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Good morning, ladies and gentlemen. Welcome to the ATS Automation Second Quarter Conference Call. I would like to remind you that this call is being recorded on Wednesday, November 7, 2018, at 10 a.m. Eastern time. [Operator Instructions]I would now like to turn the call over to Stewart McCuaig, Vice President, General Counsel of ATS.
Thanks, operator, and good morning, everyone. Your main hosts today are Andrew Hider, Chief Executive Officer of ATS; and Maria Perrella, Chief Financial Officer.Before we begin, I'm required to provide the following statement respecting forward-looking information, which is made on behalf of ATS and all of its representatives on this call. The oral statements made on this call will contain forward-looking information. The actual results could differ materially from a conclusion, forecast or projection in the forward-looking information.Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information are contained in ATS's filings with Canadian provincial securities regulators.Now it's my pleasure to turn the call over to Andrew.
Thank you, Stewart. Good morning, ladies and gentlemen, and thank you for joining us.Our second quarter performance featured year-over-year growth in order bookings and we finished the quarter with record order backlog. This morning I'm going to speak to you about our performance, outlook, progress of the ABM and provide an update on our recent acquisition. Maria will then provide more detail on our second quarter financials.Starting with our Q2 financial value drivers. Bookings were $355 million, up 38% year-over-year. Q2 bookings were driven by transportation, which featured an $80 million EV program with a new ATS customer. The initial $8 million of the order was booked in Q1, with the remaining $72 million booked in Q2. This program is for an automated battery assembly system for a global automotive manufacturer. This win follows an almost year-long effort in which we worked alongside the customer's engineering and manufacturing teams during the development of their product and manufacturing process. Our technology and EV expertise were key factors in winning this strategic program we will deliver over the next 2 years leveraging 3 ATS facilities.In life sciences, Q2 bookings were strong and including both new and follow-on programs in medical devices. Our track record of delivering value to life sciences customers through our proprietary technology and strategic solutions has resulted in these new and repeat wins. The consumer market remains strong, with continued expansion of our warehousing automation program.In energy, as we expected, bookings were down following the major program for Bruce Power we announced last quarter. Work is now well underway and will be ongoing over the next 15 months.As you know, our goal is to drive year-over-year growth in bookings on an annual basis, despite normal course variability from quarter to quarter due to our project-based business. For the first half of the year, bookings were $713 million, an increase of 36% over last year.Q2 revenues were $284 million, flat to last year, excluding foreign exchange, due to the timing of certain programs, which Maria will expand on shortly. For the year, revenues are $584 million, up 8% over last year. Our Q2 adjusted EBIT margin was 9%, down from 10% in Q2 last year due to higher stock-based compensation costs.From an operations standpoint, we expanded capacity at facilities in both Germany and Canada over the past several months. In addition, we have taken on new space at certain facilities and continue to evaluate and plan our capacity to ensure we can effectively deliver to our customers.We have also expanded our workforce in areas of the business where we are growing. We are well positioned to continue delivering value to our customers from our substantial book of business.Moving to our outlook. We ended the quarter with record order backlog of $830 million, up 28% over last year. Looking at our funnel, life sciences continues to be strong and we are seeing good opportunities in both medical devices and pharmaceuticals. The life sciences market has positive dynamics, high barriers to entry, including stringent regulation and high consequence of failure. These characteristics are complementary to ATS's capabilities, which include high-speed, high-precision solutions across a number of life sciences applications.EV activity is strong and accounts for the majority of our transportation funnel. EV represents a considerable changeover for the transportation industry, which I expect will result in continued strong market activity. Our proven success in the EV market, including battery module and pack assembly and E motor assembly, positions us well to capitalize on the EV market shift and deliver value to our customers. The recent addition of KMW is a good complement to our EV offering. I will speak more about KMW in a few minutes.We will continue to proactively target the EV and life sciences markets for growth. Our niche positions in consumer and energy have positively contributed to our business and we will continue to pursue select opportunities where our technologies align well with the value required by customers.Overall, I expect our customers will continue to exercise caution and be thorough in making their capital investment decisions, which may lead to variability in order bookings from quarter to quarter. On after-sale services, customer receptivity has continued to be positive. Our Q2 bookings were up over last year and our funnel has grown. We are focused on the strategic area of our business and it's an important part of our margin expansion plans.Moving to the development of the ABM, our ATS business model. As a reminder, the ABM is our playbook, designed around our business strategies, collective strengths and commitment to performance.The first pillar of our ABM is people -- developing, engaging and empowering our people in order to build the best team. In support of this, in October we appointed a new Chief Human Resources Officer, Angella Alexander, who brings a 20-year track record of international experience in people management. I'm excited to have Angella on board and part of our team.During this period our team continued to drive process improvements, with the number of Kaizen Events growing in Q2. For example, one of our divisions conducted a Kaizen Event in their assembly area, targeting and achieving a 25% reduction in assembly time. This will have a positive impact on throughput for this division, which will help drive growth. This Kaizen Event employed a number of tools and initiatives, including 5S, project preparation and layout, daily visual management and resulted in improvements to a number of operational processes. Problem-solving activities in another division were targeted to reduce time between customer change order processing and invoicing and led to a measured improvement in working capital. As well, a number of problem-solving activities are ongoing to drive improvements to our sales funnel through improved opportunity qualification and quoting processes, training through boot camps, weekly Lean training sessions and leadership excellence is ongoing and driving further ABM adoption. The pace of development is encouraging and we have many opportunities ahead for continued improvement.Turning to our work on innovation. This is a key area of focus for us. Our goal is to drive technology leadership and expand the reach and scope of our capabilities through the creation of innovative platforms and analytics that benefit our customers by reducing complexity, shortening development cycles and improving production efficiencies.We have moved forward on our digital capabilities, Industrial Internet of Things and other key innovations, such as co-bot, vision imaging systems and linear movement systems. Specifically, in Q2 we launched new, more powerful imaging hardware and we advanced our IoT offering by making upgrades to the user interface to support scaling.Overall, we have more work to do to drive our innovation agenda. Over time, value-added innovations that address the needs of both new and existing ATS customers globally will help us to capture additional systems, product and service business.Moving to M&A. Last week, we closed our acquisition of KMW, a German-based provider of micro-assembly systems for the EV market. We are very pleased to welcome KMW to the ATS family. KMW is a great fit, as it provides us with incremental capability and micro-assembly and fills a niche that adds to our overall offering in EV. Specifically, KMW will enable us to provide a more complete turnkey system, particularly in battery and E components.KMW is a well-run company that has a track record of delivering value. We're in the early stages of integration, which will include administrative and operational activities over the next 3 quarters. Importantly, we will be deploying the ABM into KMW to enable them to grow and drive improvements into their business going forward.In summary, we are focused on executing our value-creation strategy -- build, grow and expand. We have continued to advance and have success with the ABM. Our ongoing innovation activity is exciting and I expect will continue to be well received in our markets. And the acquisition of KMW will add to our EV offering going forward. Our balance sheet is strong. We are well positioned to drive long-term shareholder value.Now I will turn the call over to Maria.
Thank you, Andrew.Our operations continued to perform well in the second quarter. Bookings and backlog were strong and we made progress with our M&A growth strategy with the completion of the KMW acquisition last week. KMW will be consolidated starting in Q3.This morning I will discuss Q2 and our balance sheet. I'll start with operating results. Q2 bookings were $ 355 million, up 38% from last year's bookings of $257 million. On a year-to-date basis, bookings of $713 million were 36% higher than prior year bookings of $523 million. Our Q2 bookings include $72 million of the $80 million EV program from a global automotive manufacturer, which we announced in September.Q2 revenues of $284 million were 3% higher than last year's $275 million, with the increase primarily foreign exchange related. We had expected higher revenues in Q2 than what we generated. Consistent with every quarter, when we model out our business we take into account the programs in our ending backlog, expected timing of third-party content deliveries, expectations for in-quarter bookings and the resulting translation of those in-quarter bookings into revenues.In Q2, lower than expected revenue was due primarily to 3 factors. The large EV program announced mid-September was expected to be booked in mid-August, which deferred revenues on this program by about a month. There were a number of large programs with considerable third-party content that was forecasted to be received at the end of Q2 and was pushed into early Q3. And one customer made some design changes partway through their program. Because this program has a shorter period of performance, the change impacted Q2 revenue. This will be deferred into Q3 and Q4. The combination of strong Q2 bookings and lower than expected Q2 revenues drove order backlog to a record level. This will benefit our revenues and help contribute to growth over the next several quarters. On a year-to-date basis, revenues were $584 million, up 8% from prior year's revenues of $539 million, primarily reflecting our high order backlog entering fiscal 2019.Period-end order backlog increased by 28% to $830 million compared to $648 million last year Q2. As I noted, this provides us with a strong foundation to generate revenue growth going forward. Based on the composition of our backlog at the end of the quarter, our estimates of in-quarter orders which may be booked and converted to revenue in the same quarter and the addition of KMW starting November 1, Q3 fiscal '19 revenues are estimated to be in the 35% to 40% range of backlog.In the last 2 quarters, we have booked several large enterprise programs that have longer than typical periods of performance, ranging from 18 to 24 months. Although these programs do not have a quick revenue conversion cycle, they are a significant benefit to us as they provide greater visibility for capacity planning and future revenues.As Andrew noted, we have increased our capacity. With respect to people resources, our headcount has increased by approximately 100. We have also increased and have plans to further increase our physical space. For example, we've leased space that we will occupy December 1 to be used to deliver the $80 million EV order. In parallel, expansion is taking place in Germany at existing facilities, plus Cambridge campus expansion plans are underway. We constantly assess our needs and proactively make decisions in order to meet our customer requirements as well as fulfill our strategic plans.On margins, at 26%, our gross margin improved from 25.7% in Q2 last year. The increase in headcount to support our growth slightly offset the margin gains achieved. As with bookings and revenues, our goal is to deliver year-over-year improvements in operating margins. However, the nature of our project-based business can cause variability.Moving to SG&A. Excluding the $0.9 million of [indiscernible] related M&A costs in Q2 this year and acquisition-related amortization expenses in both periods, Q2's SG&A was $41.7 million, approximately $1.4 million higher than Q2 last year and similar to Q1. SG&A has increased over the prior year due primarily to increased employee costs and sales-related expenses. Our higher gross margins more than offset increased SG&A costs.Excluding amortization of acquisition-related intangibles and nonrecurring expenses, we expect SG&A to increase going forward slightly on an organic basis and as we assume KMW's costs and incur integration-related expenses.Q2 adjusted earnings from operations of $25.4 million were 9% of revenue, down from $28.8 million, or 10% last year. The decrease primarily reflected increased stock compensation expenses, partially offset by higher revenues and gross margin. At $6.6 million, stock compensation expense increased by $4.9 million and impacted margins by approximately 1.8% due primarily to mark-to-market adjustments. Excluding the impact of stock compensation, our margins have improved. Our goal is to drive further improvements through the deployment of our ABM, capacity utilization, supply chain management, increasing services revenues, standardization and program management.Moving to the balance sheet. Our noncash working capital as a percentage of revenue remained low in Q2 at 9.3%, down from 10.6% in Q4 and up from 8.4% in Q2 last year. Cash from operations was $39.5 million in Q2 compared to last year where we had generation of $37.7 million. At quarter end, our cash-net-of-debt position was $36 million, an improvement from last year's net position, which was effectively 0.We continue to have strong liquidity, with cash on hand of $354 million in our credit facility, of which approximately $618 million is unused. The acquisition of KMW was funded with existing cash on hand.In Q2, we generated earnings per share of $0.11, down 27% from $0.15 last year. On an adjusted earnings per share basis, we generated $0.17 in Q2, down $0.01 from $0.18 last year. The decrease reflected increased stock compensation expenses, which had a $0.04 per share impact.Our effective tax rate was 22% in the quarter. Going forward, our effective tax rate is expected to be in the range of 25% of pretax earnings.In summary, our business remains strong. Our record order backlog of $830 million provides a substantial platform for revenue generation in the upcoming quarters. We will continue to focus on the adoption and development of the ABM and other initiatives to drive margin expansion going forward. Our funnel remains well diversified with a mix of programs and enterprise solutions. We have a strong balance sheet with available credit, which will support our objective of profitable growth.Now we'd like to open the call to your questions. Operator, could you please provide instructions to our listeners? Thank you.
[Operator Instructions] Your first question comes from Cherilyn Radbourne, TD Securities.
The first question I wanted to ask was on bookings. If I take out the $72 million for the battery program, bookings were still quite robust at $283 million, especially when you consider that it was a summer quarter. So I just wonder if you could comment on the composition of that $283 million.
Sure. So as you're suggesting, Cherilyn, there's a couple of other things in the bookings for the quarter that help us get to the $355 million. And as we've said in the past, typically we have life sciences and/or some transportation orders, larger orders that are greater than $20 million or $30 million that bump up our bookings. And in this quarter, we did have a follow-on order from a life sciences customer that we press released in Q3 of fiscal '18. And that order was in the $30 million range. And then we also had a follow-on order of about $20 million from the consumer warehousing customer that we spoke of in Q3 also.
Great. And that actually leads into my next question, which was it looks like you've delivered at least part of the warehouse automation program in Q2. And just given that, that was a new vertical for ATS, I wondered if you could comment on how that work progressed and how the system is performing for that customer so far.
Yes, Cherilyn. We're pleased with the progress, both with the customer as well as the continued booking in this space. We have continued to see the machine executing as planned. That said, the customer has come back and worked with ATS and said, "We want to improve it even further." And we welcome that type of discussion, as we're looking at this space as a niche application in a area that we believe we can drive differentiation. So to answer your question directly, we've seen success so far and the continuation with the customer even through this quarter has been positive.
And is this work that you think you can leverage with other customers in the future?
So our initial focus is to drive the value into this customer, with this customer. They have a global network that they are going to be deploying this solution set in their global network. Secondly, as we have a solution set, we are looking at other areas potentially to offer that. But it's a niche application and we want to ensure that we deliver first to the customer on their global footprint.
Your next question comes from Mark Neville, Scotiabank.
I just first want to make sure I'm understanding the guidance for backlog conversion in revenue. The 35%, 40%, that's inclusive of the acquisition, or is that additive, the KMW?
That's inclusive of the acquisition. And as we press released, KMW will add about $20 million of revenue per annum. And if we just take 2 months of that, then for the quarter it's not really that material. It would be about $2 million or $3 million.
So I guess when I think about where the sort of conversion rate's been trending in prior quarters and just think about some of what happened this quarter with deferrals and some equipment coming a little later, I guess it feels like the -- I know you might not want to point to end of the range, but it feels like something towards the higher end of the range is achievable. But again, I guess you have some other larger contracts, too, that are sort of extending it. So I'm just trying to think about this going forward and how you're thinking about it, the range, and where we should sort of sit with that.
The range that we've provided, the 35% to 40%, takes into consideration what we know or what's changed in our backlog today. So in the past, when we looked at our backlog and when we looked at longer period of performance programs, we had a certain amount. And at the end of Q2, that certain amount has more than doubled. And we provide 2 examples, for example, the EV order, which is over 2 years, and the nuclear order, which we announced last quarter, that's over 18 months. So that changes out. And there's a couple more, a couple more. And I talked to 1 or 2 of those when I talked about bookings in the quarter. So that lengthens our profile. And when I look at quarter-over-quarter, just that shift -- and not to be too precise about things, but there is about 2% or 3% there that's shifting out. So we have lots of backlog. We'll be able to revenue that over the next while. It's just over a slightly longer period.
Yes, okay, I don't want to really beat it to death. And I'm not that fussed about it, but I guess the market seems to care a lot about a revenue miss, so that's really the only reason I was asking.
Yes. So Mark, just on that, so for us we don't consider it a revenue miss. We provided an estimate and we always try to provide an estimate. And as we've said, it's a little bit difficult to do given our business. That revenue is in our backlog and we will revenue it in the upcoming quarters.
And maybe just moving on to the margin, so the gross margin, it's flattened out here for a quarter or 2 or 3. And you've talked about sort of adding headcount and adding capacity. So I'm just curious sort of how much of an impact that's having and how we think about the ramp and the margin going forward because, again, it is sort of a big focus here.
So I'll just talk about some numbers. In headcount, we've said that we increased our headcount by about 100 in the quarter. And so that's ramping up to be able to deliver the higher backlog. And when we just calculate the impact of that, those 100 people, about 3/4 of those are in cost of sales. And that impacts about 0.3% in the quarter. So we are -- we spent that in the quarter. We expect to recover that going forward. And then the other thing to add to that is we did have gains that offset some of that cost that we saw in the quarter.
Maybe just one last one. I did notice there was an adjustment to the backlog, $30 million. I'm not sure if it's all FX or if there was something else in there.
So that is typically foreign exchange adjustment, a foreign exchange adjustment. But in this case, or in this quarter, we also had a cancellation. So about $10 million of that is a cancellation. But it's from a customer that we have had for a long time, and we continue to have. And the cancellation was just based on their customer requirements or needs. But that same customer ordered another $20 million. So that was offset nicely.
Okay. So you would have added $20 million in bookings but not -- and just netted out the $10 million?
We -- correct. That's correct.
Your next question comes from David Tyerman, Cormark Securities.
Maria, just to clarify the comment about the cost of sales and the ex 100 FTE, so you said 0.3% impact on gross margin. Wouldn't you be reporting a profit against that, all those expenditures, as part of your accounting?
We -- I'm not sure I understand the question but I'll try...
Well, you use percentage-of-completion accounting, do you not? And I would have thought, okay, if your labor input goes up it would go into completion, you would record a profit related to that, or...
Right. So that is correct. But we -- as these people come on, they -- I'll say it my way, they're ramping up or training up. So they're not as efficient as our workforce that's been here for months and months or years and years. So there's been inefficiencies. And then they're not working on direct labor hour work and we're just absorbing that cost as they ramp up.
Okay, I got it, so it's just learning curve and all that. The other-- the question I had was on capital intensity. You do seem to have won more larger programs, enterprise programs. I don't know if that's the normal going forward, but -- and I guess [ that's ] hard to guess. But I guess the question is, do you see the capital intensity of the business changing because the nature of your business is [indiscernible] solutions programs such that you require either more fixed assets or working cap than in the past?
First, in the EV space, and we announced the order within the quarter, the $80 million application for the new customer. What we can state is in that space specifically, in the EV shift, we are seeing larger orders. And it's usually wrapped around the capacity expansion to meet the demand. As a whole, in our business, and we've said this before, but as a reminder, all orders matter. And so we ultimately want to have a focus on the small, medium and large through that process and how we think about approaching our customers with the individual applications all the way to the potential total solution set.
And then just on -- I think the question is also around CapEx and working capital requirements. We've said...
Yes, what's changing, broadly?
Yes. And we've said in our scripts that we will be investing more in CapEx. And that has to do with facilities to accommodate some of these larger programs. And for example, with the EV program we know that we do need a bigger footprint and we'll accommodate that. And then on the working capital side, with some of these programs we could see a shift in our working capital percentage. We've been low over the last number of quarters. And we say that we target to be below 15%. Because of these large programs, it could very well be that we see an increase from around 10% to below 15% and then back down. But having said that, we still target to be below 15%.
And then on the CapEx side, can you give us a number that you're looking at here for, I don't know, fiscal '19, whatever is the relevant period?
Sure. So year-to-date, we've spent about $12.5 million. We have said for fiscal '19 we expect to spend somewhere between $20 million to $30 million. But just based on our current run rate, I'd say we're at least midway in that range. The range has to do with timing of these capital expansion decisions that we have made, i.e., when do we break ground and when do we spend the money. So it could be that some of that happens towards the end of fiscal '19 or just moves out to the beginning of fiscal '20.
So do you regard that $20 million, $30 million as kind of normal run rate now?
Right now, yes. And then in fiscal '20, we will reassess and we can provide an update.
Your next question comes from Justin Keywood, GMP Securities.
On the services revenue in the quarter, I'm wondering if you're able to give an update here on how that progressed and what has been the recent uptake by customers.
Absolutely. First of all, very pleased with the customer acceptance that we've seen. Both bookings and backlog were up double digits. And part of that -- and, Justin, we laid out the strategy some time ago. And then, as you recall, Simon Roberts went through the strategy. One of the key areas of focus is attach rate. And we have seen a continuation of that strategy and the rollout of that strategy, of an increase of attach rate. And that's been a big driver of the increased bookings. With the increased attach rate it's going to be tied to CapEx, so we're going to see a little bit more variability in the timing of the service revenue. But we're pleased with the progress that we've made in this space. And as we've said during the Investor Day as well as today, there's a lot of opportunity in a lot of areas that we need to continue to drive between now and year-end.
And then on the lower conversion of backlog into revenue in the quarter, you mentioned the 3 different buckets. I'm just wondering if you're able to quantify what each of those different areas has as far as an impact.
Sure. So versus our original estimates, we are lower by about $15 million to $20 million. And each of those areas impacted approximately 1/3.
Is that anticipated to show back up next quarter? Or is it a bit of a longer period to realize that?
It's a mix. So some of this is next quarter and some of it is the following quarter.
[Operator Instructions] Your next question comes from Maxim Sytchev, National Bank Financial.
I was wondering if you don't mind expanding a little bit more on what looks like slightly greater CapEx intensity because of bigger programs, and the margin improvements that you telegraphed in the past and how those 2 things are linked on a going-forward basis.
From a standpoint so we can answer the question properly, on the capital intensity, could you explain what you would like to have answered on the first part of the question? The second piece, we know clearly.
So like EBIT's improvement targets, 500 basis points over x amount of years, but more CapEx intensity will negatively impact I guess D&A on a going-forward basis slightly. So I'm just trying to see if there's any change on the EBIT improvement target that you have telegraphed in the past.
Okay. Thank you for a clarification. There is no change in our position and our focus and our target.
And wondering in terms of the stock-based comp, I mean obviously a large jump this year versus last year. Any thought process in terms of trying to hedge that, if that's possible?
Yes. We are looking at that and we're doing a cost-benefit analysis on that.
And then, well, just looking at the share price reaction today and given the very healthy balance sheet, any thought process to allocate some of the capital on the balance sheet towards share buybacks in addition to M&A? Just any thoughts there?
So Max, we're always assessing this area and its capital deployment. And we've got our key areas of focus for this. So certainly that's one of the areas we look at as well as investment into the business as well as investment into M&A. So it's one of the areas we consider.
And last quick question. Does the commentary around the duration of KMW integration, 3 quarters, correct me if I misunderstood that, but it seems to be a fairly lengthy process for a relatively small transaction. I'm just wondering, if you don't mind, like maybe knocking off the timing of what exactly you're going to be doing in Q1, Q2, Q3 so that we can visualize it a little bit better.
Sure. And Max, it's -- I'll just be up front. It's not a perfect time period and nor is there any perfect time period. But what I can tell you is the majority of the work is going to be done over the next 2 quarters. And how we view integration and how we view really bringing somebody on board is we first focus on the key areas, right, making sure they align around being a part of a publicly traded business, all of the above. And then it's about ABM and really working with the team on understanding how we drive our organization. And then we go through a fairly healthy strategic planning process with the new asset to make sure first fits in our total corporation alignment on where we're going in our strategy but then, secondly, their piece and how they can execute. That typically is going to take about 2 quarters. And then the rest will be as we see items that come up through that process in the third quarter. So the majority and the bulk of the work will be done over the first 2 quarters.
[Operator Instructions] Your next question comes from Robert Caldwell, Richardson GMP.
We're very heartened with your comments in the quarterly report and also on this call with regard to the EV industry. One question. Is the technological capability in this particular customer proprietary or can you translate it into other customer projects?
Robert, thank you for the comment, and good morning. So our expertise, our capability in this space is one of the reasons why this new customer chose to go with ATS. And so yes, we're able to utilize some of the core technology we have. And as we develop new areas and new approaches to it we will be utilizing that in our total portfolio moving forward. That said, we also -- as we know, an $80 million order is a big order for our business and we need to execute for this customer. And so we're pleased with the win. We're off and running and the team is wrapped around how do we deliver that value and really help this customer achieve success in their market.
Follow-on question then, if I may. If you had the opportunity to bid on another contract of this magnitude, or perhaps 2, how easy will that be for you to accommodate here over the next year, say?
So Robert, what I can tell you is even after this order was received, our funnel remains very strong in the EV space. And we are lined up to deliver that value to customers. And so can't comment on size because size is a moving area. What I can tell you is the size tends to be on the larger scale and we do have other businesses that are in the funnel that we're working with that we are ready to drive as soon as we prove the value to them and we can position them with an ATS order. Does that answer the question?
Yes, that's helpful, Andrew. Would part of that potentially continue to be in Cambridge?
We don't provide guidance on location. And one of the reasons we don't, Robert, is we have a very successful footprint globally, whether it's in Europe, whether it's in China, whether it's in North America. And so we are looking at all areas of our business to really provide that level of value to our customer.
Thank you. Mr. Hider, there are no further questions at this time. Please proceed.
Thanks, operator. Thank you, everyone, for joining us today. And I look forward to reporting our third quarter results in February. Have a great day.
Thank you. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.