A O Smith Corp (AOS) 2007 Q3 法說會逐字稿

Welcome to the third quarter 2007 earnings conference call. (OPERATOR INSTRUCTIONS). As a reminder, this conference is being recorded. I would now like to turn the conference over to our host, Mr. Craig Watson, Vice President of Investor Relations.

Thank you. Good morning, ladies and gentlemen, and thank you for joining us on this conference call. With me this morning participating on the call are Paul Jones, Chairman and Chief Executive Officer, Terry Murphy, Chief Financial Officer, and John Kita, Controller and Senior Vice President of Finance.

Before we begin with Paul's remarks, I would like to remind you that some of the comments that will be made during this conference call, including answers to your questions, constitute forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters that we have described in this morning's press release. Paul?

Thank you, Craig. Good morning, ladies and gentlemen. This morning we released our results for the third quarter of 2007. Sales in the quarter decreased slightly to $554 million, while net earnings increased to $24.7 million, or $0.79 per share. This compares with $17 million, or $0.55 per share, last year.

The earnings in the current quarter included a $0.10 per share tax benefit that Terry will describe later on.

In addition to earnings, we announced the closing of three of our motor operations. The weaker-than-expected housing market has negatively impacted existing plant utilization rates in our residential hermetic motor business. Therefore, we decided to accelerate the closing of our operations in Scottsville, Kentucky [and] Mebane, North Carolina, and are relocating the production to Mexico. In addition, we will be closing a much smaller operation in Hungary and will be writing down the value of certain real estate and other assets. These decisions are consistent with our roadmap to substantially increase margins and returns in our motors business. We will close our operation in Scottsville, Kentucky and transfer its production to our facilities in Juarez and Acuna, Mexico.

The residential hermetic motor manufacturing facility in Scottsville was acquired in 1998. Over the last five years, the market share of one of our larger customers has declined significantly. And as a result, plant utilization rates have declined in both Scottsville and Acuna, Mexico. These actions will appropriately resize this business segment for this market.

Consistent with our objective to consolidate our hermetic motor manufacturing and more fully utilize our Acuna operation, we will also close our commercial compressor motor operation in Mebane, North Carolina. The transfer of work at both hermetic motor facilities will be completed by the fourth quarter of 2008.

We will also close our motor facility in Budapest, and we will complete that closing early in the first quarter of 2008. Terry will cover the financial details of the restructuring shortly.

As we announced this morning in our press release, we've narrowed our earnings forecast again for 2007 to $2.85 to $2.95 per share. This is before the estimated $0.25 fourth-quarter charge, or to $2.60 to $2.70 per share including the charge. Though we are still within the previous range prior to the restructuring charge, we have become more cautious about the general economic outlook.

I will come back to talk about the forecast later, but first, Terry will talk about the financial results in a little more depth.

Thank you, Paul. Third-quarter sales of water products were $334.5 million, a 3% declined compared with the third quarter of 2006. The primary reason for the decline was lower sales in the residential market, particularly on the wholesale side, which is more heavily impacted by the new housing market. The decline was partially offset by increases in commercial and other market segments, including a nearly 20% increase in China.

Third-quarter sales of $220.1 million were essentially flat compared with the same period last year for EPC. Higher pricing related to raw material increases and modest increases in the distribution and commercial hermetic motor market segments offset lower volumes in the pump, residential hermetic, and general industries market segments. Operating profit of $35.9 million increased 22%, or $6.5 million, compared with the third quarter in 2006.

For WPC, despite the lower residential volumes in our water products business and higher costs for raw materials and components, operating profit of $33.6 million increased 4.4 million, or 15%, compared with the third quarter of 2006. The increase resulted from acquisition synergies, higher profits in China, and lower SG&A expenses. Operating profit margin was 10%, compared with 8.5% last year.

In the motors business, operating profit of $12.7 million was $4 million higher than the third quarter of 2006, which included $2.5 million of higher restructuring expenses. Third-quarter operating profit margin improved 5.8% from 3.9% last year.

Our tax rate was 15.1% in the third quarter as a result of the $3 million tax benefit worth $0.10 a share from the reversal of tax reserves associated with closed tax years and audit settlements. The tax rate for the fourth quarter and the full year, excluding the fourth-quarter restructuring charge, will be 25.8%.

Operating cash flow was $95 million for the first nine months, reflecting $57 million of positive cash flow in the third quarter. Cash cycle days increased slightly to 67 days from 65. Lower receivable and inventory days were offset by an increase in days payable. We were particularly pleased with the 13-day reduction in inventory days at EPC.

Capital spending totaled $42 million for the first nine months of the year, similar to last year. We continue to project approximately $75 million for the full year. Depreciation and amortization were 50 million through September and should total approximately 70 million for the full year. As a result of the excellent cash flow, our debt to capital ratio decreased to 36.6% from 38.5% at the end of the second quarter and 39.1% at the end of 2006.

Since the share repurchase authorization last spring, we've repurchased 189,000 shares at an average price of under $41.50 a share. For 2007 we are projecting full-year operating cash flow of $150 million. In addition to fourth-quarter earnings, we expect cash flow to benefit from continued working capital improvement, as well as the tax benefit from restructuring. Now more on restructuring.

We anticipate recording a fourth-quarter pre-tax charge of approximately $13 million, or $9 million after taxes, to close the North American facilities and write down the value of other assets. We will also record an estimated charge of approximately $9 million to close the Budapest operation, and will receive an estimated $10 million tax benefit associated with the write-off of our investment in this operation. The combined after-tax charge is estimated to total approximately $8 million, or $0.25 a share.

In 2008, we anticipate recording an additional pre-tax charge of approximately 12 million to complete the closure of the North American facilities, equivalent to approximately $7 million after taxes, or $0.24 a share. The expense for the North American facilities is expected to be incurred relatively evenly throughout the year.

The Company also anticipates reporting an additional after-tax charge of $2 million, or $0.06 a share in the first quarter of 2008, to complete the closure of the Budapest facility.

Approximately $12 million of the total cost are expected to be future cash payments, while the tax savings associated with the repositioning are expected to be approximately $19 million, for a net favorable cash impact of $7 million.

As many of you know, we are working hard to expand the margins in our motors business and are formalizing a roadmap to get us there by the end of 2009. Big pieces of that roadmap are captured on this slide. Our lean products initiative is intended to reduce product SKUs and components and simplify product offerings. This is intended to address opportunities related to the integration of some of the acquisitions we have made.

Our product and customer rationalization initiative is intended to address the weaknesses in some of the lower-margin products we offer in the markets we serve.

And the third initiative is asset optimization, significantly addressed this morning. The closures we announced this morning represent an important part of the asset optimization initiative.

We expect to generate savings of approximately $5 million in 2008 and annual savings of $20 million beginning in 2009 from these repositioning actions. The full-year impact on operating profit is expected to add at least 200 basis points to the 2009 operating margin in electrical products. As we work our way through a softer economic environment, we'll continue to work diligently to enhance motor margins through our product standardization, rationalization and asset optimization programs.

Paul will now finish up with the outlook, and then we'll take your questions.

Thank you, Terry. Though we are still within the range before the restructuring charge that we issued at the end of the second quarter, we have lowered the top-end because of the weaker-than-expected residential end markets, particularly with respect to the balance of this year. Also, like most economists, we now believe this housing weakness will continue for the foreseeable future.

Throughout the year, the impact of housing-related weakness has been more than offset by strength in our commercial and Chinese businesses, and the positive impact of our aggressive cost-reduction activities. For the balance of the year, we expect to continue to be challenged in the residential market segment. And as we move into 2008, we believe, the weakness in the housing market will persist, and may be accompanied by a slowdown in our other market segments, including commercial. And ironically, though we would expect these softer markets to provide relief from higher raw material costs, we expect to continue to face historically high prices for steel and copper as we move forward. So in front of these headwinds, we are more cautious about the outlook for our business for the foreseeable future.

Operator, we're now ready to take questions.

(OPERATOR INSTRUCTIONS). Ned Borland, Next Generation Equity.

Just a quick clarification on the guidance. Does that include the tax benefit of $0.10 in there, the $2.85 to $2.95?

Yes. That's everything in there.

And if we could go to water heaters first, what did you see in terms of unit decline in the quarter in North American residential?

We're not giving out that much information, because we're the only public water heater company, so we don't want to give our competitors that information. But there was definitely a decline.

If you remember in the quarter, the first couple of weeks in August when credit dried up, and that was when everybody decided that we weren't at the bottom on the housing, we saw a couple weeks of practically no orders in both businesses. And I think that was across the industry. Things have picked up, and we actually ended up within the quarter, given the volumes, we think, a pretty good quarter, because really, really doing a good job in the operations at controlling costs and productivity. The plant managers have done a real good job on scalability to enable us to not incur huge costs as we do things to keep our inventories in line, keep our service levels up and the like. But there was, without a doubt -- obviously, we had some price in the quarter. And then we show essentially flat to down revenues. There was definitely a decline in volume in the quarter.

And then, commercial water heaters, is that market still strong? Is it consistent with what you've seen year-to-date?

Yes. It's held up strong. It continued to be strong. We've got a couple of new products we brought out there that are just booming that we're really proud of in the commercial segment that -- we have a small commercial boiler that's selling at twice the rate we anticipated when we first brought it out a few months ago; a couple of others. So, we're very pleased with what's going on in commercial.

We have not seen anything that would indicate there would be a slowdown going into next year. But history tells us that after a housing decline, there will be some decline in commercial. It won't be near as significant as housing, because we don't have a sub-prime problem with commercial. But as subdivisions don't get built, some of the commercial restaurants and strip malls and the like will be delayed a few months or a year. So we're anticipating as we go into next year that there might be a decline, but we haven't seen it yet.

And then on China, are you still sticking with the 25% growth this year?

Yes. 25% is still doing well. This is going to be as large of a volume growth year as we've had. Our retail partners are opening stores at a record pace. But we have to remind you that they're doing it in second-tier cities now, so they're not opening these huge mega-stores. They're more sized for the local market, and the volumes out of those stores will be a little less than what we've been getting in the major markets. But the expansion rate continues, and very proud of the productivity and the margins out of that business.

These moves that you've announced today in electrical products, does this sort of accelerate the margin improvement in that segment? Does it offer you some cushion in getting there, to double digits, by 2009?

It's an acceleration, Ned. When we go back four years ago when we first started on this plant rationalization -- by the way, we will have closed nine plans when we complete with these three from that project. This is primary the rationalization of facilities from all the acquisitions we made over the last decade.

This has been on the list towards the end of the list on getting the operations into Acuna. We have freed up -- there are two facilities in Acuna. We have freed one of those up over the last couple of years, so it can now take the commercial out of Mebane. And we're able to take the residential into the other plant, Acuna 1, out of Scottsville, and some of Scottsville will go to Juarez. This was part of the plan that we had around four years ago that we've been following. It's just that, as you know, we have one very large residential hermetic customer, and their volume is off somewhere in the neighborhood of 75 to 80% from where it was five years ago. So we're just rightsizing the assets to serve the market that we have there. We still have enough capacity in place, as well as enough idle equipment to put in place in case the market takes off. But for right now, we're just making sure we have it rightsized for the markets that we're in.

I'll let somebody else ask questions here.

Scott Graham, Bear Stearns.

I've got several questions. Your new guidance indicates a pretty troubling fourth quarter. And I was just kind of wondering why the fourth-quarter thinking, particularly given that you've seen the residential order rates bounce back, albeit modestly; commercial continues strong; it looks like you still have GSW synergies that are reading through; you've got pricing in your favor. Maybe get to what are the two or three critical factors that are having you guys really communicate a very weak fourth quarter.

Our cautions are related to one thing, and that's top-line volume. We are pleased with how the operations are performing. We've still got 5.8% operating margin out of EPC. That's above the historical 5% average that follows the 7% we got in the second quarter. We're still getting traction on the margin improvement projects there. I know they're taking longer than some people think they should. And by the way, we are pushing as hard through those as fast as we can. Some of the OEM customers require 12 to 18 months of testing, and we've just got to go through that.

But to answer your question, as we look at the fourth quarter, it's just the top-line (technical difficulty). It's not share-related. We are still picking up a little share in the market segments where we want to. Where the margins are good, we're doing some very, very surgical things there that are helping us in both businesses move the returns up. It's just the overall softness. We're one of the first to come out and report. It will be interesting what others related that have operations in housing have to say, but I don't think they'll see anything too much different than we do.

Paul, are you suggesting that after you saw the pickup later in the quarter, in your residential volumes, I'm assuming that means both motors and water heaters, that maybe you saw renewed weakness in the month of October?

We saw a small pickup from practically nothing the first couple weeks in August. It's still weak. We are still having revenues below what our plans were for the year because the market is a lot softer. Our original plan was for 1.7 million housing starts. And it's now going to be 1.4 to 1.3. And we have 50% share for residential water heaters. So you can tell right there that there's a couple hundred thousand water heaters we're not going to sell this year that when we began the year we thought we would sell. That's just one example. Of course the motor business is a little more complex, but it has essentially the same things. We're not predicting a disaster by any means; we're just cautious folks. We like to tell you what we're going to do and then meet it.

The GSW acquisition, obviously, the synergies there may be taking a little bit longer based on what you're talking about with the product testing. I assume that you meant that for the water heater business. But, the similarity in the manufacturing, it's almost perfect similarity between you and GSW. What is still in front of us on the improvement with the synergy realizations in this business?

I'm going to disagree with you. We're not behind there; we're actually ahead on our internal projects. We are getting everything blended together. We did not mention GSW in the press release today on purpose. It's essentially getting hard to delineate whether this is a GSW synergy, or whether it's just ongoing efficiency improvements in the businesses. And we still have quite a few projects that we're pretty excited about across the whole water heater business for cost reductions.

One that's under test right now that, I think, I've talked about publicly is a new combustion chamber, where we will standardize on one from three. That's one that we'll be implementing early next year, and it has pretty significant savings.

There are several others that we're working on that are pretty good sized for water heaters and motors [relative] to cost reductions. And we, frankly, are very pleased with what's happening there, and think that it's going to show up in the operations of the businesses as we go forward.

So, your reference to some people believe that we're behind on -- your reference wasn't clear. You were talking about the motors business then?

Yes.

So you're ahead of plan on GSW?

We are ahead of plan on the GSW integrations. We're actually stopping talking about it internally. We're not tracking GSW because it's all meshed together with everything else.

And there's nothing that you now over a year -- well over a year past this thing almost --

Year and a half.

-- nothing that suggests that this still can't be a 12% margin business?

Absolutely not. We still believe it's 12% plus. We grew margins last month -- last quarter with a sales miss. I think that says it all there. If we had a stronger market right now, I'd really be crowing about the numbers right now. But we're just facing the reality of what we have.

A couple of others. Curious about the Budapest closing because it would seem to me that would be a lower-cost facility. I'm just -- why that facility, and what area does that facility serve whereby China can serve that same group of customers?

That's exactly what's happening. The customer base that we have there is being transitioned to China. We started this project a couple years ago. That's what's happening. The Budapest operation is an old, large, inefficient manufacturing operation that has been costing us operating income year after year. And that will go away within the next few months. (multiple speakers)

What area does that serve?

It served some customers in Europe with some hermetic as well as some industrial business.

Two final questions. Are you contemplating additional pricing actions in either business in the quarters ahead?

Our costs are going up, and we're taking the appropriate actions relative to that.

Lastly, you had a terrific quarter of free cash flow. What did you do within inventory and accounts receivable that was really the contributor there?

We've been working -- that's been some major effort for the last three years to get our cash flow up. We did over 300 million over '05 and '06 together, adding both years together. And we're continuing to do that. And we're just rightsizing inventory. We're taking our service levels up, getting our inventories down. We've taken over $20 million out of one water heater facility in process inventory, simply by using modern manufacturing techniques, point-of-use inventory, things like that.

I am particularly pleased, I think, Terry mentioned in his comments, with what the electrical products group is doing. We're not talking about the absorption hit that we're taking there. We still grew our earnings $4 million over third quarter last year, and we're, obviously, [eating] some absorption. But it's the right thing to do. It's getting the inventories in line and getting our inventory turns up. And I still think we have a lot of runway for that project. I know that we've done quite a bit to get our turns up, but I think there's even more on the horizon as we go forward.

Andrea Wirth, Robert Baird.

Just a question on your residential outlook. You had mentioned now you're looking for about 1.4, 1.3 million units for '07. Just curious what your initial thoughts are on '08. It kind of seems like this is more like 1.2 million units. Is that your current thoughts as well, or are you a little bit more pessimistic than that?

We're currently in the throes of putting together our operating plan for next year, and we are in the 1.15 to 1.2 range right now in our thinking. And we're still gathering data.

I guess just a question on what we should maybe expect next year. I know you're still doing your initial planning. But just kind of given that, obviously, you're going to see probably another downward tick in the housing market next year, and all of the moves that you have going on, should we still expect margins to expand in '08 in the motors business? Or it's just a little bit maybe (inaudible) a little bit too much to overcome with the volumes and also the moves going on?

It is our expectation that the margins will expand before the additional restructuring charges. We do have -- because of the way we have to do accounting now, we will have -- some of the restructuring charges for next year will be coming pretty well evenly throughout the year. So, before the restructuring charges, I am quite confident that we'll see the margins improve. And then you've probably already done the arithmetic on the turnaround from '08 to '09 from the results of the restructuring charges. So that's the roadmap that we're on, and we're sticking with it.

Just a question, a follow-up on pricing. It sounds like your competitors [Ream] and Bradford White have both raised pricing in the wholesale channel about 4 to 6% for next year. Did you also follow that price increase?

Everybody has announced a price increase, and I really can't talk about pricing in the water heater business. Our costs are going up. And relative to that, we're taking the appropriate actions that a prudent company would do.

Final question. For the guidance, what's the tax rate we should assume for the fourth quarter?

25.8%

John Emerich, Ironworks Capital.

A couple questions of clarification. What is the percentage of total company revenue that is new residential construction?

New residential construction affects about 20% of the water heater residential market. About 80% of residential water heaters is replacement. And roughly, on the motor side, roughly about 70% of our product line is affected. But a whole lot of that is replacement. Our distribution business has been growing double-digits every year and is continuing to do so. The new housing part for motors is tough to get a handle on, but it's probably in the 15 to 20% of revenues are affected by new housing.

15 to 20% of total company revenue?

Approximately, yes.

I'm sorry; could you repeat your statement about housing, your housing starts expectations for '08? [They're] obviously in the early stages of being developed.

It's about 1.2 million right now, maybe slightly below. I saw a forecast from somebody that has been accurate more often than most, and his was 1.16. We're still finalizing the numbers, and we'll -- as always, in January when we come out with our guidance for '08, we will reference what we believe the number will be at that point.

I guess with orders, the last three months have been coming in from the public homebuilders being down another 25%. '08 could easily be down another 10 to 20 in starts from this '07 number, I'm guessing. Correct?

I think that would be a worse scenario than what we're forecasting (multiple speakers)

Fair enough, thank you.

The other part that I haven't talked about is, as I said, we have very few orders. Obviously, the people that serve -- we don't sell directly to home builders; we sell through wholesalers that go to the home builders. And we sell to OEMs. They all took their inventories down because they're rightsizing. So we saw a little bit more of a downward blip simply due to our customers reducing their inventories to serve a weaker end market. It's hard to say. We think that part is pretty much behind us. Next question?

Ted Wheeler, Buckingham Research.

You started to answer this; maybe you could just add a little color on channel inventory. I guess they took it down. Could you kind of go through some of the pieces, if you will, wholesale and retail, both electric and water heater?

It's a little bit. It's nothing like what we've seen in the past relative to inventories ahead of pre-buys and energy -- mandated energy or redesign changes. But it was tweaking down. I think we saw the wholesalers in water heater and the retail have taken their inventories down slightly. And that's been reflected in a decline in our order rate for a short period of time. And I think our OEM partners, the large HVAC companies, have all taken their inventories down somewhat. They're taking days of production out of their facilities. We have very -- when you're an OEM supplier, you have very tight lines of communication with your customer base. So if they're taking an extra few days off in December, we already know it and it's factored into our plan.

Okay. That was kind of my question. So, as far as you can see through the rest of this year, you feel that the information on inventory change with customers is pretty solid?

Yes. It's minor. It's nothing like we've talked about in the past. It probably affected a couple of percentage points of revenue in the quarter.

And for the fourth quarter as well, I presume.

We're not as bad as we were in August on an order rate right now, but we're being cautious about the fourth quarter. Maybe we'll be surprised on the upside.

When your customers come to year-end, will those inventory levels be normal? It's a moving target, of course, as to sales level. Would you think they'll be at normal levels, or below, or still above?

If there is a normal level, that's where they'll be. I'm not being flip. All of us thought -- when we had our call in July, we really thought that we were level at a lower housing rate and it would stay at that rate. Nobody was anticipating a significant drop again that happened in the August/September time period. But to answer your question, yes; they will be at the appropriate level they feel they need to be for the market they're serving.

Lastly, I guess, back on pricing, if steel and copper prices were to stay where they are today, would you need to increase prices similar to the pricing you got in '07, or do you think you'd need to raise prices more or less?

We have a lot of contracts on the motor side that have escalation clauses in them, and those contracts are being renewed all the time and being modified all the time. We have a couple of contracts, long-term contracts, that thankfully run out at the end of this year. And we have put new contracts in place for those that will give us better recovery as we go forward. So we're not going to have -- we have one contract that was for fixed-price from four years ago. We're wrapping very large bills around that one, currency around those when we ship them. That contract goes away in another 10 weeks. And we have a couple of others where we had a 50% sharing on steel that has turned sour on us, obviously. So we're not going to have agreements like that.

Other than that, we -- all of our contracts have these clauses in them. And our non-contract business, like distribution and motors, as well as the water heater side, we do what we need to do as our costs go up. And we do it across the whole customer base -- residential commercial, residential wholesale, residential retail.

That's very helpful color. It sounds like maybe you're slightly more optimistic on recovery next year than you have been?

I think our margins are going to continue to move up. I'm really pleased with what's happening in the operations in getting traction on the (multiple speakers) improvement program. We're just suffering with a weak market right now. (multiple speakers) gives us a chance to rearrange the jungle and be more aggressive on some things so that when things do pick up, we'll have a step function movement in our margins.

I agree. Your margins, I think, are, all things considered, doing fairly well. I'm just kind of trying to go forward and get a sense of your feel. That's very helpful. Thank you.

Scott Graham, Bear Stearns.

Just one follow-up, Paul. On your roadmap to improvement in the motors business, could you talk about maybe two things, two sub-parts to this question? First, the anticipated SKU reduction in terms of sales -- what should we sort of be modeling in? Even if you can give us a reasonable parameter for that for next year and 2009. And then additionally, the lean initiatives that you're talking about certainly now could be applied to a much smaller base of manufacturing -- I guess my question would be that why weren't some of these things being done previously? That business' margins, frankly, ex-charges, has been a flat line at about 6% for probably five years. You guys are looking at the same numbers I'm looking at, and I'm sure are equally frustrated. Why wasn't this happening beforehand?

I'm not going to comment on the history. Today is October 17th, and we look at the situation we have. About a year ago we elected to tweak or change the strategy. We were on more of a growth track. But as we looked at the growth opportunities we had on the motor side, we decided that we really had better returns to shareholders by focusing more on getting our margins up. And the roadmap that we communicated at that time was lean products, which is a standardization optimization, take all the acquisitions we've made and all these 20 and 30-year-old motor designs that came with those, and optimize them to one motor design with a reduced material and a cost-reduced parts list to serve that particular application with the OEMs that application went to. And we said that would give us 1 to 2 points over the next two to three years. And we are still on that track. We are getting some traction.

We're still in a lot of discussions with a lot of our OEMs relative to getting trials scheduled. Some of these trials take 12 to 18 months because, obviously, they design an air-conditioning unit around their OEM parts or a furnace in a home. And they want -- rightfully so -- want to make sure it works properly. So the OEM part of that is taking -- it takes a while to get that sold in.

The second element that we've also said is 1 to 2 points is a product and customer rationalization. We are getting some benefit there. We have had some very tough discussions with some customers. It's either raise the price or the business goes away, but we're not going to sell it below cost anymore. And we're gaining a little bit of traction on that. But because of the sensitivity of some of those conversations, we're not yet ready to come out and say what the ultimate benefit will be from that element.

The third element, the asset optimization, capacity utilization, we have said, will give us 1 to 2 points of margin in the motor business. And we just announced today that it's going to be in excess of 2 points when that project gets completed by the end of '08.

So that's about as much guidance as we can give you right now. You run the numbers; it gets us to '10, a little bit above that by the end of -- as we get into '09, and that's the game plan we're on. And if anything, at least one of the three we're reporting today has a little bit of upside to it from what we told you before.

We have no questions at this time. Please continue.

We appreciate everybody's attention today. And as always, we're available to help answer your questions when we can. Thanks for your interest in our company.

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