Nov 28, 2018
Executives
Kathy Bian - Vice President, Corporate Finance Albert Chen - Chief Financial Officer
Analysts
Michael Schmitz - Jayhawk Capital Kent McCarthy - Jayhawk China Fund Patrick Terrell - Terrell Group Management
Operator
Welcome everyone to Global Cord Blood Corporation’s Earnings Conference Call for the Second Quarter of Fiscal 2019. All participant lines will be placed on mute during the presentation.
After which, there will be a question-and-answer session. Now, I would like to introduce Ms.
Kathy Bian, VP of Corporate Finance to begin the presentation.
Kathy Bian
Thank you, Anna. Good morning, everyone.
Welcome to our fiscal 2019 second quarter earnings conference call. A press release discussing our financial results has already been published and a copy is available on our Company’s Web site.
During the call, our management team will summarize corporate developments and financial highlights for the quarter. A question-and-answer session will follow.
Before we begin, please note that today’s discussion will contain forward-looking statements that are subject to certain risks and uncertainties and actual results could be materially different from these forward-looking statements. Kindly refer to our SEC filings for detailed discussions of potential risks.
In the interest of time, we will begin with our CEO’s remarks followed by a detailed report of our fiscal 2019 second quarter financials given by our CFO, Mr. Albert Chen.
Our management will be available to answer questions during the Q&A session. Today, on behalf of our CEO, Tina, I will read her prepared remarks.
Let’s begin the presentation. Good morning, ladies and gentlemen, investors and analysts.
Welcome to our fiscal 2019 second quarter earnings conference call. In the reporting quarter, the volatile capital market in China and the escalating U.S and China trade tensions, continue to rattle consumer confidence and sentiment in all markets, which therefore demanded more effort to bringing new clients.
Despite this, the Group successfully recruited 22,908 new clients, representing a year-over-year decrease of 3.1% and a quarter-over-quarter increase of 11.2%. Guangdong and Zhejiang were once again our leading contributors of growth.
By the end of the reporting quarter, our accumulated subscriber base has surpassed 700,000, meeting our expectations and further strengthening our leading status in the cord blood banking industry around the globe. During the second fiscal quarter, we not only continued our access to carefully expand our hospital channels and to selectively intensify our sales activities, but also undertook additional client convention approaches, such as upgrading our service offerings and educating our market.
For example, we increased the self ensures in Beijing, Guangdong and Zhejiang. And this was positively received.
This success also suggest that there's still untapped demand of preventative healthcare services within our markets and that these consumers can be converted given relevant education and promotion. Meanwhile, we also gained client convention from our continued support of blood stem cell related clinical research projects, such as those using stem cells to treat cerebral palsy in China.
Although we are pleased that our new subscriber numbers for the quarter met our expectations. We have to stay alert as uncertainties in the general macro business environment increase.
The economy in China continues to show signs of a slowdown and financing costs trend upward. Taking these factors into consideration and with the introduction of more favorable economic policies in China, we remain cautiously optimistic on the outlook for the second half of the fiscal year and maintain our new subscriber target for fiscal 2019 at between 85,000 to 90,000.
To reach our new subscriber target and to maintain our position as a global leader in the industry, we will remain focused on nurturing and penetrating existing domestic markets. At the same time, we continue to explore development opportunities that may provide cost or profit synergies.
Such opportunities could take the form of geographical expansion or offering additional services to existing clientele. This concludes my remarks regarding our fiscal 2019 second quarter results.
Thank you for your ongoing support of GCBC. I will now turn the call over to our CFO, Mr.
Albert Chen to review our second fiscal quarter financial performance in greater detail.
Albert Chen
Good morning, everyone. Thank you for joining our call today.
In the second quarter, revenues increased by 5% year-over-year to RMB247 million. And such increase was mainly led by the contribution from storage revenue.
As mentioned in the CEO remarks, by the end of September 2018, our accumulated subscriber base has expanded to over 704,000. Accordingly, storage revenue for this quarter increased by approximately 19% year-over-year to RMB95 million.
Storage revenue accounted for 39% of the total revenues, up from 34% of last year. In the second quarter, we successfully recruited 22,908 new subscribers which represented an 11% increase quarter-over-quarter, despite conservative consumer spending.
As a result, second quarter processing revenue amounted to nearly RMB152 million. Our Guangdong division remained a key driver and the Zhejiang division continued to ramp up steadily.
Gross profit in this quarter increased by 6% year-over-year to nearly RMB200 million as economy of scale offset rising raw material costs. Gross margin improved to 81%, which was led by higher contribution from storage revenue.
As a result of the absence of share-based compensation expense and moderate margin improvement, operating income increased by 37% year-over-year to RMB105 million. Even without the impact of share-based compensation expense, operating income still grew by 10% quarter-over-quarter.
As a reminder, no share-based compensation expense was recorded in the first quarter of this fiscal year either. Operating margin increased to 42%.
Operating income before depreciation and amortization and share-based compensation expense, which we refer to as non-GAAP operating income, increased by 9% year-over-year to RMB118 million. Non-GAAP operating margin increased to 48%.
Depreciation and amortization expenses in this quarter remain at RMB13 million. Share-based compensation expense for the same quarter of last year was RMB20 million, whereas no such expense has been recorded since April 1, 2018.
Sales and marketing expenses in the second quarter decreased by more than 8% year-over-year to less than RMB52 million. The drop was mainly because no share-based compensation expense has been recognized since April 1, 2018.
Meanwhile, we took a more prudent approach when deploying sales and marketing resources under current market conditions. As a result, sales and marketing expenses as a percentage of revenues decreased to 21%.
General and administrative expenses for this quarter decreased by 24% year-over-year to RMB40 million, largely due to our cost tightening measures and the absence of share-based compensation expense. General and administrative expenses as a percentage of revenues was down to 16%.
In the second quarter, we recognized RMB31 million in unrealized holding loss for equity securities as other expenses under the new accounting standard. Such mark to market loss was mainly attributable to our investment in Cordlife Group Limited.
In the second quarter of last year, we recorded similar loss of RMB19 million, but it was recorded as other comprehensive loss below the net profit attributable line. As the increase in operating income was hit by the mark to market loss, net income attributable to the company's shareholders for the second quarter was RMB65 million.
Net margin for the reporting quarter was 26%. Total number of shares issued and outstanding as of September 30, 2018 was 121.55 million.
Basic and diluted earnings per ordinary share for the second quarter were RMB0.54 and RMB0.53, respectively. Please note that the diluted EPS was caused by the scrip dividend and the company has no dilutive derivatives or instrument outstanding.
This wraps up my earnings highlight and we are now happy to take any questions concerning our latest financial results.
Operator
Thank you, Albert. [Operator Instructions] Your first question comes from Robert from WayPoint Capital.
Your line is now open. Please go ahead.
Unidentified Analyst
Hi. Thank you for taking my question.
Just really this is more of a series of comments. Right now the market cap of the company is 775 million.
There is cash with 700 million approximately. Shandong is worth at least 400 million, which gives you 1.15 billion of assets.
That when you subtract, the market cap gives you a negative $335 million valuation for something that generates $130 million in cash per year and gross earnings and net income at the year substantially. This -- the only reason the market can ascribe this sort of valuation is because management is either incompetent or is intentionally suppressing the value of the company.
Strange convertible deals in the past, trying to privatize the company at a little price, no attempted analysts coverage, never mentioning the value of the Shandong stake and putting in a one-time kind of dividend and taking it away. To sum it up, this is just hurting investors, also hurting employees.
I mean, employee compensation is based on this, this has to demotivate employees. Has -- using the stock as currency for a takeover, it has to hurt that, it makes management looking confident which really affects business.
I would like to know, I mean, something has to be done to change this. You can say that you want to be conservative because of the business conditions.
This isn't really conservative, it's really the opposite of that. So can you please tell us what you -- you plan to do about this?
Albert Chen
Well, thank you for your question, Robert. To -- I think to -- my reaction to your comment is that we understand that the capital market as well as the share price of a particular company can go up and down sometime, it's driven by the fundamental of the business, sometime it's driven by psychological factor or the liquidity of the company, various factors.
But I think certain factors within our control, we will try our best to improve the profitability as well as the return to our shareholders as a whole. And also not losing sight on the long-term strategic goals of the companies.
We are aware of that, we acknowledge your comments and we will try our very best to try to resolve that.
Unidentified Analyst
Well, if I can follow-up on that, I define long-term as 5 to 10 years. The stock has gone nowhere for 10 years and its trading at 30% to 40% below asset value when it generates a 130 million a year, that is a time for management to change and it's time to protect investors.
10 years is long-term. It's already been long-term.
So have you guys talked to a banker about exploring alternatives to get bought out, for example, GI Partners in California recently bought corded blood registry, they are trying to consolidate the space. I think this stock is worth at least $20 to $25.
You guys should be exploring alternatives like getting bought out by somebody who knows what they're doing.
Albert Chen
We constantly look at alternatives to improve the operations of the company and also to improve -- enhance the value of the company, so that it will benefit not only to the company as a whole, but also to our shareholders. If we are to engage in a particular transaction, we'll have to announce it in a timely manner.
Unidentified Analyst
Okay. Thank you.
I mean, that's the end of my question. But -- okay, thank you.
Operator
Thank you, Robert. Your next question comes from Mike from Jayhawk Capital.
Your line is now open. Please go ahead.
Michael Schmitz
Hi, Albert and Kathy. Congratulations on the good quarter of operational results.
Couple of quick kind of technical questions and one follow-up. Could you provide the subscriber breakdown by province?
Albert Chen
Thank you, Mike. For the second quarter of fiscal 2019, new subscriber breakdown approximately 64% of new subscriber came from the -- from our Guangdong market, and 18% from Beijing and another 18% from Zhejiang.
Michael Schmitz
Okay. And could you also provide the breakdown of the payment options net?
Albert Chen
Approximately 55% of new subscriber elected the normal payment options. Approximately 40% elected the bullet payment options and the others -- the remaining 5% are basically others payment options, things that we do during promotions.
Michael Schmitz
Okay. Thank you.
Albert Chen
One thing I do want to highlight that is the bullet payment option right now is at 40%. And we will continue to monitor the situations and as you -- because as you recall, the bullet payment options normally account for about 40% to 45%.
Now we are kind of at the low end of it.
Michael Schmitz
Okay. And was there any reason for that or do you think that's kind of tied to people not being comfortable with the market condition or just general market sentiment, or ...?
Albert Chen
As highlighted in our CEO remarks, we have experienced certain level of softness amongst our target segment. So I think the emphasis as you can see from our results and one thing that we are also continuously doing is on cost control and cost tightening.
We are working very hard try to improve the cost efficiency. But at the same time, we have to adjust our sales and marketing strategies in order to match with the somewhat softer consumer demand while we are trying to continue to hit our various internal operational benchmarks.
So things has been progressing on track contract, but I think it is something that we have to monitor very, very closely. At this juncture, I mean, we are -- it's fair to say that we are still comfortable meeting our annual new subscriber targets.
But as you can see, if things change or worsen all of a sudden, we have to be prepared as well.
Michael Schmitz
Thank you. And I know I will try to just ask kind of one more question and I have a feeling other people will continue to follow on the previous callers comments about how are you guys are going to improve value for shareholders.
But the other thing I just wanted to kind of probably more of a comment really is just about the business itself that you're mentioning, the storage revenue continues to grow and basically will continue to grow -- actually as long as the new subscribers are more than the average for the previous 18 years, given the way the model works and as you mentioned the margins will continue to get better as more and more of the revenue comes from storage fees. So the business just looks like it's on pace to continue to get better even if the subscriber numbers -- even if they were to stay flat for the next 18 years, the margins and profitability will continue to get better and better.
So, I guess, I will kind of just ask you to follow up again on, did you -- if there is any more further clarification on dividend policy since the last call, if there's any more specifics that you can add to that? Thank you.
Albert Chen
Thank you, Mike. Let me try to answer your question this way.
In the absence of unforeseeable events, the team has been supportive of a stable and predictable dividend policy. And we believe it is the right thing to do for the company and shareholders.
But as we think about our company's current status, and where we want the company to be five years from now, we need to carefully evaluate various factors including like the PRC industry dynamics, the PRC cord blood banking policy environment, our current financial position and the current opportunities available as well as opportunities that are potentially available. We believe it is in the best interest of the company and all the shareholders to take a more balanced approach when it comes to capital allocations to weight between the company long-term strategic goals, while at the same time rewarding all shareholders.
But, again, if we have decided to make a material change regarding our capital deployment strategies or dividend policy, we will have to announce such information in a timely manner.
Michael Schmitz
Okay. Thank you.
Operator
Thank you, Mike. [Operator Instructions] Your next question is from Adam from Morgan Stanley.
Your line is now open. Please go ahead.
Unidentified Analyst
Hi. Congratulations on another great quarter.
I feel like we continue to see this. I was wondering if you could speak a little bit more freely about the term you used geographic growth, so maybe you could touch on growth initiatives that you have other than what we kind of already know about?
Thank you.
Albert Chen
We are talking about geographical expansion. The team has a vision of expanding its business beyond the border.
And partly because we acknowledge the characteristics that we are -- that of CO, that we have a high concentration in China making the company subject to specific country risk and specific country related policy risk. So it is always our -- we always look for angle and opportunity to expand beyond our existing home tariff for the purpose of diversifying our service portfolio and geographical scope.
To give you a better sense will be, I think, we are -- we will look into opportunities outside of China that is in the similar line of business or something that we can add to our existing service portfolio. I hope that it will help -- I hope it will give you a flavor about the things that we are interested in.
Unidentified Analyst
Would those areas be in the same geographic Far East region, if you would?
Albert Chen
I don't believe that we should confine our self to one particular regions only.
Unidentified Analyst
Okay. Thank you.
Operator
Thank you, Adam. Your next question is from Kent from Jayhawk China Fund.
Your line is now open. Please go ahead.
Kent McCarthy
Hey, Albert. Hey, Kathy.
Arguably this is one of your optimal three quarter given the economic environment, and in particular congratulations on the expense controls. As usual, I just want to reiterate that I’m hopeful at some point you will consider a share repurchase, but I also recognize it's incredibly difficult right now with the core expense [ph] with the currency controls.
Plus I'll acknowledge that not doing it in the last few years has been smart, because the stocks continue to decrease. My question is on Shandong, it's been I think three years since they paid the dividend to us, and I believe we'll probably we are entitled the $50 million to $100 million or where we have that type of ownership.
Can you make any comments on your relationship with Shandong, or are you concerned that we haven't received the dividend from them?
Albert Chen
Well, as you are aware, Shandong Cord blood Bank which we own 24%, the remaining 76% is owned by a PRC listed public company and controlled by Sanpower. I wouldn't say I have a particular concern regarding Shandong Cord Blood Bank.
I understand that they have their own development strategies and they have their own capital requirements. But from our perspective, obviously if they can payout dividend, I think it'll be something that will beneficial to CO and also to our shareholders as well.
Kent McCarthy
And given their -- the Nanjing's ownership and their financial difficulties, would that be a possibility for us to buy their 76%?
Albert Chen
I guess it will depend on the -- it'll depend on the capital need for the PRC based listed company, because as far as I'm aware I think the Nanjing Xinjiekou Department Store which is the owner of that 76% equity interest in Shandong Cord Blood Bank, that particular public company is -- even though it's controlled by Sanpower, but I -- Sanpower does not -- it doesn’t own the public company like 100%. So it is hard to say how Sanpower will be able to extract the indirect economic interest from Shandong Cord Blood Bank through their intermediate holding company, which is a public company.
But that being said, I mean, if the opportunity arise in China, whether or not it's Shandong Cord Blood Bank, we will definitely consider, but it has to be the right economics of valuation.
Kent McCarthy
Okay. Thank you.
Operator
Thanks, Kent. Our next question is from Chris from Fairmont Capital.
Your line is now open. Please go ahead.
Unidentified Analyst
Hi, Albert. Thanks for having us again and congratulations on a great quarter.
I had one comment and one question. The comment being when we spoke a few weeks ago and you’ve again today sort of reiterated your view that stocks go up, stocks go down.
Let me dig into a little bit. Stocks go up and stocks go down, just like any commodity when there is more buyers or more sellers.
And if you look -- I have been involved in your company about six years now as an owner. If you look at your share price it went up very significantly about 18 months ago and over the last few years.
And if you kind of dig into that, there are significant number of buyers, but many of them were [indiscernible], Renaissance being the largest, you can still see them pretty high up in the share register. And if you look down, you kind of dig into who those buyers are, there are other similar buyers.
So these are people that use computers to look at your numbers, obviously your company is very cheap, but they also use computer trading activity to -- I'm not going to -- I'll say manufacturer, I don't mean to -- you could say, manipulate, although I don't want to intimate any sort of wrongdoing. I don’t think what they do is illegal, but they can use their trading activities to increase the price of the stock artificially.
And if you or anyone else on the phone try to trade shares when they're up around 15, that 15 price [indiscernible] there was really no volume there. So that was one activity that happened in the stock, but taking that out if you really look at the share registry, there has been no significant change over that entire period.
So that speaks to really a lack of investor relations [indiscernible], a lack of finding new buyers for the stock. So in light of that, I just like you to update us -- I know we spoke to about it in the last quarterly call, could you update us on your investor relations activities both in regards to directly finding new investors as well as getting coverage or interfacing with the sell side [indiscernible]?
Albert Chen
Thank you for the question, Chris. Well, actually since we last spoke, I have luckily being approached by more than one publishing analyst, so I think that's a good sign.
And to many of you who are currently on the phone, some of you who are currently working with me, introducing some shareholders to CO, we also appreciate your support. I just want to say that we are very -- we are -- we -- I can't think of a better way to say, but honestly to bringing investor interest, all the help are welcome.
Some of the existing shareholders that is currently on the register, I think they’re actually helping me to plan the next roadshow as well. So I think that is very interesting.
But I think we will [indiscernible] if you work on this and I think we just have to get more investor interest into the company. It's [indiscernible], it's not a battle.
Unidentified Analyst
Well, that’s very good to hear. I applaud your efforts.
Could you tell me -- if you can tell me who are the sell side firms you are speaking with? And if you can't, can you tell me whether they are sort of bank affiliated or independent research groups?
Albert Chen
They’re from brokerage dealer house. It's a U.S based firm.
But if you're able to -- it's still a relationship I need to cultivate. It doesn’t mean they will definitely write something about the company.
Unidentified Analyst
Okay. Well, look -- we [multiple speakers].
Albert Chen
But at the same time, if you have interesting or if you have investor analyst who is interested in covering this particular space, please send them our way.
Unidentified Analyst
Okay. Well, if we can help again, we'd be very happy to do it.
So please feel free to reach out.
Operator
Thank you, Chris. Your next question is from [indiscernible] CRCM.
Your line is now open. Please go ahead.
Unidentified Analyst
Hi. Hello, Albert, and Kathy and the team.
First of all, congratulations on the terrific quarter in this environment and cost reduction. We think the management did a good price -- good job running the business in this environment.
Three quick questions. One, what exchange rate you're using for the June 30 -- actually September balance sheet, is the average renminbi or spot renminbi?
Can you give us that? I have two more follow-up, but that's a quick question.
Albert Chen
The convenient translation that we produce in the earnings press release is based on the September 30th RMB/U.S dollar rate. So that is the convenience translation, that result in the U.S dollars column you see in the income statement -- sorry, comprehensive statement of operations as well as the balance sheet.
Unidentified Analyst
Got it. Secondly, as you think about the regulatory changes in 2020 and there will be more provinces opening up potential licenses.
How do you think about deploying capital within China versus outside of China where we can acquire technology to expand potential margin of the domestic business versus acquiring new license in another province?
Albert Chen
I think this is actually a very good question, and one of those question that is also challenging to answer as well. As we have stated in our public disclosure, the current one license per region policy is meant to expire in 2020.
And it gives a possible speculation of various different outcomes. For example, it may allow the authorities to open more locations for people to apply, but as to what kind of application processes required, that remain to be determined.
That's one possibility, meaning there are more location for people to apply for the license. Another possibility is that there is no new location being granted, but they lower the barrier of entry, for example, allowing one -- multiple license per region, that's also possible.
But again, I mean your speculation is good as mine, because the authority is keeping their lips tight at this stage. Or there is also a possibility which we are seeing repeatedly at the end of 2010 and also at the end of 2015 is that the policy get extended status quo, but no new locations is available.
Based on our readings, it is fair to say that we suspect that it is not likely and it is based on the fact and circumstances that is available to us now, we believe it is not likely that the PRC authorities will directly the entire industry and basically letting go off licenses, meaning that anyone can come in and compete. It doesn't look like the typical PRC authorities way of doing things.
Now with that being said, there is always a possibility that in the remote future that one license per region policy will change, whether this is going to happen at the end of 2020 or whether this is going to happen later down the road, we don’t know. We don’t have the crystal ball, but as part of our capital deployment decisions, we have two stand ready for this possibility as well, which is why in my earlier remarks when we talk about capital allocation decisions, we have to think about if the opportunities arises within the PRC and outside of PRC, what should we do.
That also is part of our evaluation process as well. But I guess it's fair to say that this policy has been extended twice already, we are still here.
Unidentified Analyst
Got it. Thank you, Albert.
And I think as a shareholder at least, we invest to look at the whole China and to the extend there are opportunities within China, and its good capital deployment in other provinces. We love to see the management team think through these issues and prepare, because it takes so long to apply to licenses, but thank you for the comments.
My last one, I will stick to the guideline, which is part of the reason we have so much cash is we didn't have a great banking relationship with banks and couldn't get loans. So we have to keep cash on the box.
When the management thinks about potential buybacks, dividends, how is our banking relation with both domestic and U.S dollar-based banks? And do we have credit lines?
In that case, we don't have to pile all those cash on the box that we can pay dividend, buybacks, if we have credit lines, given the fact we are listed for -- listed company, we have steady free cash flow, any thoughts on that? We are lucky than six years ago where we have no cash or no cash flow.
Albert Chen
Well, I mean, part of the reason that we have changed our strategy since 2012 is because we think that the -- as you know the financial market or the financial institution in the PRC are still more -- I would say more favorable towards the [indiscernible] price as compared to private enterprise. We are glad to see that things are eventually starting to turn, starting to change favorably.
I think that banking relationship is something that we can work on right now. I think, I will probably answer your question after that stage.
It's something that we can -- I think it's worth looking into it now as compared to like five years ago.
Unidentified Analyst
Thank you for your time and congrats on a good quarter.
Albert Chen
Thank you for your question.
Operator
Thank you, [indiscernible]. Our final question comes from Pat Terrell of Terrell Group.
Your line is now open. Please go ahead.
Patrick Terrell
Hi, Albert. It's actually Pat Terrell of Terrell Group Management.
But Albert, congratulations again on another great quarter. And it seems like the resounding theme here is how do we get the stock price up, not really just for the shareholders today, but it'll give you another currency to use as you look at deploying your strategy wherever and whenever that happens to expand.
And I think at this stage it's safe to say that have 600 million or 600 -- or 700 million, almost 671 million available to invest is a lot of money, it would be equally nice if your stock was being traded at a reasonable multiple of earnings. And today it probably would shift up at least 2x, maybe even 3x, and valuation, but I think you're always in this slot where you are trying to protect your cash, even though you're generating another $30 million of cash in the quarter.
So it really seems to me that if the management and the board are really looking at this, they would say, hey, why don’t we try to have a consistent quarterly dividend program which will show people that we're rewarding the shareholders that are currently there. It's hopefully that will have the effect that will bring your stock price up, I think it would and since we haven't really tried it, it's got to be consistent one, meaning a quarterly one, not -- maybe every year you might get one.
This would bring your ability to use your stock as currency also, because it sounds like you have planned to deploy capital in some fashion even though that's being discussed now for probably at least four quarters, and of course we are seeing nothing that you deployed capital in. But we like the idea if you could deploy capital that would increase our earnings and add to our already robust cash flow.
So I guess the question is there is a huge consistency on this dividend. It appears that you can always take the dividend policy off the table, if for some reason you have catastrophic changes in your business or something like that, but I don't understand where it -- how it could possibly hurt you and only it could help you going forward by helping get your other currency up which is your stock, because at some point companies usually use stock and cash to buy assets -- in other regions.
Can you make a comment about that please, Albert.
Albert Chen
Well, Pat, thank you for your questions. Like you said, I think capital deployment position is an important one.
And if we are going to, for example do a dividend, it is certainly we want this dividend to be repeatedly happening and also sustainable. So like you pointed out, I mean, we have to find the best way to deploy our capital, dividend being one of it and also -- but as I highlighted in my remarks early on is, we have to think about where we are and where we want to be five years from now and take a more balanced approach, make sure that the company will continue to strike over the course of the next -- over the long run and at the same time able to reward our shareholders who have been with us so long.
So I hear you loud and clear and this is something that is definitely on up high on that priority list. But once we have a definitive decision or if there is going to be a material change with respect to the capital deployment policy, we will have to announce it through a press release so that the entire market knows.
What you say is right and we are working on it.
Patrick Terrell
Okay. Thank you very much.
Operator
Thank you, Pat. This concludes the Q&A session of the call.
I would like to turn the call back over to management for any closing remarks.
Kathy Bian
Thank you, Anna. This concludes our earnings conference call for fiscal 2019 second quarter.
Thank you all for your participation and ongoing support. Have a great day.
Operator
Ladies and gentlemen, that does conclude our conference for today. You may all now disconnect.