Title

Presentation

Company Representatives: Juergen Stark – Chairman, Chief Executive Officer John Hanson – Chief Financial Officer Alex Thompson – Investor Relations

Operator: Welcome to the Turtle Beach Fourth Quarter and Full Year 2022 Conference Call. My name is Victor and I will be your operator for today’s call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. . Delivering today’s prepared remarks are Chairman and Chief Executive Officer, Juergen Stark; and Chief Financial Officer, John Hanson. Following their prepared remarks, the management team will open up the call for any questions. As a reminder, the conference is being recorded. I will now turn the call over to Alex Thompson from Investor Relations. Alex, you may begin.

Alex Thompson: Thank you, Victor. On today’s call we will be referring to the press release filed this afternoon that details the company’s fourth quarter and full year 2022 results, which can be downloaded from the Investor Relations page at corp.turtlebeach.com, where you’ll also find the latest earnings presentation that supplements the information discussed on today’s call. Finally, a recording of the call will be available on the Investors section of the company’s website later today. Please be aware that some of the comments made during this call may include forward-looking statements within the meaning of the Federal Securities Laws. Statements about the company’s beliefs and expectations containing words such as may, will, could, believe, expect, anticipate, and similar expressions constitute forward-looking statements.

These statements involve risks and uncertainties regarding the company’s operations and future results that could cause Turtle Beach Corporation’s results to differ materially from management’s current expectations. While the company believes that its expectations are based upon reasonable assumptions, numerous factors may affect actual results and may cause results to differ materially. So the company encourages you to review the Safe Harbor statements and Risk Factors contained in today’s press release and in its filings with the Securities and Exchange Commission, including without limitation its Annual Report on Form 10-K and other periodic reports, which identify specific risk factors that also may cause actual results or events to differ materially from those described in our forward-looking statements.

The company does not undertake to publicly update or revise any forward-looking statements after this conference call. The company also notes that on this call they will be discussing non-GAAP financial information. The company is providing that information as a supplement to information prepared in accordance with the accounting principles generally accepted in the United States, or GAAP. You can find a reconciliation of these metrics to the company’s reported GAAP results in the reconciliation tables provided in today’s earnings release and presentation. And now, I’ll turn the call over to Juergen Stark, the company’s Chairman and Chief Executive Officer. Juergen.

Juergen Stark: Thanks, Alex. Good afternoon, everyone and thank you for joining us. While 2022 was an extremely challenging year from a macroeconomic and gaming market standpoint, we are pleased with our execution and continued product expansion throughout the year, which we believe sets us up well for improved results in 2023 and beyond. Our fourth quarter sales were $100.9 million, bringing our full-year sales to $242.2 million and $249.3 million in constant currency. While we entered 2022 with more conservative market and revenue estimates than others, gaming accessories experienced a surprising drop in consumer purchasing, which then combined with a large retail inventory reduction impacting sales for us and many others.

Importantly, Q4 revenues were down less than 4% from a year ago in constant currency, and our sales and retail sell-through were well-balanced. Each quarter during 2022 showed successive improvements in year-over-year net sales percent change, supporting our thesis that our market recovery has started. This, along with our 2023 product plans provides the basis for our 10% revenue growth target for 2023. We reported adjusted EBITDA of $6 million for the fourth quarter of 2022, and a loss of $18.7 million for the full year 2022, compared to $36.6 million of adjusted EBITDA a year ago. The unprecedented combination of lower operating leverage amidst weak market wide demand, extremely aggressive competitive discounting and pandemic driven excessive freight cost created an enormous headwinds on margins and earnings.

Excessive freight costs alone impacted EBITDA by roughly $11 million. Fortunately, those costs have already significantly dropped in recent months. We proactively took steps starting last spring already to reduce our operating expenses with recurring expenses down 16% in Q4. We did this with a very careful eye to maintaining key programs that will bear fruit in 2023 and beyond. After generating over $190 million in EBITDA in the five years through 2021, we are intent on returning to positive EBITDA this year and getting back to our 10%-plus EBITDA target as soon as possible. Despite the difficult environment, our strategy to continue our leadership and console headsets while diversifying into additional categories and platforms is progressing well.

As the number of gamers continue to grow, and multi-platform gaming and gaming accessories become the norm, this strategy enables us to best leverage of the positive long term trends underlying the gaming market and deliver on our growth aspirations. Here are some notable highlights for 2022 on our execution of that strategy. We continue to be the clear leader by far in console gaming headsets. Our U.S. market share continued to exceed the next three competitors combined in Q4. We also launched our phenomenal high-end wireless Stealth 700 MAX series with a $199 MSRP and captured over 40% US retail sales share of that premium price tier. In fact, despite the extremely promotional competitive environment, we increased our console headset ASPs by over 7% in 2022 per US NPD.

Without our increase, the competitive market ASPs were down over 4% for the year. Importantly, our wireless console headsets are intentionally and increasingly multiplatform, usable on consoles as well as on PCs and mobile devices. Interestingly, this may be why the Turtle Beach brand is now #3 in brand loyalty in the U.S. among hardcore PC gamers in the headset category. We are executing a multi-year product strategy to maintain our strong lead and counsel headsets, which is working well and will continue this year and in 2024. In addition to our bestselling console headsets, we continue to expand our game pad controller lineup with the design for Xbox or React-R controller, which offers gamers many of the same features as our critically acclaimed Recon controller.

Following bullish reviews of our Recon and React-R controllers, we announced the Recon Cloud hybrid controller, which is perfect for mobile gamers playing on compatible android devices and Xbox. We have additional products designed for iOS and other platforms coming soon. Our activities here reflect an expansion in controllers, as well as expansion in the mobile and cloud gaming. Our gaming simulation accessories category continued to expand with the VelocityOne Rudder, pedals, stand and flight stick launched in 2022. Incredibly, our first product VelocityOne Flight launched back in November 2021 became the number one best-selling flight controller by dollar sales in the U.S. in its first full year per NPD. Our controller and simulation product categories continue to perform well, growing by well over 100% last year.

We continue to strengthen our Rocket PC lineup. In the fourth quarter we announced our Syn Max Air wireless 3D headset, a premium beautiful PC headset with our signature, superior sound, comfort and innovations that make this the most advanced PC headset we’ve ever produced. We also announced the availability of the stunning Vulcan 2 Max optical mechanical keyboard and Kone XP Air wireless mouse for PC gamers, which provide ultra-fast keystroke responses, added durability and versatile characteristics that give gamers a winning edge. We recently took the Number 1 share position with our PC keyboards in Germany. Additionally, we expanded our mobile gaming lineup by launching the Scout Air and SYN Buds Air wireless ear buds, giving gamers access to our game winning advantages when they’re on the go.

In the fourth quarter we debuted our Hyper-Portable Atom Controller, which is the latest addition to our expanding controller portfolio, and it is an easy way for mobile gamers to pick up and go without sacrificing quality controls. In these highlights, I’ve covered our increasingly diverse product portfolio spanning counsel, PC and mobile gaming platforms. Importantly, roughly 25% of our revenues are now outside of our core console headset category, reflecting tremendous progress over the past years. Our long-term strategy to become a top provider of gaming accessories for all gamers on all platforms is tracking well. To achieve this goal, we leverage our clear leadership and console audio, reputation for high quality, innovative products, strong brand and superior retail and operational execution.

Succeeding with this strategy allows us to best leverage with the strong underlying trends across gaming overall and meet our long term target of 10%-plus of revenue growth. In fact, combining gaming headset, mice and keyboards for both console and PC, we come in at the #3 revenue share position in the U.S. for 2022 per NPD. This also positions us well to capitalize on the additional opportunities created during the inevitable market turnaround as reflected in our revenue guidance to outgrow the market this year. Next, I’ll turn it over to John to cover the financials in further detail, after which I’ll provide additional comments about what we see for the market and our business in the New Year. John.

John Hanson : Hey! Thanks, Juergen, and good afternoon everyone. As Juergen noted, our full year revenue was $240.2 million or $249.3 million in constant currency. A reflection of lower demand driven by reduced consumer discretionary spend and significant retailer channel inventory compression. This compares to the $366.4 million that we reported last year, which was the highest revenue in the company’s history. Q4 revenues at $105.5 million in constant currency came in only modestly lower than 2021, indicating a progressive recovery on year-over-year quarterly revenue changes as Juergen mentioned. In 2022, gross margin was 20.5% compared to 35% in 2021, impacted by higher promotional credits due to an unprecedented combination of aggressive competitive pricing to reduce inventory levels, pandemic driven high freight costs and volume driven fixed cost deleveraging.

Freight costs have declined significantly in recent months, and we expect to see the benefit in 2023. We also recorded a $9.8 million charge for potential excess components and finished goods relating to pandemic driven supply chain impacts and the weak gaming market last year. Excluding these non-recurring items, gross margin in 2022 was 24.5%. Operating expenses for the full year 2022 were $100.7 million compared to $108 million in the year ago period, and included $10.9 million in non-recurring items with $7.4 million of that resulting from last year’s proxy contest and related expenses. Recurring operating expenses declined approximately 13%, a reflection of the proactive expense management initiatives we undertook in mid-2022, as well as the alignment of expenses to lower market demand.

Our full year adjusted EBITDA loss was $18.7 million compared to a gain of $36.6 million in the year ago period. The year-over-year variance is primarily driven by the items as covered above, including more than an estimated $22 million impact of higher promotional activities and higher freight costs. Non-GAAP net loss for the full year 2022 was $25 million or a $1.52 per diluted share, compared to non-GAAP net income of $20.2 million or a $1.11 per diluted share in the year ago period. We expect our effective tax rate for the full year to be approximately 25%. Turning to the balance sheet, at December 31 2022 we have $11.4 million of cash and $19.1 million of borrowings outstanding on our revolving credit line. As of February 2023, the company has fully repaid the borrowings outstanding on its revolving credit line and is therefore debt free.

Inventories at December 31 of 2022 were $71.3 million compared to $101.9 million at December 31, 2021. Now as I said on the last call, we expected our inventory to decline as it has improving cash flow. Finally, this afternoon we also announced that our Board of Directors has approved an extension of our share repurchase program for an additional two years through April 9, 2025. Under the program the company is authorized to acquire up to a total of 25 million of shares of its common stock, including those shares already acquired under the program before this extension, at its discretion from time to time in the open market or in block purchase transactions. Now, I’ll turn the call back over to Juergen for some additional comments. Juergen.

Juergen Stark: Thanks, John. We are excited about our growth prospects and strategic positioning as we look forward to 2023 and 2024, given what we believe will be a progressive recovery of the gaming markets and our compelling product and market strategy. This, combined with continued superior execution should enable us to take full advantage of the strong underlying long-term trends in gaming. Despite 2022 being down market wide year-over-year, the foundation of the gaming market is growing. According to Newzoo, the number of global gamers increased by 300 million since 2020, grew over 4% in 2022 and is expected to grow by an additional 335 million through 2025. Gamers are also spending more on gaming hardware, with annual spend per gamer up over 20% since 2022.

Even in last year’s slump, consumer spending on video game hardware, content and accessories, all continue to trend well above pre-pandemic levels throughout the year. We are encouraged by the higher quality slate of AAA games with several setting franchise record and the strong outlook for games this year. New generation Xbox and PlayStation supply is expected to significantly improve, with DFC forecasting a 60% increase in PS5 sales for 2023 versus 2022. While difficult to predict, we believe that consumer spending on gaming accessories will slowly improve this year. We believe that consumer caution due to the broader economy has caused delayed upgrades in gaming accessories, which have historically been very reliable. This could result in pent up demand over the next 12 months to 18 months.

The pullback in retailer inventory levels, which reduced sales significantly more than consumer sell-through last year, may also modestly recover over time and add sales in excess of sell-through. That said, our 2023 revenue forecast of roughly 10% growth is driven primarily by expected outperformance of the gaming markets in specific categories based on our exciting product plans for this year. Those product plans, including additional launches in 2024, as well as the continued execution of our overall business strategy projects us returning to 10%-plus revenue growth going forward. We expect Q1, 2023 gross margins of just under 25%, but full year gross margins to be in the 28% to 30%. Those margins are significantly improved, but still include some headwinds from aggressive competitive discounting and residual higher than normal freight costs, particularly early in the year, and then sequentially improving.

Reflecting the roughly $10 million impact from those headwinds, we expect EBITDA to improve by over $23 million to approximately $5 million this year. Our long term financial outlook has us progressively returning to our profitability targets of 10%-plus adjusted EBITDA as we grow revenues overtime. We anticipate quarterly revenue phasing in 2023 to be roughly 17% in Q1, similar percentage in Q2 and about 65% of revenue in the second half. We continue to believe gaming is a great market to be a leader in, and we are focused on capitalizing on the strong opportunity in 2023 as the market recovers from the 2022 downturn. The key pillars of our long term strategy are as follows: First, continue to lead in the $1.4 billion console gaming headsets market, where we have maintained leadership by far for 13 consecutive years.

Our longstanding reputation for high quality, innovative products for all levels of gamers and superior retail and operational execution provide a strong foundation for continued leadership and growth in new categories. Second, continue to expand our PC gaming portfolio of headsets, keyboards and mice and grow our share in that large 3.2 billion PC Accessories market. While the PC Accessories market was very challenged for all participants this past year, we have exciting products and plans as part of our multiyear plan to become a major player in this large category. Third, drive continued expansion and growth in the gamepad controller, simulation and mic categories that we entered in 2021. With well over 100% growth in these categories this past year and our first flight simulation product reaching #1 in U.S. sales, we are full speed ahead on this part of our growth strategy.

And fourth, continue to identify and selectively evaluate other growth opportunities, including new product categories and expanding and target geographies as we have with Korea and Japan. This strategy has and will continue to enable us to take full advantage of the compelling long-term trends in the global gaming market and fulfill our objective to drive profitable growth through organic investments and selective M&A over time. Our goal is to create long term shareholder value by executing on our strategy and delivering on our long term targets of 10%-plus annual revenue growth at 10%-plus EBITDA margins. Finally, I want to thank our great team at Turtle Beach for their continued hard work and dedication. With that, let’s turn to our Q&A.

Operator: Thank you. . Our first question comes from the line of Mark Argento from Lake Street Capital Markets. Your line is open.

Mark Argento : Hey Juergen! Hey John! Just a couple of quick questions. First off, just wanted to get your view on how the retail channel from an inventory perspective looks like and then what are you seeing from retail. Are they starting to do some restocking or are they still taking it pretty conservative?

Juergen Stark: Hi, Mark! Nice to have you on. Great question. Retail inventories, which were higher than normal, as were the inventories of providers during 2023 are in reasonably good shape coming into 2023. I can’t speak for others in the category, but we’ve actually had some restocking right at the front of the quarter and are actually you know a couple of products low on supply in our own inventory as well as retail inventory, and that is just a reflection of having Q4 well balanced as I covered in the script in terms of sell-in and sell-through. So we feel good about where our inventory is and that’s part of the reason why Q1 at 17% of the year is a little higher than normal actually.

Mark Argento : That’s really €“ that’s super helpful. And then can you talk a little bit about the view into 2023 in terms of the growth. It seems like you feel pretty comfortably your able to grow the business at least 10%. Are you €“ is the key driver really the installed base of consoles or what €“ can you just remind us again, kind of the key drivers of your expectations and to be able to grow the business in 2023.

Juergen Stark: Yes, we expect the 10% growth target and our growth to be driven really by us outperforming the market in select categories. And for competitive reasons, I’m not going to cover which categories, but it’s based on our product plans for this year. What that means basically, you know our underlying assumption for the gaming markets, which obviously all dropped a ton last year, is flat to up slightly this year. That’s the underlying assumption for gaming and that’s really driven by two things which are counteracting each other. The first is a recovery in the underlying dynamics for the gaming market, better games, more console supply, but largely offset, particularly earlier in the year with what we view is still reluctant consumer sentiment and that we expect to recover during the year, but the two of those in our view, our forecast, while it’s difficult to predict obviously is a market in gaming, and that’s flat to up slightly, leading our 10% really to be driven by our specific growth plans and new product launches during the year.

Mark Argento : Okay. And then just one final one for John in terms of the balance sheet. It looks like inventory was down. What do you anticipate working capital needs, are you net generator from work working capital this year? How are you thinking about the balance sheet?

John Hanson: Yes, so good question Mark. So we do expect to be a net generator of working capital in 2023. Obviously as we continue to manage the inventory and return the business to positive EBITDA, that’s going to be a key driver for us, which is why we also announced today that we’re extending the share repurchase. We expect to generate cash flows here over the next two years certainly.

Mark Argento : Great. Thank you guys and good luck this year!

John Hanson: Thanks Mark.

Juergen Stark: Thanks Mark.

Operator: One moment for our next question. Our next question comes from the line of Drew Crum from Stifel. Your line is open.

Drew Crum: Okay, thanks. Hey guys! Good afternoon. So Juergen, I just want to better understand the adjusted EBITDA guidance. If I look at 2017, you reported about half the sale that you’re forecasting for this year, but reported an adjusted EBITDA figure that was more than 2x versus what you’re projecting for this year. So I guess, I just want to better understand the puts and takes on how you’re thinking about adjusted EBITDA for this year relative to prior years.

Juergen Stark: Yeah, a good question Drew. So adjusted EBITDA is essentially transitioning in recovering this year, and it reflects €“ the roughly $5 million reflects around $10 million of impact from freight costs, which still residually are high, particularly in the first few quarters. That gets progressively better pretty quickly as we go through the year and it’s also quite reliable in terms of an improvement. Last year we had an impact of around $11 million from freight, and this year the impact is estimated to be around $3 million, so that’s kind of number one. Number two, aggressive competitive promotional discounting, which created roughly another $11 million impact last year, is expected to continue at least through the first half and has about a $7 million impact in our forecast and EBITDA guidance.

We expect you know that we €“ while we are good shape on inventory with pockets that are heavy and pockets that are light, we have to participate when competitors are driving heavy discounting and defend our turf, and so that’s kind of factored into our EBITDA plans this year. And the last thing is, remember that I think you were €“ were you comping to 2019?

Drew Crum: I mentioned 2017. You guys reported $149 million in sales that year.

Juergen Stark: Right. So remember that the business now is the revenue generated as a business now, spans multiple categories and geographies. And though those, each of those categories come with R&D costs, with marketing costs to launch products, with costs to support growth in geographies, we are €“ just as an example, we’re in Korea and Japan and that’s going really well with good growth over the past few years and this year. But each of those comes with a chunk of OpEx to support that business, and so you really can’t compare to a business years ago that was essentially single threaded in console gaming headsets that were mostly North America and Europe based.

Drew Crum: Got it. Okay, that makes sense. And then maybe a follow-up. I think Juergen, in your preamble you talked about APSs being up 7%. I miss if that was specific consoles or across the entire portfolio, but nonetheless, how are you thinking about pricing for ’23? Can you take pricing in this environment? Is that part of the revenue growth that you’re assuming or maybe not?

Juergen Stark: Yes, so a couple of things. The 7% growth in average selling price was across the mix of our console headsets portfolio in the United States, which is pretty impressive given that the market without us dropped 4%, and that 7% was significantly helped by us taking over 40% market share in $199 price tier, right. So really up from roughly zero by the way in that tier. So we’ve moved up tier in terms of pricing and that’s helped to pull our ASP’s up and that trend has continued going to this year. Part of that is inflation driven price increases as well, but in terms of our plans, we don’t have plans to somehow aggressively move pricing. Our hope is that you know in contrast to that, that the discounting level that’s been pervasive among competitors in the industry and all of our categories will go back to normal, and that will in and of itself drive better gross margins as we go through the year and better average pricing.

Drew Crum: Got it. Okay, all right, thanks guys.

A – Juergen Stark: Thanks Drew.

Operator: One moment for our next question. Our next question comes from the line of Jack Vander Aarde from Maxim Group. Your line is open.

Jack Vander Aarde : Okay, great. I appreciate the update, guys. Thanks for taking my questions. Juergen, non-console product sales has clearly ramped pretty nicely and it hit 25% of your 2022 revenue. Can you just remind me, remind us again of your targets for these non-console product sales mix over time, detailed ramping in 2023, just any kind of directional comments there. And then how that kind of splits throughout the balance of 2023 as well?

Juergen Stark: Sure. So yes, that 25% reflects significant progress over the past years given that number used to be close to zero a few years ago. We see this year, the PC accessories business continuing to be very challenged. That category was highly challenged, you know more so challenged even than console headsets in terms of market drop and competitive discounting. So we expect this year to be roughly flat in PC, up a bit in the new €“ other new product categories, controller simulation. Microphones, we have held off on our investments and plans in microphones, because that category already early in 2022 was really not tracking well. So that was the wrong time for a small new player to start marketing and developing a brand and promoting products. That we expect to return more aggressively in the microphone category in 2024, but not in 2023, and so I would expect the 25% to be roughly similar in 2023 given all those dynamics.

Jack Vander Aarde : Got you! That’s helpful color. And then kind of just back to gross margin on the unit economics basis, I think in the past you’ve kind of had this idea. I think the picture is like basically every product is roughly similar gross margins on a unit basis. But we’ve €“ you know you’ve done some price increases on certain products recently, had some freight impact and other impacts on inventory. Is that still the case today, kind of roughly the same across your whole product portfolio or is it €“ are you seeing a shift?

Juergen Stark: It still is roughly the same Jack, and we’ve got products in all categories that some have better gross margins than our target of mid-30’s, some have lower gross margins. It really depends on the type of product, the cost structure of that product, and most importantly, the specific price tier we’re trying to hit with the product. So that’s kind of an overall view. PC tends to track a bit lower than the mid-30’s target and other new categories like simulation in particular tend to track a little above, and console ends to track right around the mid-30’s target. And despite the challenges for gross margins driven by freight costs which are coming down and an excessive level of competitive discounting, we’re maintaining our long-term gross margin target to be in the mid-30’s.

Jack Vander Aarde : Okay, great. That’s it for me. Thank you.

Operator: One moment for our next question. Our next question comes from the line of Martin Yang from Oppenheimer. Your line is open.

Martin Yang : Good afternoon. Thank you for taking my question. Juergen, the first question to you is, you know assuming other competitors just are also thinking about expansion in their product portfolio, can you maybe elaborate on how do you intend to differentiate Turtle Beach products across the different categories or across the main categories you’re competing?

A – Juergen Stark: Sure Martin. Our reputation and our leadership in console headsets for more than 13 years now is really driven by the product; products which have introduced innovations at a pace and importance to consumers that are unparalleled in the category. And you know that innovation, the sustained long term innovation is part of what’s behind the roughly 375 patents that the company has. So that first and foremost is why we have one in the past and why we believe we continue to win in these new categories. And frankly, the flight simulation product, a new category for us. We hired in the right expertise with deep knowledge of that category from an engineering and a product standpoint; launched the first product and took the number one share position in the U.S. in its first full year, and that product €“ that was driven by a product that had high quality and unique innovations relative to anything else that had been in the market or was in the market at the time.

Martin Yang : Got it, thank you. My next question is about ROCCAT. You know we’re almost four years into the acquisition. How do you think about the two brands, and is there any intention for you to maybe consolidate to or everything under the Turtle Beach?

Juergen Stark: That’s a great question, Martin. You know multi-platform gaming is certainly becoming more and more pervasive. We have intentionally made more and more of our console headsets multi-platform to ride that wave essentially, and we suspect actually that a lot of our console headsets might be being used by PC gamers. And I commented on that in the prepared remarks, with us having the number three brand loyalty position among PC, hardcore PC gamers in the United States. So all that said, right now our plans are to continue with the ROCCAT brand, while making consumers more and more clear that ROCCAT is part of Turtle Beach, part of that brand and that reputation, and that retail strength and everything that comes along with that, and then we’ll see how that progresses over time.

Martin Yang : Got it, thank you. My final question is on competition. Based on your observation of 12 months, have you seen any new competitors coming onto the gaming accessory space from perhaps non-gaming background, and you know how would you characterize the overall threat to your market share?

Juergen Stark: No meaningful new competitors outside of the category come to mind Martin. You know what we’ve seen in the last year is the same competitors. Everyone is competing across multiple categories, which is a key driver for us to have expanded our TAM from $1.4 billion to over $8 billion in the last few years, is to play in all of these categories, deliver great products to all gamers across all categories over time, because that’s also what the competition is doing, and it opens up a lot of white space for us that can help us drive growth. What we’ve seen competitively really that’s been a change last year is just really aggressive competitive pricing and promotional activity. It might be driven by the fact that we had a much more conservative forecast than others in the category, and that €“ you know that may have led others to have a much bigger inventory issue than we had in a market downturn last year.

And so we hope that subsides and goes back to normal as the competitors you know sell through their inventory.

Martin Yang : Got it. Thank you, Juergen.

Operator: Thank you. And I’m not showing any further questions at this time. I’ll now turn the call back over to Juergen Stark for closing remarks, Juergen.

Juergen Stark : Thank you very much. We look forward to speaking with our investors and analysts again in May. Thanks for your participation and interest in our company.

Operator: Thank you ladies and gentlemen, this concludes today’s conference. Thank you for participating. You may now disconnect. Everyone, have a great day!