Altra Industrial Motion Corp (AIMC) 2009 Q1 法說會逐字稿

Good day, everyone, and welcome to today's program.

(OPERATOR INSTRUCTIONS.)

It is now my pleasure to turn the conference over to Mr. Carl Christenson. Please go ahead.

Thank you, Megan.

Good morning, and welcome to our conference call to discuss Altra's first quarter 2009 financial results. Joining me today will be Christian Storch, our CFO.

To help you follow our discussion on this call, we have posted slides on our website that we will be referencing during the call. Hopefully, you've already had a chance to access them, but in case you haven't, I'll walk you through the steps to access this presentation.

Please go to our website, www.altramotion.com, click on "Investor Relations" in the upper right-hand corner, click on "Events and Presentations" on the left-hand side of the screen, click on "First Quarter 2009 Results," and you'll see our slides.

Now, please go to page one. I will pause for a moment to give you time to read the Safe Harbor statement, which covers any forward-looking statements that may occur during this call. And if you're not looking at the presentation, you may refer to our forward-looking statement in our press release or the documents we file with the SEC.

I will make some opening comments and give you our view of Altra's current business environment. Christian will then review our first quarter 2009 financial results in detail. We will also discuss the actions we're taking in response to the global economic downturn, which started to impact our business in the fourth quarter of 2008, and then we will go to Q&A.

Now, please go to page two. We are extremely pleased with our first quarter results in light of the very sudden broad-based global economic downturn we began to experience in the fourth quarter of 2008. We took swift and aggressive action to maximize cash flow and profitability. Our operating cash flow for the quarter almost tripled to $11.6 million compared with $3.9 million for the first quarter of last year, and our cash position increased $9.3 million, or 17%, since year-end.

The strong cash flow was due to solid execution by our operating units, reduced capital spending, and reduction of working capital. We generated $3.1 million from working capital reductions, primarily from inventory. Our factories are under-utilized as a consequence of both lower demand and our focus on inventory reduction.

We are very pleased with the excellent execution by our operating (inaudible) to reduce cost. Our cost savings initiatives enabled us to offset much of the under-absorption due to the lower volume.

On a recurring basis, our operating income was $11.1 million compared with $21.3 million for the same period last year, and recurring EPS decreased from $0.37 to $0.12. Christian will provide more detail on the results.

Now, please go to page three. We are well ahead of plan regarding the cost reduction initiatives we began in the fourth quarter of 2008. During our fourth quarter conference call, we indicated we expected to achieve $40 million of cost savings in 2009 with an annualized value of $50 million.

We now anticipate cost savings for the year of approximately $50 million with an annualized rate of about $60 million. These cost savings initiatives can be grouped into three categories - payroll related expenses, site consolidations, and procurement and other cost reductions.

Regarding payroll costs, since November of last year, we have reduced the number of employees by approximately 16.2%, or 564 associates. We have frozen wages wherever possible. We implemented one-week unpaid furlough for all salaried employees. We eliminated the discretionary portion of 401(k) matching contribution. We have implemented shortened workweeks and reduced target incentive compensation by 50%.

The executive staff has taken a temporary salary reduction. I have taken a 10% reduction, Christian has taken a 7.5% reduction, and the remainder of the executives have taken a 5% reduction. In addition, the Board of Directors has taken a temporary 10% reduction in their fees.

Our facility consolidation plans are also on track. We expect to rationalize operations at up to six locations during the next 15 months. And during the quarter, we announced four rationalization projects to the operations being affected. We expect the annual savings from these six projects to be in the range of $6 million to $7 million and the cost to be approximately $10 million to $12 million.

Our procurement and other cost reductions are also ahead of plan. During the first quarter, we announced that, as the result of a competitive bidding process, we changed our outside audit firm, which will yield annual savings of approximately 25%. We reduced our marketing expenses, travel and entertainment expenses, all discretionary spending and professional fees, and re-negotiated some leases.

Our low-cost country sourcing initiatives are on plan. Material costs have had a mixed impact. Steel prices, while down significantly from their peak, were essentially flat in the first quarter of this year when compared with the first quarter of last year. Copper prices were significantly lower in the quarter than they were a year ago.

At the beginning of the quarter, it appeared as though copper prices were stabilizing at a level significantly lower than their peak, and then they began to run up again. Where possible, we manage material costs through surcharges and by tying prices for custom products either to a firm material quote or index.

Now, please go to page four. Sales for the quarter were $124.5 million compared with $163.2 million for the same quarter last year. This was a 23.7% decline. After adjusting for the inventory write-down, our gross profit was 27.6% compared with 29.3% for the same period last year.

And after making adjustments for the inventory write-down, the OPEB settlement gain and restructuring charges, our operating income was 9% compared with 13% for the same quarter last year. This translates to a de-levering on the operating income line of about $0.25 per sales dollar.

In general, we have been successful in maintaining our selling prices, and pricing had a favorable impact of approximately 220 basis points for the quarter when compared with the same quarter last year. We do not expect to see pricing pressure from our (inaudible), but we do expect to see pricing pressure from our customers, but we continue to believe that pricing issues are manageable and will not result in across-the-board reduction in our selling price.

Currency movements as a result of the U.S. dollar strengthening against the euro and the British pound accounted for 520 basis points of our top-line decline. We believe our balance sheet and liquidity are in good shape to weather this downturn. The majority of our debt, $242.5 million of 9% notes, is not due until the end of November 2011.

Nearly every market we serve is experiencing significant retraction, with the only exceptions being our Military business and our Power Generation business, where some significant projects are helping to maintain sales in those two end markets.

Based on incoming order rates, the reduction of our backlog, seasonality and anticipated extended factory shutdowns at some of our customers, we expect the second and third quarters to be more challenging than the first. This may be somewhat offset by a reduction in inventory de-stocking by our industrial distributors. We also expect to realize a favorable impact on our earnings as a result of over-achieving on our cost savings initiatives. In addition, when business levels improve, these savings will have tremendous leverage.

Of course, we are continuing our growth initiatives, and we are working on several significant new business opportunities. Last year, we introduced a stainless steel gearbox targeted at the food industry, and sales of this product are exceeding our expectations.

Project work at many of our customers continue even though production orders are down. We received a significant order from a mining operation in Australia that is continuing to invest in an upgrade project. We also had a request from a military contractor to design and build a prototype of a custom drive system with very short lead-time.

The drive system included a linear actuator, a gearbox, a motor and an electric brake. We exceeded the customer's expectation with respect to our response and the performance of the system. The annual value of the production units will be over $2 million.

We believe that, in the long-term, energy will be a growth market for us, not only in traditional energy sources but also in new technologies like wind turbines and new geographic regions. During this quarter, we received a request for proposal from another large wind turbine manufacturer that is expanding capacity in North America. We do not expect market conditions to improve appreciably in the near-term. The economic indicators that we track are predominantly still negative, but have at least stabilized and, in some cases, shown slight improvement.

The ISM/PMI, while still indicating contraction, has improved for the last four months, and the pressure curves indicate that we could return to economic growth in late 2009 or early 2010. We also expect that inventory destocking will begin to abate some time during the second quarter and, by the end of the year, we should be receiving orders based on true market demand and not at a level that reflects the destocking.

Now, I'll turn the call over to Christian.

Thank you, Carl, and good morning, everyone. I'll start by reviewing a few details on our first quarter results.

Moving on to page five in our unaudited first quarter 2009 results, sales for the quarter were $124.5 million, a decline of approximately 24% from $163.2 million in the prior year first quarter. Order rates continue to be weak, but are not deteriorating.

The favorable effect of price increases of 220 basis points was more than offset by unfavorable currency effects of approximately 520 basis points.

The gross profit margin for the quarter was 25.9% compared with 29.3% in the prior year quarter. We added approximately $2.2 million to our inventory reserves due to the significant slowdown in our incoming order rates. Excluding this charge, our gross profit margin would have been 27.6%, a performance which we are very pleased with.

SG&A expense as a percentage of sales was 17.4% compared with 15.1% in the prior year first quarter, mainly due to lower sales volume. As Carl mentioned, we are significantly exceeding our cost reduction targets for 2009. We now believe that our initial goal of $40 million in cost reductions will be fully included in our run rate in late May.

Restructuring costs for the quarter totaled $1.9 million and was related to severance and an asset impairment charge associated with the plant closure. A new collective bargaining agreement with the union at one of the company's facilities eliminated post-retirement benefits, resulting in a one-time benefit of $1.5 million. Interest expense totaled $6.3 million for the quarter, down 15% from the prior year level. The decrease was due to lower borrowing levels, partially offset by lower interest income on our investable cash as we continue to invest our cash conservatively.

Our first quarter tax rate was 38.4%. With lower income levels, permanent differences have had a larger impact on our rate. We believe that the first quarter rate is a good indication for our full-year tax rate.

And finally, net income for the quarter was $1.4 million compared with $8.6 million in the prior year. Diluted earnings per share were $0.05 a share compared with $0.33 in the prior year. On a recurring basis, our EPS, which excludes restructuring charges, the benefit of eliminating the post-retirement benefits and the inventory charge, were $0.12 a share for the first quarter compared with $0.37 in the prior year.

Page six is a reconciliation that shows how we get from reported first quarter net income to the non-GAAP recurring net income number. In this reconciliation, we have removed all material one-time costs to give you a feel for what our ongoing business looks like.

Now I'll cover some balance sheet highlights. Taking a look at page seven, our cash at the end of March was $61.4 million. Our cash balance has grown by nearly $10 million, or 17.9%, since December 31, 2008 as a result of very strong cash flow from operations. In fact, our operating cash flow almost tripled when compared with the prior year quarter.

Cash flow from operations was $11.6 million compared with $3.9 million in the prior year period. Net debt was $201.6 million at the end of the first quarter, a decrease of $33.1 million from the year-ago quarter and $9.7 million from the December 31, 2008. Reducing net debt levels will continue to be a focus over the next several quarters.

From a working capital perspective, at the end of the quarter, working capital, which we define as trade receivables plus inventory minus trade payables, totaled $130.2 million, a decline of $3.1 million since the end of the fourth quarter. We made significant progress in reducing our inventory levels, as inventory declined $6.4 million, or 6.5% since the end of December.

We have not seen any significant collection issues in our accounts receivables, as DSO remained essentially flat when compared to the fourth quarter. We continue to see working capital as an opportunity to generate cash over the next several quarters and are well on track to reduce our working capital requirements by $8 million to $10 million.

We significantly reduced capital spending in the first quarter. Capital spending totaled $1.8 million compared with $4.5 million in the first quarter of 2008. We also expect second quarter spending levels to be lower than those in the first quarter. However, capital spending levels might increase sequentially in the second half to support growth opportunities.

Depreciation and amortization was $5.5 million, essentially flat when compared to the prior year quarter.

For a summary of our liquidity position, please turn to page eight. As we mentioned on our fourth quarter conference call, we feel good about our debt structure both from a rate and maturity perspective. We generated more than $11 million of cash flow from operations in the quarter, almost triple the amount in the prior year.

Our cash position remains very strong. Our revolver remains undrawn, and the capacity exceeds $20 million. Our debt is covenant-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. In fact, we currently have no financial maintenance covenants.

We continue to take a strategic view of our liquidity at this point and continue to invest our cash conservatively. As a result, we have seen a decline in our interest income.

With that overview, I'll now turn our discussion back to Carl.

Thank you, Christian.

We are maintaining the guidance for 2009 that we provided during our last conference call, and this is on page nine. Based on the current order demand and the reduction in our backlog, we believe that we are still on track to achieve the lower end of our sales guidance. Of course, the environment we are operating in is still extremely uncertain. Our full-year guidance for 2009 is for revenues of $460 to $500 million, recurring EPS of $0.25 to $0.45, $6 million to $8 million in capital expenditures, $20 million to $22 million in depreciation and amortization, $25 million to $26 million net interest expense, and 38% effective tax rate, which previously was 35%.

We provided the depreciation and amortization and the interest expense as part of our guidance to highlight these significant and essentially fixed costs which have a noteworthy impact on the net income. The effective tax rate has been changed from 35% to 38% to reflect the issues Christian discussed.

And we'll now turn it over to the moderator and open up the call to Q&A.

(OPERATOR INSTRUCTIONS.)

Torin Eastburn from CJS Securities.

Hi, good morning.

Morning, Torin.

Morning.

I wanted to focus on the destocking with my first question. Granger and AIT have both reported inventories that are flat to up year-over-year, even though they're seeing double-digit declines in sales. Can you just talk more about kind of the timing of the destocking that you expect and what you hear when you talk to your distributor customers?

Yes. I think it's really a company-by-company issue and depends on how much stock and what the selling rate is of the products that each company provides. And we get reports from our distributors on our inventory positions and what their sales are of our products, and some of our distributors, their inventories are in good position, and some of them still have significant amount of inventory to burn off.

So we aggregate all that together, and our estimate is that we'll begin to see some destocking abate in the second quarter, and then it'll ramp up through the year. And by the end of the year, we estimate that it will be -- that we'll be back on an incoming order rate that reflects the true market demand and not destocking.

Right. And do you have any sense of what, right now, that rate might be when you take out the destocking and currency and all the other effects?

Not in an aggregate basis, Torin.

Okay. I know it's hard to pull out of everything.

Yes. And I don't want to commit -- the other issue is that our distributors have to reduce their inventory to a level they're comfortable with, and some people have come out and said they're comfortable with the levels that they're at. Some have said they've still got some additional destocking to go. And where that endpoint is for each distributor is their own business decision. So we're not privy to that on all cases.

Sure.

And then regarding guidance, it sounds like you're saying you're going to get $10 million more cost reductions than you expected this year, which, based on my math, would be $0.20 to $0.25 of EPS, and yet you're leaving the EPS guidance where it is. Can you just explain that there?

Yes. I think the EPS guidance was more reflective of probably being to the midpoint or the high point on the top line. And as we get down to the lower end of the top line guidance, it has a significant impact, particularly when you consider the fixed costs we have in D&A and interest expense.

Yes. I think what we indicated in the release is that, if everything stays the way it is today, that we are comfortable with the low end of our sales guidance, that these additional cost reductions will allow us to outperform the low end of our EPS guidance, although, if nothing changes, we will come in at the low end of the sales guidance.

Now, with the destocking at the distributor level, it's probably improving as we go through the year. We also see potential for some upside on the top line. But if nothing changes, conditions continue to be the way they are today through the end of the year, we feel comfortable with the low end of our sales guidance. But, given the additional cost savings, we should be doing better than the low end of EPS.

And the other thing you've got to consider, that these cost savings include the removal of variable and fixed cost. So as your top line drops, you've got to remove both variable and fixed costs, and the variable cost doesn't provide a pickup on the bottom line. It's just mitigating the consequences of lower volume.

That's very helpful, Christian. Thank you.

And last one, any end markets or geographies that were significantly better or worse than you expected?

No. I'm sure we'll get a question on geography, so I'll address it now.

In North America and in Europe, it was down about the same amount. They were very close when you account for the currency difference. And then, Asia was not down as much as Europe and North America, probably about half as much, but it was still down.

So, geography, nothing surprising. Nothing that's not out in the general news. And from a market standpoint, I guess the projects that we'd won and had success in have been really Power Generation and Military-related that have helped those markets for us. And other than that, it's pretty much across the board. All of our markets are down significantly.

Okay. Thank you, gentlemen.

Thank you.

Steve Sanders from Stephens, Incorporated.

Good morning.

Morning, Steve.

Morning, Steve.

Just a follow-up on the margins. You obviously commented that second quarter, from a top-line perspective, would be tougher than the first quarter. I think that's in line with what we're hearing from other companies. But, the gross margin in the first quarter seemed fairly strong, given the revenue decline.

Were there any mix benefits in the quarter? How should we be thinking about the headwinds in the second quarter gross margin versus the first quarter?

Yes. I think first quarter benefited from a mix perspective. Some of our late cycle markets did do well in the first quarter, and those are typically our higher margin businesses. We see those late cycle markets, those business units, slowing down in the second quarter, and, therefore, we don't expect margins to be as good in Q2 and Q3.

Okay, that's very helpful.

And then, the inventory write-down, we saw a fairly sizable charge in the quarter. How should we think about that over the balance of the year? In other words, how aggressive were you in scrubbing the inventory in the quarter? And as a follow-on, was there a particular product or end market that absorbed the bulk of the write-down?

Yes. We requested that all business units analyze their inventory in great detail, and we actually took a charge of $2.6 million, of which we added back $2.2 million. So we left about $400,000 in the quarter in the non-recurring number because that's what we feel is a normal run rate that you have if you have an inventory approaching $100 million.

There was a small amount of obsolete inventory in that charge. The majority was related to slow-moving inventory. And that's just anticipating that our inventory will age as lower sales will enter the aging cycle.

So, we think we're done with it except for the normal run rate that we left inside of the first quarter to begin with.

Okay. And that's the $400,000?

Right.

Okay.

And then, Christian, just ballpark for the year, if the current pound-euro exchange rates hold around this level, what would your forex headwind be for the year?

The headwind will increase slightly as in Q2 and in Q3, and should ease in the fourth quarter. The appreciation of the dollar happened mostly last year in the fourth quarter. You look at the euro, which was trading in the 150s second and third quarter of last year, and we're at 130. So, it's going to get a little worse in Q2 and Q3, and then it should get better from a year-over-year comparison standpoint we think in Q4.

Okay.

And then, I think you've given us pieces of this final question here. But, as we think about the $50 million number for the year, can you give us a sense, one, of how that builds over the course of the year, and two, the rough COGS versus OpEx split?

I can't answer the first part of your question. We now think that we're going to realize $50 million of cost savings. And please keep in mind, some of that is a removal of variable costs, the elimination of direct labor, for instance. Some of that is the removal of more fixed cost, indirect labor, SG&A, headcount and so forth.

We believe, at the end of the first quarter, we had a run rate of about $7 million or $8, and that will ramp up to the $15 million run rate by late second quarter.

Okay. Thanks very much.

Jeff Hammond with Keybanc Capital.

Hi. Good morning, guys.

Good morning, Jeff.

(Inaudible.)

Hey, just wanted to get a sense if there was much in the way of cancellations within your order discussion. And then, just as you look into the March and April trend, any kind of clear stabilization, upticks, glimmers of hope to speak of?

We have a lot of hope. We don't think that's something to build a business plan around. But, the order rate has stabilized, and we really haven't seen anything that's changed significantly, Jeff. And with the backlog reduction that we've had and the incoming order rate that we've got, we're going to manage to the level that we've got.

And if I could add, Jeff, the order rate, nothing has changed from last time we talked. The order rate, our weekly order rate, has been flat since the first week in December, so no improvement, no deterioration.

What we have seen is that, if we look at distributor level inventory on a product line by product line basis, we see that, on certain product lines, inventory levels are very low, and on other product lines there's still a ways to go for the distributors. That's what caused our optimism that some of that destocking in some product lines, Altra product lines that distributors carry will soon ease. And others, it will happen late in the year.

Okay, great.

And then, you bumped up your cost save [inventory]. I mean, where are you finding these additional cost saves, or are you just executing on it faster, or maybe just a little more color on where you're getting surprised at the upside.

When we put together the original plan that we talked about in the last call, we had a pretty solid plan laid out around the payroll reductions. And then, we've actually accelerated that, to some extent.

The part that was a little bit less clear was on the procurement side and how much we would be able to achieve there. We had a good plan laid out, but that requires negotiation, and I think we've significantly over-achieved on that side. I think our business units have accelerated their efforts there and have really pushed hard on that side of it.

So that's been a nice upside, and then also the additional -- we did raise the headcount target and have achieved that also.

Okay. And then, final question. How are you thinking about free cash flow for the year, given you're starting within the context of the guidance?

Yes. We continue to believe that our cash flow from operations will be in the $30 million to $40 million range. If you then deduct our CapEx level, that would indicate free cash flow should be in the range of 25 to the mid 30s [at the mid-point].

Okay, helpful. Thanks, guys.

Yes.

Thanks, Jeff.

(OPERATOR INSTRUCTIONS.)

Cole Schneider from Robert W. Baird.

Well, it's Michael, but I'll take whatever I can get.

Hi, Michael.

Morning, Michael.

Morning, guys. I'm curious. If order rates have been stable since early December, I'm curious just, one, why you're guiding to the low end of guidance on revenue. And then, secondarily, why ramp the headcount cuts at this point? Is there something else you're seeing in the business mix that changes what you started in the fourth quarter?

No. I think it was just an outlook [perspective]. I think everybody wanted to believe that it wasn't going to be as bad as flat for six or nine months. I think everybody -- at least we thought that we wanted (inaudible) conditions for an upturn, so we had laid out a plan that maybe wasn't as aggressive as we needed to be.

Once we got in and saw that, after 14, 16 weeks that it was flat, we ramped it up a little bit. And I think we've over-achieved on that. And I think that the flat order rate, I think we have to plan for that as we get into the second and third quarter.

[We] also have the late cycle businesses, Mike, that we had some backlog on. The Mining and Energy businesses for us, we have some custom engineered products there that had a little bit bigger backlog that we ate into. So, that has phased out some of the reductions.

But, you have not seen any significant cancellations within that backlog?

From a cancellation standpoint, we have not had hard orders canceled. What we get from a lot of large OEM customers are production schedules, so we'll get a 12-month schedule every week from a customer, and then they'll release for the next four to six weeks on that. And we have--some of the big OE customers have readjusted their schedules and moved those out, so that's how they manage it and how we manage it.

Okay. And then, just trying to reconcile that Q2 and Q3 are expected to be sequentially worse than the first quarter. You mentioned the seasonality. You mentioned customer shutdowns, presumably less late cycle.

But, it strikes me the seasonality should be the opposite, that that should be working in your favor, not against you. And customer shutdowns, just seeing what I see, other than maybe Automotive, unless that's the one you're referring to, have faded as well. I was wondering if we could just produce more color.

Yes. For us, seasonality, typically the third quarter is the weakest from a seasonal standpoint. And that's a result of European operations being weaker, our customers' operations shutting down for extended vacations in the summertime in Europe. And then, also, our Turf and Garden business is typically much slower in the summertime than it is in the (inaudible) season, which runs from the fall through the spring. So those two really are the most significant impacts we have from a seasonality standpoint.

And the extended shutdowns I think is one impact. One data point would be the automotive plants that have announced extended shutdowns for the summertime. We have a small piece of our business that's related to automotive that was about $20 million last year, will be significantly less than that this year. So, that will be down for the summertime.

And then, our opinion is that other businesses will also take the opportunity to shut down and adjust capacity during the summertime.

And if I may add, Michael, I think we entered the year with a backlog in our late cycle markets. We have eaten into that backlog in the first quarter. That will be significant, will reduce the available backlog as we go into Q2 and Q3.

And the other comment I would make is that, if we look at order rates, they are flat week after week since December 31st. That is also an indication that historical seasonality may not be a good indication for seasonality in 2009, because we don't see any seasonality influencing our incoming order rate at this point, which means--.

Okay. And then, the orders during Q1, what were they actually down, percentage?

We don't give the orders down, Mike, because, based on -- we get some orders. We get some schedules from customers. We get schedule changes. So we really look at the total demand rate.

And we're confident that, if we take that aggregate demand that we get and the backlog that we have to work out of, that we'll be at the lower end of the guidance -- and the demand stays flat, that we'll be at the lower end of the guidance that we've provided.

I think the math that you have to do, Mike, is to take the low end of our range, as we've pointed out, in the earnings release, deduct the first quarter, and then you can get a feeling what the order rates may look like.

Okay. And then, just focusing on distribution versus OEM, one, I guess can you address just what sales were off in the quarter, just to give us a sense of what, indeed, destocking is doing presumably in the distribution channel?

And then, secondly, if you could address pricing in both, because, as you said, your procurement success has been greater than expected. A lot of the companies are saying that as well. [But yet], a lot of manufacturers, like yourself, are seeing pricing has been purely firm. I'm just trying to reconcile that, as well.

Our distribution business was off on the order of high single digits more than the OE business. And that was from a shipment standpoint, so it was off probably close to 10%, Mike. If you use 10%, that's probably a good number.

And then, from a pricing standpoint, we have -- obviously there's tough negotiations going on, but we have not seen -- and this industry is fairly mature. There's been a lot of consolidation. There's relatively limited competition, so we don't expect, and we haven't seen a lot of price pressure out there. Obviously there's some at some of the bigger OEMs.

We did have a price increase in November of last year, and that was a general industrial distribution price increase on many product lines. We had one product line where a competitor didn't follow that we felt it was prudent to roll back, so we rolled back prices on one product line from that November price increase.

And those comments hold true across both channels, OEM and distribution?

Yes. Just from the nature of the business, there's much more pricing pressure from the OEM channel than there is on the distribution channel.

Sure.

Okay. That's all I had. Thank you.

All right. Thanks, Mike.

(OPERATOR INSTRUCTIONS.)

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

Thank you very much, Megan.

And I'd just like to wrap up and say -- thank everybody for attending our conference call and for your interest in Altra. And I would like to thank all of our associates for their hard work during this very difficult time. Without their skillful execution, the results that we've been able to achieve would not have been possible.

So, thank you very much for your interest, and look forward to talking to you next quarter.

This does conclude today's teleconference. You may disconnect at any time. Thank you, and have a great afternoon.