ATI Inc.
Q1 2011 Earnings Call Transcript

Published: 27 Apr 2011

[Operator:]

Good day, ladies and gentlemen, and welcome to the First Quarter 2011 Allegheny Technologies Earnings Conference Call. My name is Keisha, and I'll be your operator for today. [Operator Instructions] I will now like to hand the conference over to Mr. Dan Greenfield, Senior Director of Investor Relations and Corporate Communications. Please proceed.

[Dan Greenfield:]

Thank you, Keisha, and good afternoon and welcome to the Allegheny Technologies earnings conference call for the first quarter 2011. This conference call is being broadcast on our website at www.atimetals.com. Members of the media have been invited to listen to this call. Participating in the call today are Pat Hassey, Chairman and Chief Executive Officer; Rich Harshman, President and Chief Operating Officer; and Dale Reid, Senior Vice President, Finance and Principal Financial Officer. All references to net income and earnings in this conference call mean net income and earnings attributable to ATI. Comments on expectations for 2011 and beyond do not included any impact from our pending acquisition of Ladish. In addition, as I am sure you'll appreciate, we cannot comment or entertain questions regarding Ladish, as the acquisition is not yet complete. After some initial comments, we will ask for questions. [Operator Instructions] Please note that all forward-looking statements this afternoon are subject to various assumptions and caveats as noted in the earnings release. Actual results may differ materially. Here is Pat Hassey.

[L. Hassey:]

Thanks, Dan, and thanks to everyone for joining today's call. I've said that 2010 was the transition year and 2011 would be the year when strong secular growth resumes. We're off to a great start. Sales increased 36% to $1.23 billion, putting ATI on track to return the company with over $5 billion in sales. Segment operating profit increased nearly 85% to $162 million, which is 13.2% of sales. Earnings per share were $0.54 including $0.05 of special charges. This represents the highest quarterly percentage 2008. Our key global markets are strong and represent 70% of ATI first quarter sales. At 25% of first quarter revenue, aerospace and defense sales grew 33%, compared to the same period last year. At 23% of first quarter revenue, sales to the oil and gas/chemical process industry grew 51% compared to the first quarter of 2010, and also grew by 400 basis points to 23% of total sales, up from 19% of sales for the full year. Electrical energy market represented 16% of ATI first quarter sales. At 6% of first quarter sales, medical was once again our fastest-growing market. This market more than doubled since the first quarter of last year. Historically, the medical market has run at about 4% of sales across the business cycles. There is a real change here, demonstrating differentiation and the quality of ATI-produced products. Orders continue to be strong in the first quarter. Backlog in our High Performance Metals segment at the end of the first quarter is approaching levels reached in early 2007 and 2008. As a result of the major project wins, we also have a solid backlog for 2011 in our Flat-Rolled Products segment. Market strength, along with ATI's improved capabilities and expanded capacities, give me confidence in our beliefs that strong secular growth resumes in 2011. 2012 will be better than 2011, and 2013 is shaping up to far better than 2012. This extraordinary time in the specialty metals business -- this is an extraordinary time in the specialty metals business. It is the beginning of a period of sustained growth unlike anything I've seen in my 40-plus years. ATI is now very well-positioned for the future and for profitable growth. As you know, I will retire after our annual meeting. This is the right time for the change. I am confident that Rich Harshman is the right person for the job. Rich and I have been working together for nearly 8 years, developing and implementing ATI strategies for profitable growth. We have on outstanding team in place to support Rich. I'm confident that under Rich's leadership, ATI can continue the transformation that we started in 2004 and take ATI to new levels of performance. Before I turn the call over to Rich, let me just say how much I've enjoyed my time leading ATI. I've enjoyed the many conversations that I've had with you, our investors and our analysts. I particularly liked those of you who questioned our strategies and our theories. Good management must be open to opinions that test our thinking. You required us to be more thoughtful and to look at our positions from every perspective. ATI is a better company because of you. My personal thanks. Now here is Rich Harshman.

[Richard Harshman:]

Thank you, Pat. We are optimistic that 2011 will indeed be the year in when strong secular growth resumes for ATI. This optimism is supported by our performance in the first quarter. It is important to note that while are focused on our four key global markets, 48% of our first quarter 2011 revenue came from our 2 largest markets

[Operator:]

[Operator Instructions] Your first question comes from the line of Steve Levenson with Stifel.

[Stephen Levenson:]

Question about armor. You didn't really talk about armor, but there was a recent contract announced for strike shields for Stryker vehicles. And there's also been some news about funds shifted to recapitalizing the Army's existing fleet of Humvees, particularly to add a "v-hole" to the bottom. What do you see as the opportunities for Allegheny there?

[Richard Harshman:]

Yes. We're still optimistic about armor, even in light of the defense spending. There's still going to be a lot of defense spending going on, maybe not so much in some of the new programs as in some of the retrofits, at least, near-term. We have a tremendous amount of activity going on with a number of the primes dealing with a number of the alloy systems that we make, including ATI 425, including some of the high-hard steel armors that we make, as well as 6-4, ATI 6-4 titanium plate. The other -- so we share the optimism there in terms of armor applications going forward. The other thing that we're looking forward to is the completion of our Fabricated Components business outside of Chicago, where we're putting in some manufacturing capability that's really value-add, to do some fabricated components out of the mill products that we make from a value-add standpoint. And that -- we expect that facility to be online and up and running by early third quarter, perhaps even late second quarter of this year. So this is -- we share the optimism in the armor side. The process there is a little bit longer because of qualification and the customers are really looking at a wide variety of designs to meet the missions that the U.S. DoD is looking for.

[Stephen Levenson:]

Second question is, can you tell us what the lead times are for titanium and nickel-based alloys, please?

[L. Hassey:]

Well, nickel-based alloys lead times are longer than titanium. We're now booking past the third quarter for nickel and in some product forms for titanium. Our focus on both of those products are for more of the value-added products as opposed to ingot. And the second quarter is booked in a very good position. The third quarter is filling up very nicely, and in some cases, based on the product form, we could be out into the fourth quarter.

[Operator:]

The next question comes from the line of Gautam Khanna with Cowen & Company.

[Gautam Khanna:]

A couple of questions. First on the high-performance nickel shipments in the quarter, very strong sequentially year-over-year kind of anyway you cut it. I was wondering was there anything, any sort of timing slip from Q4 that explains the strength? Or do you expect this to be kind of the baseload going forward?

[Richard Harshman:]

No, there's no timing slip from Q4. We expect this to be the kind of volume demand going forward. Typically and historically, what we've seen is that the nickel strength in a recovering market, in growing market in the aerospace side leads titanium. We are seeing that, so it's not unusual and we expect that to continue. But also in addition to aero engine, there's a significant utilization of nickel alloys in the oil and gas and the chemical process industry, both in terms of high-value, the High Performance Product forms that we make, but also the Flat-Rolled Product forms.

[Gautam Khanna:]

Okay. And may I also ask just on the comment regarding pricing and sort of the base pricing trend. We so the LVAC [ph] surcharges for Q2. Should we think about titanium and nickel surcharges, let alone the base prices, moving up in Q2 and beyond? I mean it looked like fairly healthy step up on the various titanium product forms as well as the specialty steels and nickel superalloys just on surcharge. And obviously because you're vertically integrated on titanium, that's a double benefit.

[Richard Harshman:]

Yes. As I said, I think that pricing will continue with the assumption that what we see in these markets in terms of secular growth, that we would expect to see pricing continue to increase throughout 2011.

[Gautam Khanna:]

I was just wondering if there's something with mix that would actually blend the average ASP.

[L. Hassey:]

Well, there always is. As you know, we're pretty mix-sensitive, and when you look at both nickel and titanium -- and when we drive the business into the higher-value product forms away from the lower-value ingot product forms, you will see that. But across the board, I think we're seeing pricing strength.

[Gautam Khanna:]

Okay. And lastly, you also made a comment early on about titanium raw materials, the bulk weldables, the sponge prices moving up. We also heard from one of the rutile ore producers that availability is somewhat constrained, of rutile ore, and their pricing is going up fairly dramatically. I mean how much of a function do you think the move in scrap and sponges reflects that? Or is that just an ancillary effect?

[Richard Harshman:]

Yes. I don't think the move necessarily in scrap, because we've been at the $7-a-pound rate here for 3 or 4 months on premium grade 6-4 prepared bulk weldable. On the sponge side, especially in China, but more globally on sponge, if you didn't have a supply agreement for titanium sponge for the kind of markets we're really focused on, you would have a tough time getting sponge, number one. Number two, on the comments about what we're hearing out of China. I think rutile has an impact to that, but the other thing that we are hearing is a shortage of titanium dioxide, and that leads into a shortage of pickle [ph]. So there's a wide variety of factors here. But fundamentally, it's really all driven off of a strong demand across the end markets for titanium and titanium alloy products, from industrial to aerospace to medical, et cetera.

[Gautam Khanna:]

May I ask a last one on fasteners. Just, have you secured any contracts with the fastener OEMs yet?

[Richard Harshman:]

We are selling fasteners, yes. We're selling [indiscernible], I should say.

[Operator:]

And your next question comes from the line comes from the line of Sal Tharani with Goldman Sachs.

[Sal Tharani:]

I wanted to ask a question on Flat-Rolled Products. You have -- for the past, you've said that the direct shipments were 31%. Can you tell us which of the products are the ones which contribute to the international sales in the FRP division?

[L. Hassey:]

Yes. I mean we sell virtually all of our product alloy systems and product forms internationally. We sell stainless sheet. Clearly some of the high-value products, all of the high-value products, from nickel alloys and specialty alloys in plate and sheet form to titanium, CP titanium through the Uniti joint venture and titanium alloys in plate and sheet form, precision-rolled strip and engineered strip is a significant -- the international, the non-US market is a significant market for those products. So everything we make we look at -- and grain-oriented electrical steel as well. There are some export opportunities there. But we look at the market for all these products as being global.

[Sal Tharani:]

And then can you quantify how much of your HPM goes direct from international? So do you have a given aggregate of that number?

[Richard Harshman:]

The high-performance metals? I don't know that we've -- it's north of 40%, I think, would be direct for high-performance metals. And that's all the product, that's titanium, that's nickel, that's specialty alloys, that's exotic alloys.

[Sal Tharani:]

And the last thing on backlog. You mentioned backlog has been growing. Can you quantify in terms of sort of how much percentage is it up on these HPM and FRPs since this fourth quarter?

[L. Hassey:]

Off the top, I don't know what percentage it would be up, but I think it would pretty much mirror -- when you look at sales compared to the fourth quarter, I think we're up about 18%. So 20% to 25% would be the rough range.

[Sal Tharani:]

And on your backlog, how long sort of do they extend? Into 3 months? 6 months? 12 months? Or over that?

[Richard Harshman:]

It depends. I mean in some cases, we'll -- we don't enter anything into the backlog unless we have a firm order with a specific delivery date. So even where we have a long-term supply agreement that extends more than 1 year out, typically, the deliveries get established on an annual basis. So the only thing that really goes into that backlog is where we have a firm delivery date, even though we may have a firm contract for that. So if anything, the backlog is understated.

[Operator:]

Your next question comes from the line of Mark Parr with KeyBanc.

[Mark Parr:]

I was asking a question just about base prices. And I was thinking about the previous peak of base prices was probably, what, late '07, maybe early '08?

[Richard Harshman:]

Yes, that's right.

[Mark Parr:]

And I was just wondering if you could give some color kind of where base prices are now compared to the previous peak.

[Richard Harshman:]

Well, I think the number would vary based upon what product you're talking about, but I think it's safe to say that nothing is at where the previous peak was. Everything is below that, from titanium to nickel to stainless to grain-oriented to exotic alloys. I think the prices have only recently, quite frankly, begun to recover. But I think that, in our view, that 2011 is the beginning of the recovery of base prices. We would expect, given the dynamics of the market, that '12 would be a substantial increase over '11, and '13 is probably where you get back to or closer to the base prices that we saw at the last peak of the cycle. And the other way we look at it is that we're certainly facilitized to have a higher volume in 2012 and '13 than we did before because of all the capital investments that we've made. We also have a lower cost structure because of all the costs that we've continued to take out. I'm talking variable costs, mainly things like depreciation expense will be higher because of all the investments that we've made. But I think when we look at base prices, if you want a generality, we think that there's opportunity for 25% to 30% more upside in base prices over the next couple of years.

[Mark Parr:]

Okay. That's very helpful.

[Operator:]

Your next question comes from the line of John Tumazos with John Tumazos Very Independent Research.

[John Tumazos:]

You've forecast 15% to 20% revenue growth for the full year 2011. The first quarter was 36%. Did you mean to forecast that the final 9 months of the year would be under 10% revenue growth to make that average out to 15% to 20%? Or did you exclude surcharges? Or could you tell us what the revenue growth for the final 9 months will be?

[Richard Harshman:]

No I think -- Yes. Well, I think that first of all, surcharges do have an impact. And to an extent, we think some of the raw material costs will moderate over the second half of the year. Maybe that won't happen, though we'll have to wait and see. I think that sitting here today, we -- in making that forecast we're looking at it on a year-over-year basis. The comps get harder as we go through the year because of the improving and rising sales throughout 2010. Having said that, I mean I would be disappointed if we weren't at the higher end of that 15% to 20% range, or perhaps even above it. And you heard Pat say that, and we recognize that, if you take our first quarter and annualize it, we're closer to $5 billion. So that number is going to be as big as we can make it.

[John Tumazos:]

What would you expect the volume growth to average for the balance of the year?

[Richard Harshman:]

Well, I think we had significant volume growth here in the first quarter on a year-over-year basis. I think even sequentially for most of the products, there were healthy volume growth in the high-single to low double-digit range. And I would expect that with these markets that we would continue to see that. I think some of the project business is obviously lumpier than the more traditional business. Having said that, the 3 big orders that I cited are really pretty much uniformly being delivered throughout 2011. So with those 3 large contracts, I mean, we've moved out some of the lumpiness of the project business that we've seen in the past. I think we still believe that on the aero engine side, the aero engine build rate is not necessarily supportive of the kind of OEM build rates that we're hearing from Boeing and Airbus. So I think we've said in the past that we would expect improving demand, and therefore increased volume, out of the aero engine side in the second half of 2011 compared to the first half, and I still think we believe that.

[Operator:]

Your next question comes from the line of Luke Somers with Plural.

[Luke Somers:]

Thanks for taking my call. Just a question, I mean it sounds like the trends are improving incrementally from Q4 to Q1, whether it relates to base price increases, lead times and even orders. I'm just curious how that compares to the 15% to 20% guidance. Is that kind of in line with your expectations? Is that coming in ahead?

[Richard Harshman:]

Yes. I think it's certainly towards the upper end.

[Operator:]

Your next question comes from the line of Brian Yu with Citi.

[Brian Yu:]

I'm going back to the guidance again from the previous 2 questions. If we just annualize first quarter, it seems like you're already at a 21% revenue type growth rate for the full year. Is there anything you're seeing that would lead you to believe that revenues are going to stay at these levels? Something with volumes or pricing? Or is that a conservative guidance?

[Richard Harshman:]

Well, I think our fundamental approach is to not be aggressive in guidance that we give. So as I said, we're trending towards the upper end of that range, and we're not going to let ourselves be range bound. Some of the impact that we're seeing here is from surcharges, but not all of them. I mean certainly, base prices are improving and only now beginning to improve. Volume is improved. The mix is more the way we like it. It's s a richer product mix. I think that in some of these end markets, not the real major ones that we would view as our key global oriented end markets, but there is some level of seasonality in some of the business, especially in the third quarter. When you look traditionally at stainless, when you look at the tungsten-based materials, have a trend to be stronger in the first half of the year than they are in the second half of the year. So there are some puts and takes on that, but I think we are clearly trending towards the upper end of the range, and I think we'll all be disappointed if we don't do better than that range.

[Brian Yu:]

Okay. And then my -- the second question is just on inventory cost and some LIFO-related. Last year, you had pretty strong results in the first half, then there's a catch-up adjustment in 3Q. If we assume that nickel prices stay where they are, can you provide us with any kind of comfort that there won't be a material catch-up adjustment later in the year?

[Richard Harshman:]

Well, I mean LIFO is driven by a lot of things, and we do the best job as we can of forecasting what we think that the fourth quarter is going to be. Not only from a pricing standpoint of all of these raw materials that use, but also a volume standpoint in terms of how much and what's the mix in inventory. We update it every quarter. We use the insights and the forecasts from a number of people who are on the call right now that spend even more time than we do looking at it and trying to forecast things like nickel and moly [molybdenum] and chrome and iron units and things like that. But I think historically, we've had a pretty good track record of -- it may not be exact every quarter because of the difficulty in forecasting, but our objective is to try to be realistic in terms of what we think it's going to be, and that's what we forecasted here in the first quarter. And we'll update that every quarter.

[Brian Yu:]

Is the Q1 average of $12 close to what you guys are thinking for the year?

[Richard Harshman:]

As I said, I think that our view and most of you, of the people who followed on the phone, is that there will be some moderation over the second half of the year in nickel. We share that view. I think when you go back and look at recent history over the past 5 years, nickel averages higher in the first half of the year than it does in the second half of the year. So those are the factors that we look at in the assumptions that we make.

[Operator:]

Your next question comes from the line of Dan Whalen with Capstone Investments.

[Daniel Whalen:]

It seems revenue is well on its way on the right trajectory here in terms of returning to peak levels. Can you talk a little bit in terms of the High Performance Metals margins, in terms of when they can start approaching? Maybe they don't return to peak levels, but if you can kind of give some color in terms of where you guys think they can get back to.

[Richard Harshman:]

Yes. I mean, I think with the caveat that the last cycle, when Pat and I were asked this question, I mean, we gave a range, and we ended up beating it quite a bit. And then we said that the time that we'll do as good as we can possibly do for our shareholders. And we have that same approach now. I think that when you look at High Performance Metals and you really look at the drivers and the markets that it serves and the capacity that we have today and will have with the completion of the fourth pan furnace in July of this year, that -- and I'll set even Ladish aside obviously, because there is a different dynamic and benefit that we obtain there in our view. I think that there's a lot of opportunities to have segment operating profit margins in High Performance that starts with a 3. And both in terms of products, in terms of base price improvement, in terms of increased volume. Because with increased volume, we're not increasing our fixed cost structure at the same rate that we're increasing sales. So I think there's certainly upside in the High Performance Metal segment.

[Daniel Whalen:]

Sure. Would it be fair to assume that your earnings return to peak levels before your HPM margins return to peak levels?

[Richard Harshman:]

Well, maybe. I mean I think that when we look at earnings -- I mean, we are looking at earnings, just to be clear, from an EPS standpoint. Because that, in our view, is really the ultimate driver of shareholder value. I mean I know some people look at EBITDA and returning to EBITDA levels that they were at the last peak. If all we did was return to EBITDA levels of the last peak, we wouldn't be happy because we've been growing and we've been investing in the business and we've been making acquisitions. And therefore, the depreciation is higher and the interest expense is higher. So our focus is going to be on driving the business back to those peak earning level in the 2007 timeframe.

[Daniel Whalen:]

Okay. All right. Great. Thank you very much for the color.

[Operator:]

[Operator Instructions] Your next question comes from the line of Dave Martin with Deutsche Bank.

[David Martin:]

I wanted to come back to the outlook one more time. I think clearly, the most important item in here is the margins you can achieve in the High Performance business this year or towards the end of the year. Rich, your comments on 30-plus-percent margins, which you just made, I'm just curious whether you think that's achievable in the back half of the year or towards year end, simply because I think to get to some of your EBIT margin guidance, you're basically implying that, that's achievable this year.

[Richard Harshman:]

I don't know that I would agree with that. I think that when we look at Flat-Rolled Products at 9%. That's not where we need to be or we want to be on the Flat-Rolled Product side. So that's not something that we're going to consider to be some success in 2011. I think, clearly, we believe that the segment margin for High Performance Metals will continue to improve throughout 2011. One of the things that we don't expect to have every quarter is $6 million of startup costs in Raleigh as we ramp that up. I would expect that, that number would be cut in half in the second quarter. And if not, be completely gone in the third quarter, certainly be cut in half again if not more. And then in the fourth quarter, we're not expecting any startup because we're expecting to be running at an annualized rate approaching 20 million pounds. So whether we can be at 30% in the fourth quarter on average, I don't know. If we can, we will. I don't think not achieving that is a negative impact on the guidance that we've given, because I think we look at all of these businesses and believe that there are opportunities to improve all of them.

[David Martin:]

Okay. And then secondly, just some quick questions on one-off costs, if you will. Startup costs, I think you said down 50% in the second quarter. Are you still expecting $20 million for the year? And then secondly, what would have been the Ladish costs in the first quarter?

[L. Hassey:]

Maybe about $1 million.

[Richard Harshman:]

Not a lot. The bigger issue is the second, but I -- back to your question about $20 million, I mean just looking at the idle facility and startup cost, there's about $4 million a quarter that's associated with the warm idling of the Albany sponge operations. That will continue unless we restart it in 2011, and that's not currently in our thought possess. And about $3 million of that $4 million is depreciation expense. The rest of it is largely focused on Raleigh, and I think it cuts the second half, second quarter in half from the first quarter. And cut it again in half in the third quarter, and then nothing in the fourth quarter. So that gives you a view in terms of how we would view startup and idle facility costs for the year.

[Operator:]

Your next question is a follow-up from the line of Gautam Khanna from Cowen and Company.

[Gautam Khanna:]

Rich, two questions. One, I think I've asked it before, but perhaps you can give us some color on it this time, which is when you talk about kind of the LVAC [ph] surcharges, how should we think -- like, what percentage of the current base of business at high-performance nickel and titanium are subjected to quarterly surcharges versus kind of spot-related transactions and/or long-term agreements where the prices are indexed, maybe, annually or some other way?

[Richard Harshman:]

I don't think -- most of that business is -- first of all, the transaction business is just what it is, I mean it's a transaction business, so if we sell it in the second quarter into transaction business, it will basically reflect the same kind of surcharges that the LTAs have. And then the LTAs, each one is a little bit different, but for the most part, those are quarterly adjustments, they're not annual adjustments.

[Gautam Khanna:]

I mean, should we think the vast majority of that business is subjected to quarterly or near-realtime surcharges?

[Richard Harshman:]

Yes. Certainly, on the aero engine side, that's absolutely true. On the titanium side for the airframe for Boeing, that's not necessarily the case. The surcharge component of that is very small, and it only pertains to the master alloy that gets added to make the 6-4 titanium. Everything else is fixed.

[Gautam Khanna:]

Okay. And just to maybe help quantify what you were saying regarding the kind of the peak earnings trajectory of the company, given the lower cost structure, the potential for base prices to improve 25% to 35% through the cycle and clearly higher levels of demand. Do you anticipate that you'll -- do you have a sense for where the business, given the capacity, given everything else, can go relative to peak earnings? I mean are we talking $9? Are we talking $7? I just wanted -- because when you talked about it in relation to the last peak, that was $7.26.

[Richard Harshman:]

Right, so $7.26. It'll be as high as we can get it is probably the best way for me to answer that. We are not going to be range-bound. We're obviously respectful of the relationships with customers. And how you get there is in a lot of different ways. I mean there's a focus on cost, there's a focus on rich product mix, there's a focus on new products, there's a focus on different markets. And I think we've been saying, for the last several years, that it won't be the same recipe as it was in '06 and '07. It's a different approach, it's a different market, but we certainly believe that it's achievable.

[Gautam Khanna:]

I agree. I guess what I'm asking, though, is you have added capacity. I understand the mix will be different. The business does look different from the last cycle. But given just kind of return on the capacity you've put in place, should it be higher than what we did? Obviously, we had some...

[Richard Harshman:]

I mean you know me and Pat well enough to know that we won't be happy if all we do is achieve the same things that we did in the past because to your point, we have invested a lot of money in these capabilities to generate returns and to create value for our shareholders. So do I expect it to be higher? Yes.

[Operator:]

There are no further questions in queue at this time. I will now like to hand the conference back over to Mr. Rich Harshman for any closing comments.

[Richard Harshman:]

As always, thank you very much for joining us today, and thank you for your continuing interest and support of ATI. This is a day of mixed emotions for me and really for all of us at ATI. As you know, Pat Hassey has announced his retirement effective May 1. Pat has been our inspirational and visionary leader for over 7 years. He is quite simply the best person I have ever worked for and with. I think that it's the goal of every CEO to leave his or her company in a better position than when they became CEO, and Pat has certainly accomplished this at ATI. Pat has agreed to continue to provide his unique insights to ATI for the next couple of years as a senior adviser to me, and I welcome that very much. And I promised him I'll be respectful of his time and Marcia's time as well. On behalf of ATI's Board of Directors, ATI's management and all the employees of ATI, I would like to thank Pat for his leadership and for leaving ATI in a strong position for the future. On a personal note, I would like to thank Pat for his guidance and support, but most importantly for his friendship, which I know will continue. Pat, we wish you and Marcia well in your retirement.

[Dan Greenfield:]

Thanks, Rich, and thanks to all of our listeners for joining us today. That concludes our conference call.

[Operator:]

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect your lines. Good day.