Albany International Corp (AIN) 2008 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the third-quarter earnings call of Albany International. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given at that time. At the request of Albany International, this conference call on Tuesday, November 4, 2008, will be webcast and recorded.

I would now like to turn the conference over to our host, President and Chief Executive Officer, Joseph Morone. Please go ahead.

Thank you, Mary. Good morning, everyone and welcome to Albany International's Q3 2008 earnings call. As always, we'll begin with my commentary, which this time will be a little longer than normal because we think it's important that our investors understand why, even despite the looming recession, we're feeling pretty good about where we are as a company right now. And then after my commentary, as always, Michael Nahl, Executive Vice President and CFO, will add his amplifying comments, which will focus on cash flow and CapEx. And then, as always, we'll turn over to your questions.

Despite a rapidly deteriorating general economy and paper industry, and the effects of the previously announced slowdown at Eclipse Aviation, earnings in Q3 2008 were comparable to earnings in Q3 2007, excluding the effects of restructuring, performance-improvement initiatives, and income tax adjustments. The effects of weak PMC and EF sales and AEC income were largely offset by continued reductions in cost and another outstanding quarter for Albany Door Systems.

More generally, the Q3 results offer a window into the performance trends that we anticipate for the next few quarters. The top line, particularly in PMC, is certainly being hurt by the global recession. On the other hand, even in a long and deep recession, we expect to continue to make good progress, just as we did in Q3, toward our twin objectives of restoring the long-term cash generating potential of PMC, and establishing a family of new businesses with the potential for significant, sustainable, and profitable growth. We are of course acutely aware of the likelihood of a prolonged global recession. But fundamentally, we are confident that our cash and grow strategy is sound, and that we will come out of the recession in an even stronger competitive position in each of our businesses than we were in at its outset.

Turning first to PMC, Q3 sales, excluding the effects of currency translation, were 8% lower than in Q3 2007. This was an across-the-board effect. Sales in every region were lower than normal, primarily due to lower sales volume. Sales were especially weak in August 2008, suggesting that normal seasonal downturns are likely to be magnified during recession. Operating income in Q3, excluding costs associated with restructuring and performance-improvement initiatives, was 5% lower than a year ago as continuing cost reductions partially offset the lower sales.

We expect this global slowdown in PMC sales to continue for the length of the recession, as paper makers in every region reduce mill operating rates, slow down operating speeds, extend downtime periods, and accelerate the pace of machine slowdowns. And yet, as the paper industry weakens, our competitive strength in the PMC market continues to grow, which is why even in the face of global recession we are confident about our overall strategy and progress. We gained market share year to date in the Americas, Europe, and China; maintained what is for this time of year a strong order-to-sales ratio in North America; continued to make progress with key contract negotiations in Europe; and completed promising new product trials in each of our major product lines.

Meanwhile, our three-year, global restructuring process enters its final year on schedule. The pacing item now in this process is the ramp-up of our three plants in Asia. The expansion of our Korean plant is largely complete, and the team there has already expanded its production rates while maintaining exceptional quality levels. And the new plant in Hangzhou, China, passed an important milestone in early October, when it successfully produced its first set of products for shipment.

Engineered Fabrics had another tough quarter in Q3. As we have discussed before, this business shares many similarities with PMC, and about 30% of its revenues derives from sales to markets adjacent to paper. Another 20% of revenue derives from products that serve the struggling building products market. If there is a silver lining here, it is that 40% of EF's revenue derives from sales to the nonwovens industry, which is still growing even in North America and Europe. Q3 2008 orders for the nonwovens industry grew by 25% compared to Q3 2007, and by 15% compared to Q2 2008. Moreover, as sales -- our sales to the building products industry appear to have bottomed. Orders in Q3 2008 were comparable to Q3 2007 and considerably stronger than in Q2 2008. For this reason, even though EF sales performance in Q3 was similar to PMC's, there is reason to believe that the recession will not have as large an effect on this business as it is already having in PMC.

Turning next to Albany Door Systems, Q3 2008 was another strong quarter. Compared to Q3 2007, and excluding currency effects, sales grew by 16% and operating income by 250%. Once again, performance was strong across the board, in all regions and in both product sales and aftermarket. Orders in Q3 2008 were 20% higher than Q3 2007. Nonetheless, we still expect a slowdown in this business next year. How severe the effect will be is uncertain. Product sales will likely decline, which will especially affect North America, where product sales represent 90% of revenue.

On the other hand, in Europe, which represents 70% of total segment sales, the impact of recession should be lessened by the aftermarket business, which should continue to grow during recession. Europe's aftermarket business represents about 35% of European sales and an even larger fraction of total segment operating income. And even in the product side of the business, we have been preparing for a downturn for at least a year by reducing fixed costs in our manufacturing operations, and shifting the underlying operating model to one with a heavier reliance on variable costs.

Turning finally to Composites, in August we announced that Eclipse Aviation, AEC's largest customer, was substantially cutting back production. For AEC, this meant a complete stoppage of production of parts for Eclipse. We also stated in August that we expected Eclipse to ramp back up in 2009. Indications from Eclipse are that they are on track for a 2009 recovery, which would mean that AEC production of Eclipse components would return to at least Q2 2008 rates by Q3 of 2009.

In the short term, the slowdown has clearly affected our results. We had been expecting AEC to at least break even in Q3. Instead, it lost $3.3 million or $0.09 per share. Even without Eclipse, AEC did grow by 29% compared to Q3 2007, but since Eclipse represented by far our highest volume, and therefore most efficient production line, losing those sales had a disproportionate effect on income.

We will update our sales and profitability five-year projections for AEC in our Q1 2009 release. For now, in the short term, we still believe AEC has the potential to continue to grow along the five-year, 35% compound annual growth rate that we projected at the end of 2007. Our experience in Q3 suggests that short-term setbacks to the realization of this potential will likely be of the sort that we experienced with Eclipse, rather than more general recessionary pressures.

Beyond the five-year horizon, the Eclipse slowdown in no way alters our view of the long-term potential of this business. We have spoken in earlier announcements of AEC's potential to become significantly larger than the $150 million enterprise we had earlier envisioned, and to become a second core business of the Company. During Q3, we conducted a comprehensive analysis of the size and nature of the AEC market opportunity. We now see a business with the potential to grow organically to $400 million in sales, with operating income margins at least comparable to PMC, by the time the next-generation single-aisle aircraft goes into service late next decade.

In sum, across all of our businesses, Q3 suggests to us that we continue to make progress with our cash flow and grow strategy, and that our long-term vision of a mutually reinforcing portfolio of advanced textiles businesses continues to unfold in the manner we've been anticipating. That said, we are under no illusions about the economic environment that we are facing. While we hope we are wrong about this, we are preparing for a long and deep global recession. And so, company-wide, we are approaching 2009 with two overarching principles.

On the one hand, our goal for each of our businesses is to come out of this recession in an even stronger competitive position than we were in when we entered the recession. This means we will continue to push ahead with our various strategic initiatives, whether they be new business development in AEC, growth of the aftermarket in Doors, introduction of new product lines in EF, or completion of the three-year restructuring plan and introduction of new products in PMC.

On the other hand, we must do and are doing everything possible to maximize cash flow. We have frozen travel, except when it entails working with our customers; frozen hiring, except when it entails bringing on board exceptional talent; are delaying capital expenditures, except when they directly promote advancement of our strategic initiatives; have slowed down the global rollout of SAP, which, compared to this year, will reduce cash outlays by as much as $10 million in 2009; are accelerating efforts to reduce working capital; and in general, have instilled a sense of awareness throughout the Company that in a recession as long and deep as this one is likely to be, cash is unquestionably king.

We have told investors for the past two years that our objective for 2009 was to generate significant cash flow. While the recession means that we will not generate as much cash as we had been anticipating, we do still expect 2009 EBITDA to significantly exceed capital expenditures and to therefore enable the Company to significantly reduce debt.

Like everyone in this economy, we are sobered by the prospect of global recession. And there is no doubt that revenue and income are being affected by it. Q3 results, especially in PMC, give us an indication of the magnitude of that effect. But we are also confident that the strategic pathway we set out on two years ago is the right course for Albany International and its investors. We are making good progress toward the development of our cash and grow portfolio of businesses, and despite the recession, our timeline for the development of that portfolio remains unchanged. We continue to expect that by this time in 2010 the cash and grow portfolio will have been fully implemented.

Now we'll turn the call over to Michael Nahl for some amplifying comments. Michael?

Thank you, Joe. Good morning. First, a reminder that the comment about forward-looking statements contained in the press release applies equally to our remarks in this conference call.

In the last conference call we provided some color supplementing the balance sheet and the cash from operations. In our forward-looking comments we explained that we were "assuming we do not experience a major global recession." Three months later we find ourselves in the midst of a global major recession. Joe and the management team have been moving aggressively and proactively to continue reducing costs; assure that we reduce debt in 2009 regardless of the global economy; complete the three-year restructuring program designed to secure our continuing leadership in our Paper Machine Clothing business; and continue to lay the foundation for profitable growth in our emerging businesses.

We are in the final months of our major capital expenditure program supporting that transformation. Capital expenditures in 2007 were $149 million. Capital expenditures this year were $31.7 million in the first quarter, $41.9 million in the second, $31.4 million in the third, for a nine-month total of $105 million. With an additional $45 million capital expenditure planned and under way in the fourth quarter, total capital expenditures for 2008 are expected to be approximately $150 million.

Of the $150 million, approximately $120 million is for the Paper Machine Clothing business, $19 million is for Albany Engineered Composites, and the balance of $11 million for our other businesses, Engineered Fabrics, Door Systems and PrimaLoft. Depreciation for 2008 is currently estimated to be approximately $60 million and amortization $7 million.

After this quarter's large capital requirements, capital expenditures for 2009 are expected to decline sharply to approximately $60 million. We expect depreciation and amortization in 2009 of approximately $70 million for depreciation and $8 million for amortization.

Just as our capital expenditures will decline sharply in 2009, the end is in sight for our other restructuring idle-capacity costs and performance improvement initiatives. We are now two-thirds through our global restructuring program. In addition to the capital expenditures for this program, we have incurred associated expenses of $52 million in 2007 and will have spent approximately $57 million more by the end of 2008. In 2009 we expect expenses associated with the completion of the global restructuring program to be a little less than we are spending in 2008. The portion of those costs for SAP enterprise resource planning system should decline by approximately $10 million next year.

As Joe described, we are clearly on track with all of the strategic initiatives that have been a part of the Company's three-year transformation. And we are proactively positioning to assure that we generate free cash flow in 2009 regardless of the length and depth of a recession. Our highest priority for using that cash during 2009 is to reduce debt in the last two quarters, even while incurring the high capital expenditures and costs related to restructuring and performance improvement initiatives. We reduced our leverage ratio as defined in our principal debt agreements with our bank group and with Prudential from 2.82 at the end of the first quarter to 2.80 at the end of the second, and 2.62 at the end of the third quarter.

While we would prefer to operate in a more favorable economic environment, we've experienced severe recessions before and we believe we've demonstrated that we know how to manage through them. Most importantly, regardless of the extent of the recession, we're clearly on track to complete by 2010 the transformation of our company into the cash and grow portfolio of businesses that we've been outlining for investors over the past two years.

Mary, that completes our comments. We'd be happy to take any questions at this time.

Thank you. (Operator Instructions) Mark Connelly; Credit Suisse.

Michael and Joe, always nice to hear you say that you're going to have less restructuring costs. I hope that charges go away too. If we could start -- it looks like despite the big drop in revenue your margins held up pretty well. Can you talk about where specifically you're making the most progress on the cost side, because something looks like it worked reasonably well here. Relative to my numbers you were $30 million light on the top line and just a couple of million light on the operating profits. So can you just give us a sense of where the costs have been more successful or less?

Hey, Mark. This is Joe. It's across the board. This three-year restructuring plan really touches every dimension of our operations from our manufacturing structure. A lot of the cost savings are the impact of the consolidation of our plants, starting to fully wash in. And they haven't completely washed in yet. Cost reductions in how we -- in restructuring we've done in STG&A for example, that shared services organization that we put in place in Europe has had a big effect. The global procurement system that we put in place, which actually led to an increase in expenses in STG&A as we built the global procurement team, has clearly led to a reduction in our procurement expenses globally.

So as all of these costs associated with restructuring and performance improvement that Michael just enumerated have been leading to a global restructuring of the business with the intent of leaning it down and reducing costs -- and we're seeing that wash in. And it will continue to wash in, both the steps we've taken and steps we're still taking, and will be taking, over the next year.

(Inaudible).

So you're reading it exactly the way we're reading it, that the top line pressure, mostly related to volume because of this recession, being offset in large measure by this comprehensive restructuring.

When you talk about selling, technical, general and research, with the composition of your business changing so meaningfully over the next couple of years, is the composition of that number changing a lot? I remember years ago talking about changes you were going to make in the sales force in PMC, but with all the different moving parts is SAP a big driver of that number now? Just wondering if you can give us a sense of how we should be thinking about that as it plays out across several businesses that are getting more important.

Well, a lot of the restructuring is still -- has almost exclusively been focused in PMC. And remember, if you go back to the beginning of this three-year effort, we were starting with a business that was structured around 12 profit centers. And so now we're really down to two profit centers. We have an Americas corridor and a Eurasia corridor. And it used to be we went from twelve to three -- Americas, Europe and Asia. Now it's down to two -- Americas and Eurasia.

And the implication of your question is dead on. You can't go through that kind of radical restructuring without fundamentally changing how we approach everything -- from R&D to product management, to product engineering, to the way we sell, to the way we service, and to the way we purchase, to our information systems. So I can't give you a single silver bullet that explains what we're doing in STG&A because it's a radical overhaul beginning in the corporate offices and spreading through to how we organize in the field.

And just one last question and comment --

And the frustration for us over the past two years has been we've been showing the cost of that overhaul, but the benefits from a cost side where there was a time lag before you'd start seeing them on the bottom line. You're now seeing them on the bottom line.

Yes, well, that's why I was asking -- you're clearly seeing that you're making progress. And I was trying to get a sense of precisely where. On that point about Americas and Eurasia, Albany historically has tried to from time to time align its production with its customer base currency-wise. That worked out well in Mexico and presumably in Brazil for quite a while. I'm curious, with the rising dollar, whether what you're doing in China is really as important as it felt before. I -- recollection was that you were selling fabrics in dollars out of Europe, which had to be just disastrous. So now with the US dollar coming back up, is all this money you're spending in China really as important as it was before? And as a sideline, could you give us an update on Brazil and how that is faring?

Okay. Well, that is a complex question and let me try to answer it in number of ways and then ask Michael to weigh in as well. First point is that if we had to do it all over again, in our expansions in China and in Brazil, we would absolutely positively do it again. And it is because the primary driver of those investments was not currency, but was emerging markets and where the markets are growing in the paper industry, and positioning ourselves long term for the growth in those markets.

So if you just step back from the paper industry for a second and think about what is going to drive us out of this global recession, all of the previous recessions in our professional lifetimes, the recovery has been driven by the American consumer, and secondarily by the European consumer, who in turn were -- particularly the American consumer -- were enabled by cheap credit. That's not going to happen this time. So where's the recovery going to come from? Well, part of it surely will come from government spending on this side, but globally it's going to come from growth in the domestic markets, in the emerging markets, probably led by China. And so our view is we're even better positioned for what's to come than we thought we would be in when we set out on this investment.

As far as currency, we -- our footprint, manufacturing footprint, is spread out in so many parts of the world that there's almost a natural hedging going on with us. You know, when we make in China and sell in China, we make in RMB and sell in RMB. If we make in China and sell outside of -- and sell it to Europe, we make in RMB and sell in euros. When we make it in Canada and sell it in Canada it's Canadian dollars, Canadian dollar. When we make it in Canada and sell it in the US, it's Canadian dollar to the US dollar, and vice versa.

In Brazil we make in reais; we often sell in dollars. So when you try to integrate across all those effects and try to predict the impact of currency swings, the net net-net effect to us on operating income has to be relatively muted. This quarter it was probably, with the strengthening dollar, was probably $0.5 million positive effect, which -- and we can go into more detail if you want. But for us we don't make these kinds of strategic decisions, like the China investment or the Brazil investment, on the basis of currency. We think there are underlying strategic forces that wash out -- that are more important and that are far more determinative than the currency effects will be on us, which tend to wash out over time.

There's one thing I'd add, Mark, to Joe's comments. And that is, if we were to do it all over again, we couldn't do it all over again as inexpensively as we were able to do it by virtue of being at the leading edge. We've spent, as you know, a combination of capital expenditures and the costs associated with this transformation, over $400 million in two years.

At a time when capital was cheap.

At a time when capital was cheap. And the inflation rates that have been going on during that period really would make it very prohibitive for any of our competitors to try to duplicate on anything approaching our scale at the same costs. So we're feeling very good that the vision that Joe brought to this game three -- two years ago, close to completion now, is exactly where we want to be.

Operator, are you there?

Yes. Are you ready for the next question?

Yes.

Arnie Ursaner; CJS Securities.

Good morning. It's Jason Ursaner for Arnie. For PMC you mentioned promising new product trials. Can you expand on that at all?

We're having trouble hearing you.

Could you repeat the question, Jason?

For PMC you mentioned promising new product trials. Can you expand on that at all?

Yes. We have four major categories of products, or four major product lines for each section of the paper machine basically -- forming, pressing, drying and process belts. And in each of those product lines we are in the process of trialing in the market significant new products which, at least in one paper grade, will bring substantial performance benefits to our customers, and could also provide costs benefits to us. But the main driver of these new products in each product line is benefit to the customer.

And the way this works in this industry is you need to convince a paper mill to run a trial with one of these new products. And since it's a product that hasn't been tried, there's a fairly high failure rate in typic- -- historically in this business, whether it's us or somebody else trying out the new product in these trials. Our trials have been unusually successful with these new products and they come across the board.

And then behind these new products that we're trialing. in each product line there's another major wave of new product families behind them, in some case right behind them, in some cases a couple of years behind. So we've gone from feeling confident that we had a good R&D pipeline to now watching that pipeline hit the market. The first way it hits the market is with trials to prove to the customer that it works in the way we suggested. And then based on that the customer will reorder and then the word gets out and you start gradually defusing the innovation through the market. And at the same time, we're still feeling good about our R&D pipeline. There's more behind it.

Okay. And for a composite, to clarify, the $400 million revenue target for the end of the next decade, what revenue opportunity do you see over the next three years? And do you expect to achieve profitability in that time frame?

In the next three years -- we haven't provided any kind of an update beyond -- we're basically saying take that projection of potential growth that we made at the end of '07 and, using '07 as the base, we said figure 35% per annum growth in the next five years, and expectation of breakeven this past quarter. Well, we're hold- -- we're saying that our revenue projection is still good. And we've clearly missed -- because of the Eclipse slowdown we clearly missed our goal of getting to breakeven this quarter. We think we would have. Now we're --

What would have to occur for that to happen?

We think we've got a shot at it next year, but that's why I said we'd rather give you an update, give everyone an update, in our Q1 release on what we're expecting in terms of revised projections on top line -- it probably won't be that much -- and revised projections on when we think we can break even. But for now figure that that breakeven mark has been pushed off by at least a couple of quarters.

Thanks.

Ned Borland; Next Generation Research.

Good morning. Just a question on the competitive landscape within PMC -- I just wondered if there's any takeaways from either past negotiations in the quarter or current negotiations that alters your view of the competitive landscape here, given the state of the economy. I mean, are some of your competitors a little more frozen out given the state of the latest negotiations, or what gives you the confidence that you're going to be gaining share? Is it just from what you're already gone through or what you see on the horizon?

Multiple issues there, Ned. We --[that word] -- when we say we've gained share it's not a future projection. It's based on the data available to us now. So that's not we will gain share; the statement was year to date we have gained share in all of our key markets. The -- as you well know, the big uncertainty in PMC over the past couple of years, and really the single biggest risk for investors in Albany International, has been the risk of major disruptions in price driven by the competitive dynamics. And as we've discussed, the window for those disruptions opens when there's a major contract negotiation. The -- that window is now pretty much closed for at least the next several quarters. In Europe, the two major contract negotiations that we've been telling investors about have taken place. They're done -- UPM and Stora. And the customers have asked us to not -- to let them be the ones to announce the results of those negotiations. So I would just as soon leave the statement that I made in the release stand on its own. We made progress in those negotiations.

But the window is now closed, so in Europe we're not concerned about the wild card of major unexpected swings in prices going forward for at least the next couple of years. Now, the results of the contract negotiation is that we get in exchange for volume as we have always done, as we've tried to manage that price premium, prices will go down some over the next couple of years. And we believe we can offset those price declines with volume increases and cost reductions as we've done before. But the key point is that window for wildcard instability in Europe is closed.

In North America we had been saying that we were expecting a big negotiation in January with AbitibiBowater. They have now put that negotiation off until sometime in the second half of the year, the beginning of the negotiation. So International Paper will be the other big negotiation toward the end of the year. But you can assume no changes in pricing and the pricing environment, no unexpected changes, between now and the end of '09. So basically the window there is shut as well.

The real issue for the next five or six quarters in PMC, the unknown if you will, is really the effect of recession on the top line. And that's going to be a volume effect more than a pricing effect, other than the pricing effect I talked about in Europe as a result of the contract negotiations. It will be a volume effect, and I think we've got a pretty good taste of what that's going to look like in Q3.

Okay. That's all really helpful, Joe. And then a follow-up on the last question on Composites, going from $150 million to $400 million, what made you -- what makes you guys more optimistic about the long-term prospect for the business? Is there something -- some incremental business that you feel real good about or what? Help me out there.

Okay. So the underlying business model here is you invest today in program development with the customer for a future platform of some sort, whether it's an engine or a new aircraft or a part of an aircraft. But there's basically a five-to-seven-year lag between when you get selected to be a development partner and a production partner with a customer, and the whole process of developing the part, qualifying the part, and actually having the system that the part is going to be sold -- that it is going to built into, having that system actually go into service. Once that system is in service, whether it's a new engine or a new plane, you basically have an annuity for 20, 30 years that's relatively predictable. So you have expenditures and investment today to create an annuity five to eight years from now. So the basic business dynamic is the more of these clusters of expenditures today, the more layers of annuities you have five to seven years out.

So our projection about the future of this business is based on our best sense of the -- where we are today in working with customers, either having gotten on or working to secure positions in new platform development, coupled with our projections of major new opportunities that are likely to arise over the next five years, and the probabilities that we will get our fair share on those new platforms as well. So the combination of how are we doing today in program development with an array of customers -- let's look at the new opportunities that will bubble up over the next few years, particularly around the next-generation single-aisle aircraft, but also next-generation business aircraft, next-generation of regional jets and all the engines and parts that go with that. And what's a reasonable estimate of how we will do on those new platforms as well. Analyze all of that, make some -- do some conservative discounting and you project out to $400 million organically per annum without stretching very much.

Okay, thanks.

Paul Mammola; Sidoti & Company.

A question on PMC -- would you suggest that [people stretching] Paper Machine Clothing in the quarter is having a magnified effect on the drop in sales and, if so, do you think we can expect that lumpiness to continue through '09?

I think what we -- the weakness we saw in PMC sales in Q3 was recession-like and -- you know, one of the reasons we were pretty cautious despite a very strong second quarter is we were seeing signs that the paper industry was going into recession sooner than the general economy. It's ironic; we were feeling pretty cautious then and everybody was asking us why we were cautious. Now we're feeling pretty good and everybody must be asking us why we're feeling pretty good. But so yes, we -- Q3 was a pretty good indicator of what the recession will feel like. I mean, the magnitudes might shift up or down, but I think that -- we think that gives you a pretty good sense.

One of the really striking patterns that we saw in Q3 was we know there's always a seasonal effect in August, that summer slowdowns always mean a lower PMC sales in August. That effect was magnified this August and it was a really weak August by historical standards, which leads us to think that whenever -- wherever we've seen seasonal effects like the back end of December -- we've noted several times now we saw a seasonal effect -- we assume in a recession that seasonal effect is going to be even more severe.

So first approximation, PMC revenue in Q3 and how we at least partially offset that revenue decline, is a pretty good indicator of what's going to happen during the recession.

Okay. That's helpful. And Michael, is the tax -- the discrete tax charge related to, I think it was foreign tax payments, the same as the second quarter?

Yes. That's correct.

Okay. And then on financing, is there any concern for aging receivables or customer financing? I guess I'll throw Abitibi out there at this point.

Our view is that if it's a long and deep global recession, one of the ways you absolutely, positively have to prepare for it is to be carefully monitoring credit risk and doing whatever you can to mitigate that risk. So we're all over that one.

Okay. Thanks for your time.

Thank you. And there are no further questions. We'll turn it back for closing comments.

Thank you all for participating on the call. And we'll see you again at the Q4 call if not before. Thank you.

Ladies and gentlemen, a replay of this conference call will be available at the Albany International website beginning at approximately noon Eastern Time today. That does conclude our conference for today. Thank you for your participation and for using AT&T Executive Teleconference. You may now disconnect.