Altra Industrial Motion Corp (AIMC) 2010 Q4 法說會逐字稿

Greetings and welcome to the Altra Holdings Fourth Quarter 2010 Financial results. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

(Operator Instructions)

As a reminder this conference is being recorded. It is now my pleasure to introduce your host, David Calusdian of Sharon Merrill Associates, Inc. Thank you Mr. Calusdian. You may now begin.

Thank you. Good morning. Welcome to the call. With me today is Chief Executive Officer, Carl Christenson, and Chief Financial Officer, Christian Storch. To help you follow managements discussion on this call, they will be referencing slides that are posted to the www.altramotion.com website, under events and presentations in the Investor Relations section.

Please turn to slide one. During the call, management with making forward looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are inherently uncertain and investors must recognize that events could differ significantly from management's expectations.

Please refer to the risks, uncertainties, and other factors described in the Company's quarterly reports on form 10-Q, and annual report on form 10-K, and in the Company's other filings with the US Securities and Exchange Commission. Except as required by applicable law, Altra Holdings, Inc does not intend to update, or Altra it's forward-looking statements whether as a result of new information, future events, or otherwise.

On today's call management will refer to non-GAAP adjusted earnings per share, non-GAAP adjusted income from operations, non-GAAP adjusted net income, non-GAAP free cash flow and non-GAAP net debt. These metrics exclude any restructuring charges and any other items that management believes should be excluded when reviewing continuing operations.

The reconciliations of non-GAAP measures to the comparable GAAP measures are available on the financial tables of the Q4 2010 financial results press release on Altra's website. I'll now turn the call over the Altra's CEO, Carl Christenson.

Thank you, David. During this evening's call, we will be discussing our financial results for the fourth quarter and year end, as well as our exciting announcement this morning regarding Altra's acquisitions of Danfoss Bauer. I will begin by discussing the Bauer acquisition.

Please turn to page two. Based in Germany outside of Stuttgart, Bauer manufactures high-quality gearmotors in Germany and Slovakia. High efficiency gearmotors are a terrific compliment to our existing product range, and like the majority of our other businesses, Bauer focuses on providing engineered solutions. The company reported revenue of about EUR73.4 million in 2010, and we expect that the acquisition will be accretive to our earnings in 2011.

So what does Bauer provide ultra? First it gives Altra additional scale in Europe and improved access to emerging markets. They have a significant presence in Germany and a strong sales network in 15 additional countries in Western and Eastern Europe, China, and the US.

Second, it provides us with an opportunity to leverage our US sales channels, to cross sell Bauer products domestically. And third, it significantly strengthens our gearing product platform, enhancing our industry leading portfolio of power transmission brands.

Bauer is well recognized for it's engineering capabilities, global support structure, and high-quality products. This will immediately make us a strong player in Helical Gearmotors, which is a segment of the industry where we do not currently have a presence.

We see Helical Gearmotors is having growth potential because they are more efficient ,and consequently use less energy than some other types of drive systems. In addition, the design requires fewer components and is quite compact, making them an attractive choice when space is a concern.

The end market served by Bauer align closely with core strategic markets for Altra . Some of the common strategic and markets include material handling, metals, food processing, and energy. Bauer has a strong management team and we look forward to working together to serve our customers and execute on our strategic growth plan. We expect the transaction to close during the second quarter of 2011, pending customary closing conditions including receipt of required regulatory approvals.

As you can see, this transaction aligns squarely with our strategy to acquire companies that are accretive to earnings, offer complimentary products, provide custom engineered solutions, selling to common end markets and provide new geographic markets. We are very excited about the many growth opportunities this transaction provides us.

Now let's turn to slide three as we review the financial results for the fourth quarter and for the full year 2010. For the fourth consecutive quarter, we have recorded a year-over-year increase in revenue. Sales were up 17% for the quarter. Our growth in the past year was primarily driven by early cycle end markets.

But in Q4, we can say that most of our late cycle markets contributed significant weight to our growth as well. We are also pleased that our operating income grew 60 basis points to 10.4%, and we recorded non-GAAP adjusted EPS of $0.24 for the quarter compared with $0.14 last year.

These results were achieved despite was pressure from material cost increases, learning curve inefficiencies at the facilities as we completed the final stages of our plant consolidations, and a one-time healthcare cost adjustment. In 2011, we expect the bottom line to benefit from price increases, we lamented at the beginning of the year, as well as increasing productivity at our newly consolidated plants. Looking at the year, sales grew 15% to $520.2 million. We are pleased with the demand environment has recovered throughout the year and in our ability to capitalize on that demand. You can also see the effects of our permanent cost reductions, ongoing productivity initiatives, and plant consolidations in our 2010 results. Gross margins grew by 230 basis points to 29.6%, operating margins increased by four in the 10 basis points to 10.6% and non-GAAP adjusted EPS increased by more than 200% to $1.2. Our balance sheet is also much stronger than it was a year ago. Cash balance was $72.7 million on December 31, up 41% from year-end 2009. With the strong balance sheet, we have the ability to execute on our organic growth initiatives as well as to make strategic componentry acquisitions that are quickly accretive and provide an excellent return on invested capital. With that, I'll now provide some insight into what is driving our top line. Please turn to slide four for a discussion of our end markets. First I'll describe what we're seeing in the distribution channel and then discuss specific end markets. Participation channel is read-only comprised of sales of aftermarket parts and original equipment to small OEMs. This tradition orders were strong during the quarter and distributors appear to meet maintain their current levels of in the -- inventory. We had an outstanding year in grew faster than the market. The outdoor power equipment Institute or OPEI estimates activity will be December last year. We expect record about the same strong level of sales in 2011 as we recorded last year. We continue to develop new products. Close collaboration with our customers. We expect that this and our just in time delivery would differentiate us in the market again in 2011. Turning to tag, this market also continues to perform well as we have mentioned on prior calls, sales growth has been partially driven by demand for combine machinery as a result of pending interim tier four admission rules. These rules went into effect at the beginning of the year, so there is some uncertainty about what effect that we'll have on your turn demand. However, we expect that increasing international activity and domestic new business loss of sales declines in North America related to the interim tier four mission goals this year. We also expect to benefit from contract wins from new products. For example, we result produced and sold a device for a GPS see your application which was the ninth competitive win for us. We continue to be very bullish about the egg market long-term. The transportation market has been strong for us as build rates have been healthy and the platforms where on have been particularly well. Build rates should be even higher in 2011 with growth in the mid single digits. However, we expect that demand will be offset by pricing pressure that we expressed at the end of last year. On past calls we have discussed our investment in a dual clutch transmission product, and we are excited production of this product is now ramping up. We will continue to create new opportunities for our product development efforts. Sales of the material handling market also continue to be strong. We see a good number of new projects and we expect this trend to continue. Our products in this end market are permanently used in markets such as conveyors, forklifts, and elevators. Development and deliver product is particularly strong, driven by new designs by our elevator OEMs and continued construction in Asia.

We have recently won several new products in China. Our sales of products for electric fork-lifts also continued to be strong and we are now seeing steady growth in the conveyor systems market. Conveyors have been the last product areas and materials handling to show improvement.

I will now discuss our later cycle markets starting with energy. On the oil and gas side of the market, we continue to see robust demand for our products for higher horse-powered drilling rigs, which is really our sweet spot. We anticipate that capital spending will begin to ramp up as oil and gas companies begin to (inaudible) out of capacity.

As a result, the North American market should remain strong throughout 2011, with growth rates similar to last year. Demand from the power generation side of the energy market has been relatively stable and very good levels and demand for high performance products for gas compression and transportation have rebounded nicely. The initial improvement that we saw in the 3rd quarter continued throughout the first of the year and we expect this trend will continue.

Turning to mining. Demand was quite strong in Q4 after quoting activity first started to turn into orders in Q3. We expect this trend to continue, driven primarily by activity in China and other developing countries. In aerospace and defense, we have the opportunity to grow revenue in 2011 and a soft overall market as a result of a few key projects that we are working on.

We were recently awarded a very exciting piece of new business for a military helicopter application.And finally, while commercial construction is not a large end market for us, it is the one end market remains soft. That summarizes what we're experiencing in the major markets we serve.

One additional note before I turn the call over to Christian, during the fourth quarter we substantially completed the final two consolidation projects of the six we announced in early 2009. We expect the performance of the receiving facilities to be back to pre-consolidation levels in Q2. With that, I'll turn the call over to Christian and then I'll be back for a wrap up.

Thank you, Carl, and good afternoon, everyone. Moving on to slide five and our un-audited fourth quarter 2010 results. As Carl mentioned, our net sales increased 17% year-over-year to $130.5 million and were up 1% in the sequential fourth quarter. Foreign exchange rates negatively impacted the fourth quarter top line by approximately 90 basis points, when compared to the prior year fourth quarter. The prior was scalable by approximately 100 basis points.

Gross profit margin for Q4 was down 40 basis points year-over-year ,and 100 basis points from a sequential fourth quarter to 29% due to a number of factors. These include commodity price inflation, mix, and other items.

Even though gross margin declined in the quarter, the real story is what we have been able to achieve in terms of our cost reduction in all going productivity initiatives. At 29%, including the factors that I just mentioned, our gross margin is about the same level as it was in the fourth quarter of 2008, when we reported 11% higher revenues. SG&A and R&D for the quarter declined year-over-year as a percentage of sales to 19.2%, down from the 19.6% a year ago.

I should note that we have completely added back certain temporarily suspended costs at this point. SG&A was impacted by a one-time healthcare cost adjustment.

Our tax rate for the quarter was 25.2%. For the full year the tax rate was 29%. The low rate was primarily driven by our ability to utilize previously trapped foreign loss carry-forwards, and the expiration of tax-statutes. The fourth quarter rate also benefited from the extension of the R&D tax credit.

Income from operations in the fourth quarter climbed 36.2% to $12.3 million, or 130 basis points to 9.4% of shares. Excluding $528,000 in restructuring charges, and $816,000 of acquisition related expenses in the fourth quarter of '10, and $1.9 million in charges for restructuring costs in the fourth quarter of '09, non-GAAP adjusted income for operations increased 25% to $13.6 million, or 10.4% of sales.

As Carl mentioned earlier, we substantially completed the last of our facility consolidations in the fourth quarter. And we have yet to fully benefit from these consolidation efforts. We expect these benefits to continue to ramp up through the 1st quarter of 2011 and increasingly contribute to margin performance.

The reported net income of $5.4 million or $0.20 per diluted share compared with a net loss of $2.6 million dollars or $0.10 per diluted share. Non-GAAP adjusted earnings for per diluted share were $0.24 in the fourth quarter of 2010, compared with $0.14 in the prior year period.

(inaudible) the reconciliation that shows us how we get from reported net income to non-GAAP adjusted income number, now we get from reported income from operations to non-GAAP adjusted income from operations.

Please turn to slide seven. Our cash balance was $72.7 million, and was up about $21.2 million when compared with year-end 2009. Due to a free cash flow of $25.5 million for the year.

Slide eight reviews our working capital performance. On a year-over-year basis, sales increased 17% while operating working capital state essentially flat as a percentage of sales.

Capital investments during the quarter totaled $4.6 million, bringing us to $17.3 million for the year. In line with our expectations. Depreciation and amortization was $4 million for the quarter, also in line with our expectations.

As we look at 2011, we see exciting growth opportunities in many of our end markets. So we are continuing to invest in product development and infrastructure to capitalize on these opportunities such as renewable energy. We expect to invest in the range of $16 million to $20 million in 2011.

Let's turn to our guidance for the full year of 2011. See slide number nine. As a result of the demand trends in both our early cycle and late cycle markets, we are confident in our ability to report solid revenue growth in 2011.

We are projecting 2011 sales in the range of $560 million to $580, and adjusted diluted EPS in the range of $1.25 to $1.35 for the entire year. Free cash flow is projected to be in the range of $25 million to $30 million. We anticipate depreciation and amortization in the range of $21 million to $22 million, and a tax rate of 30% to 33%. This guidance excludes any financial impact that the acquisition of Bauer may have on 2011.

During the quarter we continued to make progress on our company wide implementation of SAP. We successfully brought our second and third business unit online and we expect the next manufacturing locations to go live in the second half of the year.

Before I turn the call over to Carl, I'd like to discuss our financing relative to the Bauer transaction. Please understand that all comments on the financing will be limited to the following. This afternoon we announced our intention to issue senior convertible notes in the principle amount of $75 million.

The notes will have a final maturity of March 1, 2031. Upon conversion, they can be settled in cash, stock, or any combination thereof. The notes will have no registration rights, and as such, will only be offered to qualified, institutional investors. With that, I will turn our discussion back to Carl.

Think you, Christian. Please turn to slide 10 for a wrap up. First, we're very excited about the Bauer acquisition. This transaction provides us with the ability to greatly increase our presence in Europe, leverage our US sales channels to cross sell Bauer products, and broaden our product line with a well recognized platform of products.

We are bullish about the end market environment as we proceed into 2011. Demand is very strong at both our early cycle, and now our late cycle end markets. 2011 should shape up to be a very exciting year with significant opportunities to take share in many growing and markets.

Through 2010, we began to seek enhanced leverage in our business model as a result of the cost reductions in ongoing productivity improvements we put in place. Our plant consolidations are now completed and we should realize the full benefits of the effort. With sales volumes continuing to increase, we expect to realize accelerated earnings growth as a result of the excellent leverage in our business model.

In addition to capitalizing on positive market trends and operating leverage, we plan to aggressively execute on our growth strategy in 2011. This strategy includes first investing in organic growth opportunities. Organic growth at both new and existing customers has been a significant contributor to our success and our focus on new product development will continue to drive that growth.

Second, targeting key underpenetrated geographic regions like China and South America. Third, entering new high growth markets as we are doing with renewable energy. Fourth, enhancing our efficiency and productivity through the Altra business system by continuing to develop our people and processes. Success in this area will be a major contributor to improving our operating leverage. And fifth, continuing to pursue strategic acquisitions.

We will now go to your questions.

Thank you. We'll now be conducting a question and answer session.

(Operator Instructions)

One moment, please, while we pull for questions. Our first question comes from Torin Eastburn from CJS securities.

Good evening.

Good evening, Torin.

I'd like to start with the revenue guidance. Can you share what any of your assumptions are going into that, whether they be for GDP or for price growth or growth in new products, et cetera?

Yes, I think, Torin, I'll start and Christian can fill in the blanks I leave out. It includes everything, and we feel very good about that guidance. I think the increasing order rate we experienced last year and what we've seen at the beginning of this year really supports that kind of growth, and it includes all those factors that you mentioned.

I think from a [CapEx] standpoint we always assume year end rates as we develop our guidance, and it does include price increases as included in that top line guidance. The price increases that we announced earlier in January, plus some price increases that we are currently in the process of implementing as well.

Are you willing to say what any of those are?

Well, it varies based on -- based on market, based on product and business. So, they range anywhere from 3% and some of them were as high as -- could be as high as 9% based on material content, and our internal analysis on what we need to achieve to get the profitability we need.

But we are currently estimating that what will stick is around 200 to, yes, 300 basis points.

Okay. And if I take the midpoint, say of your revenue and your EPS guidance ranges, it looks like 10% revenue growth and 30% EPS growth. Where specifically in the business do you see yourself getting the leverage, other than on interest expense?

One big factor will be, as we mentioned in our comments, the plan consolidations that we concluded or substantially concluded by the end of the year, there's still some ramp up in terms of getting back to the same productivity levels that we had prior to consolidation and are now hopefully exceeding those productivity levels. And that is ramping up and that will contribute to a leverage that is in excess of what we have historically delivered.

Okay. And my last question, what is the geographic sale breakdown for Bauer?

The Bower Europe is say roughly 90% European sales, and that includes Eastern and Western Europe.

Okay.

And they have, I don't know, maybe a few single-digit percentage in North America, and the balance would be the rest of the world. So, it's some very, very good opportunities for us to go cross sell those, and for us to get better representation in Europe.

Okay. Thank you.

Thank you. Our next question comes from Mike Halloran from but Robert W. Baird.

Afternoon, guys.

Hi, Mike.

Could you start with what's changed on the revenue line? I think it was last quarter you guys kind of gave a preliminary outlook for a 5% to 7% type 2011 growth. Now you're somewhere in that 8% to 11% range. Maybe you can just talk a little bit about what's improved and why the strengthening?

So, the -- I think some of the markets that we thought might be softer in 2011, like our turf and garden business was really strong in 2010, and that seems to be -- the order rate in that market has been very solid. So, we feel that's solidified a little bit.

I think some of the later cycle markets, mining, as an example, is very strong and all indications are that's going to continue strong. And then, you know, the incoming order rate has been -- I think has ramped up in the last three or four months. And we put it altogether and we thought we were being a little too conservative in our 5% to 7% guidance.

Makes sense. And then kind of looking at the incremental profitability assumptions underlying your guidance. It seems, and I think from previous calls you guys have talked about kind of a core upper 20's% or 30% incremental margin type goal, or at least that's what you think you can do on a go-forward basis. When I look at the guidance ranges you guys put out there, it seems like there's a little bit more pressure on what that incremental profitability could look like. Maybe you could just talk a little bit about some of those pressure points.

I think we said that somewhere between 25% and 30% is what this business model will leverage at. Some of the assumptions are relative to timing when we will ultimately achieve those productivity goals for those locations that have been consolidated, the receiving end on those locations.

So, that might - timing of that event might change the leverage to the positive or to the negative. And that has been reflected in the guidance and I think has a fairly impact. The other is in terms of timing of the price increases and how that would unfold. We've seen some commodity price pressure ,especially during the fourth quarter and there's always uncertainty as to our -- the timing of these price increases.

That makes a lot of sense.

Yes, material commodity costs, you know, really ramped up rather rapidly in the last quarter. So --

So, in our guidance, we hedged different assumptions in terms of where commodity prices would go. And how quickly we can follow with price increases, or to what extent they may actually taper off and --

We are very confident though that we will be able to get price increases to offset input cost increases.

And, then I guess, two things on the commodities side. First, when you look at the fourth quarter, how much of a pressure point was it there, and then second, do you think exiting the 1Q is when you'll -- assuming commodities kind of stay in the current range at their end -- exiting 1Q, is that about when things will normalize for you?

Yes. We saw very significant pressure in commodity prices in the fourth quarter, much more than we had anticipated. So, which has forced us to actually go out and go for additional price increases in selected areas. We believe that, that will all be in place by the end of the first quarter, and will ramp up as we go through the quarter. But the full effect will not be available until the end of the quarter.

And we receive copper prices -- significant or dramatic increases in copper, and scrap -- steel scrap, and pig iron and -- so we're reacting to that. And as we've always said is, well we ultimately have shown that we can pass these pressure points through to our customers, that maybe dislocation of a quarter or two.Sometimes we are ahead of the game, and sometimes things happen so quickly like what happened to us in the fourth quarter, we may be a quarter behind.

Okay, and --

One reason for that, Mike, is when we announce price increases, you have to get some lead time and then we also honor open orders out to a certain lead time. So, you know, it takes a while before you see the full impact of the price increase, also.

That makes a lot of sense. And on the health care costs, could you guys quantify how much that was in the fourth quarter?

Around $0.02 a share.

Okay. And then last one. With the acquisition you guys made today, or announced today, let's assume that gets closed at some point in the second quarter. How much bandwidth do you guys have for acquisitions beyond that?

From a management standpoint, I think we're -- we can certainly handle an acquisition, certainly some bolt-on's into some of our platforms. So, I think from a management standpoint, we're pretty good, and I think the balance sheet is in good shape. The acquisition environment, as we have been saying for the last six to nine months, has been improving significantly.

So, could you do another deal of a comparable size?

I think we could. We don't -- we're not prepared to say that we have one on the table and that we have one ready to go, but I think that -- and depending on the acquisition, how complex it was, but we could.

Nope, that makes a lot of sense. Just want to see what you guys were potentially able to do down the line. All right, great. I appreciate the time.

Thanks.

Thank you. Our next question is from Jeff Hammond from KeyBanc Capital Markets.

Hey, guys.

Hey, Jeff.

Yes, just -- it looks like the deal is not in your guidance. So, would you expect when you close the deal you'd update any kind of accretion assumptions, or do you have thoughts on accretion just based on what you think the business will do, you know the financing around it, et cetera.

Yes, Jeff, we -- there's uncertainty as to when this deal will close. Once those conditions -- the conditions will be met, we'll go to closing, whether that's second quarter, or just outside of our control.

We assume that will close sometime in the second quarter, and with that assumption, we said, it's going to be probably modestly accretive in 2011. Should that happen, a couple of pennies maybe. But we think that next year is going to see the real benefit of this acquisition.

Okay. And then maybe to ask the capacity question a different way. If you just take what you expect to raise from your financing this deal, what is your -- without doing any additional financing, what would you say your balance sheet capacity is to do, you know, to do deals from here?

Without additional financing, our capacity will be somewhere $40 million to $50 million. And that's the assumption is that you would have about $80 million to $90 million of cash on hand, and a credit facility that is undrawn with the capacity of -- just shy of $50 million. We need about $30 million to $40 million of cash to run the business, so probably $50 million.

Okay. And then you mentioned beyond --

And we would update our guidance once we closed the deal, we plan on updating our guidance.

Yes, we'd do it at the conference call, you know, our earnings release conference call following the -- once we close the deal.

Okay, perfect. And then just -- you mentioned in addition to this healthcare cost which was one-time, just kind of material cost inflation, some learning curve inefficiencies, is there a way to quantify, maybe what price cost was in terms of relative to what you maybe thought and how much these efficiencies, inefficiencies were?

We don't have an exact number. Our best estimate is that it probably impacted gross profit margin somewhere between 40 and 50 basis points.

That would be material cost plus the inefficiencies?

Yes.

Okay. And you think the inefficiencies may be leaked into the first quarter and then you're back to normal into 2Q?

That's the game plan.

Yes.So, with the consolidations, we'll be back to where we were in Q2 and then the plan is to have continuous improvement from there.

Okay, great. Thanks, guys.

Thanks.

Thank you.

(Operator Instructions)

Our next question comes from Scott Graham from Jefferies.

Hi, good afternoon. Just a couple of questions about the deal and maybe kind of piggy-backing on what has already been asked. I think I heard you indicate that the deal, combined with the financing, you still believe will be accretive in 2011, even if modestly?

Yes.

Okay, but higher accretion next year. On a -- on a trailing EBITDA basis, I was wondering what that multiple -- what that multiple was for Bauer. Is that something you can tell us?

What we're prepared to tell you is what was on the slides. We paid about seven times forward-looking 2011.

Is that their number or is that a number with synergies that you expect?

That's a number that excludes synergies and is our estimate of what the business will do next year.

That's correct. What I will say, one of the things that we really like about the business is that they went through a recent restructuring themselves in the end of 2009, beginning of 2010, and they closed a high cost facility in Munich and moved production to Slovakia.

So, they had some learning curve issues and transition issues, and they executed that very well. The management team there -- we were very impressed with how they executed that plan and -- but, we think there's still a lot of upside to come in the business from that, and some very good potential for us with that Slovakian facility, and Slovakian operation.

It reminds us how this Company, Altra, was formed. When we acquired Colfax to form Altra , that power transmission business was also -- just went through a restructuring. Pretty much a similar situation. The heavy lifting was done, and it was underperforming because of those disruptions, and we acquired it, and upped it to significant improve performance.

I think we've always said we don't -- we want to steer away from turn-around situations. This is by no means that. This is a very good well-managed business, but it's -- there's definitely some upside on the performance that we think we'll benefit from.

Okay. On the sales growth for the quarter, I'm wondering were there any early cycle markets that slowed for you?

No. I think you should take into consideration we had four fewer shipping days than in the third quarter. And if you would normalize that, it would tell you that our fourth quarter was actually very strong.

Yes. Okay.

When you say slow, I mean, we had tremendous growth.Automotive was an early cycle business for us, and the growth in automotive last year was tremendous. So, when you look forward, we probably won't see a 35%, of 40% growth in that end market, but it's still expected to grow significantly. So, I guess you could say, that market the growth might slow, but off a very, very big number.

Okay. That make sense. And, you know, in the past, I think Christian, you and I in particular, have talked about your goals to be sort of mid teens margin company at some point, and I'm wondering, does nothing in Bauer, or anything else that might be looking at changes that view, right?

Nothing changes that view. It will take some time to get Bauer to perform at the same level that the average Altra portfolio is performing at. But we do believe that Gearmotors can perform at that same level.

Get there.

All right. That's all I had. Thank you.

Thanks Scott.

Thank you. Our next question comes from Jordan Hollander from Jefferies.

Hey, guys. Just wanted -- following up on the price increases. Were there any that were effective in the fourth quarter, or is all going to be new rolling into the 1Q?

We'll there might have been in the fourth quarter. As I mentioned in the script, we had a small benefit year over year benefit from price in our top line, and that was about 90 basis points -- I'm sorry, that was 100 basis points, and -- but the price increases that we are talking about, new ones that we put in place generally first and thereafter.

Okay, great. And then just turning to the balance sheet. I know you have that 10% call option on the bonds, is that anything you're looking at now or is this, looking forward now we're looking at a focus of cash on the balance sheet, any new generation of just future acquisition?

I'm not sure I understood your question.

Are you guys looking at -- to exercise you know you have that 10% call feature on your --

We do not plan to exercise that call option at this point in time.

Okay, so just future --

I think we told all the bond investors that, that was their safety net. So, we're not -- we do not plan to at this point.

Okay, great. Thanks a lot, guys.

Thank you.

(Operator Instructions)

We appear to have no further questions. I'd like to turn the call back over to Carl Christenson for any closing comments.

And I would just like to thank everybody for joining us this evening, and we look forward to speaking with you on the next call after our first quarter ends in the spring. Thank you very much.

Thank you. This does conclude today's teleconference. You may does connect your lines at this time. Thank you for your participation.