Invacare Corporation
Q3 2010 Earnings Call Transcript

Published: 30 Oct 2010

[Operator:]

Good morning, ladies and gentlemen and thank you for standing by. Welcome to the Invacare 2010 third quarter earnings conference call. I will begin with the customary Safe Harbor statement that this conference call may include statements regarding anticipated and future developments that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are those that describe future outcomes or expectations that are usually identified by words such as should, could, plan, intend, expect, continue, forecast, believe and anticipate and include, for example, any statement made regarding the company's guidance for 2010. Actual results may differ materially as a result of inherent uncertainties and risks, including the risk factors described in the company's form 10-K and other filings with the Securities and Exchange Commission and in the company's Form 10K – in the company’s earnings release. The company may not be able to predict and may have little or no control over the factors or events that may influence its financial results. Before I turn the call over to Invacare's Interim Chief Executive Officer, Mr. Gerry Blouch, I would like to remind you that all of the lines have been placed on mute for the first part of the call. After the management overview, we will open up the call to questions. This conference is being recorded, Thursday, October 28, 2010. I would like to turn the call over to Mr. Gerry Blouch, Interim Chief Executive Officer. Mr. Blouch, you may now begin.

[Gerry Blouch:]

Thank you very much. With me on today's call is Rob Gudbranson, Invacare's Chief Financial Officer. In the following comments we’ll focus on the highlights of the release as opposed to covering all of the details which you can read in the release after the call. However, in particular, I would refer investors to the company's earnings release to review the definitions of free cash flow and adjusted earnings, which will be mentioned several times during the call. You can find the release on Invacare's website. Key highlights of Invacare's performance for the third quarter of 2010 are as follows. First, adjusted earnings per share for the quarter increased 8% over the third quarter last year to $0.56 per share. Second, the company achieved organic sales growth of 2.4%, compared to last year's third quarter. Third, gross margins increased sequentially with an improvement of $0.7 of a percentage point versus the second quarter of this year and finally the company generated $17.2 million in free cash flow. Turning to the company's outlook for 2010, Invacare is narrowing its previous 2010 guidance on adjusted earnings per share to $1.78 per share to $1.83 per share from the previous guidance of $1.75 to $1.85 per share. In addition, the company is updating guidance on the organic sales growth to approximately 1% versus the zero to 1% in previous guidance. Regarding 2010 guidance and free cash flow, Invacare is raising its range by $5 million making the updated range $80 to $90 million. And I’ll cover in more detail on the consolidated results for the third quarter. Adjusted earnings per share were $0.56 from the third quarter of 2010, as compared to $0.52 for the third quarter of 2009. This 8% improvement in adjusted earnings per share for the quarter was primarily driven by net sales growth; lower selling, general and administrative expense and reduced interest expense, partially offset by a slightly reduce – reduction in gross margin and an increase in the effective tax rate. Net sales for the quarter increased $0.8 of a percentage to $437.5 million. As noted previously, organic sales growth for the quarter increased 2.4% over the same period last year, driven by all segments of the business, except the Institutional Products Group. Gross margin as a percentage of sales for the third quarter sequentially improved by $0.7 of a percentage point, versus the second quarter of this year. The overall sequential gross margin improvement was driven by cost reduction activities, lower warranty expense, which were partially offset by increased freight costs and commodity cost increases. Selling, general and administrative expenses decreased 2.3% to $101.9 million in the quarter, compared to the third quarter of last year. Excluding foreign currency translation and our acquisition, SG&A expenses decreased 2.7%, compared to the third quarter of last year, primarily due to decreases in bad debt expense and favorable foreign currency translations, offset by increased associate and legal expenses. With that, I would like to have Rob review additional financial highlights for the third quarter of 2010.

[Rob Gudbranson:]

Thanks, Gerry. Please note that all comments regarding earnings before income taxes for the segments below exclude restructuring charges in 2009 were relevant. For the quarter ended September 30, 2010 North American HME net sales increased 3.2%, versus the same period last year, driven by increased rehab and standard product line sales, partially offset by a slight decline in respiratory product line sales. Organic net sales for North American HME increased 1.3% for the quarter. For the quarter, North American HME earnings before income taxes increased $5.5 million, primarily as a result of volume increases, cost reductions related to warranty and SG&A expense and lower interest expense. These were partially offset by increased commodity costs. Net sales for Invacare Supply Group in the third quarter increased 6.2%, versus the same period last year. The net sales increase was attributable to continued growth in sales to national providers, particularly in diabetic and incontinence products. Earnings before income taxes for the third quarter of 2010 increased $0.6 million, as a result of increased volumes and lower SG&A expenses, including bad debt and associate costs, this benefit was partially offset by increased freight costs. In the third quarter, net sales for Institutional Products Group decreased 15.7%. Organic net sales for IPG decreased 16% for the quarter. The net sales decrease was related to slowed capital equipment purchases, primarily as a result of customer concerns around the availability of financing in the current credit market. In addition, long-term care customers were dealing with a new Medicare nursing home reimbursement change in the United States that was effective October 1, 2010. Earnings before income taxes for the third quarter of 2010 decreased $1.7 million, primarily as a result of reduced volumes, which negatively impacted margins and unfavorable foreign currency exchange impact, related to the Canadian dollar. For the third quarter, European net sales decreased 4.5%. However, organic net sales for the quarter increased 4.3%, primarily related to increased rehab and respiratory product line sales. For the third quarter, earnings before income taxes decreased $1.4 million, compared to last year. The decrease in earnings before income taxes is largely attributable to higher material and inbound freight costs, unfavorable foreign currency translation to the U.S. dollar and increased SG&A expense related to associate costs. Partially offset by an increase in sales organically and by favorable product mix. For the third quarter, Asia-Pacific net sales increased 14.4% versus the same period last year. Organic net sales for the segment increased 7.7%. The net sales increase continues to be driven by the company's New Zealand distribution business and increased demand for product from the company's subsidiary which produces microprocessor controllers. Earnings before income taxes increased $2.1 million, as compared to third quarter last year, primarily as a result of increased volumes and favorable impact foreign currency, which was partially offset by increased SG&A expense, related to associate costs. Total debt outstanding including the debt discount as described in the release decreased by $18.6 million during the quarter to $274.5 million as of September 30, 2010. Invacare reported $17.2 million of free cash flow in the third quarter, which was driven by increased profitability, partially offset by increases in accounts receivable and inventory and a decrease in accounts payable. I will now turn the call back over to Gerry to discuss some highlighted points, some detailed points, regarding Invacare's outlook and updated guidance for 2010. We then can address questions.

[Gerry Blouch:]

Thanks, Rob. During the quarter, the company met its internal plan despite weakening foreign exchange rates compared to the U.S. dollar. However, it is useful to note that at the beginning of Europe's fourth quarter, which starts in September, European foreign exchange rates were strengthening compared to the U.S. dollar. However, the third quarter ended certain commodity costs were on the rise, particularly aluminum. The company will continue to manage through these issues and its guidance reflects the volatility associated with commodities and foreign exchange rates. As previously announced the company entered into a new $400 million senior revolving credit facility. Borrowings under the new revolver will bear interest at LIBOR plus a margin of 250 basis points or 2.5%. While this is a higher rate than the company's previous revolver of LIBOR, plus a margin of 1.25%, the increased capacity is expected to be used in part to repurchase the company's approximately $146 million outstanding 9.75% senior notes. The company is currently conducting a tender offer for the senior notes. If any or all of the senior notes are not purchased in the tender offer, Invacare intends to redeem the remaining notes in February of 2011. With these factors in mind, Invacare is updating 2010 guidance as follows. Organic net sales growth of approximately 1% as opposed to the previously announced guidance of 0% to 1%. Adjusted earnings per share of $1.78 to $1.83 per share, previous guidance was $1.75 to $1.85 per share. Free cash flow increasing to a guidance of $80 to $90 million, as compared to the previous guidance of $75 to $85 million. And effective tax rate of 27 to 28%, on adjusted annual earnings, as opposed to previous guidance of 27% and adjusted EBITDA between $145 and $155 million, which is unchanged from previous guidance. On behalf of the company, I appreciate your time and attention during this call. We will now open the phone lines and take questions. Thank you.

[Operator:]

(Operator Instructions). Your first question comes from the line of Joshua Zable of WJB

[Joshua Zable:]

Congratulations on a great quarter. Thanks for taking my questions.

[Gerry Blouch:]

Glad to do it.

[Joshua Zable:]

Just a couple of quick ones here. So I just want to, Gerry and Rob, I guess just as far as Q4 goes, you narrowed the range here, I know you talked about tax rates being up, obviously commodities, going against you a little bit here, is there anything else kind of we're missing? I'm assuming that excludes any benefit from sort of – from interest here as well, right? So that sort of includes higher taxes, higher commodity and does not include any benefit you get if you basically tender the debt?

[Rob Gudbranson:]

Josh, let's hit the big factors, Q4, this year, versus Q4 last year.

[Joshua Zable:]

Great.

[Rob Gudbranson:]

First, I think when we look at the translation, last year at Q4, the Euro averaged above $1.48 and even right now, I think this morning, I saw the Euro is trading at $1.38 but I would emphasize, as Gerry said in his comment, the first month of Europe is September and in September, the Euro averaged out at $1.31. So there is a decent head wind just on the FX and then in terms of commodities, it’s – both steel and aluminum are up fourth quarter this year compared to fourth quarter last year, as currently they're trading freight, whether it be diesel or ocean cargo is up also. And then, I think a key item we mentioned is that when you look at the effective tax rate, we're showing a lot more profit in our plan now from the U.S. entities, which is our highest tax rate, as opposed to overseas entities. So the full year is looking more like 27%, 28% as opposed to 27% that's pretty big move when you’ll just look at the fourth quarter. So that will – those will be sort of the pressure points. The one thing I’d say is we do have a range, as part of the range, we also have something out there for whether we have a success on the tender offer or we don't have a success on the tender offer, but I would emphasize the real benefits from the tender offer will be in 2011, even if we have a good result on November 1, most of the benefit will be the 10 months next year, not the two months this year Gerry, would you add anything to that?

[Gerry Blouch:]

Josh, unless the EPS number dominates or creates some anxiety that we're weakening, if you look at adjusted earnings, before tax, it still represents a healthy increase year-over-year. I know we have – the shareholders get paid on earnings per share but I want the listeners to take the impression that we're slowing down.

[Joshua Zable:]

No, that's great. And is there any – no, we appreciate that. Is there any additional cost sort of, of interest that you're taking on the credit so to speak in Q4 or that's really negligible? Because the…

[Rob Gudbranson:]

The additional costs you mean?

[Joshua Zable:]

Yes.

[Rob Gudbranson:]

We’ll have some fees related to doing the transaction. But those are typically capitalized and put over the life of the loan.

[Joshua Zable:]

Okay. Great. Thanks very much. And then just want to talk about growth, another quarter of impressive organic growth here. So kudos to all, I know this is something you guys have been focusing on more and I guess, I'm just trying to understand kind of what is going on in terms of the market, obviously times are still tough out there, but you guys seem to actually be getting stronger. Is the market getting healthier? Are these all market share gains, just color around it, because it’s pretty impressive growth? It was stronger than we thought.

[Gerry Blouch:]

Thanks for the compliment. I have to say that internally, we're pleased that we are regaining momentum, but – so it is impressive relative to recent history, certainly not where we want to be or expect to be or have been historically and what we're aiming to return to. It will be difficult – we're in so many different markets, I’d say if there is useful generalizations, I’d say that much of the market, particularly outside of the United States is dependent on government spending and that is in a fair amount of uncertainty right now and there are – the rate of change in the health care marketplace is increasing, not just in the United States with health care reform, but elsewhere, we've got health care agencies consolidating to get more efficiencies, you've got more bidding, you've got funding interruptions. So there are a lot of things. Generally, you’d rather be in health care than most other things in the world. So contextually, it is relative to health care, but I don't have many – looking at an event last night and I don't think there wasn't any businessmen there that wouldn't relish being in our shoes compared to what they're dealing with. So it’s not a bad thing in an absolute sense. But there is – when there is uncertainty, when there is change, there is hesitancy, whether it be Wall Street or health care. So I would say that it is a little choppy and but those things will iron themselves out, the market – now the economies are starting to settling in. We’re – with our worst situation is the North America institutional, the institutional business as Rob mentioned. And we're obviously heavily focused on that internally. We think it was a pretty severe drop in revenues, but even though many or most of our competitors are private, there is a lot of useful information available in the market and we've had competitors who are experiencing layoffs. We got everybody is seeing down sales, so it’s difficult to calibrate with precision, but we don't think there is any significant market where we're not stable and gaining share.

[Joshua Zable:]

Okay. Great. And then just pricing in general, I know competitive bidding is in front of us. I know it’s been in front of us for a long time. I know we got another delay here again. I think, the listeners kind of recognize some of the mess that this is sort of as a program or at least I will say it, so you don't have to. But with that said, obviously customers expecting it, I know it is only a very, very small base, just wondering if anything has changed out there, just in terms of are your competitors being less rational than they were in front of this or are they still kind of following your lead?

[Gerry Blouch:]

Specifically, nobody is – there is no change in the rationality or irrationality of some of our competitors, I’d say that just from a relative competitive standpoint, things have been stable during the quarter and we're not seeing anybody bolt or be any different than they have been in the past.

[Joshua Zable:]

Okay. Great. I’ll let somebody else get some questions in. And congratulations, guys. Thanks for taking my questions.

[Gerry Blouch:]

Thanks.

[Operator:]

Your next question comes from the line of Jason Rodgers of Great Lakes Review.

[Jason Rodgers:]

Good morning.

[Gerry Blouch:]

Good morning.

[Jason Rodgers:]

Just looking at the top line, I wanted to ask first about the environment for acquisitions and what opportunities you’re seeing there. And also just looking out at your organic growth, you talked earlier about trying to get back to that historical growth range and I was just wondering what type of environment you think that would take to get the higher organic growth, either focusing on new products or just I guess a more stable environment?

[Gerry Blouch:]

Let's take acquisitions first. This is Gerry. There’s a lot available out there. There is not many – there hasn't been many buyers in the last three or four years, there’s been a few VCs doing rollups in Europe. So there’s a lot of opportunities. We have been very internally focused for good reasons that you're aware of over the last three or four years, so we’ve kind of kept our head down and haven't paid much attention. We're beginning to aggregate simultaneously the focus on completing the process of globalizing our product platform and looking at acquisitions in the context of – as opportunities to accelerate that process. So we’re still, we’re – we've got one more arrow in our quiver now, now that our leverage is down and now that Rob and his team are close to completing the debt offering, but it is still going to be diligent. There is plenty of vehicles out there, too that will help us accelerate organic growth, as well as accelerate the globalization process. On your second question, I’d say that there isn't any kind of external exogenous factor that we're depending on to re-establish our historic growth rates. We have 25% market share, which is certainly nowhere close to any kind of saturation. And actually, the interesting thing is you look at the market share by line, by country, it’s very inconsistent. So we've got – which means – the cup half full version of that is even though we haven't done a good job in some countries say on respiratory or rehab, we got a solid foundation that we can build from, so I'm not the least bit concerned. If there is a pinch of star dust, the pinch of star dust is, other than we've got 6,000 associates and maybe 500 or 600 of that, I don't know, some small percentage are TBMs those are people who have sales goals and management has been very internally focused on cash flow, on earnings per share and I think remapping what the priorities are for the management team will go a long way to complement reestablishing the priority for sales growth. So the opportunities are there. The market is solid. The only thing that we won't – I don't think we will be – you know, it’s going to be tough to drag IPG with the market declining in the double digits, it is obviously going to be a drag, but that's a moment in time. The normal factors, which dictate the growth of that market, will reengage shortly and we don't expect that to be a long term burden. Rob, do you want to add to that?

[Rob Gudbranson:]

The only thing I would add Jason, which you know, but I mean, if you look at the last two quarters, I mean, we’ve basically been up 2.5%. We’re not back to the 4% to 5% we've done historically and the company is capable but I don't want to leave the impression that we're not delivering some growth right now.

[Jason Rodgers:]

Thank you.

[Gerry Blouch:]

Anything else?

[Operator:]

Your next question comes from the line of Robert Goldman of CL King.

[Robert Goldman:]

Hey, good morning, everybody.

[Gerry Blouch:]

Hi, Bob, how are you?

[Robert Goldman:]

Good. Thank you. Got a couple of questions. Why don't I just ask them and then sit back to hear the answers? First, I don't believe Mal was introduced as participating on the call and obviously we all wish him very well but perhaps you can give us an update on Mal's current involvement in the company. And second, on IPG, I might have come in a little bit late on the call but it sounds like you've been attributing the sales decline there to an overall market decline. And if you wouldn't mind, and I apologize if this was addressed earlier, just give us a little bit more idea of why that market is declining and why you see it increasing at some point and when. And then finally, if you wouldn't mind just breaking out what the R&D spend was in the quarter.

[Gerry Blouch:]

Bob, let me first mention Mal. And incidentally Mal was not on last quarter's call, either. But at last quarter's call, we did mention that Mal's attitude is great, I was with him last night, he is positive, he is engaged, he started back as Chairman actively and he is in the office with great regularity. And the situation with regards to the CEO slot remains unchanged. He intends to make a decision by the end of the year and we’ll make an announcement then. Rob, you want to talk about the IPG market and R&D?

[Rob Gudbranson:]

Sure, I think we know, Bob that there are quite a few pieces to the business, there is sort of the base business, we typically see – continue in various environments, so that might be things where people need to replace some of the beds or lifting equipment or other aspects of the equipment for the nursing homes. And then there are additionally, projects. And projects not surprisingly over the last multiple quarters have been really uneven. So we did not see much of a return on that this quarter. The base business too has been slow. I think again in this constrained capital environment, the nursing homes are not shockingly watching their spend. We even had a case with a very good customer, very professional customer, said they had a bunch of bids for us and then called back and said actually they have reconsidered, with their finance team and they're not going to be buying in the near term after all. So I think things are just very tight there. In terms of telling you whether they will be back this quarter or next quarter, I think the important thing we're focused on is making sure, as Gerry mentioned earlier, we're in all of the bids that are out there, all of the expansions that are being done and we feel comfortable we're still maintaining share. And it’s not a shocker that we would like to come on the call and tell you all five segments are up, but the fact that we get four out of the five pointing in the right direction and we’re holding our own in the other one, we feel pretty good with that. So we think that is going to turn pretty quickly. I mean, last quarter, there was organic growth. Whether we will see it in the fourth quarter, we will have to wait until we report in February. But we're clearly in the right position with our customers, whether that be nursing homes or key customers who deal with the nursing homes. Last question on the R&D, we don't really break that out along the way, but I think I can guess why you asked the question. There’s no major change there at this point. It is pretty much on par with what we spent as a percent of sales in previous years. So nothing major there.

[Robert Goldman:]

Okay. Great. Thanks for taking the questions, guys.

[Rob Gudbranson:]

Glad to do it.

[Operator:]

Your next question comes from the line of James Sidoti of Sidoti & Company.

[James Sidoti:]

You can hear me?

[Gerry Blouch:]

Yes, Jim. Take care of that cough.

[James Sidoti:]

Okay. Couple of questions. The top line, you have been up a little bit every quarter so far this year. Your guidance, full year guidance indicates that you think you might be down a little bit in the fourth quarter. Is that primarily the currency shift or is there anything else?

[Rob Gudbranson:]

If you sort of, look, if we exactly do 1% organic sales growth for the year, the math works out to be around 2% growth for the fourth quarter. But you can also do the math and say we would be at 2.5%. So we're basically saying we would be similar to the second and third quarter in terms of organic growth, so no major change.

[James Sidoti:]

So what are you assuming for interest expense in the fourth quarter?

[Rob Gudbranson:]

We haven't put a specific number out there because it’s going to depend on what happens Monday with the tender offer but I think you see all of the pieces, we have broken out the pieces and you know what is out there and the only question is going to be after Monday, where the tender offer ends up. If we don't end up getting everything on Monday, we’ll get the rest of it at the latest by February. But again, the key is going to be seeing the financing release, we've got a LIBOR plus 250 and we've also got the 9.75 notes out there that we're hoping to buy back as much as we can on Monday. I would emphasize though, when you're looking at your models that the core revolver cost has now gone up, we were LIBOR plus 125 and now it is LIBOR plus 250 and we're very happy with that new rate, given the market and it is going to help us when we take out the high yield note at 9.75. It is a win-win. But just for the detail, you need to think about both pieces.

[James Sidoti:]

Okay. And then, just a last question. When you give your guidance, what are you excluding outside of the refinancing charges?

[Rob Gudbranson:]

Well, we're not excluding the refinancing charges; it will just be part of capitalized as part of the cost of doing the refinancing. You amortize those over time. The only things we do on adjusted earnings and particularly for any new investor who might be on this call, the only things we really adjust for are related to the convertible, the convertible debt instrument. So it has a noncash interest and additionally, we bought back some convertible bonds this quarter and sometimes we buy back the high yield but we back out the premium we pay on that because it has nothing to do with operations. So other than those type of adjustments, we're clean as can be on adjusted earnings.

[James Sidoti:]

Okay. Thank you.

[Operator:]

(Operator Instructions). Your next question is a follow-up from the line of Joshua Zable of WJB Capital.

[Joshua Zable:]

Thanks for taking the follow-up here. I just want to talk a little bit about commodity costs here for a second. I know you guys are always pretty transparent about what you're seeing out there and I know in times when commodity costs have been rising a lot, you've kind of had to deal with this more and more. And this is the first we've seen or heard you guys talk about it in a while. Obviously, none of us here are commodity analysts, so I guess without asking to you make a prediction, I'm just wondering given, your sourcing now is a lot more sophisticated, I would assume you have to see some big moves as we’ve talked about the kind of have these effects on you and when they push back. I'm just wondering sort of how often we could see this occur. Again, I know it’s difficult, it is all contingent on how big the moves are, but I am just – as we start to think about our models for next year, I'm just kind of wondering, should we kind of assume that there is going to be some headwinds going forward? Does it look like we're going to see that? That's question one. And then I will have a follow-up. Thanks, guys.

[Rob Gudbranson:]

I’ll take an attempt to answer that but I must admit I'm not quite sure what you're asking, but let me take one shot at it and you can tell me if I didn't answer it.

[James Sidoti:]

Great.

[Rob Gudbranson:]

There is a lot of uncertainty in the market right now. You can read the releases from the big steel companies, some go out and say that they're comfortable prices are going to be rising back up, they're seeing the market strengthen and then you can read another one the next day that says things are tough, things are – there is way too much capacity and they're nervous about next year. So it is really hard to call. I think the issue is, is that what we can talk about right now and sort of focus on the fourth quarter, is you sort of look at and you can see in Bloomberg, steel costs, they are up from the fourth quarter last year, so we know that sitting right now, but it’s really hard to try to give you a 2011 view on steel and as best as we can do that, we will do that when we do the fourth quarter release.

[Gerry Blouch:]

And if I can add to, that just if I can make it even more murky, some of the drivers on precious metals and some more key commodities like nickel and lead, seem to be driven less by supply demand issues than by consolidation of inventories, by China notably. And so it is hard – again, I just kind of, adds to the unpredictability. I think the most important thing is staying the industry leader, we got to stay close to it we’ve got – while I can't, if we were doing a Harvard case study and setting those irregularities ahead, what should commodities be doing given the state of the economy and it is the overall trend lines, you’d be hard pressed to argue that commodities should be going up. But then aluminum keeps on with a steady march. So it’s a cloudy picture and our business people stay close to it, if we have to deal with it. We always reflect that it hurts – however bad it is, it is less bad for us, than it is for the competition, we're the industry leader and if we have to deal with it, we have to deal with it.

[James Sidoti:]

Okay. That's fair. That's fair. And then just again, I know you guys aren't talking about 2011 yet. And you may not comment at all here. But just in terms of kind of keeping expectations sort of inline so to speak or realistic here, I know back in the day, 4% to 5% growth was pretty realistic and I know obviously the more recent – recently it has obviously been a lot slower, obviously the last couple of quarters, we've been moving in the right direction, so just as we think longer term and again, just in terms of keeping us in line here, I mean is it reasonable to expect that kind of growth in 2011 with competitive bidding with other stuff going on, with health care reform, et cetera, et cetera? I know that is a long term goal but just in terms of realistically where we should start thinking about the business growing, even with your plans in place; can you just comment around that so to speak, to the extent you're comfortable? Thanks, guys.

[Rob Gudbranson:]

Josh, it’s Rob. Unfortunately, we really can't talk about 2011. So you hit the right issue if you want to talk about a specific year. But clearly we have for things Gerry has talked about our efforts with globalization with new products being delivered by the team internally and worked on by the team internally, we're clearly talking about getting back to the growth rate we had in the past, the 4% to 5% organic growth but specifically about 2011, that we got to wait until we're ready to do.

[James Sidoti:]

Fair enough. I tried though. Thanks a lot. Congrats again.

[Rob Gudbranson:]

Thanks.

[Operator:]

There are no further questions at this time. I will now turn the conference back over to Gerry and Rob for closing remarks.

[Gerry Blouch:]

Well, we appreciate the ongoing support. And appreciate you folks taking the time to be on the call with us. Just to reiterate on behalf of the company, I appreciate the time and attention during the call. And if you have any further questions Laura and Rob are always available. Thank you again.

[Operator:]

Thank you again for participating in today's conference call. You may now disconnect.