Simpson Manufacturing Co., Inc.
Q2 2013 Earnings Call Transcript

Published: 26 Jul 2013

[Operator:]

Good morning, ladies and gentlemen, and welcome to the Second Quarter 2013 Simpson Manufacturing Co., Inc, earnings Conference Call. In this conference call, the company may discuss forward-looking statements, such as future plans and events. Forward-looking statements, like any prediction of future events, are subject to factors, which may vary, and actual results may differ materially from these statements. Some of such factors and cautionary statements are discussed in the company's public filings and reports. Those reports are available on the SEC's or company's website. Please note, today's call is being recorded. Now, I'd like to turn the conference over to Tom Fitzmyers, the company's Chairman. Please proceed.

[Thomas J. Fitzmyers:]

Thanks, everyone. Good morning, and welcome to the Simpson Manufacturing Company Second Quarter 2013 Earnings Call. Our earnings press release was issued yesterday. It is available on our website at simpsonmfg.com. Today's call is also being webcast and a replay of that webcast will be available on our website. As usual, joining me in Pleasanton for today's call are Karen Colonias, Simpson's CEO; Brian Magstadt, Simpson's CFO. I'll lead off followed by Karen and Brian and then we will be delighted to take your questions. As you've seen in the press release, we've, again, include information about segment sales and profits, which we have previously discussed in the base of the earnings call and they are now part of our quarterly or annual report filings that follow. Although housing starts dipped this month, they are up compared to last year and we are starting to benefit from that increase. And then like lumber or other products that have a more direct correlation to starts, our products are used to a greater extent in code-based areas subject to natural forces, such as seismic and high wind events. And they are also subject to sequential construction processes like the foundation first, the walls and then the resistance. Sales were up nearly 11% in North America for the quarter due to increased homebuilding activity despite price reductions we took in the latter half of 2012 and the loss of Lowe's in May of 2012. Lowe's accounted for $5.3 million in sales in the second quarter of last year. Although we believe we picked up some of that business through our other customers. As we've mentioned in the past, only 50% to 60% of our wood product sales are dependent on new residential housing starts. In Q2, the home centers excluding Lowe's were up 6% for the quarter and Home Depot was up 10%. The financial uncertainty in Europe, along with an extended winter in some parts of that region, also seems to be affecting our revenue there. Actually heavy-duty mechanical Anchor business contributed approximately half of the sales decrease in Europe. North America's operating profits were up $3.1 million due to higher gross profit, primarily from increased revenue volume offset to some extent by price decreases and increases in operating expenses. Europe's operating profit increased slightly due to lower operating expenses, partially offset by gross profits. In Ireland, we have moved out the remaining assets and we are evaluating whether to rent or sell the facility depending on the best return to us. The Asia-Pac operating was narrowed as a result of higher-risk profits, offset by increased R&D, engineering and selling expenses. We continue to have a very strong financial position, which gives us lots of flexibility. I'll turn the meeting over to Karen. Karen?

[Karen W. Colonias:]

Thank you, Tom. It's nice to see that we are benefiting from increased housing starts in North America, as we are also continuing to invest in new initiatives to strengthen our market position in both the wood products and concrete product segments of our business. For example, we've accelerated our software spend in anticipation of our new release at the BCMC show on October to meet our customers' software needs in the wood product segment. In Europe, operating profits are up slightly this quarter, and we are positioning ourselves in the region for additional improvements. We are continuing to monitor our operations around the world to strive for long-run returns that are satisfactory to us, as well as our shareholders. The company continues to focus on its core business with programs such as our Genuine campaign. The Genuine Simpson Strong-Tie Connector campaign is a way to remind our customers about all the benefits they get from doing business with Simpson Strong-Tie, such as code listed and thoroughly tested products that are widely available. As part of this recent campaign in the last 90 days, our sales reps performed over 1,500 store resets providing our customers with new signage, new point of purchase materials and new products to help drive sales and to support our customer success. To repeat from prior calls, we manage our business from a geographic segment perspective. You've seen this in our 10-Q's and 10-K's. Within those regions, we have 2 broad categories

[Brian J. Magstadt:]

Good morning, all. As noted in the earnings release, Q2, 2013 gross margin was 45.7% compared to 45.8% in Q2 of last year. A relative sales mix of the 2 product groups did not affect gross margins. Also, as in recent past, the lower margin concrete products relative to the total was 15% this quarter versus last Q2, while the wood products was 85% of the total. The margin differential of wood to concrete products is 9% this quarter compared to 13% last Q2. The wood product margin was affected more by the price decrease than was concrete products. We have also seen some improvements in the concrete construction product cost. The estimated gross margin for 2013, we believe, will continue to be in the 42% to 43% range. Operating expenses, as a percent of sales, was down slightly in the quarter compared to last year, although certain compensation expenses such as commissions, cash profit sharing and stock compensation increased $2.3 million in the quarter or 1.2% in net revenues. With taxes, we had lower non-deductible foreign losses affecting the tax rate this quarter. This quarter, it was a little less than $1 million that we did not take a tax benefit on. And we believe our annual estimate for 2013 to be in the 42 to -- oh, I'm sorry, the 40% to 42% for annual effective tax rate. 2013 CapEx is looking to be around $29 million to $30 million and that's somewhat consistent with what we mentioned last quarter. Q2 2013 CapEx spending was $8 million, primarily from manufacturing equipment in the U.S. For 2013, depreciation and amortization expense is expected to be $27 million to $28 million of which, $20 million to $21 million is depreciation. Intangible amortization expense in the quarter increased $0.2 million compared to the prior year, all in admin expense, due primarily to the acquisitions of the Weyerhaeuser assets and the software development team in Boulder. Before we turn it over to questions, I'd like to remind you that if you'd like further information, please contact Tom at the phone number listed on the press release. Also, look for our Form 10-Q to be filed in the next couple of weeks. We'd like to now open it up to your questions.

[Operator:]

[Operator Instructions] Our first question comes from Arnie Ursaner with CJS Securities.

[Arnold Ursaner:]

In the last call, you commented that embedded products had been improving very nicely and that's a leading indicator. As you think about the process of moving from permit to final demand for wood-related products. Can you comment on the trends you saw in the quarter and how the outlook for Q3 is relative to wood products?

[Karen W. Colonias:]

This is Karen. We -- as we mentioned in the last quarter, we do track very closely our concrete-embedded products. As Tom mentioned in our phase of construction, the first element that we see from our product line will be concrete, certainly than the walls and the roof. We are seeing continued similar tracking of those concrete products as we look into what we had last quarter and what we see in July.

[Arnold Ursaner:]

Okay. And you mentioned you incurred -- you redid 1,500 or so, your sales reps went on 1,500 units or calls, resetting things. You mentioned $600,000 of promotional expense in your prepared remarks. Does that include that -- is that where it would be or maybe you could separate out perhaps the one-time expense of doing this program?

[Brian J. Magstadt:]

Arnie, it's Brian. The expense would have been incurred probably over Q1 and Q2 as we go and develop those materials and such. And I don't have the number, the expense amount that was related to that particular campaign. But it wouldn't have just been in the quarter because there is a lot of work in getting those materials ready. And that would've been, though, probably starting around the first of the year.

[Karen W. Colonias:]

Maybe, Arnie, I could just add 1 point. This will be a continuing campaign as we are going throughout the year. We have several elements as we roll this campaign out.

[Arnold Ursaner:]

Okay. Final question or a comment. Congratulations, Karen, on being elected to the board. Do you or Tom care to comment on how -- if it may change your role or the future? How it might impact Simpson, with you being added to the board?

[Karen W. Colonias:]

Well, first of all, I appreciate that. Tom, go ahead.

[Thomas J. Fitzmyers:]

No. Karen has been doing a marvelous job for a long time and being a board member, really doesn't change that at all. And Karen has participated ever since she's been a -- the Chief Financial Officer in all of our board activities except, of course, for some of the specialized board meetings, which are just outside Directors. But personally, from my standpoint, congratulations. You're highly deserved, but I don't think it changes too much of it, Karen. It does except the way maybe she signs a couple of things, so.

[Operator:]

And we'll take our next action from Trey Grooms with Stephens, Inc.

[Trey Grooms:]

So you noted lower selling prices again, in the quarter. Is that -- obviously, a big year-over-year, but did pricing continue to slip in the second quarter there? And then also, you noted pricing pressure in Europe; is that something new there? I can't recall hearing you mention Europe before. Maybe I am forgetting.

[Brian J. Magstadt:]

It's Brian. On the selling prices, no, I don't think we've seen any further erosion in that category -- or in that classification. In Europe, so their pricing maybe on a slightly different cycle, so I don't think it was significant, although when you look at Europe together, it had a little bit of an impact but it wasn't much.

[Trey Grooms:]

Okay. And that's good to hear on the pricing here. And just kind of looking at the Lowe's business there that you've lost. You gave us some color on 2Q. Could you give us an idea of kind of what the annual impact could be from -- as we look maybe trailing 12 months or something like that or we can get a sense of kind of what the impact could be for the Home Centers business as we look forward? Or is that anniversaries?

[Brian J. Magstadt:]

So as we -- again, it's Brian. As you mentioned the Lowe's business we lost back in May of last year, so for the year of 2012, it was $11 million. So annualized, if you were to look at trailing 12 months, $20 million to $23 million in that range.

[Trey Grooms:]

Okay. That's helpful, And then on R&D. So bringing a portion of that in-house, I guess, can you give us a sense of how that will change that going forward? I would assume there will be some cost savings there over time, as you did that. Can you just kind of give us a sense on run rate on R&D, please?

[Brian J. Magstadt:]

I think, as we mentioned in the press release, we accelerated some software development costs and we would be -- based on current information today, we would expect that, that pace would continue as we saw in Q2.

[Operator:]

And we'll take our next question from Robert Kelly with Sidoti.

[Robert J. Kelly:]

A question on the amount of the price decrease you saw in North America. I'm not sure if you quantified it. Could you tell us what it was, year-over-year?

[Karen W. Colonias:]

Yes. We -- as we've mentioned, we certainly need to make some adjustments as we are working to service our customers. And again, to really help us improve and maintain some market share, we have had to have some small price decreases.

[Robert J. Kelly:]

So, I mean, as we look at North America, the 11% sales growth, what was volume? I'm just trying to get a sense of what the drag from lower prices or mix was.

[Brian J. Magstadt:]

Well, volumes were up, but -- and for -- due to competitive reasons, we'd really like to not talk much about the specific drag on revenues, but volumes were up.

[Robert J. Kelly:]

Okay. Let me try this. Steel prices are lower year-over-year, but your margins are feeling compression the way you stated in the release, owing to lower selling prices. So, how do we kind of reconcile the fact that your raw material cost are moving down, but your margins are getting squeezed by a lower prices?

[Brian J. Magstadt:]

Certainly, the gross margin is directly affected by the lower price decrease, but I don't have the number that price affected margin to give you.

[Robert J. Kelly:]

Okay. How about in Europe? What were the 2Q '13 savings from the closure of Liebig?

[Brian J. Magstadt:]

About $700,000 on the operating line.

[Robert J. Kelly:]

Is that a good run rate to use for the entire year, $700,000 a quarter?

[Brian J. Magstadt:]

If we exclude the one-time, the severance, and some of those write-down activities that we had in Q4 -- Q3 and Q4 of last year, I think it's -- I think that would be a good run rate number, yes.

[Robert J. Kelly:]

So couple of million in costs -- cash cost savings from closing Liebig?

[Brian J. Magstadt:]

I'd say $2 million to $3 million.

[Operator:]

[Operator Instructions] We'll take our next question from Barry Vogel of Barry Vogel & Associates.

[Barry Vogel:]

Karen, how would you explain, in your own words, the competitive conditions for connectors in North America.

[Karen W. Colonias:]

Well, Barry, I think one of the things that you see on our campaign and one of the things we've always done is to really relay to our customers, all the services and, basically, features and benefits behind the Simpson Strong-Tie brand. It is a very competitive market. As things pick up a little bit in the housing market, certainly, that means we need to have a key element, which is product availability and that is always been one of the service levels that Simpson has prided itself on. I mentioned the campaign because that was a means of really helping our customers in this market area, to be able to support their product sales and help them with their product turns. So I would say it is definitely a competitive market. I would say that as we look at all the things that Simpson provides behind just price, that our customers certainly are appreciating it, and that's what's helping us maintain a large portion of our market share.

[Barry Vogel:]

Could you give us an idea what Connector utilization rates were in the second quarter in North America?

[Karen W. Colonias:]

Yes. We are running our factories. As you've seen, we've got some increase. As we increase volume, we've got some increased labor cost and some reduction of our factory because we have a little bit better absorption. We still have room to be able to produce whatever our customers’ needs. And so we're fine from a standpoint of manufacturing and being able to meet as we get back into some better looking housing starts.

[Barry Vogel:]

But if you want to pick an approximate range of the utilization rates, there could be a difference between 80% and 88%. And I know you had a major expansion near the peak of the last cycle. And obviously, you have room to produce more product, if housing and these steps you're taking to improve your sales continue. So can you give me some little bit of a range of utilization rates through the second quarter?

[Karen W. Colonias:]

Yes, I guess from a range standpoint, I would say our utilization rate is probably somewhere between maybe 60% to 70%.

[Barry Vogel:]

So you have a lot of room to grow in terms of output?

[Karen W. Colonias:]

We have room to grow, and I think, as I've mentioned in the past conversations, we've initiated several lean initiatives that have helped us be very nimble, from a production standpoint, and really be able to do those things to meet those customer needs.

[Barry Vogel:]

Now, could you tell us where the best end use of demand is in the United States currently for your connectors?

[Karen W. Colonias:]

Well, we're certainly seeing -- you're seeing from a geographic standpoint?

[Barry Vogel:]

Yes.

[Karen W. Colonias:]

Yes, we're certainly seeing some improved areas in the Southeast. Some areas improving in the California, both Northern and Southern California markets. So those are probably the best specific areas.

[Barry Vogel:]

What about Texas?

[Brian J. Magstadt:]

I was going to say, in Texas, yes. I mean, part of that Southern market area. One of the demand is definitely in the areas that are stronger on the code enforcement on the coasts and certain parts of those -- of the country.

[Barry Vogel:]

Okay. I have a question for you, Brian. In the past, you've given us some idea of the effect on your P&L -- or your operating profits when you made that flurry of acquisitions in late '11 and early '12. And could -- so can you give us an idea if we looked at the first quarter of '13 and the second quarter of '13, if we took those specific acquisitions that you made at that time, what the impact would have been in the first quarter of '13 on overall operating profits from those acquisitions? And the same with the second quarter of '13?

[Brian J. Magstadt:]

As I mentioned, that we were providing that comparative -- or that information for comparative purposes. But now, they're in both quarters and we would let you know -- there was nothing significant or material -- materially different. We basically want to try to identify and point out in the press release if there are any material changes in any particular spend category. And other than what we mentioned in the R&D line with software development, there was nothing materially changing from quarter-to-quarter.

[Barry Vogel:]

Right. What I was getting at, if you remember, when you first told us that they were negative impacts, obviously, from amortization of intangibles. A lot of them were sort of start-up companies where you paid a lot of money for. So if we can get -- if that impact can go not only to 0, the net negative impact, but also go into the black, that will be very helpful for earnings growth for the company. That's what I'm getting at.

[Karen W. Colonias:]

That's right, exactly. And I guess what I'm saying is that they're not materially different than what we have disclosed in the past.

[Barry Vogel:]

So they're negative -- it's still negative effect?

[Brian J. Magstadt:]

Correct. Correct. And we really should see the benefit of those on the revenue line when they start contributing there. And again, if they are material changes, we're going to put them in the press release.

[Barry Vogel:]

So they really haven't happened yet?

[Brian J. Magstadt:]

Correct.

[Operator:]

And will take our next question from Steve Chercover with D.A. Davidson.

[Steven Chercover:]

First of all, Karen, you were just talking about customers. But can you define it a little more? I mean, do you view your customer to be Home Depot or the engineer or the installer? Who are you getting closer to?

[Karen W. Colonias:]

Well, I think you hit on the majority of our customers there, and I would also add that our customers are the specifiers and, in some cases, even the homeowner. Our sales force work very closely with all of those entities. We, of course, start with products that can meet a specifier's needs and can build the structures stronger, and we work with them to get those specification on the plans. We carry that through with our distributors, making sure they're aware of the differences on our products and that if they've got the product availability, work closing with them on job sites. We certainly work with building officials, they're also our customer. Large builders and the home centers. The particular campaign that I mentioned was specifically focused on our lumberyard customers, which we have thousands of throughout the United States. And so that program was first focused on those customers. But, as I mentioned, our Genuine -- Simpson Strong-Tie Genuine Connector campaign, is just -- that's 1 of the phases. We will be continuing to work specifically with our other customers, those being the specifiers and some of our distributors.

[Steven Chercover:]

But does this ever trickle down to, like, literally, the retail level? And I don't mean the guys at Home Depot with the orange smocks, but the Sunday carpenter who's trying to build a fence, he knows that you got to get strong ties. Are you trying to get right into that level?

[Karen W. Colonias:]

Ideally, we'd like to get to the final person that's installing our product, and we are able to do that from a larger contractor base. It's much more difficult for us to touch that closely with the smaller contractors, but that would be ideal. I mean, we would like to get everybody that's touching our product or specifying our product to really understand everything that stands behind that brand, and that's how we need to be able to differentiate it. And as we've talked about in the past, from the manufacturing support, marketing, engineering services, the quality of our product, our salespeople there to be able to answer questions, and, certainly, again, I'll mention the availability. It's there when they need it. Those are all key factors that stand behind our brand and really help us really deserve and differentiate, I guess, from a pricing standpoint.

[Steven Chercover:]

Okay. And then the switching gears. It seems to me that so one of the bigger opportunities for you guys is truss plates. And I think that's what your new in-house engineering team is focused on. Can you give us some time, benchmarks, do you expect this to be truly in the marketplace, commercial?

[Karen W. Colonias:]

Tom, you want to follow up with that?

[Thomas J. Fitzmyers:]

Yes, I have a couple of comments on that. And also, just to add one thing to Karen's comments about how far down we go. We have lots of seminars across the country all the time and product knowledge programs, too, to try to get to the end user, deck seminars, for example, product knowledge seminars and various customers. So there's a huge amount of activity going on there all the time. When we started out with the truss plate business, we had acquired the capability to do the software part of it, as well as the manufacturing part. And I think that on the manufacturing side of it, we've always felt very comfortable with that opportunity. The software side, we have a lot to do and we still have a lot to do. And I think the framework that we've used for trying to put that in perspective is to look at it over in 2-year period at a time. So we're 1/2 a year into that 2-year period of time. There's a show that's an industry-wide show in October that we're going to participate in. We're going to demonstrate progress that we're making with our software. And we have continuous releases now with the software side of it. And as you have been able to tell from press releases, we have acquired a lot more capability from a development standpoint with the substantial acquisition of the people and the processes at Keymark. And that was kind of a 2-stage process that we went through there. But we think we're making a lot of progress. We've been focusing on customers that are smaller right now because we want to do a really good job for them as we go along. And we have a software release approximately every 6 weeks. Some of those are very small and some of them are pretty substantial. So the possibility for us to increase our market share is growing. And I think as we have said in the past, we think that this market, from our standpoint, is today's starts is north of $300 million and we don't have very much business there. However, most of the prospects for that business are already our customers, because we're selling them our standard connector products for the wall systems, the floor systems and the roof systems, as far as hooking trusses to plate lines. So we're pretty familiar with that market and we're interested. However, software gets to the point where they are really comfortable with using it and we've looked at that as a 2-year process.

[Steven Chercover:]

Well, I mean, that's the reason why I think it's such an opportunity, because they are already using your stuff, they're familiar with your brand. So is the endgame -- and this is my last question -- is the endgame that you could provide the entire, kind of, steel connector package within a house just the way Weyerhaeuser says we've got the lumber, the panels and the engineered wood? So anything that's wood in this house is ours?

[Brian J. Magstadt:]

I'm not sure of anything that's wood, but we're disconnected. And we also have fasteners too, so for example, some of the siding products we can provide fasteners to help with that. But anything where the wood is connected and with the concrete and roof systems, that is, we think, a major opportunity for us. And as time goes on, there's more and more engineering that integrates all of that. And part of the reason for that is to have an extremely well-designed house to withstand the natural events that we get confronted with all the time. And part of it really is finding ways to be more efficient in the actual construction of the house. And so those opportunities exist for us and we work on them all the time and we think we made some progress here. On the software side, recently, where also work on product development to try to integrate the wood group, if you will, all the wood products, and, also, as it relate to concrete and the foundations, primarily. So lots of interesting things for us to work on.

[Operator:]

And we'll take our next question from Arnie Ursaner with CJS Securities.

[Arnold Ursaner:]

I have a couple of quick follow-ups. In trying to respond or follow-up, my friend, Mr. Vogel's questions, when do you see the inflection point of when the expenses turn neutral? What's the timing of when you think that it will occur?

[Brian J. Magstadt:]

I think that it's probably a 2- to 3-year process.

[Arnold Ursaner:]

So as we think about 2014, we should not assume we hit that inflection point in that short a time frame?

[Brian J. Magstadt:]

Correct.

[Arnold Ursaner:]

I noticed a tiny drop in your share count. Was there any -- were there any share repurchases in the quarter?

[Brian J. Magstadt:]

There was. Prior to the end of the quarter, mid-June, we announced share repurchase. So that was put out. It was, if you give me just a second, $9.8 million, about 340,000 shares.

[Arnold Ursaner:]

Okay. And you spoke about Europe. You mentioned a couple of things about it that half of it was exiting heavy-duty mechanical anchors, and you also highlighted weather, the extended winter conditions. So 2 questions related to that. Maybe give us a sense of how trends develop in the quarter between April, May and June. And also, more specifically, if you could comment on trends you're seeing in the S&P Clever.

[Brian J. Magstadt:]

I think that with Europe, S&P Clever is definitely tracking with the remainder of the business. I think they are pretty similar cycles. So some of the bigger economies over there, Germany, for example, extended winters into early Q2, really affected some projects that were going on there. But definitely as the quarter falls out, so to speak, that their activity was picking up.

[Operator:]

And we'll take our next question from Barry Vogel at Barry Vogel & Associates.

[Barry Vogel:]

I have a question for Brian. When we look at the areas where you've had difficulties in terms of the actual losses, we know all about your attempt in Asia-Pacific. And, obviously, Europe had a lot of difficulties economically. Brian, do you think it's plausible that you could break even in Asia-Pacific this year and break even and were better in Europe, given what you know?

[Brian J. Magstadt:]

Based on current information, I would say that -- I would say Europe would break even or better. I think Asia-Pac -- and when we talk Asia-Pac, I'm looking in Australia, New Zealand -- I don't think they're going to break even this year.

[Barry Vogel:]

And as far as the stock buyback, all of a sudden, we saw this press release. What triggered the buyback? You've had the authorization for quite a while.

[Karen W. Colonias:]

Tom, you maybe address that one?

[Thomas J. Fitzmyers:]

Right. If we look at capital allocations all the time, and they range from our CapEx expenses -- which by the way, we look at very closely because many of the opportunities that we have to improve the margins in the company come from things that we do with those capital expenditures. But we just looked at the opportunity that we have before us. we thought it was a good way to spend the company's money and it is kind of a reflection of the confidence that we have in the future.

[Barry Vogel:]

Would that be tied into improvement in overall conditions for the company's end-user markets?

[Thomas J. Fitzmyers:]

I think, Barry, we're pretty opportunistic and we just continuously evaluate it, so it could change quite a bit from quarter-to-quarter or year-to-year.

[Operator:]

And we'll take our next question from Kevin Leary with Spitfire Capital.

[Kevin Leary:]

First, just to confirm, did I hear correctly that gross margin for the year is expected to come in around 42% to 43%?

[Brian J. Magstadt:]

Correct.

[Kevin Leary:]

Okay. So if I look at the first half, gross margin was just over 44%, which was down 70 bps year-over-year? And if I look at the second half, it looks like, if I use a 42% to 43% for the year, the second half looks like it is expected to get worse year-over-year than the first half. Is the pricing environment expected to get worse? Is that some type of seasonality that I'm not thinking of? Can you just spend a minute talking about that?

[Brian J. Magstadt:]

Sure, Kevin. This is Brian. I don't believe it's pricing related. I think it is more seasonality. Gross margins in Q2 and 3 are a bit better than gross margin we see in Q1 and 4. So baking in some expectations for the latter part of the year, that's where we are coming in at that 42%, 43% range, because Q4 really does a drop off, business-wise, in certain parts of the world.

[Kevin Leary:]

And so you would generally characterize the pricing environment as stable?

[Brian J. Magstadt:]

Based on current information, it's so hard to say, but I believe we would confirm that. Karen, what do you -- do you have any thoughts on that?

[Karen W. Colonias:]

I would agree. I think we would see some -- a little bit more stability in that.

[Operator:]

And it appears we have no further questions at this time.

[Brian J. Magstadt:]

Thank you.

[Thomas J. Fitzmyers:]

Thanks very much.

[Operator:]

This concludes today's program. You may disconnect at this time. Thank you, and have a great day.