WPP plc
Q3 2008 Earnings Call Transcript

Published: 28 Oct 2008

[Operator:]

Ladies and gentlemen, thank you for standing by. Welcome to the Wausau Paper 2008 Third Quarter Results Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. (Operator instructions) As a reminder, this conference is being recorded. Now, I would like to turn the conference over to Perry Grueber. Please go ahead.

[Perry Grueber:]

Thank you, Linda. Good morning, everyone. Thank you for joining us for the Wausau Paper third quarter 2008 analyst and investor call. I am pleased to be here today with Tom Howatt, President and Chief Executive Officer of Wausau Paper; Scott Doescher, our Chief Financial Officer, and Dan Trettin, Senior Vice President of our Printing and Writing business. He joins us again today this quarter for an update on the Printing & Writing business. Thanks, Dan, for being here. Those of you viewing the webcast of this call will note we’ve started something new this quarter by providing slides that summarize and highlight key elements of our presentation, and provide commonly requested data points in a user-friendly fashion. We would appreciate any comments or suggestions you might have to improve the usefulness of these future calls. This morning we will be discussing Wausau Paper third quarter financial results, which we announced yesterday afternoon. Tom will provide a few opening remarks relating to the performance of the Corporation and initiatives in each of our three business units. Then we will ask Dan to provide commentary on the progress Printing and Writing is making against its profit recovery plan and uncoated freesheet market conditions in general. Following those comments, Scott will provide a summary financial review and touch on often-asked-for data points. Tom will then conclude our prepared remarks with a review of our outlook for the fourth quarter of 2008, after which we would be happy to address any questions you might have. With that, as usual, I would like to inform you that statements made during this conference call, other than those that refer to past events and results, are forward-looking statements made pursuant to the Safe Harbor provisions of the Securities Reform Act of 1995. Such statements, including those relating to expectations concerning earnings and price increases, involve risks and uncertainties that may cause results to differ materially from those set forth during this discussion. Among other things, these risks and uncertainties include the risks and assumptions described in Item 1A and Item 7 of the Company’s Form 10-K for the year ended December 31, 2007. The Company assumes no obligation to update or supplement forward-looking statements that become untrue because of subsequent events. And with those formalities out of the way, I will now turn the call over to Mr. Tom Howatt. Tom?

[Tom Howatt:]

Good morning, everyone. Adjusted third quarter earnings of $0.08 per share were significantly improved over a second quarter loss of $0.03 per share, and approached prior year profits of $0.09. Despite recessionary market condition, sequential profitability improved for each of our three business segment while year-over-year profitability improved for two. The success to-date of Printing & Writing’s profit recovery plan coupled with sales mix and pricing initiatives across all three of our businesses has created a measure of earnings momentum. Average selling price increased 14% over prior year with the most notable gains occurring at Printing & Writing. While input costs have begun to moderate recently in response to weakening economic conditions, year-over-year increases were significant with market pulp and natural gas cost up 11%, and 64%, respectively. Our Specialty Products business achieved significantly improved third quarter results as compared with both the second quarter and prior year. Price initiatives and mix enhancement efforts resulted in average selling price gains of 5% and drove much of the increase in profitability over the second quarter. These gains were particularly noteworthy considering a prolonged weakness in key domestic markets such as housing and manufacturing. Similar to Printing & Writing’s capacity reduction, we announced fourth quarter shutdown of the release liner machine at Jay, Maine, to address an underperforming area of the business and reduce exposure to the more commoditized segments of the liner market. Shutdown of the machine will eliminate 40,000 tons per year of high-cost capacity. Early in the third quarter, we closed our roll wrap operations in Columbus, Wisconsin and Jackson, Mississippi, as we completed transitional activities related to the sale of this unprofitable business in December 2007. These moves will allow us to further improve profitability by focusing the business on core markets, such as food service, food packaging, tape backing, and premium release liners. Towel & Tissue’s third quarter operating profit increased from second quarter levels but remained below prior year due to increased fiber and energy cost and several nonrecurring production upsets encountered during the quarter. Average selling price improved as a result of current year pricing initiative as well as continuing mix gains. Although third quarter operating margins fell below our long term target of 15%, the fundamentals of the business remain strong with year-to-date value-add and Green Seal certified product shipments increasing 11%, and 24%, respectively. These gains were achieved despite flat demand in the away-from-home market and reflect the continuing benefits of product innovation and our targeted distribution strategy. A priority for us over the next two quarters will be to complete the $31 million rebuild of our towel machine in Middletown, Ohio. Solid progress continues on the rebuild project. For those viewing the webcast, we’ve included several photos of work in progress on the new forming section. Installation is scheduled for late January and will require approximately three weeks of downtime. When fully operational, the upgraded machine will provide an additional 16,000 tons of capacity. Printing & Writing achieved the first of our profit recovery plan targets by returning the business to profitability in the third quarter. Dan Trettin, our Senior Vice President of Printing & Writing is with us again today to discuss third quarter results and the progress we’re making with the recovery plan. Dan?

[Dan Trettin:]

Thank you, Tom. It’s a pleasure to be with you this morning. Printing & Writing’s third quarter adjusted operating profit of $1.7 million is our strongest quarterly performance in four years and is in stark contrast with the second quarter and prior year losses. It is the execution of our profit recovery plan, specifically the repositioning of our business with the closure of the Groveton mill that has delivered improved performance. This performance is reflected in two important measures. First, as Tom mentioned, we achieved our initial recovery plan target that being a profitable third quarter. And second, our average selling price improved 18% as compared to last year, reflecting significant product mix improvement, due initially to the capacity reduction and elimination of lower margin grades present in our mix of last year. Sales and marketing efforts targeting growth for our core premium brands and market-leading position in colored papers gained traction in the quarter and as these continue we’ll see greater benefit in future quarters. These efforts, along with cost and efficiently focused capital expenditures will put us well on our way to achieving the second financial target of the plan, cost-of-capital earnings performance by the end of 2009. Meaningful progress has been made against our recovery plan this year. With one of our targets accomplished, we have now turned full attention to the second target, achieving cost-of-capital returns. The three elements of that plan were; minimize our exposure to the commodity segments of the uncoated freesheet market, bringing singular focus to our core products and brands, and systematic infuse capitals into our ongoing manufacturing system to enhance operational efficiency and improve the cost structure of these assets. The second part of our recovery plan continues today. For sales and marketing teams, our enhancing margin contribution from our premium brands such as Astrobrights, Royal, and Exact, through enhanced brand development and customer segmentation. Targeted account expansions have gone well, yielding additional volume contracts for 2009. The fist investment of our profit recovery plan is the Brokaw dry fiber-handling project. This $15 million project is on track and will begin to reduce cost and improve both efficiency and safety at the mill in the first quarter of next year. While not complete, we are certainly pleased with progress made to-date on our recovery plan. Third quarter shipments of 65,000 tons were 32% below prior year levels while net sales of $95.7 million compared with $119.5 million last year. Again, as was the case in the first half of this year, these fall-offs were anticipated and associated with the Groveton mill closure and our 30% reduction in manufacturing capacity. As we look forward, we are determined to achieve additional progress despite continued uncoated freesheet demand declines and uncertain economic conditions. Although industry demand declined 6% through the first nine months of 2008, pricing in this sector improved as producers sought to offset increased input costs. The broader economic weakness has had one benefit. Input costs appear to be stabilizing. Fiber and energy prices began to improve -- to mover lower towards the end of the quarter and indications are for that trend to continue into the foreseeable future. A combination of the unsettled economy, our moving into seasonally weaker sales periods, and the impact of scheduled holiday outages, will have a bearing on the fourth quarter results, but not our commitment to continue the progress achieved thus far through the profit recovery plan. We are confident that the steps taken to reposition Printing & Writing will provide substantial benefit in the months and years ahead. I appreciate the opportunity to share a few comments with you this morning. We’ll be more than happy to address specific questions during the question-and-answer session later on. Scott Doescher will now continue our presentation with a corporate financial review. Scott?

[Scott Doescher:]

Thank you, Dan. I’ll begin by providing several highlights for the quarter. First, as both Tom and Dan described, increased third quarter pricing and sales mix enhancements drove much of the improvement in profitability from the second quarter. The benefits of price and mix initiatives are quantified on earnings reconciliation schedules that I would – will discuss in a minute. As described in our press release, third quarter pre-tax charges related to the closure of the Groveton mill and shutdown of a paper machine at our Jay facility were $2.4 million and $3.7 million, respectively. Groveton closure charges are now essentially complete with charges of less than $100,000 expected in the fourth quarter. Charges associated with the paper machine’s shutdown are also expected to be complete in 2008 with nearly $7 million of those charges expected in the fourth quarter. As anticipated, capital spending increased during the third quarter due to spending on the $31 million towel machine rebuild at Middletown and the $15 million fiber-handling project at Brokaw. Total spending for the first nine months of the year was $24.7 million. And we now expect full year capital spending to be approximately $40 million. The pace of our timberland sales has slowed in recent quarters as a result of weakening economic conditions. During the third quarter, we did, however, sell approximately 1600 acres of timberlands at an average price of $1450 per acre, bringing total sales for the year to 3800 acres at an average selling price of $1600 per acre. 17,800 acres remain in our sales program. In addition, early in the third quarter we expanded our bank credit agreement, increasing the size of our credit line from $125 million to $165 million. I will share with you specifics on our current debt structure and available borrowing capacity later in the presentation. Before discussing our debt structure I would like to share two earnings reconciliation schedules with you. The first compares third quarter 2007 adjusted earnings of $0.09 per share with third quarter 2008 adjusted earnings of $0.08 per share. Sales mix – sales price and mix improved the equivalent of $0.40 per share as compared to last year with actual product price increases accounting for approximately two-thirds of this total. Although price and mix improved in each of our three business segments, it was Printing & Writing that recoded the strongest gain as a result of the capacity reduction associated with the profit recovery plan. Fiber priced increased the equivalent of $0.17 per share year-over-year with pulp accounting for approximately $0.09 per share of this total and purchased Towel & Tissue parent rolls $0.04 per share. Energy prices increased the equivalent of $0.11 per share as compared to last year with natural gas price increases accounting for $0.04 per share of this total and fuel surcharges $0.03 per share. Although material mix and use was unfavorable $0.07 per share compared to 2007, the higher cost were more than offset by increased revenue realized as a result of product mix enhancements. Operations and other variances were unfavorable $0.06 per share as compared to last year, driven in part by weaker operations within our Towel & Tissue business unit. The second reconciliation compares second quarter 2008 adjusted losses of $0.03 per share with third quarter adjusted earnings. As in the earlier comparison, third quarter sales price and mix was favorable with actual selling prices accounting for approximately $0.10 per share of the $0.12 per share improvement. Both fiber and energy prices were relatively flat on a sequential basis with each moving modestly during the quarter. As the quarter ended, we began to see lower fiber and energy prices, reflecting weakening economic conditions. Operations were essentially flat quarter-over-quarter. Our balance sheet remains strong at quarter-end with working capital measures improving slightly from year-ago levels. Debt increased modestly compared with last year while our debt-to-capital ratio increased from 34% to 38%. Given the uncertainties in the current credit market, I wanted to provide additional visibility on our debt structure. Slide 15 identifies our structure as of September 30th. At quarter-end, we had $15 million outstanding under our current bank agreement that expires in 2011. As mentioned, that line of credit was expanded from $125 million to $165 million early in the third quarter. The agreement provides the line of credit that backs up the $17.4 million in commercial paper and $19 million in industrial development revenue bonds outstanding at quarter-end. Our Senior Notes come due in two tranches with $68.5 million of our Series B Notes due in August 2009. While we have the option to pursue other refinancing alternatives, our expanded credit agreement provides the capacity necessary to meet repayment obligations with respect to these Notes. Our Series A Senior Notes come due in 2011, while our industrial development revenue bonds mature in 2023. At quarter-end, we had nearly $113 million of available credit under the bank line. Together with cash from operations, our borrowing capacity is anticipated to meet capital spending requirements, satisfy current maturities of debt obligations, and fund dividend payments to shareholders. Given the state of the credit market, covenant compliance is understandably on the mind of most investors. Slide 16 quantifies for you our performance against each of our covenants. We remain in full compliance with all of our covenants. Interest coverage is currently the tightest of these covenants with current coverage at four times interest compared with a minimum of three. Influencing this number are the facility closure and machine shutdown charges absorbed over the prior four quarters. In fact, if these charges are eliminated, our third quarter interest coverage increases to six times. We expect coverage to improve over the next several quarters as Groveton mill closure charges begin rolling off. We are comfortably in compliance with both our net worth and leverage ratio covenants. It is important to note that although we expect to remain in full compliance, recent changes in pension asset valuations are likely to place somewhat more pressure on both calculations. I’ll now return the call to Tom to discuss our fourth quarter outlook. Tom?

[Tom Howatt:]

As we begin the fourth quarter we see little reason to expect a near-term improvement in the domestic economy with demand remaining difficult in most business segments. At the same time, our focus on strategic markets coupled with actions taken to address underperforming areas of the business is paying dividends. We’ve achieved the early objectives of our Printing & Writing recovery plan. Mix improvement is gaining momentum at Specialty Products. And Towel & Tissue continues to achieve above market growth through the strength of its value-add product initiatives. As a result, we expect fourth quarter earnings to improve substantially over prior year and be in the range of $0.03 to $0.05 per share excluding timberland sales gains and facility closure charges. The apples-to-apples year ago comparison is a loss of $0.05 per share. We would now be pleased to answer questions.

[Perry Grueber:]

Linda, if you could queue for questions please.

[Operator:]

Certainly. (Operator instructions) And our first question comes from the line of Mark Wilde from Deutsche Bank. Please go ahead.

[Mark Wilde -- Deutsche Bank Securities:]

Good morning.

[Tom Howatt:]

Hey, Mark.

[Dan Trettin:]

Hey, Mark.

[Mark Wilde -- Deutsche Bank Securities:]

Tom, one issue that I had a question on kind of right off is just the benefit that you are assuming in the fourth quarter from lower fiber cost and lower natural gas cost. Can you guys tell us kind of what’s baked into the guidance at this point?

[Tom Howatt:]

Scott, why don’t you take that one?

[Scott Doescher:]

Sure. Mark, I can tell you that with regard to pulp when we had done our projections we had assumed modestly lower pricing. Certainly signs over the last couple of weeks are that pricing may fall off even quicker than anticipated but I would tell you that at this point our assumption is for market pulp to fall off modestly. Natural gas, which as you know is another important input cost for us, we do have a portion of that hedged. In fact, a large portion of those prices protected or that price protected over the fourth quarter and that price is about 20% below what we had realized in the third quarter of the year. So, sequentially natural gas price is down about 20%.

[Mark Wilde -- Deutsche Bank Securities:]

Okay. All right. I mean I am just – I am kind of surprised here just given all of the reports that (inaudible) about both pulp and waste paper prices that there is not a little more benefit there. Are there some contracts that may kind of affect all these spot prices that we hear about in the market either affect you or don’t affect you?

[Tom Howatt:]

Our contractual arrangements, Mark, are relatively limited with respect to market pulp both in terms of volume and in terms of any impact on price. So, we will ultimately market price. In some cases there may be an indexed arrangement that take some time to work its way through to our actual cost structure. But I think really the issue at this point is that as we put together our forecast for the quarter we’ve assumed a relatively modest fall-off. Based on what we all are reading in recent days there clearly is a likelihood of a more significant decline, but at the same time that also raises the specter of demand decline and potential impact on paper prices as well.

[Mark Wilde -- Deutsche Bank Securities:]

Okay. Is it possible to give us a sense about what you are seeing in and what you pay for parent rolls right now and whether you think there is any relief coming there?

[Tom Howatt:]

To this point in time really that market has remained relatively tight and there has not been any meaningful change in overall parent roll prices. Clearly, waste paper prices have begun to ease and you would certainly expect at some point in time that that may flow through to the parent roll market, but it hasn’t as of this point.

[Mark Wilde -- Deutsche Bank Securities:]

Okay. And then, Scott, I wondered if you could just provide a little more color on the pension comments you made toward the end of your comments?

[Scott Doescher:]

Sure, Mark. Wausau Paper, I think like most other companies right now, pension plans are being impacted by performance in the equity market. And although we don’t know exactly where the end of the year will bring us in terms of valuations from a pension perspective, certainly it’s reasonable to assume that pension assets are going to be a bit lower than what they were certainly at the beginning of the year and lower than where they were at the end of the second quarter. In fact, we’ll be taking a close look at that over the coming weeks in conjunction with a review of the actuarial assumptions for our pension plans. And at that time we’ll have a better idea as to what impact those pension plan changes will have on our financial statements.

[Mark Wilde -- Deutsche Bank Securities:]

Okay. But no further color you can give us right now?

[Scott Doescher:]

No, nothing specific. Nothing specific that I have available to provide today.

[Mark Wilde -- Deutsche Bank Securities:]

Okay. And then you’ve also mentioned that Towel & Tissue machine it’s going to be out for I think you said three weeks in the first quarter. Is there any way to give us some idea of what the cost of that may be in the first quarter?

[Tom Howatt:]

Well, we haven’t really quantified that at this point, Mark. Certainly, we’ll be building parent rolls as we prepare for that outage. And we are purchasing additional parent rolls on the market right now. But, of course, we will realize a reduction in output from our facility during that rebuild period. But at this point we haven’t quantified that/

[Mark Wilde -- Deutsche Bank Securities:]

I mean it looks to me like going to be a significant issue in the first quarter.

[Tom Howatt:]

It will certainly have an impact on first quarter performance.

[Mark Wilde -- Deutsche Bank Securities:]

Okay. And the things that you mentioned some production upsets in Towel & Tissue in the third quarter, is it possible that we can get a little better sense of what those might have been?

[Tom Howatt:]

Well, I would characterize them as either utilities related impact or mechanical failures that would have occurred on the machine, unusual circumstance within the quarter, atypical of the performance of that operation. And something that we believe is a nonrecurring-type situation.

[Mark Wilde -- Deutsche Bank Securities:]

How big might that have been just give us some rough estimates so we can kind of make an adjustment in terms of how Towel & Tissue did perform in the third quarter? Are you talking about $0.5 million, $1 million, just order of magnitude?

[Tom Howatt:]

The impact to that market exceeded $1 million in the quarter.

[Mark Wilde -- Deutsche Bank Securities:]

Okay. By a little or a lot?

[Tom Howatt:]

It was in the range of $1 million to $1.5 million.

[Mark Wilde -- Deutsche Bank Securities:]

Okay. (inaudible). I will drop back into queue now. Thanks.

[Tom Howatt:]

Thanks, Mark.

[Operator:]

Thank you. (Operator instructions) And now we’ll go to the line of Jonathan Lichter from Sidoti. Please go ahead.

[Jonathan Lichter -- Sidoti & Company:]

Good morning. What kind of assumptions are you making for 2009 uncoated freesheet volumes?

[Tom Howatt:]

I will perhaps start here, Jonathan, and maybe Dan can jump in. As we take a look on a longer term basis for the uncoated freesheet market, our expectations are a decline of perhaps in the neighborhood of 1% to 2% per year on an ongoing basis. That market, as you know, has declined between 5% and 6% so far this year, and we think a meaningful portion of that what’s happened from an economic climate. That economic weakness is clearly going to be with us again in 2009. So I think my sense of this is, is that the decline in 2009 will probably be perhaps somewhat more than that trend of 1% to 2%. Dan, you got further color you want to--?

[Dan Trettin:]

No, I think that’s pretty accurate, Tom. We are planning somewhere in the neighborhood of 260,000 tons to 270,000 tons for the year.

[Jonathan Lichter -- Sidoti & Company:]

And that’s compared to how many in ’08?

[Dan Trettin:]

275,000.

[Jonathan Lichter -- Sidoti & Company:]

Okay. Can you talk a little bit about the current conditions you are seeing in some of the Specialty Products product lines?

[Tom Howatt:]

Sure. The areas that the economy most significantly impacts the Specialty Products business is in the areas of housing and construction. That most significantly impacts tape markets. We also see it ultimately in lighter markets. And then some specialty grade such as (inaudible) and those types of grades. Those markets, historically, fall off meaningfully during recessionary business conditions. And we have clearly seen. That type of impact -- I would say that we actually began to see modest decline in some of those areas at the very end of 2007. That has continued through 2008 and I would -- perhaps as clearly picked up in terms of pace here over the course of the last few months.

[Jonathan Lichter -- Sidoti & Company:]

What about some of the other areas outside of housing and construction?

[Tom Howatt:]

Now, as you know, we have focused on growing our food service and food packaging participation in the Specialty Products market and in fact have been moving away from the more commoditized segments of the release liner market into those grades. We found those grades to be holding up very well and in fact we’ve been achieving a measure of solid pricing leverage in those markets as well. So, as we look at food service and food packaging, those markets clearly have remained strong for us.

[Jonathan Lichter -- Sidoti & Company:]

Okay. And then lastly, I may have missed this, but in Towel & Tissue the revenue gains there was that – what was the percentage that was attributable to share gains as opposed to other perhaps pricing?

[Tom Howatt:]

If we take a look at the average selling price, I was up as compared to last year, Jonathan, by about 7%. The majority of that was driven by price. A small portion, perhaps 20% or so is driven by mix.

[Jonathan Lichter -- Sidoti & Company:]

Okay. Thank you.

[Operator:]

Now, we’ll go back to the line of Mark Wilde from Deutsche Bank. Please go ahead.

[Mark Wilde -- Deutsche Bank Securities:]

Hi. I would like to just dig in a little more on the Printing & Writing business. You have mentioned that at several points potentially further capital into the Printing & Writing business and I wondered if you could just give us a sense of when those decisions will be made and if you have any sense – kind of order of magnitude?

[Tom Howatt:]

We can talk about timing of projects, Mark, because we have, as you know, been – are now into the recovery plan for essentially a year. And the first project that was approved that is nearing completion. We have a couple of other significant projects that are under consideration at this point in time. They’ve not been approved, but I would characterize their readiness as relatively near term, i.e., things that we will address as an organization within the next quarter or so and projects that if approved would be focused on helping us achieve our cost-of-capital returns in this business by the end of 2009.

[Mark Wilde -- Deutsche Bank Securities:]

So those would be decisions that will get made before we know if the business can actually get itself to cost of capital then?

[Tom Howatt:]

Yes. That’s part of the cost reduction initiative within this business that is going to get us to those cost-of-capital returns.

[Mark Wilde -- Deutsche Bank Securities:]

And is there any – can you give us any sense of kind of how they might compare in size the fiber line project that you are doing right now?

[Tom Howatt:]

That fiber project is likely the largest of the projects that we have under – it is the largest of the projects that were under consideration.

[Mark Wilde -- Deutsche Bank Securities:]

Okay, second question, you talk about how the overall uncoated freesheet market is down about 6% this year. Is the change in your targeted markets in Printing & Writing, is – can you give us a sense of how much that’s changed this year? In other words, is it different than 6%?

[Tom Howatt:]

Well, the 6% represents the overall uncoated freesheet market.

[Mark Wilde -- Deutsche Bank Securities:]

Right, exactly.

[Tom Howatt:]

If you look at the text and cover or premium end of the commercial print market, the decline in that particular area would be greater than the 5% to 6% the overall market has declined, but there are other components of – of course, the markets that we participate in one area is retail, which has grown to be a substantial portion of Printing & Writing’s revenues at this point in time. The other area is the new channels that we have been pursuing such as luxury packaging, scrap booking, and those types of more unique markets. And in those markets, clearly they would not be suffering to the extent that the overall uncoated freesheet market has been.

[Mark Wilde -- Deutsche Bank Securities:]

So, what will you guess the kind of that text and cover market is doing, Tom, just on a year-to-date basis?

[Tom Howatt:]

We believe it’s in the 8% to 10% decline range.

[Mark Wilde -- Deutsche Bank Securities:]

Okay, right. And then the last question I have just a little bit philosophically, Printing & Writing looks to me from covering you guys for a long time like it’s really entering into what typically has been kind of its cyclical sweet spot. When you have this drop in fiber cost you actually have an opportunity typically to hold on to margin for a little while. So, it seems to me if ’09 from at least a cost standpoint represents sweet spot, is this hitting cost of capital at the end of next year, is that good enough?

[Tom Howatt:]

Well, we would be thrilled to see a normalization of pulp and paper prices return to the marketplace. As you know, we’ve faced headwinds for four to five years where pulp and paper prices have really separated. And time will tell if in fact market pulp falls to a degree that we return to some measure of normalization. If in fact those things occur, it certainly creates upside potential for the business.

[Mark Wilde -- Deutsche Bank Securities:]

Okay, good enough. Thanks.

[Operator:]

(Operator instructions) And at this time we have no further questions. Please continue.

[Tom Howatt:]

Despite the impact of recessionary business conditions over the near term we remain confident that our focus on strategic markets, product innovation, and a disciplined approach to operations, will continue to produce improved results. We look forward to reporting our continuing progress and year-end results on Monday, February, 9th. Our next scheduled conference call is set for 11