Apogee Enterprises Inc (APOG) 2003 Q3 法說會逐字稿

Good lay day ladies and gentlemen. Welcome to your Q3 Apogee Enterprise earnings conference call. My name is Jean. I will be your conference coordinator. [Caller Instructions]. I would like to advise you the conference is being recorded for replay purposes. I would like to turn the call over to your host, Ms. Mary Ann Jackson. Please proceed, ma'am.

Thanks, Jane. Good morning and welcoming to the Apogee Enterprises fiscal 2004 third quarter conference call on Thursday, December 18. This call is being webcast live over the Internet from Apogee's corporate Web site, www.apog.com, and a replay of the call will be available on the Investor Relations section of our site. With us on the line today are Russ Huffer, Chairman, President and CEO, and Mike Clauer, CEO and Executive Vice President. Their remarks will talk about the fiscal 2004 third quarter results and the outlook for the remainder of the fiscal year. Before we begin, I would like to remind you that our discussions today contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements reflect management's expectations or beliefs as of the date of this release. Please note that the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. All forward-looking statements are qualified by factors that may affect the operating results of the company, including the factors described in our press release.

The company wishes to caution investors that other factors may, in the future, prove to be important in affecting the company's results of operations. New factors emerge from time to time and it is not possible for management to predict all such factors, nor can it assess the impact of each such factor on the business or the extent to which any factor or a combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. For a more detailed explanation of the foregoing and other risks and uncertainties, see exhibit 99.1 on the companies Form 10(K) for the fiscal year ended March 31, 20003. Information in this conference call related to projections or other forward-looking statements may be relied upon subject to the previous Safe Harbor statement as of the date of this call and may continue to be used while this call remains on the Apogee web site. Russell will give you a brief review of the results and Mike will cover the financials. After they conclude we will open the call up to questions. Russ?

Good morning and welcome to our conference call. As you know we have some significant changes underway at Apogee with the anticipated closing of the sale of Harmon AutoGlass by early January, 2004. We announced in November that we have a definitive agreement to sell Harmon AutoGlass to Glass Doctor, part of the Dwyer group. We are in a pivotal period as we work to reposition Apogee for a stronger future.

In addition to the sale of Harmon AutoGlass, we are in the midst of developing and implementing strategic growth initiatives aimed at boosting the growth of Apogee. I will talk about our strategies in a moment. We earned 20 cents per share in continuing operations in the third quarter. Net results were earnings of nine cents a share. This includes a loss of 11 cents a share from discontinued operations. Our third quarter revenues from continuing operations declined 7% , compared to the prior year, as expected , to $143.6 million. We met our overall expectations in the third quarter, despite the ongoing difficult commercial construction environment. Architecture revenues for the quarter were down, due to the slow construction market. The segment's performance were somewhat below our expectations due to project delays in our window and curtain wall business and lower margins on isolated jobs previously identified as having project management issues. Although market conditions for our architectural segment remained challenging in the fourth quarter and for fiscal 2005, we are starting to see some positive trends. The architectural segment backlog increased almost $28 million on top of a $30 million increase in the second quarter, for nearly a 40% increase over two quarters. In the third quarter we saw growth in backlog in all architectural businesses. The bulk of this backlog growth will fall into our fiscal 2005, and unfortunately doesn't drive the same profitability as our backlogs have in the past, due to project mix and competitive pricing. Our inbound order rates for architectural glass fabrication and windows and curtain wall also have improved in the last few months. I am pleased that we are finally winning more business in these tough markets. The latest industry forecasts from FW Dodge predict a 4% increase in total nonresidential markets in calendar 2004, and an increase of 9.6% in our key office sector, after an expected decline of 8.8% in calendar 2003. Office construction recovery is very important to Apogee's businesses. The products, quality and services required by the office market often have the greatest value in this market. However, because of the timing of our products and services, lag construction project starts by about nine months, we don't expect to see this market growth benefitting our architectural businesses until late in fiscal 2005 or early fiscal 2006.

Our large scale optical earnings in the quarter benefitted from continued conversion to value-added picture framing glass and operational improvements, Partially offset by ongoing pricing pressures in consumer electronics and clear glass picture framing products. We will continue to use our positive cash flow this year to strengthen our balance sheet by reducing our debt and paying our dividends. We also expect to begin repurchasing stock under our current share repurchase program during the fourth quarter. The continuing soft commercial construction markets and the impact of project delays have led to us guide to the low end of our previous range of 38 to 50 cents a share for fiscal 2004. This does not include an additional 5 cent, one-time reduction in auto glass segment earnings in the fourth quarter, as a result of amending the existing PPG AutoGlass joint venture pricing amendment to better reflect market pricing; and potential one-time charges as we evaluate the needs of reorganization after the divestiture of Harmon AutoGlass. We plan to provide fiscal 2005 guidance during our fourth quarter after we close on the sale of Harmon AutoGlass.

Let's take a look at Apogee's new growth strategies. As we have stated, we are committed to repositioning Apogee for growth, despite the down commercial construction market. We have been working on our growth strategies for the past several months, and have shared with you that our focus will be on the architectural glass, architectural products and services and picture framing glass. Our strategies are designed to help us grow our core businesses, and at the same time obtain new revenues from extensions of these businesses. It goes without saying, our goal is to achieve much higher profitability on our revenues. Moving ahead, you should notice that we are talking less about individual businesses and instead are focused more on the goods and services we are delivering to our markets. This is how we are looking at Apogee in our strategic plan. This morning I am going to provide an overview of four key strategies we are working on. First is to exit Harmon AutoGlass, a major non-core business that was Apogee's roots. This should be completed in the next few weeks, thus eliminating a major drag on our earnings, while allowing us to give our growth strategies our full attention. The second strategy is to increase the conversion of all picture framing markets to value-added glass. We are building from a stronger base here. We have a clear market leadership in our profitable picture framing business. One of the key ways we are doing this is through reducing the price of our reflection control products to make them more affordable for consumers. To make this possible we are determining ways to streamline costs in this segment as we continue to transition our coating capacity from consumer electronics to picture framing in upcoming months. At the same time, we are working to grow our traditional custom framing market while we start to focus on two new markets. We are already making inroads into the institutional fine art market, consisting of museums, galleries and high end custom framing. We are also evaluating the do-it-yourself market, which we have defined to include ready-made frames, photography and scrapbooking.

Our third strategy is to increase our market share of commercial architectural glass products. We are leaders in the office category and have an opportunity to gain share in other categories, such as education and healthcare, with our value-added products. The same goes for geographic regions of the United States. We are strong in the Midwest region, served by our plant in southern Minnesota, and have lower shares in other regions. A key focus for helping us gain share is operational improvements throughout all phases of this business, from shorter lead times to a simpler product line. These efforts can also help us in the shorter lead time commercial architectural market, today served largely by regional fabricators. There are opportunities here, and we are in the process of determining how to most profitably pursue these opportunities. (sp) has been selling more into this broader market this year, so we are demonstrating the potential for success.

Our third strategy is to continue to improve the performance of our architectural products and service business. These businesses deliver glass installations on new business, renovation of window and curtain wall systems on older buildings, glass services on our window and curtain wall product lines. We will continue to make operational services using our Six Sigma Lean tools, using our best practices across these businesses. We will also focus on our most profitable growth opportunities, such as renovation, expanding glass installation work in existing markets and growing our share by offering full window and curtain wall lines in a single source. For example, most of our window competitors offer store front and entrance products. Finally we will continue to manage our well run, nonstrategic businesses to maximize cash flow. This includes our windshield manufacturing business. By fiscal 2007, we envision an Apogee that is providing greater shareholder value where we are growing and having significant improved profitability. We are excited about the roadmap that these strategies provide for repositioning Apogee for growth. We hope you, too, agree that there is great potential for Apogee. I will now turn to CFO, Mike Clauer. Mike?

Thanks, Russ. We expect the implementation of the strategic initiatives that we are developing will help us in overcoming the market challenges we are facing. Our focus will be to competitively and profitably deliver our products and services to underserved markets where our brands deliver recognized value. We expect the closing of the sale of Harmon AutoGlass by early January will allow to us focus on our future strategies. We are excited about our strategic initiatives and expect to make announcements related to these efforts during the fourth quarter of fiscal 2004.

We earned 20 cents from continuing ops in the quarter, meeting our overall expectations for Q3. The EPS reconciliation to the 35 cents per share from continuing ops in the third quarter of last year underscores the challenges in the architectural segment. Our architectural segment was down 22% from last year. Auto glass is flat, including PPG Auto Glass, which is reported in equity and affiliates, the large scale optical group was up two cents per share year over year, one time items in the prior year third quarter of 3 cents from the gains on sales of assets and we had an 8-cent improvement from our tax rate reductions. Our net results were earnings of nine cents per share after a loss of 11 cents per share in discontinued ops. Discontinued ops included charges of $1.3 million related to the anticipated sale of Harmon AutoGlass and retail auto glass unit operating results were below expectations, as an increase in units was offset by a pricing decline versus the prior year period. Third quarter revenues from continuing operations totaled $143.6 million, down 7% as expected versus the prior year period. Architectural segment revenues continued to decrease as a result of the ongoing construction industry decline, and were down 11% to $109 million. Operating income was $1.7 million compared to $10.8 million a year ago.

We continue to suffer from lower volume and competitive pricing. In addition, operating income in the quarter was further impacted by projects shifting out in our window and curtain wall businesses, and by the ongoing margin pressures in isolated glass installation projects. The architectural backlog increased to $209 million, up almost 40 percent in the last two quarters. We saw increases across the board in our architectural businesses. The majority of this work will be shipped in fiscal 2005, and, as Russ said, it doesn't carry the same margins as we've had in the past. The capacity utilization in the architectural manufacturing was on average about 60% in the third quarter. Third quarter large scale optical revenues were up 2% to $22 million, while operating income increased 37% to $2.5 million. Earnings benefitted from the continued conversion to value-added products and operational improvements, partially offset by the ongoing pricing pressures in consumer electronics and clear glass picture framing products. Auto glass segment revenues for the third quarter,which now reflect only the manufacturing business, were $12.6 million, up 15% from the prior year period. The segment reported operating income of $2.8 million, up from $2.2 million in the prior year period, due to higher than expected manufacturing shipments in the quarter, a timing issue that will be reflected in lower shipments in the fourth quarter. This was offset by manufacturing pricing that declined approximately 12% compared to a year ago.

EBITDA, earnings before interest, taxes, depreciation, and amortization, from continuing operations, was $11.3 million versus $19.1 million in the same period last year. Our long-term debt was $41.7 million at the end of the third quarter, up slightly from 40.4 million at the end of the second quarter, and down from $47.3 million at year end. Our total debt to capital ratio remained at 19% at the end of the quarter, compared to 21% at the end of fiscal 2003. Non-cash working capital, current assets excluding cash, less current liabilities, increased to $57.1 million at the end of the quarter from $49.7 million at the end of the second quarter. The increase was due to seasonal increases in accounts receivable, as well as a planned inventory build of our value-added picture framing glass. Capital expenditures from continuing operations were $7.8 million year-to-date, even with the same period last year. Our tax rate, year-to-date, is zero, due to our constant tax credits on lower earnings. Our third quarter results benefitted by six cents per share, or $1.6 million, due to favorable impacts of constant tax deductions and credits, relative to a reduced base of free tax income and additional deductions from an intellectual property donation. We did not buy back stock in the quarter but plan to begin buying in the fourth quarter.

I will add some color to the outlook for the remainder of the year that Russ has already provided. Our outlook for continued operations for the remainder of the year has declined further, due to the ongoing commercial construction industry slow down. Overall revenues for the year from continuing ops are expected to be down mid single digits. However, we anticipate slight revenue growth in the fourth quarter coming from the architectural segment. Architectural segment fourth quarter revenues are expected to be up in the low single digits. Large scale optical revenues are expected to be flat in the fourth quarter, compared to a strong prior year period. Auto glass manufacturing revenues for the quarter are expected to be more than 15% lower than the fiscal 2003 period. Annual gross margins are expected to be five percentage points lower than the prior year due to the competitive prices in almost all businesses and maintaining staffing levels to handle the large architectural backlog. Our expected annual operating margins by segment are architectural, approximately one to 2 percent, large scale optical, seven to 8 percent, and auto glass, 14 to 15%. We are estimating EBITDA from continuing ops of $34 -36 million for fiscal 2004. We estimate net cash provided by continuing ops of $18-22 million for the year. We are targeting capital expenditures of $16 million for continuing operations this year and will tightly manage investments as we leverage excess capacity. This will give us anticipated free cash flow of $2- 6 million.

We will continue to use our positive cash flow to strengthen our balance sheet by further reducing our debt during fiscal 2004 to below $40 million, continuing to pay our dividend, and buying back a modest amount of stock to offset our management incentive programs. Effective tax rate for the full year is anticipated to be zero. The rate reduction is a result of favorable impacts of constant tax deductions and credits relative to a declining base of free tax income. EPS from continuing operations are expected to be three to six cents for the fourth quarter. For the year we anticipate we will be at the low end of the previous range of 38 to 50 cents. This range does not include a 5-cent one-time reduction in the auto glass segment earnings in Q4 as a result of further amending the PPG Auto Glass venture pricing amendment to better reflect market pricing, and potential one-time charges as we evaluate the needs of the organization after the divestiture of Harmon AutoGlass. Full year discontinuing operations will reflect a charge of 25 to 32 cents per share, or $7-9 million, for the transition and transaction costs of exiting Harmon AutoGlass. Operations are expected in this segment to incur additional losses prior to the closing of the transaction. At this time we do not anticipate any income or loss from resolution of liabilities associated with discontinued European curtain wall operations. As Russ said,we plan to provide fiscal 2005 guidance in the fourth quarter after we've closed on the sale of Harmon AutoGlass. We are doing what we can to make our operations even more efficient in these challenging architectural markets. Efficient. We are also focused on selling Harmon AutoGlass, and more importantly, on developing and implementing growth strategies for the short term and long-term. Thanks. Russ?

Thanks, Mike. I'd like to go ahead and open it up for questions at this time.

[Caller Instructions]. You have a question from Eric Martinuzzi of Craig Hallum.

Good morning, Russ, Mike and Mary Ann. My first question focuses on the architectural segment. Now, in the- you talked about a couple of things impacting the business, one project delays and, two, project management issues. I know you talked about those last quarter. Are we going to be hearing these same issues impacting the business in Q4?

Let me address the prior issues, management issues. What happened before was we had to write down, and so there were surprises and the writedown on the margins on the jobs had significant impact. What we are seeing now is not a surprise, but it's now the margins are now running out at low margin. So those jobs are running out, they're running down. Going forward we would anticipate that those would still be low margin jobs as they complete, but they are becoming a much smaller piece of the total. So the dollar impact will go down. There will still be these very low margin jobs finishing up, but we expect the dollar impact to be much less in the future.

And those jobs are going to be done-- ?

Yes, they will, you know, you have retainage and things, but for the most part, they will be essentially complete this quarter. There will be some run out but it should be much less impact going forward.

Stepping back to a more macro terms issue, I know you guys haven't talked about 2005 and you are going to comment on that after the sale of Harmon, but just close to even 2005 because I know you guys do hang a lot of your projections off of the Dodge numbers. If they are looking for a 9.6 percentage improvement on the commercial- the office construction recovery in 2004, first of all, what does that compare to the prior number Dodge and second of all, is the Dodge number back-end loaded for calendar '04?

The Dodge number, I think I reported in the text was down 8.8% in office last year. So the-- in 2003, calendar '03 was down 8.8. So the 9%-plus growth in '04 fundamentally is returning us to an '02 level for starts.

Excuse me for interrupting here, but is the 9.6% for '04, was that the first projection for '04, or was that a revision to a prior?

I believe it's a modest increase in the prior published number.

That is good news, because that says that by the end of calendar '04 and early in calendar '05, that should have positive impacts for our businesses because office is where the value of our products and services is the greatest. So that is good news. The overall-- our overall penetration of the nonresidential market, though, does continue, and that's what's reflected in our current backlog, is our success in the non-office areas of non-residential construction. So that we are better utilization of assets, resources, high capital assets, that's good news for us, that helps us in these times, and it also positions us for a better future.

Eric, on a historical basis, our architectural segment lag adjusted tends to do a little bit better than what Dodge would say.

Do they break that out on a quarterly basis at Dodge? I think It's reported twice a year.

And it's an annual number.

My concern just being that will we've tied the projections to them in the past and it always seems to move to the right. But if you guys are seeing the inbound order traction that's encouraging. My only comment to that would be, you know, the recovery on the business would be wonderful if we were maintaining the operating margins. Do you see operating margins ramping back up any time?

The current backlog, of course, is a tighter margin. There is no question about that. Yes, I would say that they would start to come up. As we continue to make process improvements through our Lean Six Sigma, some occupational changes in the way we run our places, we should see some improvementa in cost. And then, as we see office come back and the market come back, then the tightness on the margins that we had to bid should improve.

Then secondly, shifting over to Harmon for a moment, are there any conditions or liabilities, post closing, that you will be on the hook for?

There certainly are some normal things in terms of the incurred but not reported Workers' Comp claims or liability claims or things like that, and we are in the final phases, I believe we really finished, but maybe Mike might want to make another comment. I think there are some minor things that we will be reserving for.

Eric, this is Mike. I mean, the agreement has what we perceive as to be normal ruts (phonetic) and warranties that we are going to be responsible for. Some of them just have a two-year tail on them. Some of them have a longer tail, but we feel--

But nothing that's performance based, deferred--

No.

Okay. Then lastly, on the buy back, if you don't mind, could you refresh my memory on the size of the authorization and the timing of when it expires?

The full authorization is 1.5 million shares ,which we have talked about in the past, that we were anticipating repurchasing this year about 500,000 shares.

Does it end at the end of the fiscal year and needs to be reauthorized again, or is this evergreen?

The 1.5 million would be to be reauthorized at some point in time in the future when we had exhausted andry repurchased those shares.

Thanks, gentlemen.

You have a question from Cliff Walsh of Sidoti.

Good morning. Can you talk a little bit about the slowing growth in LSO? What's the reason behind it and what can we expect going forward?

Well, I mean-- this is Mike. The slowing growth in Q4, it's a little bit misleading. What we are doing is continuing to see the acceleration of the value-added glass offsetting a decline and slowdown in consumer electronics. So what your expectations should be going forward is transitioning a way from consumer electronics products to picture framing products, which will, even though revenues growth will be modest, you are going to see an acceleration in margins. The other things, Cliff, to make you aware, within that segment, we also have declining clear glass sales, as pricing has gotten very competitive, number one, but we also are converting clear glass to value-added glass, and then we also do have a mat wood business as part of Tru Vue that many we've seen some low pricing pressure in that segment, albeit small to the segment, it has an impact as you are looking at revenue.

We remain quite optimistic about the LSO segment and its long-term potential to convert markets. But in the meantime, there will be these issues of conversion, capacity allocations, things like that, that we'll have to deal with.

Okay. I just wanted to make sure that--

Picture frames, it's a great segment for us.

I was wanted to make sure the picture framing side was still doing well. I was aware that you were trying to transition out of the consumer electronics.

As the demand grows, we have an limited amount of coating capacity that we right now are putting plans in plans on how we are going to transition that over the next couple of years. If we achieved all of our goals, we would, theoretically, in three years be using 100% of the capacity of those coaters for picture framing.

Okay. You mentioned, you know, getting into the do-it-yourself market on the picture framing side and also on the storefront and that architectural, have you come up with a plan yet as to how you will get into those markets?

On the do-it-yourself, we are actually right in the process right now of doing some research on what the needs are there. We don't have the final answer, but clearly, for us to enter that market would not be an acquisition. I think we have a lot of the capabilities, it's just understanding the needs of that market. As far as the store front, we are actually currently evaluating right now, you know, is this a green field opportunity, or should we look at some potential of small acquisitions but we haven't made a decision.

What's your time frame for trying to figure that out?

Store front, I mean, we are working on it pretty aggressively right now. We think it's a great opportunity for us. The do-it-yourself, we would be looking at that probably over the next six months as we understand the needs of the market and then, first we have to determine, Cliff, if we even think they are attractive for us.

Okay. Great. Thanks very much.

You're welcome.

You have a question from Clinton Morrison of Piper Jaffray.

Hi, Mike and Russ. A couple of clarifications. I think you said a 5-cent charge in the fourth quarter anticipated because of sort of a change in a pricing contract? Is that correct? Does that come in as a one-time charge? I don't understand how that works.

It's 5 cents, and if you look back at our Q2 2002, when the pricing amendments were put in place, we had a one-time accelerated increase. All we are doing is, for the most part, reversing that. It has no impact, really, on cash flow, and honestly will not have any impact next year.

So it is a one-time thing and it's separated out on the reporting?

And it's really more driven by timing.

Okay. Did you give a total backlog number? I know you gave architectural.

Architectural is really the lion's share. Total backlog is 215,800,000.

Okay. I know you indicated that the architectural backlog margins were not what they were before. Can you quantify that at all as to how much of a change the implied profitability of that backlog is?

What I can tell you is from a revenue perspective, what we are seeing in our businesses, because we don't track the profitability of the backlog. But through the year, our businesses have experienced about a 4-7% pricing pressure. Some is pricing, some is product mix. So that's kind of how I would look at it. It's probably five percentage points less.

That's pretty accurate. Clearly, our margins are sensitive to capacity utilization as well, but I think that what-- Mike has put it in a good perspective for you.

Okay. I have a final question. I know your guidance indicated a 25-32-cent charge for the year, and that includes, I think, the 18-cent change from Q3 when you lowered the valuation of Harmon?

That is correct.

Okay, so that assumes kind of a 7-14 cent additional?

Which we did take about $1.3 million in Q3.

Okay. Thank you much.

[Caller Instructions]. Your next comes from Beth Willie of Wildon Partners.

I have a couple of questions. I want to explore the architectural margins, and not necessarily the existing backlog, but just kind of, you know, as we go forward and you cycle through the backlog that's comparatively priced. Over the next year or two, where do you see margins on the architectural side going to?

I think we will see improvement over the year as we see, especially as we see office improve, we will see improvement just because that will pull it along. The other short-term improvements will be more operational than they will be market driven, so improvements in margins will have to come from operational improvements, a capacity utilization, those kinds of items. We are trying to calculate here a little bit more of a comment for you.

Beth, this is Mike. I will add a couple of points on that. Clearly, the problem jobs that occurred in Q2 are behind us and we've put plans in place to try to insure that those don't happen again. So on a year-over-year basis, we are going to just see some improvements in margins because we won't be running jobs that are actually very low or losing money.

In fact, we saw the third quarter finish in the construction glazing business finish with a consistent improvement in margin, which bodes well for next year. It's sort of a couple of data points. We want to see a few more months of that continuous improvement before we would necessarily project that, but we are on the right track.

Another thing, Beth, just from a utilization of capacity, as we get more square footage going through those businesses, which is the encouraging side of that business and some of our productivity initiatives, that those also should have an impact on margins.

So, for example, a year ago this quarter, the architectural business generated close to 9% margins.

I think-- but you are also looking at a time, Beth, that we were still working down our backlog from that robust peak of the market. So those are reasonable markets when our facilities are running at 75% capacity plus. I mean, I would not anticipate seeing that number again in the next couple of years. But that is really the right number for that segment in normal times.

I think we are probably a year away from seeing those kinds of things begin again.

A year away from pricing the kind of business that allows you to earn a 9% operating budget?

It's not only pricing, Beth. Remember, we also have a pretty big fixed cost base. It's not just pricing, it's also capacity utilization.

Okay. Okay. Then the other question I want to asking is just about the buy back. So there's 1.5 million authorization, right?

Correct.

Okay, and you said you were going to buy back a half a million shares in this fiscal year?

We have authorization from our board for 1.5 million shares, and based on our process, as far as why we buy back stock, that would saythat this FY we should be buying back half a million shares, and our plan is to begin that repurchase after we close on the sale of Harmon AutoGlass.

Okay.

Then we would revisit it for FY 2005.

Okay, so how many shares have you bought back so far this year?

Zero, as it relates to that.

We finished out the prior authorization and the new one, we have not purchased anything yet.

So, it seems to me, then, that you are going to get pretty aggressive after you close the sale of Harmon, then?

Aggressive from the standpoint, I know there's rules about a company buying back their shares.

But I'm saying, if you are going to buy back half a million, that's pretty significant over the next couple of months?

Yes.

Okay. I just wanted to clarify that. Okay. So you bought no shares back and you are going to by a half a million?

That's our intent.

That's our intent. Hopefully the lawyers don't stop us again.

Right. Okay. And then, is it your intent, then, if you exhaust-- so let's suppose you exhaust this authorization, will you go back to the board and ask for more?

Our plan would be that, you know, what we've been doing is our share repurchases has been driven by our management incentive plans. A lot of us are, our bonuses get deferred with stock. And so our intention is that we don't dilute our shareholders when we issue those shares. So we will have to evaluate at the end of the year what next year's management issues would look like, or employee issues, and then we would do the same thing.

Okay. Then one last question. At what price doesn't it make sense for you to buy back stock?

I don't know that we have sat down and tried to quantify that yet, Beth.

Okay. I'd be curious as to-- I mean, you may not want to talk about it on the call.

Actually, I've looked at it and I don't want to talk about it on the call.

Okay. All right. Fair enough. Thanks.

You have a question from Derrick DeBecki of Ireland Wood Financial Management.

Thanks, it's already been asked and answered.

Okay. Star one for questions. No questions at this time. We would like to really thank you for participating in the call today. Clearly there are encouraging signs about our business, the impending sale of auto glass, the strategic growth initiatives; the bottoming out. We think we've got a good line-of-sight into the bottoming out of the architectural markets. The timing of their recovery is important to us, and we will keep communicating that with you, but we really feel that we've gotten the company now positioned to take advantage of that. So, with that, happy holidays.

Ladies and gentlemen, thank you for joining us on today's call. You may now disconnect.