Albany International Corp (AIN) 2010 Q2 法說會逐字稿

Welcome to the second-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 Thursday, August 5, 2010 will be webcast and recorded. I would now like to turn the conference over to Senior Vice President and Chief Financial Officer Michael Burke for introductory comments. Please go ahead.

Thank you, operator, and good morning, everyone. As a reminder for those listening on the call, please do refer to our detailed press release issued last night regarding our quarterly financial results. And with particular reference to the Safe Harbor notice contained in the text of the release about our forward-looking statements and the use of certain non-GAAP financial measures and associated reconciliation to GAAP.

And for purposes of this conference call, those same statements also apply to our verbal remarks this morning. And for a full discussion, please refer to that earnings release as well as our SEC filings including our 10-K. Now I'll turn the call over to Joe Morone, our Chief Executive Officer, who has some opening remarks before we do go to the Q&A. Joe?

Good morning, everyone, welcome to our Q2 2010 earnings call. There's a lot of material in our release and I know you have a lot of questions, so we'll get to them fast. But let me just quickly run through for you what we view as the highlights of the quarter. In sum this was an outstanding quarter for Albany International, sales were 7% ahead of Q2 2009 and 6% ahead of Q1 2010.

I've said -- we've said in our previous releases several times that we expect to enjoy significant fixed cost leverage and we really see it this quarter. More than 50% of the increase in sales between Q1 and Q2 dropped through to EBITDA, which was $42 million and excluding GAAP-based restructuring $43 million. Cash from operations was $44 million. Gross margins were very strong. PMC was nearly at 42%. So this was a very strong quarter.

You can't help but notice in the release that we go into a great deal of detail about currency and that's because it had a big effect in this quarter. EBITDA was merely $7 million higher than it would have been had there been no change in currency during the quarter. Most of that effect was due to the sharp drop in the value of the euro during the quarter. Now most of that drop has reversed itself in Q3, so you have to watch out in Q3 for the reverse effect on profitability from currency.

But, given the overall results and given the effects of currency, how do we think about the normalized EBITDA run rate coming out of a quarter like this? Well, here's how we think about it. We start at $43 million of EBITDA, that's the $42 million excluding GAAP-based restructuring. So $43 million, then we subtract out the currency effect, that puts us at $36 million.

And then, depending on how much of those $3 million of lingering costs associated with restructuring you choose to add back, like $1.5 million of equipment relocation, which should end soon, you get to the upper 30s. So we the way we think of this is for a -- this level of revenue there was no effect -- no changes in currency, we should be in the $36 million to $39 million of EBITDA as the normalized run rate.

We had said in Q1 that Q2 is usually free of seasonal effects so that Q2 sales and order levels should give a pretty good indication, pretty good snapshot of the post recession short-term sales environment and we've tried to lay that out for you in the release. To make a long story short, the sales and order patterns in Q2 suggest steady sales in PMC going forward and additional growth in doors and EF and robust growth both short-term and long-term for AEC.

The important caveat here is historically there's an important seasonal effect in Q3 in almost all of our business except for AEC because of those summer shutdowns in Europe, so you have to watch out for that.

Finally, in Q2 we passed several important and noteworthy milestones. First, as we described in the release, we refinanced our revolver with a five-year unsecured agreement which in combination with a swap leaves us with a blended rate of 3.55%, so kudos to Michael and his team. That PMC contract negotiation that we've been referring to has progressed very well and we should sign a formal long-term agreement shortly.

And finally, and very importantly for the long-term growth prospects of our composites business, in separate talks at the recent Farnborough Air Show both the CEO of Airbus and COO each separately stated that the business case for reengineering the A320, their single aisle aircraft, is favorable and that they expect to make the formal decision to reengineer later this year.

So overall a very good quarter, promising outlook with the important caveat about the seasonal effects and turns. So let's go to your questions.

Jason Ursaner, CJS Securities.

Good morning. Congratulations on the results. Just looking at PMC, if I'm looking at the revenue, you gave order rates again. In Q1 orders were up 23% globally and you said that this quarter was on parity. But if I look at revenue, it's only up about 4% year to year. And you had mentioned that it's an imprecise gauge for future sales. But did these orders continue to flow through. Should we anticipate some acceleration or just some better way to think about this?

Well, orders are ahead of last year's pace, I think we made that clear. And they are at the end of Q2 at parity with Q2 sales. Ordinarily by Q2 they're not at parity, orders are lagging sales because an awful lot of orders come in at the beginning of the year and then as the year progresses the rate of orders declines. So the fact that they're at parity at the end of Q2 is a pretty strong signal of at a minimum stability in sales going forward.

Any attempt to project revenue in PMC you've got to go back to the bigger picture, and the bigger picture is the sectoral trends here will, as we reach a new level of stability coming out of the recession, the sectoral trends, long-term sectoral trends take over. And as we've said repeatedly, the way we plan for PMC is we assume the rapid growth in China, which we are enjoying, will offset erosion in Europe over time and that the steady growth in South America will offset erosion in North America.

If you think in terms of grades, tissue grades and the packaging grades will continue to grow. But anything related to printing is going to gradually erode. So, we view this business short-term and long as a cash generator and not as a growth business, even though there might be incremental improvements in growth ex seasonal effects as we still come out of this recession. But this is -- the story of this quarter for PMC is cash. I mean, you really saw it this quarter.

Right. And looking at cash, free cash flow was over $1 a share in the quarter, but obviously it had some working capital gains and there was a deferred tax reversal. How should we think about working capital needs going forward and just more generally on free cash flow?

There wasn't much gain on working capital; I think they pretty much offset each other. So you're seeing -- you're really seeing the effects of profitability providing cash flow in the quarter. And I think given that we're coming out of recession, given that there's growth and therefore some -- there will be some growth in inventory, that the big gains in working capital are probably behind us.

And in terms of CapEx, I mean this is obviously the cash part of the story, but the growth -- we've talked a lot about AEC and the reinvestment in that. Is this discovering that or has some of the long-term outlook there changed at all?

No, we're under on CapEx, under our projection in CapEx, and that's primarily because after all the restructuring in PMC we're moving and relocating equipment rather than buying new equipment. And so we're spending less on CapEx than we had anticipated.

On AEC our projections, our long-term projections haven't changed. We still expect that as these big long-term programs kick in and we build plants for them that our spending, our CapEx spending will grow, but that the total CapEx spending for the Company for the next five years will continue to be at depreciation and amortization or lower. We don't yet see anything that would drive us above that.

And then just last question for me and then I'll jump back in the queue. You mentioned an accounting error I guess associated with the severance in France.

Yes.

You talk about possibly materiality of accounting. How should we think about expenses for correcting the error going forward?

We had -- in last year -- second half of last year we closed a plant in France called -- in the town of Riberac. And we discovered in Q1 an error that was made in Q4 2009 in the accounting associated with that closure having to do with pension. And then just at the end of this quarter we discovered a second mistake had been made in the restructuring associated with that plant in France, a second mistake in Q4 when we did the initial accruals for the restructuring.

And so a second mistake -- now the combination of the two are not material to the results of 2009. But a second mistake got our antenna working over time. And we want to take a close look here to make sure that we don't have a serious control issue or had a serious control issue associated with restructuring in that entity back in 2009. And so given our bias to disclose early, we just thought that was enough of a concern for us, two mistakes like that, that we needed to let our investors know. And we're all over it, as you can imagine.

I mean, do you have any quantifiable range for what this might run to look it over?

We don't know of anything other than what we've just described. So, the two errors which we quantified are all we know about.

No, but I'm saying to pave -- to look back for all the accounting and legal expenses (multiple speakers).

That will just be an internal -- we'll use our internal audit and our -- people from our controller's office to --

Drive the analysis.

Drive the analysis and make sure we're okay. And if we felt it ran deeper and we needed outside help we would certainly hire the outside help. But it's not -- we're not putting it in there because we anticipate any sort of expense. We thought we should put it in there because we clearly have some sort of a control weakness and want to understand it.

Okay, great. I'll jump back in the queue. Congrats again.

Mark Connelly, CLSA.

Hey, Joe. A couple of questions. When you think about PMC from here, most of the paper companies are expressing a little bit more caution now, but they're running pretty full. And most of the increased profitability in the paper business now is coming from price hikes rather than volume pickups, at least within North America.

So I'm curious how you're thinking about volumes from here. Is there an opportunity for you to pick up more volume or pick up share in the markets that are running relatively full? Or are you going to be looking for volumes in the markets that haven't quite gotten there yet?

Yes, we're reading it exactly the way you are. There's been a bounce back and -- but, as I said before, I think that as we come out of this bounce back in the industry, the longer-term sectoral trends start kicking in. And the fact that the paper companies are starting to express caution in our minds is precisely a reflection of the reality that those longer-term trends kick in.

So our view is we will ride the growth in Asia, we will ride the growth in South America, but that inevitably Europe and North America begin to erode and the combination of those lead us to flat to slightly higher, less than 1% increase in revenues. And that's why for us, as we've talked about, Mark, wit you, the PMC story is a cash story and you really get a sense of the power of that cash this quarter. And our challenge internally is start with the assumption there's no growth, drive cash generation, and that's how we're managing this business.

So, probably safer to assume that you don't pick up market share from here, just leave the share static as we're modeling? I mean, I would assume with the costs that you've taken out; the fixed costs you've taken out you might be in a position to push some people out of the market. But when that happens it tends to be a pretty bumpy process. So I assume that's not your highest priority.

Right. Our highest priority now is to make the most productive use possible of the capacity and equipment, the talent that we have, drive new technology to market that will both -- that could drive revenue or reduce costs. But we're not treating this as a growth business; we're treating this as a business where you've got to optimize the use of your assets. This is now becoming a return on invested capital business.

Great. Now if we switch to AEC for a minute. You talk about the opportunity for an acceleration in revenue, but limited by your ability to ramp production. How significant are those limitations? Because a couple of years ago we ran into this problem. And you did an acquisition that alleviated that short-term issue.

But is this something that we have to just sort of assume is part of dealing with a lumpy growth business that from time to time the orders are going to get ahead of you and you may not be able to completely keep up with the growth in the short-term?

That's a really interesting question. The short answer is, yes, but let me give you more of the background. The last time we faced this kind of a growth spike, as you allude to, was in 2008. And it was with -- it was down in our operation in Texas when the Eclipse program was starting to take off. And so we had a very steep ramp curve and learning curve that we had to get through with Eclipse.

And just as we were getting through it, it was lumpy at the outset, and the lumpiness is as you're ramping -- you're coming out of development, starting production, and you've got to learn how to make the parts in high volume and you run into challenges on productivity, on [cat] time, you find bottlenecks you weren't anticipating. You might find quality issues that you have to go back and rework. All of that makes up the learning curve. Every time you introduce a new program you've got to go through that curve.

Well, all of the learning curves we went through in 2008 we got no benefit from, ironically. Because Eclipse went bankrupt so we lost all of that. The recession hits and in our Texas operations three of the programs that were just hitting production got dramatically scaled back by our customers because they were oriented toward business jets, the business jet market crash. And two more programs that we had been selected for were completely eliminated.

So, all those learning curves that we were just getting through we basically got no benefit from. Now as we come out of the recession there's a whole new set of programs with actually more significant long-term prospect. But we're going through the front end of those learning curves simultaneously all over again. And it's joint strike fighter, it's LEAP-X, it's the landing brace, it's a different set of programs from the ones we went through in 2008, but we're right back at that front end again.

So we see big customer demand with orders in hand. We know where we have to get, but getting there is going to be lumpy as we run through these early stages of the learning curve. That's inherent in the nature of the business when you're at the front end of these transitions from development to production, as we are simultaneously in several programs.

And, Joe, you've been pretty clear in the last couple of quarters that there was going to be some need for incremental spending to deal with that sort of issue. Can you give us a sense of how much of that spending we saw or are seeing? I assume that it's not all showing up in the research and technical line.

A fair amount of it is. If you look at CapEx -- let's break it into pieces. If you look at CapEx, we continue to expect that total CapEx spending each year over the next five years will be at or below depreciation and amortization, that hasn't changed. The only way that would change is if a major new program came along that we had to invest in fast with new plans that we hadn't been anticipating. But that would be a good problem. If you look at R&D, we are ramping up spending in R&D and that does show up in the technical line.

How should we think about a run rate on R&D then?

I think the run rate you see is probably pretty good.

Okay.

And then really the primary drivers of the margins in AEC besides that we allude to -- apart from those two factors, CapEx on the one hand, R&D on the other, really are at this stage driven more by what we refer to in the release -- the difference between our advanced composites operation in Rochester which is roughly a DOI breakeven, that will be lumpy, and the Boerne operation which is more conventional composites which is really where all the losses are right now.

Okay, thank you very much, Joe.

Thanks, Mark.

Ned Borland, Hudson Securities.

Good morning, guys, great quarter.

Thanks, Ned.

Just a follow-up on Mark's question about PMC and we know that the top line growth is going to stay kind of steady, but can you just sort of help us think about the profitability? I mean profitability in Asia where the growth is that's offsetting Europe, the profitability is going to be a lot better producing over there and then also in South America. So I mean, if top line stays flat does the EBITDA actually get better as these trends develop from a macro level?

You're right that the margins are very strong in Asia, prices are lower than in Europe, but nonetheless the margins are strong. So, if you assume flat growth -- I think the safe assumption right now is that what you see is what we should be able to sustain, that would be a safe assumption.

Because we will see improvements in productivity -- in profitability driven by what you just described. But we also, on the other hand, need to absorb inflation -- offset inflation. So, you've got to take that into account. So I think the safe assumption now is when you're talking about 42% gross margins in PMC, don't get greedy.

Okay, fair enough. And then maybe on the competitive front, assuming that this negotiation goes favorably, what does that do to opportunities for some of your competitors to create headaches for you again?

Well, I think it's a safe bet that -- the negotiation has gone favorably, we just have to sign on the dotted line. But we're really pleased with how that went. And as we've discussed before, the window for that instability gets wide open when you have major contract negotiations. So the fact that we got through this one, and this will lead to a long-term agreement, is significant and it augurs really well for stability in the Americas.

Now there is the next big contract negotiation in Europe takes place at the end of this year, so the window opens up again in Europe. I think fundamentally nothing has changed. That underlying risk primarily in Europe where there's overcapacity in our industry is still there.

Our fear was that that risk of instability would spread and that's why this recent contract negotiation was so important. And the fact that it is concluding the way it did leads to a reasonable conclusion that that risk is not spreading, that risk of instability is not spreading out in Europe.

Okay. And then maybe some of the other businesses that saw some growth here -- Engineered Fabrics and door systems, pretty strong top line growth, particularly Engineered Fabrics. I mean, what's driving that?

Primarily the original equipment manufacturers in the non-wovens industry, so the people who build the machines that make non-woven products, they're seeing economic recovery, they're starting to build new machines. And so that's a good sign. They're in a -- that's still a growth business, particularly in Europe and Asia. That's not -- it's not facing the same sectoral, long-term sectoral decline that the paper industry is. So that's still the big driver there.

The secondary driver, smaller impact but important is still the housing market. And at some point if we see a recovery in the housing market that should lead to additional growth as well.

On the door sides, we're encouraged by what we're seeing. What we keep reporting is that that is a business that does grow at a multiple of GNP and the more encouraging noise coming out of Europe is good news for -- is good news for that business. Keep in mind that Q4 is the seasonal high for that business. And if you have momentum coming out of Q2, even though because of the summer effect Q3 tends to be soft, if you have momentum in Q2 that usually says you're going to have a good Q4.

Great, thank you.

Thanks, Ned.

Paul Mammola, Sidoti & Company.

Hi, good morning, everyone.

Hello, Paul.

If I can just take you back to the contract renegotiation. I'm trying to reconcile stability in your words also with you're pleased. Is it fair to say that you saw some price improvement, generally speaking of course, in the renegotiation and is that the first price improvement you've seen in a contract renegotiation thus far?

Well, we really don't want to get into price, Paul. But the -- I think the best way to understand why we're pleased is to explain it this way. We do -- our share is disproportionately high with customers who think in terms of, when they go into a negotiation like this, think in terms of reducing their total cost of ownership. So when they view us as someone who can help them optimize their systems, reduce total cost of ownership we do well. We do disproportionately well. That is we have higher share than our average.

For customers who just view this as a procurement transaction and who are just focused on minimizing the price they have to pay for PMC rather than looking at the overall impact that their PMC supplier can have on their overall productivity. We do disproportionately badly, we have disproportionately low share.

The big question coming into this negotiation was, was this critical customer going to focus more on total cost of ownership and what we can do for them to improve -- to reduce their total cost of ownership, or were they going to go the more traditional procurement route of pounding your supplier and trying to set up a price war among the suppliers? And they went down the path of total cost of ownership. Our more sophisticated customers who think seriously about how to manage their supply chain, that's what they think about.

Okay, that's helpful and it's certainly understood. I know you said order rates are up 8% in PMC, but can you give us a sense if there was any sort of discernible trend in order rates through the quarter that may suggest maybe June was better than April?

No, I think the most important indicator -- you just don't want to over interpret here because there's still a fair amount of noise as the industry comes out of recession. But the unusual indicator, usual which is on the encouraging side, is that we're at the halfway mark of the year and order to sales ratios are at parity, that's pretty good.

We don't usually see that. By this time in the year orders have dropped below sales because there's an order pattern that a fair number of customers will put in bulk orders at the beginning of the year. So seasonally you always get high orders in Q1 and it usually tails off in Q2.

Okay. And then can you give us a sense on geographical order trends in the quarter -- or really sales trends rather? I guess I'm most curious to hear how North America did relative to Europe?

Sales trends North America and Europe, is that what you're asking?

Yes, are they holding hands or is maybe Europe worse than North America?

They really are different dynamics at this point. They're completely different markets. North America you have to distinguish between Canada and the US. The Canadian market, because it's so dependent on newsprint, is in trouble. The US -- and Mark was alluding to this earlier. The US -- the paper industry is in pretty good shape right now. They're running at high-capacity, their inventories are low, they're increasing prices. And our attitude is don't be fooled by that, that longer term those same sectoral trends will gradually erode the US market.

Europe is somewhere between US and Canada. They still have overcapacity, they still have over exposure to newsprint. Asia is just -- it's going gangbusters. There are a lot of new machines going in and it's everything we thought it would be and we're really happy with how we're doing there. And South America is somewhere in between US and Asia, it's a strong market and we're a very strong competitor there.

Have you seen I guess a low cost organic singular supplier of PMC kind of come out of the woodwork in Asia, or is it really just the same folks you see across the globe?

It's the same folks.

Okay. And then finally, do you think the restock of PMC is complete at this point? I know maybe at the beginning of the year we saw some knee-jerk reaction to low PMC levels. Do you think that's complete?

We think so. That's why we thank Q2 is a pretty good indicator.

Okay, thanks for your time, guys.

Thank you, Paul.

(Operator Instructions). Jason Ursaner, CJS Securities.

Hi, Joe. Just following up on PMC profitability. Trying to balance conservatism with what you're saying; it doesn't sound like we should expect profitability to get worse. But if I'm looking at operating margins, a 25.5 margin in PMC and 23% in fabrics with all the work you've done, do you think these are sustainable? And then have you ever given thought to giving long-term profitability targets?

We think they are sustainable and the challenge for us internally, the way we describe it to ourselves, is year over year we need to at a minimum with productivity gains -- incremental productivity gains beat inflation year over year. And if we do that, and that's what we're oriented toward doing, then those margins are sustainable. No, we don't do guidance and we haven't -- there's nothing in the [offing] to suggest that we would go down that road to perdition.

Well, not guidance, but in terms of a long-term projection. Just because the margins, with all the work you've done, I mean there really isn't any historical comparison at this point.

Well, I think for now what we're trying to say is if you take out currency and those one timers, use this quarter as the baseline. That's the best information we have. With all the noise behind us, all of the restructuring and recession behind us, the best information we have is use this quarter as a baseline.

And then for PMC, while there will be incremental swings up and down, the sectoral trends to us say use the top line within a few percent as the baseline. And the caveat is of course those seasonal effects -- don't forget the seasonal effects.

Right. And then just quickly on the composites. For the re-engine programs there's been a lot of talk and speculation in the industry between trade off on re-engine versus clean sheet. And I just kind of wanted to hear your thoughts on in terms of the clean sheet it sounds as if the reason they might be holding back isn't the engine, but some of these other efficiencies in airframe and other parts of the plane, which sounds as if it might incorporate your technology later on down the road. And I just wanted to hear a little bit more from your perspective, would a clean sheet that pushes it back a little bit, would it really be a negative or might you have much larger content?

Right. Well, so, let's just go back to the basics here. Originally, Airbus and Boeing -- back-up even more, the single aisle aircraft, Boeing just came out with its projections for new aircraft sales over the next 20 years, they see a 3 point -- not just for them but market overall -- a $3.5 trillion market.

70% of the new aircraft that they project to be delivered during these 20 years will be single aisle aircraft. So, the Boeing 737 or its successor, Airbus 320 or its successor, the COMAC single aisle aircraft that the Chinese are introducing, 70%, over 20,000 planes, it's a massive market.

Originally back in 2006, 2007, 2008 when we were getting going in this business it appeared that Boeing and Airbus were going to introduce new clean sheet single aisle aircraft in the middle to late second half of this decade. And then they backed off that by 2008, 2009 and instead began talking about re-engining. And re-engining is a simply taking the new 737s or A320s that are built, slight modifications and putting a much more fuel efficient engine on them.

Airbus said at the air show that they don't see enough gain for the massive investment required to build a whole new aircraft until way out in 2027, that they see a solid business case instead for taking the existing airframe A320 and putting a re-engine on -- putting a new engine on. And we're talking 10% to 15% improvement in fuel efficiency with those new engines.

If you just do the math at current fuel prices, not future fuel prices, at current fuel prices, the net present value of the fuel savings over the life of a plane with 15% fuel efficiency gain was like $8 million, it's a big deal, big savings from just that kind of fuel efficiency. So they have concluded you don't get enough bang for the additional investment in a whole new aircraft this decade, you really don't until you get out to 2027, and that's because there are not enough incremental fuel efficiencies from a whole new aircraft until out then.

A large part of the reason is the next generation of engine beyond the ones we're talking about now, the LEAP-X and the gear turbo, aren't ready until out sometime next decade. So they're convinced re-engining the business cases there and it's for the reasons I've described.

Boeing is going through the same logic. They're saying if we could see the business case for a whole new aircraft this decade then it doesn't make sense to stay with the existing model and re-engine it, let's do a whole new aircraft. Now when Airbus ran that analysis they said, no, you don't get the bang for the buck until out later next decade.

Boeing publicly is saying it's weighing those two options. What they're not saying is there's a huge cloud on the horizon in the form of COMAC, the new Chinese entrant into the single-aisle aircraft. And COMAC is targeting an entry into service 2015, 2016 with our engines, with the engines that we're participating on, neither Boeing or Airbus can afford to be -- to wait very long to come up with a fuel efficient solution or they will start losing that all important single-aisle market, at least the Asian part of it, which is huge, to COMAC.

So, all this dance behind the scenes, the specter that's out there is they have to do something or start losing share to the new Chinese aircraft, which will be more fuel efficient because it will have the new engines than the existing generation of single-aisle.

If Boeing decides that it really does make sense to go with a whole new aircraft this decade and they can get there fast enough to prevent an erosion of market share because of COMAC, it would present new opportunities for us on the airframe. On the other hand it would allow -- we might have less sales on the engine because a whole new airframe would mean they probably designed it to allow not only our engine but also Pratt's engine.

So there would be a lot of opportunity, it's hard to say without getting a lot of quantification about whether the opportunity is bigger with the re-engine or with a whole new aircraft. In either case there's a big opportunity.

Right, okay. And in terms of the Airbus' economic case with the fuel savings, they also -- it seems as if they've gone back and they're now saying that they'll offer it with the old engine or the new one. And the maintenance -- the leasing companies are saying that that MPV may offset some of that. Have you heard anything that now that -- they might offer it with both. If they do decide to go forward with it that there would be less demand for putting the leasebacks on and ordering it with a new engine?

Jason, we don't have inside information on that. What we have is economic logic. If you buy a plane and you're stuck with it for 25, 30 years, what is going to happen to the price of oil during the lifetime of that plane? And fuel efficiency is a huge driver in thinking about the economics of future aircraft.

One of the reasons that the OEMs we're working with the GE/Snecma joint venture, one of the reasons that they went with the design they went with is that it's compatible with the maintenance systems of the existing CFM engine. The LEAP-X engine is the same basic structure so there's a lot of compatibility in the maintenance approach.

Okay, great. Thanks for taking all the questions.

Pleasure.

Thank you. And there are no further questions in the queue at this time.

Great, thank you all for participating and we look forward to talking to you individually in the various investor conferences or on the phone before then. Thank you and have a good day.

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 service. You may now disconnect.