Altra Industrial Motion Corp (AIMC) 2008 Q3 法說會逐字稿

Welcome to the Altra Holdings third quarter results conference call. Please note today's call is being recorded. I would now like to turn the call over to Michael Hurt, Chairman and Chief Executive Officer.

Thank you, Chris. Good afternoon, and welcome to our conference call to discuss Altra's third quarter and year-to-date 2008 financial results. Joining me today will be Carl Christenson, our President and COO, and Christian Storch, our CFO. As has been our past practice to help you follow our discussion on this call, we have posted on our Web site some slides that we'll be referring to during the call. Some of you may not have had a chance to access them. I will briefly walk through some steps. Go to our Web site, altramotion.com. Click on "Investor Relations" on the right hand side -- right upper right corner. Click on "Events and Presentations" on the left side, and then click on third quarter results and you should see the -- our presentation that we'll be talking from. Go to page one, and I will pause for a moment to give you time to read the Safe Harbor statement, which covers any of our -- any forward-looking statements that may be made during this call.

Okay, I'll now move forward with our presentation. Before continuing with the slide, I will briefly highlight our record third quarter 2008 results. Then I'll give you of our view of Altra's current business environment. Next, Carl and Christian will review our third quarter year-to-date financial results in detail. They will cover some of the activities that drove our record third quarter and year-to-date results, where we had outstanding financial performance. Christian will also discuss the Company's liquidity position. And Carl will discuss our contingency plans for the forecasting slowing of the global economies, which so far have had limited impact on our business. In my closing remarks at the end of the presentation, I will discuss our current outlook for the fourth quarter and update our guidance for the remainder of the year. Then, prior to opening up the call for a full Q&A session, I will give you some color on the succession plan we announced in our September the 25th 2008 press release, appointing Carl Christianson as Altra's President and CEO, effective January 1 '09 and appointing me to continue as Executive Chairman of the Board of Directors.

Now I will give you some highlights of our third quarter. Altra delivered another quarter of record financial results, driven by a continuing demand from our global OEs, distributors and target markets. Net sales for the third quarter was a record $159.4 million. Reoccurring earnings per share grew 45.8% to $0.35 cents per share, beating consensus estimates. Our third quarter growth was particularly impressive, given the rising commodity prices at the beginning of the third quarter and despite the weakening global economy. Our balance sheet has a strong cash balance and we have continued to improve our leverage ratios through strong cash generation and additional repurchase of some of our 9% notes during the past quarter. Given the financial turmoil that accelerated at the end of the third quarter, we saw a deceleration in our bookings late in the quarter. Bookings for the third quarter of '08 were essentially flat compared to the third quarter of last year. Our year-to-date bookings through September were up 5% compared to last year.

In the third quarter, the late cycle markets which use Altra products, that is energy, mining, metals and et cetera, showed mixed performance. Energy, especially oil and gas drilling and power generation, continued to be solid, based on our bookings and feedback from our customers. We have not yet seen deterioration in our mining -- from our mining customers, but with the precipitous fall of copper and other metal prices, we currently have a guarded outlook. However we have just received a significant order for replacement parts for rebuilding some mining equipment in Australia. So rebuilding and upgrades appear to be going forward. Steel companies are constraining production, and we have seen upgrades and spare part repair orders moved out until next year. Our target markets on a whole were up 15% this quarter compared to last year. So with our new product development and focus on these markets, we expect that our performance in these target market niches should buffer the impact on Altra's revenues if the recession drags on.

As we have discussed in the past, we expect the diversity of our end-markets and a split of our after-market and OE business to partially mitigate the impact of a prolonged recession on our top line. However, the management team fully realizes that we are a supplier of products that are subject to the business cycle. Therefore, we have already completed significant contingency plans for a recession. Carl will give you some details of these plans in his discussions. Now I'd like for you to move to page two on the Web presentation, and Carl will -- I'll turn the call over to Carl Christianson. Go ahead, Carl.

Thank you, Mike. We are pleased with third quarter record results. Revenue for the quarter was $159.4 million, up 8.2% from the same quarter last year and 6.2%, net of acquisitions. Operating income improved from $16.9 million in the third quarter of 2007 to $18.5 million in the third quarter of 2008, an improvement of 9.5%. The operating income results were excellent when considering the rapid increase of raw material costs that some of our businesses experienced in the second and third quarters. Recurrently net income increased from $6.3 million to $9.1 million, an increase of 44.5%. And recurring EPS increased from $0.24 to $0.35, an increase of 45.8%. We repurchased 12.5 million of the 9% senior secured notes, and we are confirming our 2008 full-year guidance, which we will review in detail towards the end of the call. In addition, Christian will provide more detail on the financial results.

Now, moving to slide three, several of our end-markets remain strong in the third quarter, and our businesses that serve those markets have significant backlogs. The markets that had a positive influence on the business include energy, especially oil and gas and power generation, mining, farm machinery and material handling. Those markets that were down include turf and garden, paper and forest products, and general industrial machinery. From a geographic standpoint, North American sales were up slightly from the year ago period, while sales in Europe and Asia experienced higher growth than North America. The growth in both of these regions has moderated somewhat from what we had been experiencing. Pricing actions to offset material cost increase increases and our cost reduction initiatives helped us to maintain our operating margins. In the third quarter, the most significant cost improvements came from low-cost country sourcing and productivity improvements. The productivity improvements are a result of the Altra business system that we have been utilizing for many years. While we have seen some signs of the anticipated slowdown, we have not yet seen indicators of a major contraction in our end-markets. Some of the signs that we look for are lower book-to-bill ratios, buildup of inventories at our customers, order cancellations or push-outs, layoffs by our customers or customers paying beyond terms.

However, we are very concerned about the impact of the financial crisis on the global economy. With capacity utilization at less than 80%, capital expenditures shrinking and the October PMI at 38.9%, we anticipate that very difficult market conditions may lie ahead for some of our businesses. Our incoming order rate in the third quarter was essentially flat with last year's third quarter, and recently we have seen a few customers push out some delivery dates. The most notable has been in the steel industry, where a few plants have announced significant reductions in production. While the push-outs have been isolated and limited, all of our businesses are closely monitoring their incoming rates. In this environment, we will continue to deploy the strategy that has enabled us to grow revenues and improve margins. Our organic growth initiatives that will continue to employ include new product development, leveraging our sales and distribution network to gain share, focusing our resources on target markets, continue to expand into the motion control space and continue our geographic expansion. In addition, we continue to work our acquisition pipeline and improving the balance sheet so that we can make appropriate strategic acquisitions when the time is right.

We have some exciting new product and new business opportunities that we have been working on. The strength of our brand names, the balance between original equipment and after-market business, and the diversified end-markets that we serve provide us with a wide variety of opportunities to pursue. Earlier this year, we introduced a stainless steel feed reducer that was designed to meet the food and beverage industry requirement. The product we introduced is the only speed reducer that we know of that carries the National Sanitation Foundation certification. This product is being well received by the food and beverage industry. We also introduced a clutch earlier this year that is used inside large speed reducers in the marine and energy markets. We recently received another very significant order for this product that will be delivered in the first quarter of 2009. This is a good example of a product we engineered specifically to solve a problem that our customer was having with one of our competitor's products. And niche opportunities like this still exist in market downturns.

We will also closely monitor our incoming order rates and adjust our cost structure accordingly. All of our businesses have contingency plans and continue to improve them. I mentioned earlier several of our businesses still had a very strong backlog and are working to maximize the opportunities. Those businesses that are experiencing a slowdown are implementing multiple actions to minimize the impact of lower volumes. Some of the opportunities included in the contingency plans are that they maintain a proactive market analysis by monitoring accounts receivable, book-to-bill ratios, customer activity and industry economic indicators, a reduction in discretionary spending. They monitor material purchases to minimize inventory levels, reduce travel and entertainment expenses, accelerate the Altra business system and productivity improvements, curtail professional fees, reduce overtime and temporary labor, reduce the number of production days, and adjust work schedules, limit capital expenditures to focus on maintenance and growth activities, direct, indirect and salary headcount reductions where appropriate, evaluate acceleration of potential restructuring projects and in-source to maximize fixed cost absorption.

One significant concern as a manufacturing company is de-leveraging as volumes drop in the factories. During the last few years, while we have been experiencing significant top-line growth, we have subcontracted a substantial amount of machining work. In a downturn, we can bring some of this machining work back into our factories to reduce the impact. While we will manage costs, we will endeavor to protect the long-term growth initiatives that we believe are critical. We also will be prepared to act on opportunities that do come up. And since we have been utilizing the Altra business system for many years, we are well positioned to capitalize on our ability to deliver with short lead times and take advantage of those opportunities that do arise. And now I'll turn the call over to Christian.

Thank you, Carl, and good afternoon, everyone. This afternoon we will be filing our 10-Q, which will provide you with additional information for our results for the third quarter and the first nine months of the year. Moving on to page four of our slides and our unaudited third quarter 2008 results, we are again pleased to report third quarter results, as Carl mentioned. Our gross profit margin improved again when compared to the prior year quarter, despite higher commodity prices. Gross profit reached 28.8% of sales, an increase of 40 basis points when compared to the year ago quarter. We were able to more than offset raw material cost increases sustained during the past year through proactive price management, the continued benefit of low-cost country sourcing initiatives, productivity savings from our ABS and CapEx projects. SG&A was 16.1% of sales, up 50 basis points from the prior year quarter. This increase was driven by high compensation expense, which we expect this trend will continue into the fourth quarter. As a result, operating income for the third quarter was up 9.5% to $18.5 million. Our tax rate continues to be lower than in the prior year. The third quarter tax rate from continuing operations was 31.7%, down from 32.3% in the prior year quarter. For the full year, we now forecast a 34% tax rate, compared with 37.9% in 2007. This decrease continues to be driven by a proportional decline of our foreign tax expense.

Third quarter recurring net income was up an impressive 34.4% and came in at $9.1 million, or 5.7% of sales. Higher operating income, combined with a significantly lower interest expense and a lower tax rate, drove this improvement. Our recurring diluted earnings per share for the third quarter increased 45.8% to $0.35 a share. Slide five is a reconciliation table that shows how we get from reported third quarter net income from continuing operations to the recurring net income number. In this reconciliation we have removed all material one-time costs to demonstrate what our ongoing business looks like. In this schedule we have removed the tax effective cost of the premium and the write-off of deferred financing expense related to our redemption of debt, restructuring charges and an old debt retirement again. On page six, we take a look at our unaudited financial results for the first nine months. Our gross profit as a percentage of sales was 29.4%, SG&A expense as a percentage of sales was 15.7%. Operating income was $61.2 million or 12.5% of net sales, an increase of 22.9% over the prior year period. Recurring net income from continuing operations increased by nearly 50% to $29 million. Our recurring diluted earnings per share from continuing operations increased to $1.11 per share, up from $0.82 in the first nine months of 2007. This is an increase of more than 35%. Page seven is a reconciliation that shows how we get from reported net income from continuing operations to the recurring net income number for the first nine months.

Now I'll cover some balance sheet highlights as of November 27th. Take a look at page eight. We feel good about our capital structure at this point of great economic uncertainty. Our cash balance at the end of September was $49.8 million. This balance was $6.6 million higher than at the end of the second quarter, despite retiring $12.5 million of the 9% senior secured notes during the third quarter. As a result, our net debt to total capital ratio improved to 55.8%. This is down from 58.3% at the end of the second quarter, and from 65.3% at the end of 2007. Our leverage ratio was 2.04 times last 12 months EBITDA. Turning to page nine and a brief summary of our liquidity position, at this point we are taking a strategic position of our liquidity and move to an extremely conservative investment style. As a result, we will see a decline in our interest income going forward. Our year-to-date cash flow from operations continues to be very strong and came in at $31.6 million. This is a 45% increase from the prior year level. Our revolver capacity exceeds $20 million. Our LIBOR spread is 175 basis points with no LIBOR floor, and this facility is undrawn. Our debt covenant is light, and we do not have any near-term financing needs, as the majority of our debt is not due until late 2011 and 2013. Essentially, we have no financial maintenance covenants in our debt agreements. Our LIBOR-based debt is limited to $6 million, our floating rate debt is limited to $11.3 million.

Some other financial highlights are net interest expense was $7.3 million and continued to decline due to the benefit of lower borrowing levels, which were partially offset by the effect of lower market rates on our invested cash balance. The lower rates were partially due to investing a significant portion of our cash balance in government securities. Excluding the deferred finance expense on the third quarter debt reduction, net interest expense totaled $6.5 million. This indicates an annual run rate of $26.5 million. CapEx during the third quarter was $4.6 million, and $12.2 million for the first nine months. We expect CapEx spend for the full year to be between $15 million and $17 million. Depreciation and amortization was $5.8 million for the quarter, and $16.8 million for the first 9 months. This indicates an annual run rate of approximately $22 million. Now I'll turn our discussion back the Mike.

Thank you, Christian. Market fundamentals weakened a number of our end-markets in September, as the worldwide industrial production and capacity utilization decreased. As a result, our incoming order rates are softening in certain markets. Although our business fundamentals remain strong, in the slower economic environment we're implementing initiatives driven by detailed contingency plans across the Company, as Carl described earlier. This will ensure that Altra emerges from the economic slowdown a stronger and more efficient company. We're accelerating our productivity actions for the balance of 2008 and 2009. We're intensifying our focus on driving market share gains and maintaining best-in-class lead times in customer service through the downturn to be able to take any business that comes through our doors.

Also, we will stay the course on the key initiatives that have driven our success, which include new product development, target marketing, low-cost country sourcing and lean enterprise initiatives through our ABS system. Excuse me. As a result, we are maintaining our full-year guidance. For the top line, we are guiding $640 million to 650 million. And today we think we'll come in on the lower side of those numbers. Our earnings per share, $1.28 to $1.37, we think we'll come in on the high side of that range. Capital expenditures, as Christian just stated, we're estimating $15 million to $17 million. That range is lower than we said in the two quarter -- second quarter, which was $17 million to $19 million. Depreciation and amortization we're still forecasting $21 million to $23 million. And the effective tax rate of -- excuse me, effective tax rate of 34%.

Now, before moving to Q&A, I just want to make a few additional comment about the transition plan we formally announced in late September, appointing Carl to the presidency and CEO position effective January 1, 2009, and me transitioning to be the Executive Chairman of the Board of Directors on that date. When I came out of retirement in 2004 to become Altra Holding's CEO, we planned from the beginning for me to transition out of the CEO position in three to five years. When Carl joined the company in January of 2005 as President and Chief Operating Officer, the Board and I knew we needed an experienced leader at my side to accelerate the changes we felt were necessary to build out into the strong public entity it is today through the combination of organic growth and acquisition.

Since the late '80s, Carl and I worked together continually, exempt while he was president of Kaydon Bearings from June '01 to January 2005. The Board and I are confident that Carl has both the business acumen and leadership skills to continue to build out, to grow Altra and grow shareholder value. As for my role as the Executive Chairman of the Board, I will continue to coordinate Board activities and work with the Board committees. In addition, in this role, the Board has asked me to participate in strategic planning, coaching, acquisition identification and due diligence, and be available for special projects as requested by the Board or the executive team, utilizing my 41 years of experience in the business and/or my professional engineering credentials.

Having spent our careers in the PT business, Carl and I have managed through several of these downturns. And I have committed to Carl, his team and the Board to be available as required to help mitigate the impact of the recession on Altra. In closing, it is my opinion we have absolutely the best senior management team in the industrial power transmission business. And Carl has the right stuff to lead our company and this team. Now I'll open it up for a Q&A session.

Thank you, Mr. Hurt. (OPERATOR INSTRUCTIONS). Our first question comes from Steve Sanders at Stephens Incorporated.

Morning. This is [Trey] for Steve. I know that you mentioned that order rates have softened some in September. Has that trend continued into October or was that more of a one-time anomaly?

The rate in October was similar to September.

Okay, and if things worsen and we see, I guess, a recession somewhere to the 2001 timeframe, how should we think about compression on margins under that type of environment? I know you have some offsets with low-cost and ABS and things of that nature. If you could just talk a little bit more there, that would be helpful.

Yes. We have done an awful lot of work and we're actually working through the budgets, you know, currently. I think the most pertinent thing to talk to is probably the scenario we've mentioned in the past. If there were to be a 10% downturn in our top line, in revenues, then we think we'd see about a 250 basis point drop on the operating income line.

Okay. That was helpful. And then international sales for the quarter, what did those come out to be?

We didn't break them out separately but the-

It is still the -- I guess Europe 10% Asia and the rest of the world.

Yes, it's in that same order of magnitude. And I did mention that North America was with slower growth. We saw, you know, some better growth in Europe and Asia, but not to the same level that we had seen in prior quarters.

Okay. And then last question, with free cash flow being kind of backend loaded, what's the impact of a stronger dollar been to you guys?

On the top line, you mean?

Yes.

This quarter currency was favorable by about 60 basis points. So the top line benefited by 60 basis points.

Okay. And do you see that reversing somewhat in the 4Q?

We see that decreasing pretty significantly in Q4. We now assume that currency will be unfavorable by about 300 basis points in Q4.

Okay. Great. Thanks, guys.

Okay. Thank you, Trace.

We'll take our next question from Arnie Ursaner at CJS Securities.

Hi, good afternoon. This is actually Torin Eastburn for Arnie.

Hi, Torin.

First off, congratulations to both Carl and Michael.

Thank you.

How much of the growth in the quarter was price and how much was volume?

We had 610 basis points of organic growth. 60 basis points of that was exchange. 300 basis points of that was price, and the balance, about 150-ish, 160-ish was volume.

It's over 2%.

Okay. And you seem to have come through the rise in steel relatively unscathed. What do your inventories and materials look like right now, and what do you expect their effect on margin to be going forward?

We think it will probably take in the four to eight week period to work through the inventories that we have. So we don't have a substantial amount of inventories but we'll start to see some of the -- I think you're asking when will we start the see some of the improvement in material costs.

Right, right.

Yes, so it will probably take four to eight weeks. We think in the first quarter we'll really start the see it.

Okay. Thank you. And also, can you also give us an update on your pension, just in light of recent market events?

Yes. We actually think that our funding position has improved. Now that may surprise you. We lost -- if you look at the end of last year, I think our pension assets were about $14.5 million. That number has come down to about $12.7 million at the end of October. But at the same time our liability has dropped significantly for two reasons - one, an increase in the discount rate most likely, and secondly through pension payments that we have made since then. So net/net, we believe the funding position actually improved slightly.

All right. Thanks, Christian. Just lastly, quickly, what was the other income line in the quarter?

A big chunk of that, about $950,000 was favorable currency, driven by two things - transactional gains where we settled intercompany debt, and by a favorable current on the outstanding balance of the bridge bond denominated bonds. And the balance, about $150,000 of income from the transition service agreement as a result of the divestiture of the TB Woods [sp] Electronics business. And then there's about $300,000 of other income included in that number.

Okay. Thank you very much.

Our next question comes from Michael Schneider at Robert W. Baird.

Good afternoon, guys. First, congratulations to Mike and Carl as well.

Thank you, Mike.

And I guess, jumping right into pricing, can you give us a sense, the 5% to 6% price increase you put in effective August 1, did that stick or was there difficulty because of raw material deflation?

No. That price increase stuck, and that was primarily in the industrial distribution channel. We also did go after -- you know, where we did have some -- or thought we were going to have some margin slippage as a result of material increases. And those have all -- those have all stuck.

Okay. And Christian, I apologize. Could you repeat what pricing contributed during the quarter?

Yes. It was 300 to 350 basis points. I think I said 300 basis points earlier. It was somewhere between 300 and 3450 basis points, which sequentially is higher than the second quarter.

Okay, and presumably that contribution rises again in Q4?

We now think we're going to be in that -- in a similar range, about 350 basis point maybe in Q4.

Okay. And then, guys, based on your experience with a number of up cycles and down cycles in this PT business, what would you expect, given that the inflation in pricing has been so great this cycle? What was your experience in past cycles with product price deflation, and how might it be different this time, given where we've started and where we've ended?

Yes. Typically what we see, Mike, is in the industrial distribution channel, we don't see -- well, in past downturns, we haven't seen a retraction in pricing to any extent. And those prices seem to hold up pretty well. You know,, on the OEM side, it depends on the -- on how bad the downturn is and how extended it is. I think one of the benefits of our company is that we have a lot of engineered products and, you know, price is certainly an issue, but there's a lot of other issues that the customer looks at also - you know, our ability to deliver, the quality, the engineering services we provide, our ability to help with just-in-time deliveries and manage inventory. So we think we've got a lot of other things to sell and, you know, and try to hold those prices. Obviously if it's a real deep downturn for a long time, then there's going to be competitive situations out there that will have to work to and defend our market share.

And on some of the OEM bids or quotes that have been most recent, have you already seen some of your competitors starting to offer discounts, better terms or whatever it is?

No, no, we haven't, not yet.

Okay. And I guess, just on the EPS guidance, Christian, have you assumed within that guidance certain restructuring charges, or does it exclude them?

At this point, we're not anticipating restructuring charges in the fourth quarter beyond the small dollar amount that we have seen in the previous quarters.

Okay. And then, just within North America, Carl, can you -- you mentioned the North American business was up, but sounds like modestly. Was there a distinct difference in growth rates between channels, that is OEM and distribution?

Yes. We're definitely doing better in the OEM channel, and probably twice the growth rate on the OE side as in the distribution side.

And in units, is distribution likely negative?

Boy, I'd say it's probably flat. And, you know, we're doing very well in some of the specialized distributors and some of the more general industrial distributors it's probably a little bit softer or it may be a little bit of a downturn. But the specialized guys are doing quite well still.

And in that distribution channel, are any of your top three or five distributors of concern as far as liquidity goes, and have you changed your bad debt expense or reserve at this point?

We have not made changes to the bad debt reserve, with the exception of maybe in fourth quarter of about $200,000 to $250,000. They were specifically related to a couple of our smaller customers, where we have started to be concerned but nothing significant.

You know, our distribution position is exceptionally strong at the very large national players. And quite frankly, they buffer us from all receivables from the smaller companies, based on that's where they conduct their business, and they're solid.

Okay. All right, thank you again.

All right. Thanks, Mike.

Jeff Hammond from Keybanc Capital. Your line is open.

Hi. Good afternoon guys.

Hi Jeff.

You talked about some of the deferrals in the steel market. Any other markets where you're hearing chatter or seeing any actual deferrals to the same extent at this point?

Not to the same extent. We've had, you know, some guys -- some customers push out from fourth quarter to a few weeks to the first quarter, but not anybody shutting down production like some of the steel plants are.

Okay. And then, as you think about mark -- market outgrowth, I mean pretty good momentum this year. How do you see that, you know, changing for the good or bad into '09? You know, what are some of the key opportunities you see into '09 on that front?

Yes, I think -- are you talking about the markets in general?

Yes. Just where you see opportunity to outgrow whatever, you know, the underlying demand is going to be, whether it be new products or where you think you can take share, et cetera?

Well, I think it's some of the same strategic markets we've been going after. One of the nice things about the markets we serve, it's a very diversified end-market base. And we still have some very good projects coming in from energy related customers, and power gen systems are doing very well right now. And then we've got some new products going into some big gear boxes that go into offshore platform platforms. So those customers are still investing. We've got some good mining applications. I know the market seems the think that mining is going to fall off a cliff here pretty soon, but we still have some very good projects. And those are, you know, seem to be very long-term projects, some of them going out into '10.

One of our divisions though has some new defense business that's just starting to come online for next year that we didn't have in the past years.

Okay. And then, Carl, you mentioned a number of items that you're focused on within contingency planning and controlling costs.

Yes.

Are you acting on all of those at this point, or what are some of the areas that you're being a little more aggressive out of the gate?

We're being most aggressive at the businesses that are in, you know, some markets that have seen a downturn. And when you look across their businesses, some of them still have very strong backlogs. And we're pushing them to get the product out the door. And so we're really focusing, business-by-business, and taking the opportunities that we have at each one of those businesses.

Okay. And then finally, what would you need to see, you know, in terms of demand trends to consider something more of a greater magnitude than some of this -- some of these smaller individual items in terms of, any kind of head count or facility rationalization?

Can you repeat the question, Jeff?

Yes. Just -- I mean, at what point or what level of, you know, demand trends would you need to --

Okay, what kind of threshold?

Yes, I mean is that something that, at these levels, you're starting to contemplate?

Yes. I think, you know, if one if our businesses started to see a 10% downturn, they'd -- you know, we'd really start to look at rationalization plans and pulling some of those in. But some of them have seen just seen a flattening of growth and have started to make some changes already. So, I think it depends on the business-by-business what level and where they can make cuts. We've asked everybody to make whatever cuts they can take that are prudent and are not going to affect growth.

Two of our business units have already taken out people within the last 15 to 30 days. The other point I would make is we have a low level of unionization in our businesses, especially in North America. And many of our businesses use temps and we can flex them based on demand, and our guys are doing that.

Okay. Perfect. Thanks, guys.

Okay. Thanks, Jeff.

And gentlemen, we don't have any other questions.

Okay. Well, we thank everyone for calling in, and we look forward to talking to you the next quarter, where Carl and Christian will be working hard to answer your questions and make the presentation. And I'm going to think I'll be a listener most probably. So, look forward to seeing some of you at the meetings in the future, but Carl and Christian will be heads up next year. Thank you.

We appreciate your joining us for today's conference call. Have a great day.