Altra Industrial Motion Corp.
Q3 2015 Earnings Call Transcript

Published: 23 Oct 2015

[Operator:]

Greetings and welcome to the Altra Industrial Motion Third Quarter 2015 Financial Results. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. David Calusdian with Sharon Merrill Associates. Thank you, Mr. Calusdian, you may now begin.

[David Calusdian:]

Thank you, Rob. Good morning, everyone and welcome to the call. With me today are Chief Executive Officer, Carl Christenson; and Chief Financial Officer, Christian Storch. To help you follow management's discussion on this call they'll be referencing slides that are posted to the altramotion.com website under Events and Presentations in the Investor Relations section. Please turn to Slide 1. During the call, management will be making forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently uncertain, and investors must recognize that events could differ significantly from management's expectations. Please refer to the risks, uncertainties and other factors described in the Company's Quarterly Reports on Form 10-Q and Annual Report on Form 10-K and in the Company's other filings with the U.S. Securities and Exchange Commission. Except as required by applicable law, Altra Industrial Motion Corp., does not intend to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise. On today's call, management will refer to non-GAAP diluted earnings per share, non-GAAP income from operations, non-GAAP net income, non-GAAP gross margin and non-GAAP free cash flow. These metrics exclude certain items discussed in our slide presentation and in our press release under the heading, Discussion of Non-GAAP Financial Measures, and any other items that management believes should be excluded when reviewing continuing operations. These reconciliations of Altra's non-GAAP measures to the comparable GAAP measures are available on the financial tables of the Q3, 2015 financial results press release and in the appendix to the third quarter conference call slide presentation. Both of which are on Altra's website. I will now turn the call over to Altra's CEO, Carl Christenson.

[Carl Christenson:]

Thank you, David. Please turn to Slide 2. On today's call I'll go through a brief overview of our performance during the quarter and major drivers of that performance. Then I will provide my usual review of our end market. And then Christian will go over the financial results and I'll back to wrap things up. Altra again delivered strong results during the third quarter on excellent acquisition of our cost reduction and restructuring initiatives. Combined with raw material cost reductions as a result of lower commodity prices. You recall that we began implement profit improvement initiatives at the beginning of 2015. These initiatives had a positive impact in the third quarter as we weather continued weakness in several of our key end markets. We increased our non-GAAP gross profit by 80 basis points year-over-year despite a nearly 10% decline in revenues from the third quarter of 2014. Foreign exchange accounted for 5.75% to the 9.6% decline while net of foreign exchange sales were down 3.9%. Non-GAAP net income was $11.3 million, or $0.43 per diluted share compared with $12.2 million or $0.45 last year. A cash flow operation was very strong, free cash flow for the quarter was $28 million, part of which we used to repurchase more than $6 million of Altra stock. We also amended and extended our credit facility during the quarter, which provides us with increase liquidity, additional flexibility and better pricing. Christian will provide details in a moment. Now please turn to Slide 3. We realigned our operating segments during the quarter. This change better aligns the businesses across the end market we serve which we expect will improve cross selling and help with facility consolidations. Now please turn to Slide 4. While the global outlook remains mixed, we expect the softness in our agriculture, oil and gas, mining and metals end market to continue for some time. As many OEM in these sectors are beginning to implement restructuring and cost reduction program. In addition, we started to see weakness in some sectors that previously had not been affected. In the industrial distribution channel which is predominately made of sales of aftermarket parts and original equipment parts for small OEM. Revenues were down significantly year-over-year primarily due to continued erosion and demand for OEM in our oil and gas and metals market. Turf and Garden continue to be our leading market. Sales were up sharply from a year ago on a strong domestic housing market and favorable weather conditions. We continue to expect this market to do well based on solid housing demand forecast. Agriculture was still quite weak during the quarter and down significantly year-over-year. Low commodity prices and the strong dollar continue to negatively affect US exports. In addition, two strong organic programs introduced last year are running at lower levels. Transportation was essentially flat from a year ago and is off slightly year-to-date. Automotive sales continue to be soft as a result of timing issues at a major automotive manufacture. Marine sales were down slightly, well increase revenues from rail partly offset the decline. In material handling, sales continue to worsen as expected and were down substantially from a year ago. Demand in forklifts was essentially unchanged while elevators were down primarily on currency translation. Demand for conveyors this week due to decline in the export market. Turning to the energy. Energy overall was down significantly from a year ago and off modestly on a sequential basis. Year-to-date oil and gas has performed above as we expected at the start of the year. Alternative energy led by wind was up slightly both year-over-year and sequentially. Meanwhile power generation revenue was down modestly from a year ago. Demand in the metals market weakens during the quarter and was off substantially from the third quarter a year ago. Slower growth in China and consequently increase steel export from China continue to weigh on this market. Mining continue to be weak and was down year-over-year. Sales increased slightly from the second quarter but view this is anomaly in a contact to the overall downward trend in this market. Finally, sales in aerospace and declined modestly during the quarter compared with the third quarter a year ago. We still expect this market to be essentially flat for the full year. In terms of geography excluding the effect of foreign exchange, North America and Europe were down from a year ago, while sales in Asia and in other geographies were up nicely. The outlook for the global economy remained mixed and we are still cautious on Europe. Meanwhile the domestic US outlook appears to have softened, and the outlook for China remains uncertain. Now I'll turn the call over to Christian and then close with the discussion of our strategic initiative and a brief summary. Christian?

[Christian Storch:]

Thank you, Carl. And good morning, everyone. Please turn to Slide 5. Altra delivered a good quarter despite top line decline of nearly 10% year-over-year. We delivered expansion of our gross profit margin on a non-GAAP basis and operating income margin as well as strong free cash flow. The top line results continue to be negatively impacted by foreign exchange rate headwinds in a very challenging industrial economy around the globe. The 80 basis points increase in the non-GAAP gross profit margin that Carl discussed excludes a $2.1 million warranty expense as a result of quality issues related to a defective component. That expense resulted in an increase in cost of good sold, however, we are pursuing multiple avenues to recover these expenses although there can be no assurance of that these efforts will be successful. Looking at the top line, foreign exchange rates had a negative impact of approximately 570 basis points driven by continued strength of the U.S. dollar while price added 80 basis points despite a challenging pricing environment. Volume declined 470 basis points and net of foreign exchange sales declined 3.9% year-over-year. Geographically excluding the effect of foreign exchange, North American revenues declined 7% while European revenues were down 3% year-over-year. Sales to Asia Pacific and other geographies increased 13%. Interest expense was essentially unchanged from the prior year at $2.9 million. We recorded a tax rate of 21.7% during the quarter. As you can see in the non-GAAP table we provided in our earnings release, we recorded a $900,000 tax benefit related to the foreign tax reorganization we completed during the third quarter last year. Excluding discrete items, we recorded a tax rate of 29.6% during the quarter. Please turn to Slide 6 for discussion of our segment performance. Beginning with the third quarter we realigned our three business segments as part of our business simplification efforts. Going forward, our three segments are Coupling, Clutches and Brakes or CCB, Electromagnetic Clutches and Brakes or ECB and Gearing which include bearings. These new structures better aligned across Altra's end market and will better facilitate the company's strategic initiatives for growth procurement and facility consolidation. For the third quarter of 2015, the net sales in CCB segment were $85.8 million compared with a $100.4 million in the year ago quarter. The decrease was primarily the result of declines in the agriculture, oil and gas and mining market. Segment operating income was $8.9 million versus $13.1 million a year ago. Net sales in the ECB segment were $50.4 million compared with $49.8 million in third quarter of last year. The segment performed well as a result of continues strength in turf and garden and elevator sales as well as low exposure to the oil and gas and mining end markets. Segment operating incomes increased $700,000 as a result of four mentioned items. Finally, net sales in Gearing segment were $48.8 million compared with $54 million in the year ago quarter primarily due to weakness in North American distribution and FX headwinds. As a result, segment operating income declined $400,000. During the quarter, the average price of the company's common stock did not exceed the current per share conversion price of the company’s convertible notes as a result the notes were dilutive to earnings. Please turn to Slide 7. Yesterday, we amended and extended our revolving credit facility which provides us with increased liquidity and better pricing as we continue to manage all cost areas efficiently for the benefit of our shareholders. We extended the term of the facility by two years to the fourth quarter of 2020; we used the interest rate by -- in our current leverage profile and increase borrowing capacity under the revolver to $350 million. We also eliminated the associated term loan. Our balance sheet remains strong with equity was almost $250 million, now cash balance was $49.6 million. Net debt declined by nearly $22 million over the last 12 months. Please turn to Slide 8. The restructuring and cost reduction initiatives we implemented earlier this year contributed to the company's robust operating and free cash flow performance for the quarter. For the quarter, Altra generated impressive free cash flow of $28 million and had a cash conversion rate of 275%, year-to-date we generated $44 million of free cash flow roughly two thirds of that during the third quarter alone. During the quarter, we repurchased 250,000 shares of Altra stock for total of $6 million under $50 million stock buyback program that expires at the end of 2016. Since the program's inception last year, we have purchased approximately $31.9 million or 1, 90,000 shares. We are active in the market and we will continue to repurchase Altra shares from time to time as market conditions want. Capital investments during the quarter totaled $5.7 million and depreciation and amortization was $7.5 million. Please turn to Slide 9 and our full year guidance for 2015. As we look ahead, we see increase challenges for our industrial businesses. While the FX headwinds are likely to decline, we expect our North American distribution business to weaken and also expect weaker business investments and CapEx spending in a number of low end markets. We therefore adjust our forecast and now expect sales in the range of $745 million to $755 million. The company is also narrowing its non-GAAP diluted EPS guidance to the range of $1.60 to $1.68 for 2015. We now expect the tax rate for the full year to be approximately 29% to 31% before discrete items. Altra also expects capital expenditures in the range of $24 million to $26 million and depreciation and amortization in the range of $30 million to $31 million. With that I'll turn the discussion back to Carl.

[Carl Christenson:]

Thank you, Christian. And please turn to Slide 10 for some closing thoughts. Global economic and market weakness that began last year has continue through the first nine months of 2015. In response as these conditions persist, we are managing the business to the level of end market demand we are seeing. At the beginning of the year, we announced significant European restructuring and cost reduction initiatives and those efforts have provided a substantial boost to profit margin despite the overall decline in our sales .These initiatives include the Bauer profit improvement plan which really has taken hold as the year has progressed. As a result, Bauer has gained significant traction at the bottom line. In addition, we continue to see nice results from our strategic pricing initiative. However, the pricing environment is extremely challenging and we expect the contributions from normal annual price increases to be low. We continue to make progress on our business simplification plan which we designed to make substantial progress towards our goal of 15% operating margin by the end of 2018. The first three facility consolidation under the plan is well underway and we expect them to be substantially completed during the first quarter of next year. We plan to initiate a four consolidation during our first quarter as well. We have also started several initiatives related to our supply chain improvement program we announced as part of the plan. It is still very early in that effort, and we expect to provide additional updates when we speak again next year. We are excited about the bottom line improvement we've achieved this year and we look forward to additional opportunities we have to improve margins under the business simplification plan as we move into 2016. We are executing extremely well in a very challenging end market and global economic environment. Thanks for your continued support of Altra. And we will now open the call to your questions. Rob?

[Operator:]

[Operator Instructions] Thank you. Our first question is from the line of Matt Duncan with Stephens. Please go ahead with your questions.

[Matt Duncan:]

Good morning, guys. So I was hoping you can maybe give us a little inside Carl under what the order trends are looking like right now. You mentioned that you got some end markets that are getting softer that you previously had not seen weakening so what markets are those and what's the order book looking like?

[Carl Christenson:]

Yes. I think it is similar to some of the other industrial companies that have been talking publicly and that through the quarter, through the third quarter it's softened some and the good news that it will lap some of the bad news at the beginning of 2016. But we did see softening some of its seasonal for us in the third quarter, but I think the surprise was probably the industrial distribution business kind of weakening a little bit through the quarter.

[Matt Duncan:]

Okay. Christian on the gross margin that the adjusted gross margin was obviously very strong this quarter 31.6% is that a number we can use going forward or was there something that you benefited from this quarter that maybe you would cautious not to model like quite that high?

[Christian Storch:]

I would caution you particularly regarding the fourth quarter to not model at that high. What helped us was material cost reduction, we expect those to continue. We've been working very hard with our suppliers to get the benefits of commodity price declines, but we also had some businesses that performed very, very well. Our aerospace business saw some meaningful margin expansion during the quarter. Our wind business had a very good margin expansion. And one of our oil gas business saw some margin expansion despite a top line decline as we saw a shift from OEM to spare part and spare parts have significantly higher margins so we benefited from that mix change. Those performances -- performances of that business I wouldn't expect that they continue at that same rate. The material cost we should see continued help and the other thing we are not sure is on the pricing whether we continue to get 80 basis points a quarter as we get into a more and more challenging pricing environment.

[Matt Duncan:]

Okay. So something more similar to the gross margin level that you reported on actual basis, probably about where we ought to be then.

[Christian Storch:]

Yes. That's quite a loop, maybe yes.

[Matt Duncan:]

Okay. That helps. And last thing for me just if you could talk about cash priority is given that you are seeing some additional weakness in your end market. I assume M&A is probably a little bit difficult right now but how you are thinking about using cash between M&A, stock repurchases and debt pay down.

[Carl Christenson:]

Yes. That's right, Matt. I think a couple of things are impacting the M&A world, the primarily with these big end markets being down and things trending lower and if you are good company with good margins and don't have to sell, why would sell when things are looking worse. I would wait for things to get better. So we don't expect to have a really robust pipeline right now. Obviously, there will be some private equity firms that may want to exit a business or something happening that, I wouldn't completely ruled it out. But certainly is challenging so our priority -- number one priority is to invest in the business. We are going to the consolidations and as we go through and review the equipment that we are moving and what we are going to put into the expanded facilities, we may do some upgrade there, certainly we do still have some new projects that we are working on. So tooling and new product development would be high priority for us. And then returning share -- cash to our shareholders so that they can reinvest it. That's -- that would be other priority.

[Operator:]

Our next question is from Jeff Hammond with KeyBanc Capital Markets. Please go ahead with your question.

[Jeff Hammond:]

Hey, good morning, guys. So you talked about softening industrial distribution. What are they telling you about inventory levels and what are they doing in terms destocking, if that's occurring and how long it continues.

[Carl Christenson:]

Yes. So for us Jeff I think we've done I think a very good job with lean and so we are on time delivery performance and lead times are in pretty good shape. And over the years since 2009 when they went through a big destocking, they haven't built a lot of inventory back on our products. So what we are hearing is that they -- maybe some modest declines in inventory and we also get numbers from some of our larger distributors on sell-through of our product and their stocking levels. And it doesn't look like there has been a significant destocking on our products. I think that may not be true across their whole product range. And I think that they are probably at some places where they will be terming some inventory as possibly but I think in our components we are okay. I was just going to add on to that in the -- there are lots of cases though where we aren't seeing demand for after market products because they are cannibalizing equipment out in the field in the oil and gas fields and then the mining industry. They are doing a lot of cannibalization. So that's one place we are probably seeing a little bit of -- I guess you can call inventory. But some depletion of components as they have taken rigs and equipment offline and using those parts, those pieces of equipments for products.

[Jeff Hammond:]

Okay. And then just back to price cost. Can you give us a sense of how much the margin improvement was in lower material cost and then as you think about price into next year is it just getting difficult from the standpoint of a normal course of business price increase or some of the strategic pricing initiatives also getting more difficult?

[Carl Christenson:]

So we have completed the strategic price initiative at several of our businesses and so we are going into round two there. So that will be and probably little lower value as we get into the second step from the first step. And some of the businesses we did first had higher opportunities I guess than strategic pricing. So it's getting more difficult or also getting better at it. So we still expect to get the 50 basis points a year. We over achieved probably at the beginning but I believe we still get that 50 basis points on strategic pricing. I think when we look at the normal price increases, annual price increases that is getting harder, our OEM are certainly pushing back and relation of commodity costs are down. But there are still opportunities and this is a very rational industry so I think that there some opportunity but it will be less than it has been in parts on normal price increase side.

[Jeff Hammond:]

And then just as a follow up on that on the cost side. How much of your margin improvement would you attribute to the lower material cost?

[Carl Christenson:]

Well 30 basis points.

[Operator:]

Our next question is from the line of John Franzreb with Sidoti & Company. Please go ahead with your question.

[John Franzreb:]

Good morning, guys. Can you just walk us through the decision to rebalance the segments again?

[Christian Storch:]

Yes, so we had a realignment of our management team where we now previously we had five division presidents and we use that number tooth and as we were realigning the management team, we realigned the responsibilities of these --through presidents, the SEC reporting requirements are such that your segment essentially follows your management structure which cause us then to realign the external reporting segments. The realignment was driven by better aligning of end markets to these three division, the oil and gas, the mining exposure is mainly in the CCB business now, the others have some exposure but the biggest piece is now concentrated in that division. The other intension was to get the majority of the consolidations inside of these platforms. In other words if I can saw shut down a plant and I consolidate into another, in the majority of the cases this will be inside of one division which will make the execution much smoother going forward.

[John Franzreb:]

That's actually perfect said, delves into my next question. So the restructuring actions you announced last quarter, it sounds like now they are going to be mostly concentrated in CCB. Two things, is that true? And secondly are you still on target for that $50 million savings by 2018? Can you kind of timeline as we stand on that?

[Christian Storch:]

That is true. It is mainly in CCB although there will be some activity in ECB and in gearing but on a smaller scale compared to CCB. And we are on track the first three that we announced, these are smaller one, will be completed in the first quarter, all these moves will be complete in the first quarter. And we as Carl mentioned in his prepared remarks, we have made a decision relative to a four consolidation which we will announce internally in the first quarter.

[John Franzreb:]

Okay. And one last question. The healthcare cost that were vain on the profit profile last year. Can you bring us up to speed where we are in 2015? How much of headwind or tailwind that was in the quarter and year-to-date?

[Christian Storch:]

Year-to-date about $400,000 savings, $200,000 of that in the third quarter. That's about 4% reduction and keeps in mind that healths per cost are trending up year-over-year about 8%. So on a constant dollar basis so to speak were down 12%.

[Operator:]

[Operator Instructions] Our next question is from the line of Rupinder Bora with Jefferies. Please go ahead with your questions.

[Rupinder Bora:]

Hey, good morning, guys. Just a question for Christian on the pricing. I believe you said like 80 basis points. How much of that is strategic pricing in the quarter?

[Christian Storch:]

It's hard for us to tell. I would say that the majority, vast majority of that is strategic pricing because right now it is very, very difficult to get what we consider to be normal price increases.

[Rupinder Bora:]

Okay. And yes because I think Carl was talking about it is difficult to get normal pricing so going forward I think this 80 bips which is apply to, I don't know how much is -- that's apply over what percentage of the total revenue right now? I think its tatter but like one third initially and where we are right now.

[Christian Storch:]

So that 80 basis points relates to the entire sales of $183 million in a quarter. But typically as we stated in the past once we -- when we do an analysis at a business unit, typically we see opportunities for somewhere between 200 and 400 basis points on 60% of the revenues of that business unit.

[Rupinder Bora:]

Okay. And can you give us some updates on Bauer like where that business is now in terms of margin? I've heard like on other conference call talking about Europe being stable as you said Europe was down I believe down 3% but kind of more stable than actually a year or two years back. So just give us some perspective on that.

[Christian Storch:]

Bauer had a very good quarter. The best quarter since we own that business which we bought in 2011. The operating income came in at 9.5%. That is not sustainable, the fourth quarter is going to be lower given the holidays in December where the business shutdown for almost two weeks. But year-to-date they are both 700 basis plus and 7% operating income which is up 200 basis points from the prior year. So we are very encouraged about the positive trends that are coming out of Bauer. See some modest top line growth at Bauer. That has helped but the majority of the improvement is coming from cost reductions, the restructuring that the business did early in the year as well as other cost reduction efforts.

[Rupinder Bora:]

Okay. You said modest top line growth so are there any end markets where they sell -- do you see some positive end markets like how that top line is growing like where are they getting growth from?

[Carl Christenson:]

Yes. It's really across the board under and some initiative that they have been working on for quite a while. So it isn't any one specific end market. It is pretty broad based.

[Rupinder Bora:]

Is export to China or like Asia a part of that business? Are they -- do they depend or they do any exports?

[Carl Christenson:]

Yes, and we actually have an assembly operation for Bauer in China and that business is actually off this year. Now there is some of that is tied to construction in China and that's off, some of it's tied to steel, that's off, so some of the end markets in China that they serve are weak.

[Christian Storch:]

It's geographic. Russia is flat for Bauer, China is down as Carl mentioned. So we've seen some growth in Europe and some growth in North America for Bauer. And in Europe, we've seen some improvements in countries like Spain and Portugal. We've seen some --

[Carl Christenson:]

Germany

[Christian Storch:]

As well as in North America.

[Operator:]

Thank you. Our next question is from the line of Jeff Hammond with KeyBanc Capital Markets. Please go ahead with your questions.

[Jeff Hammond:]

Hey, guys. Just a quick follow up on the restructuring and realignment. Can you just maybe talk about as you look into 2016, what kind of incremental cost savings you've been able to quantify from the actions you have already taken or what you think that number is?

[Carl Christenson:]

Yes. I'll give my opinion first. So we believe it is going to be relatively small in 2016, Jeff, as we get these facilities moved into the new facility. You have to go through a learning curve and the productivity back to where it was before you moved it from the other location. So we might see a little benefit in the back half of 2016, but I think it's going to be 2017 before we really see the -- those benefits start to flow through.

[Christian Storch:]

For the first three we are targeting cost reduction of $1.6 million. Now that -- we will complete these consolidations in the first quarter but in the receiving end needs to come with the same productivity levels as the sending in. And that may take a couple of three quarters. We don't know but past experience shows us they are not going to be producing at the same productivity level out of the gate. But once we are back at those productivity levels we estimating about $1.6 million out of the first three which are small. The fourth one which we are going to announce internally in the fourth quarter is larger. And those benefits we probably won't see till 2017.

[Carl Christenson:]

I'd just add that in the most recent review we did the -- what we had for initial plans and what's been confirmed as we were going through more details it has confirmed our assumptions on a savings so we are very confident that we will be able to achieve those savings.

[Jeff Hammond:]

Okay. And then just from a top line perspective looking into 2016, I think you mentioned some of those commodity driven markets just starting to be challenged or continue to be challenged. Just kind of as you peek into 2016 I mean what are the prospects that you start to see some organic growth?

[Carl Christenson:]

Yes, we didn't give guidance for 2016 yet. But we do think those markets are going to continue to be challenged. Some of our large customers are just announcing restructuring plan. The rig count if you look at, the way we look at so the rig counts are going to continue to decline into mid 2016 and so we think some of those markets are going to continue to be extremely challenged. So our focus is internally how do we get these consolidations done as fast as possible so when things do recover we are ready to go.

[Operator:]

Our next question is from the line of John Franzreb with Sidoti & Company. Please go ahead with your questions.

[John Franzreb:]

I guess a first question is with distribution being what is most surprised about recent and near term, should we be rethinking the margin profile with that business being off, caught surprisingly so or you think it would be stabilize and from this point going forward.

[Christian Storch:]

Yes, I don't think so John. I think there are some upsides in the aftermarket parts of the business. We got -- as people run out of machine to cannibalize in some of our big end markets, we get some more aftermarket parts, one of the reasons that the rest of the world was up for us was a big aftermarket parts order we got for Chile and so I don't think we will see a significant on the margin profile of the business. And I think overall the after market parts will help offset some of that.

[John Franzreb:]

Okay, that's comforting. And slide presentation you mentioned that the SAP is going to have next phase in the second half of 2016. What is that next phase? Is there any incremental cost associated with it?

[Christian Storch:]

Yes, we are going to see incremental cost associated with but they are not going to -- they are going to be significantly be lower what we have done in past. And what is left to do is we acquired Svendborg since some point we need to convert Svendborg to SAP. We get three more locations in North America that we need to convert. And we want to bring the Bauer SAP instance on the Altra SAP instance which is a smaller project. So significantly lower run rate than what we had in the past. In the past we said a $1 million a quarter. I think this will be small enough that we probably might not even call them out.

[Operator:]

Thank you. Mr. Christenson, there are no further questions at this time. Would you like to make any closing remarks?

[Carl Christenson:]

Yes, thank you, Rob. And thanks to everyone for joining us this morning. We look forward to speaking with many of you at the Stephens Conference in New York on November 10 and/ or at the Baird Conference in Chicago on November 11. I hope you have a wonderful weekend. Thanks for joining us.

[Operator:]

This concludes today's teleconference. Thank you for your participation. You may now disconnect your lines at this time.