), slightly up from 29.8% last quarter (non-GAAP, fiscal Q1 2025).
  • Operating expense: $56.1 million (non-GAAP), down from $59.4 million last quarter (non-GAAP, fiscal Q1 2025).
  • Operating expense as % of revenue: 10.8% (non-GAAP), compared to 11.5% in fiscal Q1 (non-GAAP).
  • Total operating margin: 5.5%, compared to 5.2% in the prior quarter.
  • Products operating margin: 4.8%, compared to 4.6% in the prior quarter.
  • Services operating margin: 10.5% (non-GAAP), compared to 10.2% last quarter (non-GAAP).
  • Tax rate: Flat at 20% (non-GAAP); tax rate expected in the low to mid-20% range for full-year 2025.
  • Earnings per share: $0.27 on net income of $12.1 million (non-GAAP), compared to $0.28 and $12.7 million in the prior quarter.
  • Shares outstanding: 45.3 million shares (non-GAAP).
  • Cash and cash equivalents: $327.4 million, up from $317.6 million in the prior quarter.
  • Cash flow from operations: $29.2 million, compared to $28.2 million last quarter.
  • Share repurchase: 182,000 shares repurchased for $3.4 million during fiscal Q2 2025.
  • China revenue: $35 million (non-GAAP), up from $21 million (non-GAAP) in fiscal Q1 2025; China now represents about 7% of total revenue.
  • China revenue run rate: Management expects ongoing quarterly revenue from Chinese-based customers will run $40 million to $50 million per quarter.
  • 2025 revenue guidance: Projected total revenue (non-GAAP) in the $480 million to $530 million range for 2025.
  • 2025 EPS guidance: Projected earnings per share (non-GAAP) in the $0.14 to $0.34 range for 2025.
  • New orders: Ultra Clean Holdings received new business in the Czech Republic facility, which is expected to contribute incremental revenue in fiscal Q4 2025.
  • Workforce reduction: Significant reductions took place in April and July, with related operating expense savings observed in fiscal Q2 2025 (non-GAAP).
  • SAP implementation: Company-wide SAP system implemented in July for the Fluid Solutions group, and integration costs anticipated in fiscal Q3 2025.
  • Integration and efficiency initiatives: Flattening organization structure and consolidating leadership and systems across groups as ongoing strategies to drive savings and operational alignment.
  • Tariff impact: Tariff-related supply chain cost increases noted, with customers slow to reimburse incurred charges.
  • AI investment trends: Management described an acceleration in AI-related investments, though specific order impact has not materialized for Ultra Clean Holdings to date.
  • Inventory trends: Management noted that inventory at key customer accounts is being actively worked down.
  • WFE outlook: Management anticipates wafer fab equipment (WFE) growth in 2026 could reach "high single digit, low double digit type of growth," with the company positioned to outperform industry growth rates due to mix and share gains.
  • CEO search: Process is nearing completion, with announcement expected "in the coming weeks."

Summary

Ultra Clean Holdings(UCTT -2.06%) reported flat sequential non-GAAP revenue for fiscal Q2 2025, as minor product declines were offset by higher services revenue and incremental performance in China. Operating expenses (non-GAAP) fell alongside workforce reductions, improving operating margins (non-GAAP) and supporting free cash flow growth. Management confirmed that new business wins in the Czech Republic will boost fourth-quarter results, while SAP system integration incurs near-term costs with expected efficiency benefits by year-end.

  • The company executed $3.4 million in share repurchases.
  • Guidance for 2025 reflects top-line uncertainty within a $480 million to $530 million non-GAAP range, and a wide EPS range due to limited semiconductor sector visibility.
  • Services revenue and margin (non-GAAP) continued to climb, supported by successful qualification initiatives and organizational realignment.
  • Tariff costs are rising; management emphasized both the risk of slow customer reimbursement and persistent administrative burdens.
  • Ultra Clean Holdings expects cost-saving actions and new contract wins to show tangible benefits in non-GAAP operating metrics entering fiscal Q4 2025.
  • No direct impact is reported from recent AI infrastructure investments, though positive industry sentiment may drive future demand.
  • Wafer fab equipment (WFE) market growth in 2026 could support company outperformance, with management indicating the opportunity for high single-digit to low double-digit growth, but precise demand translation is yet undetermined.

Industry glossary

  • NPI (New Product Introduction): The structured process by which a company qualifies and introduces new components or systems for customer use, often involving technical and manufacturing validation stages.
  • WFE (Wafer Fab Equipment): Equipment used in the fabrication of semiconductor wafers, a cyclical end-market that serves as a bellwether for semiconductor capital expenditure trends.
  • SAP: A comprehensive enterprise resource planning (ERP) software suite commonly deployed for business process integration, financials, and operational efficiency in manufacturing firms.

Full Conference Call Transcript

Clarence Granger: Thank you, Rhonda, and good afternoon, everyone. We appreciate you joining our second quarter 2025 conference call. I'll start with a brief review of our Q2 results followed by an update on three areas of focus for us, including new product introduction, flattening the organization, and business structure and processes. After that, I'll turn the call over to Sheri for a more detailed financial review. As we discussed during our last earnings call, we anticipate our quarterly revenue will continue to bounce around the $500 million revenue for the balance of this year. With this in mind, we are continuing to focus internally on what we can do to enhance our overall business performance.

Specifically, we are focused on three key areas. The first of these is NPI, or new product introduction and component qualifications with our customers. During these slower times, our customers have more time to partner with us on new business qualifications. We have already been awarded some new business in our Czech Republic facility that should result in an incremental revenue increase in Q4. We are also working with all of our major on qualification by our fluid solutions group. Since the fluid solutions component are going into subsystems that Ultra Clean Holdings, Inc. already manufactures, it will not increase our overall revenue. However, it will enhance our margin profile.

We expect to see the benefits of this beginning early in 2026. The second focus of our actions has been on flattening the structure and reducing the overall size of the organization to improve efficiency. As I've previously mentioned, we had anticipated a return to industry growth in 2024. And we were scaled to grow at a $4 billion run rate to support this. Unfortunately, given market conditions, we are currently operating at a $2 billion run rate. With this reality, we have taken steps to flatten and reduce the size of the overall organization.

Specifically, we have had significant workforce reduction in April and July, and you can see the results of this effort in the reduction of our OpEx during Q2. While we anticipate some churning in this area during Q3, we anticipate this effort to be finalized in the coming months with notable savings heading into Q4. Larger, more complex initiatives including driving factory efficiencies, consolidating sites, and streamlining organizational layers are ongoing. While these more comprehensive strategies will take time to realize their full impact, they are critical to strengthening our long-term competitiveness. Importantly, these value creation initiatives are being executed in a way that preserves our ability to scale effectively and capture growth opportunities as market demand returns.

Our third area of focus is on business systems and final integration of our acquisitions, including Fluid Solutions, services, and HIS, into Ultra Clean Holdings, Inc.'s core systems and processes. In the fluid solutions group, we just implemented our company-wide SAP business system in July. This will add some integration costs in Q3 but will make us much more efficient by the end of the year. We've also completed strategic alignment between our products group and fluid solutions on qualification priorities with our customers. This will help us both with new business and improve margins. In the services group, we have identified several strategic new marketing initiatives to enable us to more fully utilize our factories.

In addition, we have flattened the organization of the services group by combining the manufacturing and business unit functions under one leader. Finally, in our HIS business, we are working on streamlining the facilities and consolidating leadership positions for greater efficiency. These initiatives are all crucial as they enhance operational alignment, drive efficiencies, and capture additional value across the entire organization. And a quick word on tariffs. While they remain technically paused on semiconductors, uncertainty persists and we have seen some cost increases throughout our supply chain. While our customers have all said they will assume for the tariffs that are incurred from components they have specified, most of them have not yet paid us for these additional costs.

As such, we continue to take a cautious stance and have accounted for some additional risk in our outlook. So far, we have not seen changes in customer demand relating to tariffs. And lastly, our CEO search is nearing completion on schedule. We anticipate making an announcement in the coming weeks. In summary, before I turn the call over to Sheri, while near-term business conditions remain fluid, Ultra Clean Holdings, Inc. maintains strong confidence in the long-term fundamentals of the semiconductor industry. Supported by increasing manufacturing complexity and sustained capital investment in AI.

Recent months have seen a notable acceleration in AI-related investment fueled by a surge in venture capital funding, heightened corporate and institutional interest, and a positive market sentiment. Although the trickle-down effects of these investments will vary across the equipment manufacturing supply chain, Ultra Clean Holdings, Inc. is well-positioned to capitalize as industry momentum builds. Particularly through our deep customer partnerships, proven execution, and expanding portfolio of vertically integrated solutions. These strengths reinforce our competitive position and enable us to support our customers' evolving technology roadmaps with agility and precision. With that, I'll turn the call over to Sheri.

Sheri Savage: Thanks, Clarence, and good afternoon, everyone. Thanks for joining us. In today's discussion, I will be referring to non-GAAP numbers only. Ultra Clean Holdings, Inc.'s second-quarter results reflect the challenges and complexity of navigating a dynamic environment spanning a broad range of product offerings. Amid shifting demand trends, our ability to remain agile, lean delivery commitments while reducing operating expenses demonstrates the meaningful progress we are making on our cost efficiency initiatives. For the second quarter, total revenue came in at $518.8 million compared to $518.6 million in the prior quarter. Revenue from products was $454.9 million compared to $457 million last quarter.

Our services business had a solid quarter with revenues increasing from $61.6 million in Q1 to $63.9 million in Q2. Total gross margin for the second quarter was 16.3%, compared to 16.7% last quarter. Products gross margin was 14.4% compared to 14.9% in Q1 and services was 29.9% compared to 29.8% last quarter. Margins continue to be influenced by fluctuations in volume, mix, manufacturing region, and related tariffs, as well as material and transportation costs. So there will be variances quarter to quarter. Operating expense for the quarter was $56.1 million compared with $59.4 million in Q1. As a percentage of revenue, operating expenses were 10.8% versus 11.5% in Q1.

This decrease reflects the positive impacts of our cost reduction initiatives in the quarter, as well as a return to normal operating level following higher year-end costs seen in Q1. As Clarence noted, we have incremental SAP go-live costs flowing into Q3. However, we will continue to implement broader cost-saving actions that will further reduce OpEx incrementally over the long term. Total operating margin for the quarter came in at 5.5%, compared to 5.2% last quarter. Margin from our Products division was 4.8%, compared to 4.6% and services margin was 10.5% compared to 10.2% in the prior quarter. Our second-quarter tax rate remained flat at 20%.

Our mix of earnings between higher and lower tax jurisdictions can cause our rate to fluctuate throughout the year. For 2025, we expect the tax rate to be in the low to mid-20s. Based on 45.3 million shares outstanding, earnings per share for the quarter were $0.27 on net income of $12.1 million compared to $0.28 on net income of $12.7 million in the prior quarter. Turning to the balance sheet. Our cash and cash equivalents were $327.4 million compared to $317.6 million at the end of last quarter. Cash flow from operations was $29.2 million compared to $28.2 million last quarter, mostly due to working capital efficiency.

Earlier this quarter, we repurchased 182,000 shares at a cost of $3.4 million as part of our repurchase program. The tariff situation for semiconductors remains unchanged but we are seeing some impact throughout our supply chain. We will continue to monitor the landscape and make the necessary adjustments to our business to maximize efficiency and protect profitability. Given the heightened uncertainty and limited visibility within the semiconductor market at this time, we project total revenue for 2025 to be between $480 million and $530 million. We expect EPS in the range of $0.14 to $0.34. And with that, I'd like to turn the call over to the operator for questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. You will hear a prompt that your hand has been raised. And should you wish to cancel your request, please press star, followed by the 2. If you're using a speakerphone, please lift the handset before pressing any keys. One moment please for your first question. And your first question comes from the line of Charles Shi from Needham.

Charles Shi: Hi, yes. Thanks for taking my questions. Clarence and Sheri, maybe the first one, I think you probably didn't address that Q2 revenue went a little bit above the midpoint of your Q2 guidance. Mind if you kind of walk us through what's the upside there in Q2?

Clarence Granger: Well, we had a little bit of upside from China. That was helpful. I'm trying to think of what other areas. We did have some general increase in shipments from one of our US sites, our Austin site. We also had an increase in our services revenue. I think those are the major areas where we had increases.

Charles Shi: Got it. So just follow-up on the China business. So I think the expectation a quarter ago was China revenue probably come off the bottom. The bottom in Q1, a little bit better in Q2, and the second half going to be better than first half. Is that still the case?

Clarence Granger: Yeah. Again, this is Clarence. Yes. That's that is true. But we do want to make sure we characterize this appropriately. I know I brought up the China revenue because I know it's a common question, but the China revenue represents about 7% of total Ultra Clean Holdings, Inc. revenue. So it's not huge, but I will give you the numbers. The numbers in Q1 were about $21 million and in Q2, were about $35 million. So it's a significant increase. And we've said that we expect on an ongoing basis in China and our China for China strategy to be running about $40 million to $50 million a quarter with revenue out of our Chinese-based customers.

And so it feels like we're pretty close to being where we thought we would be at this time.

Charles Shi: Thanks, Clarence, for the extra color there. Maybe I ask my last question. So you said at the beginning, it sounds like you're still expecting $500 million per quarter run rate through the rest of the year, but I think you also mentioned some new wins from your Czech site is going to contribute a little bit into Q4. Not sure if you are alluding to maybe Q4 revenue numbers. May grow sequentially from Q3, or maybe I overread that. Thank you.

Clarence Granger: Yeah. You didn't necessarily overread that. We're not in a position where we're ready to commit the Q4 numbers, but it certainly feels like there's an upward bias in Q4. We're kind of feeling pretty good about our directionality towards the end of the year. Not that the revenue is going to increase that dramatically, but we think by that time, we'll see the impacts of a lot of the cost reductions that we've implemented and some of the new business opportunities and some of the further integration of Fluid Solutions. So we're cautiously optimistic that the fourth quarter will get better.

Charles Shi: Thanks. That's all for me.

Operator: Thank you. And your next question comes from the line of Krish Sankar from TD Cowen. Please go ahead.

Krish Sankar: Thanks for taking my question. Can I start a couple of questions? Number one, thanks for the color on China. You said it might run rate at about $35 to $40 million. Just under 10% of your revenues. I'm kind of curious, you know, last week, there were some AI rules which said that you know, they might look into components of semi caps that are selling into China. So I'm kind of curious. Have you looked into that? And do you think there's a risk that this revenue that you're selling into Chinese semi caps could go to zero?

Clarence Granger: Yeah. I'm gonna let our analyst, Cheryl Knepfler, answer that one. Cheryl?

Cheryl Knepfler: So, yeah, I mean, obviously, there's always a risk that it could go forward at a different level. But at this point, we do see that the areas that we're selling to being supported broadly for multiple parts of the industry, and so do expect to be able to continue to sell for the upcoming period.

Krish Sankar: Gotcha. So just to clarify, Cheryl and Clarence, $35 million last quarter, you think it's gonna be $35 to $40 million? You think that run rate so far is sustainable and you're not heard anything from the government or anybody about potential caps on that?

Clarence Granger: That's correct. We have not heard anything about potential caps. We're pretty optimistic. Don't forget we've been there for twenty years. So it's not like we're newbies to the country, and our customers, our major customers, some of them have actually been customers of ours for twenty years. So we're very confident in our relationship there. And so far, we're very confident in what's going on with the government situation relative to us.

Krish Sankar: Got it. Got it. And then I have another question. You kind of said that, you know, I think China revenues are marginally better in the second half. I'm kind of curious, like, you know, when you look into competitive earnings call three months ago, did the commentary from China get marginally better or was it the same thing compared to three months ago point at the end of Q1, in terms of China demand either through AMA and Lam or through your China semi cap customers in the second half of this year?

Clarence Granger: I think I mentioned this is Clarence again. I think I mentioned at one point that one of our customers was having challenges with one of their customers and as a consequence weren't taking it the same rate that they might normally have been taking at. We feel that those issues have been resolved. And our customer is now taking it a rate that's more in line with what we traditionally been expecting from them.

Krish Sankar: If you could see in one follow-up to that, Clarence. I think last time you also mentioned it is one Chinese customer and also there's one European customer. Who had some delays, which many people assume to be ASMI. I'm kinda curious as that European customer should be in resolved,

Clarence Granger: Yes. We ship units to them as well. In the quarter.

Krish Sankar: Thank you so very much, Clarence. Really appreciate the color.

Clarence Granger: You're welcome.

Operator: Thank you. And your next question comes from the line of Christian Schwab from Craig Hallum Capital Group. Please go ahead.

Christian Schwab: Given the tremendous strength in AI as well as, you know, rumors of you know, what looks to be increased investment in Samsung and Austin, Texas. Which I assume you'll benefit from. Do you guys have an initial look or thought when market demand possibly returns as soon as calendar 2026 with the WFE could look like yet.

Cheryl Knepfler: So, this is Cheryl. As we look at WFE in 2026, there are a number of FABs that are expected to come online, some of which are being pulled in from 2027 into 2026. So we do see the opportunity for 2026 to have incremental growth from 2025. At this point, not certain the level but certainly possible for you know, high single digit, low double digit type of growth.

Christian Schwab: Okay. So kind of in line with some of the optimist, third-party research out there, kind of that 8 to 12% And then my follow-up question regarding that, in a situation such as that, would you expect your company to be able to outgrow WFE, you know, in a double-digit range like you have done? In an upturn?

Cheryl Knepfler: We certainly see the mix of products and our share gains as supporting that opportunity. So, definitely going forward, the balance. Most of the companies have brought in EUV, and so that initial sort of disconnect that happens when a new segment brings in some of those technologies has passed for both DRAM and for boundaries. So we expect our segments to grow with WFE, and we should be able to expect to outperform them. Overall.

Christian Schwab: Excellent. No other questions. Thank you.

Operator: Thank you. And your next question comes from the line of Edward Yang from Oppenheimer. Please go ahead.

Edward Yang: Hi. Thanks for taking my question. Clarence, you mentioned being cautiously optimistic on the 4Q and you listed a number of different items. But if you were to rank order them, you talked about new business wins and qualifications. You talked about China a bit. The prior questioner asked about AI strength. You know, if you were to rank these items in order, you know, how would they shake out and your level of visibility on each?

Clarence Granger: Well, the new business win is the most tangible one that we can tie to real near-term market gains. We actually have orders going forward, so we're confident in that. The China situation, I would say, you know, we feel pretty confident, but that could change, obviously. I guess probably the thing that still remains the most frustrating for me is the darn tariff situation. It doesn't feel like it's gonna be a huge cost to us. The last quarter, it looked like about $500,000 in the quarter. But our customers took about $3 million or we incurred about $3 million where the tariff charge is associated with the quarter.

And we've been paid by the customers about $300,000 and they claim they're gonna pay us another $2 million. But we haven't got it yet. And so I guess that causes to be a little concerned, although we've gotten verbal commits from them. I forgot what was the what was the other one that you oh, AI. Honestly, Cheryl you know, AI is that's a little distant from us. I mean, we certainly know about it and hear about it, and it should have a favorable impact on us. But, we don't have specific orders tied to that right now.

Edward Yang: And following up on the tariff reimbursement. Is it your leading-edge customers that haven't paid you for the balance, or is it, you know, I just like to understand where the disagreement might be or the related agent, I suppose.

Clarence Granger: Yeah. There's no disagreement. Don't get me wrong. They're just slow to pay. They're our largest customers.

Edward Yang: Got it. They want progress center. No.

Clarence Granger: No. No. There's absolutely no credit risk. It's just a matter of getting the documentation in the format that they're comfortable with. I'm comfortable they will eventually pay us. But the other downside with the darn tariffs is the cost. Right? We're spending probably end up spending about $1 to $2 million a year in administrative costs to deal with it. So my guess is over the time I mean, it's not overwhelming, but my guess is that over on an annualized basis, we'll probably spend about $2 to $3 million a year dealing with tariff costs. And so what does that work out to be about 6¢ a year.

So we could be ending up at penny and a half each quarter. That we have to deal with that frustrated about.

Edward Yang: Okay. That's helpful. And final question for me. I'd just like to better understand the goodwill impairment charge. You know, what was driving that?

Sheri Savage: Yeah. Hi. This is Sheri, Ed. The key thing is our stock price has unfortunately, had gone down with the overall market uncertainty. With that happening, our carrying value of those that goodwill on our books was lower than the market cap of the company. So that's what basically triggered the accounting of that. It's purely a noncash charge, obviously. But that doesn't mean that we're not very bullish about those businesses on a go-forward basis in terms of what we think that they can do. It's just more of our assumptions now are a little more conservative than what we initially bought the business when we put our goodwill calculation in place.

So it's just it's really a factor of our market cap at this point.

Edward Yang: Alright. Thank you for that clarification.

Sheri Savage: Thank you.

Operator: Thank you. And your next question comes from the line of Krish Sankar from TD Cowen. Please go ahead.

Krish Sankar: Yeah. Hi. Thanks for taking my Well, I've had two questions. And first, I do appreciate the candidness about China and tariffs. I'm kinda curious, I understand China tariffs is on top of your mind. I'm just really honestly curious if the $35 to $40 million in revenue you get from China's semi caps, do you worry that could ever go to zero? Or do you think realistically that is not a possibility?

Clarence Granger: Well, first of all, I wanna make clear we don't have China tariffs. Because all of the stuff that we make in China stays in China and all this stuff that we make outside of China does not go into China. So we really don't have a China tariff issue. There would only be an issue if for some reason something happened to our long stream revenue from China. I don't think there's any jeopardy whatsoever. As I said, we have strong relationships with our existing customers and we can't see them leaving us. Obviously, there's always some political potential political ramifications. But we are not typically supply we are supplying what specified by the customer.

We're not supplying them technology that they don't have available to them already. So I don't think we're a real threat from a technological standpoint. So I don't think there's much danger of us having an issue with China.

Krish Sankar: I apologize. I mean, China. I mean, Let me repeat the question. Do you worry about the $35 to $40 million that you sell into China semi caps? Going to zero I worry about every single one of our customers, every single place in the world but I don't worry about them anymore than I worry about our other customers. And focus on our growth with other customers.

Krish Sankar: Fair enough. Thanks for that, Clarence. And then one quick question. I'm just gonna curious I mean, is it broad based among all your customer base? US, China, whatever it is. How do you think the inventory situation is of your gas panels, components, etcetera, is, like, do you think they are, like, drawing it down enough that they're gonna start buying it more? Or do you think there's still, like, a little bit of a lag effect purely because they still have some inventory of your components on their balance sheet.

Cheryl Knepfler: So this is Cheryl. I think there's probably a little bit left, but I don't think that it's significant at this point. I think our largest customer was the one that we had the most exposure with. They are continuing to work down that inventory. In part by sending it back to us to be reconfigured. So we do see that happening. So I think they are now getting to point where they don't have very much, and it may not align with what some of their current shipment demand is. So we do see that certainly cleaning up a lot more, but you know obviously everyone, you know, will periodically find a series of things stuck in a corner.

So I think I think that's kind of where we are now versus, you know, a broad amount of inventory that's sitting.

Krish Sankar: Got it. Thanks, Rochelle. Thanks, Quell.

Cheryl Knepfler: Welcome. Thank you.

Operator: There are no further questions at this time. I want to hand the call back to Clarence Granger for any closing remarks.

Clarence Granger: Thank you everyone for joining us on our call today. And we look forward to seeing you again in October. Thank you.

Operator: This concludes today's call. Thank you for participating. You may all disconnect.