American Vanguard Corp (AVD) 2012 Q1 法說會逐字稿

Greetings and welcome to the American Vanguard Corporation first-quarter 2012 conference call. (Operator Instructions). As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Bill Kuser, Director of Investor Relations for American Vanguard Corp. Thank you, Mr. Kuser; you may begin.

Well, thank you very much, Rob, and good morning, everyone. Welcome to American Vanguard's first quarter of 2012 earnings review. Our speakers today will be Mr. Eric Wintemute, the Chairman and CEO of American Vanguard; and Mr. David Johnson, the Company's Chief Financial Officer.

Before beginning, let's take a moment for the usual cautionary reminder. In today's call the Company may discuss forward-looking information. Such information and statements are based on estimates and assumptions by the Company's management and are subject to various risks and uncertainties that may cause actual results to differ from management's current expectations. Such factors include weather conditions, changes in regulatory policy, competitive pressures, and various other risks as detailed in the Company's SEC reports and filings. All forward-looking statements represent the Company's best judgment as of the date of this call, and such information will not necessarily be updated by the Company.

With that said, we turn the call over to Eric.

Thanks, Bill. Good morning, everyone, and welcome. Thank you for joining us as we report on a very successful start to 2012. David and I welcome this opportunity to tell you more about our first-quarter performance and the prospects that we see on our horizon. I'm going to let David give you all of the operating and financial metrics, but I want to start by providing an overview of this outstanding quarter.

Revenues were up 32%, gross profit margins expanded to 43%, operating expenses were held to 26% of sales; and the all-important bottom line, net income, grew 74% over last year's first quarter. As David will describe, our balance sheet remains very strong, and shareholders' equity in American Vanguard increased nearly 5%.

The main themes of this quarter are excellent top-line growth and outstanding profitability, fueled by renewed confidence in traditional chemistry as part of a comprehensive, integrated pest management approach to modern agriculture. Revenue growth was driven by general ag sector demand, and particularly by our strength in granular soil insecticides for corn and other crops as well. As we will discuss, this is our wheelhouse, where we have the industry's most comprehensive product offering, the most efficient dispensing equipment and in-house production capabilities to satisfy growing demand.

It is noteworthy that 100% of our quarterly revenue growth came from existing products, without the benefit of any new acquisition sales. Our increasing profitability is being driven by improving gross profit margins and operating expense control.

In the quarter gross margins benefited largely from the efficiencies of higher volume manufacturing. While our expanding business required some rise in operating expenses, we have seen such expenses decline as a percent of sales. Together, this gross margin gain in operating expense restraint have contributed to our significant net income acceleration.

With that overview, I will now turn the call over to David, who will cover the financial and operating details. I will then return with additional comments about the factors that we see shaping a bright future in 2012 and beyond. David?

Thank you, Eric. As Eric has already mentioned, and as you will have read in our earnings announcement, sales for the first quarter of 2012 increased by 32% to $87 million as compared to $66 million in the first quarter of 2011. Within this number, our crop sales were up nearly 39% to $80 million, and our non-crop sales were down 13% to $7.4 million. It is pleasing to report that our export sales have more than doubled to end at approximately $18 million versus $8 million this time last year.

In our 10-Q filing scheduled for tomorrow, you will see a detailed description of sales by product groups. In summary, insecticides recorded sales up approximately 43% over the prior year. This group was driven by very strong demand for our corn insecticides into the Midwest, offset by lower Bidrin sales, which last year occurred in Q1 and are expected to occur later this year. Our herbicides, fungicides, fumigants product group was up about 39%, with strong performances from each of these product categories.

Within crop our other sales were essentially flat, and as mentioned previously, our non-crop sales were down 13%, mainly due to elevated channel inventories of our mosquito adulticide product, Dibrom, as a result of last year's drought conditions in the Southeastern and South Central regions of the US.

Our gross margin in the quarter was 43% of net sales as compared to 41% of net sales during the first quarter of 2011. This was driven largely by better manufacturing performance, resulting in fuller absorption of fixed overhead costs.

Operating expenses increased in the quarter by 30% as compared to last year. This supported an overall increase of 32% in sales, and is largely attributable to regulatory expenses and the increase in freight costs associated with higher overall volumes and our expanding international business.

Having said that, one key metric that we track is overall operating expenses as a percentage of sales. This year we posted 26% compared to 27% in last year's first quarter and a 28% average for the full year 2011.

The net result of these dynamics is operating income of $14.4 million versus $9.2 million this time last year, an improvement of 57%. Our effective interest rate for the period is 4.6% as compared to 4.1% last year. The main driver for the increase is that this year we had a fixed interest derivative, as required by our credit facility agreement. The advantage is having a stable interest rate for the 5-year term of the loan.

The disadvantage is that in comparison, short-term floating rates last year were lower. When you look at the 10-Q you will see that the fixed rate derivative cost is approximately 0.8%.

Income before tax improved from $7.9 million to $13.7 million, an increase of 73%. Our effective income tax rate is 36.3%, which is flat as compared to last year. As noted by Eric in our earnings announcement, our net income has increased 74% and our earnings per share has increased to $0.31 per share as compared to $0.18 this time last year.

Our balance sheet remains in strong condition, with shareholder equity up approximately 5% in the quarter. Certain elements of working capital increased in the period, which is quite normal for our business at the start of the growing season. The key element that we focus on daily are inventory, which remained quite low driven by strong demand and a very strong manufacturing performance, which resulted in fuller recovery of manufacturing overhead costs for the quarter.

Receivables -- the sales team spent a lot of time in the field with customers but are also very careful to collect receivables as they become due. Our performance in this area is a matter of great importance to the Company, and our success as a result of great customers and a lot of attention to detail across the organization.

Payables -- this reflects the fact that we pay our bills in a timely manner, and we are carefully managing our inventory levels. Programs reflect the significant volume of our sales growth, as well as our expanded product range.

As you will see from the cash flow statement, we are spending capital in the early part of the year. This is focused on equipping our manufacturing sites to produce additional steps in certain products acquired in 2010. Because of this careful management of cash, even during the early part of our annual cycle we have been able to cover the growth in working capital, invest significantly in our manufacturing facilities, declare a $0.05 dividend -- all without looking to revolving debt for short-term financing.

Finally, because of our overall financial performance, we continue to be in position to borrow up to the maximum allowed under our credit facility.

With that, I hand back to Eric, who will close with some comments about our sales and marketing initiatives.

Thank you, David. Since the quarter was heavily influenced by Midwest demand, let's talk a little about corn, where we see substantial growth opportunities. Mild temperatures throughout the winter months have facilitated an early and robust corn planting season. It is estimated that around 95 million acres of corn will be planted this year, and growers have had the opportunity to plan and execute that planting without the rushed pace that inclement weather has caused in recent years.

As we have previously discussed, the tendency for farmers to plant corn on the same acreage year after year has given rise to much greater primary and secondary pest pressure. For several years, we have maintained that by using both traded seed and our granular insecticide products, it is possible to achieve yield enhancement beyond which can be achieved by using genetically modified seed alone. AMVAC's best of both worlds message is gaining real traction in the corn belt, and the use of our corn soil insecticides continue to expand as corn growers choose to supplement their use of ever-improving genetically modified seeds.

AMVAC has four primary granular corn soil products for customers to choose from -- Aztec, SmartChoice, Force, and Counter, allowing growers to rotate these defensive measures, which helps mitigate the development of potential insect resistance. As a result of the groundswell of demand for our soil insects solution, we are ramping up our production capacity for each of these products and the delivery systems.

Our Axis plant has expanded its operations to accommodate necessary production. Our Hannibal, Missouri, plant, which is ideally positioned in the center of the US corn market, will become the hub of our Midwest corn initiatives. Our production of SmartBox systems will significantly increase in 2012.

Paralleling our corn soil insecticide program is our post-emergent corn herbicide initiative with Impact. As we have discussed previously, with each passing year of widespread glyphosate herbicide use, weeds and grasses tolerant to that chemical proliferate, increasing the need for complementary herbicide use.

Our Impact herbicide, which addresses the glyphosate-tolerant weed challenge, has been selected by Monsanto based on efficacy and crop safety to participate in the Roundup Ready PLUS platform. This comarketing arrangement holds the promise of much wider use of AMVAC's Impact.

Together, these two corn initiatives are part of AMVAC's yield enhancement solution, YES, which we are promoting throughout the corn belt. Increasing yield is a critical objective of corn growers, and these corn initiatives are a prime example of how preserving existing chemical and equipment technology can contribute significantly to that effort.

In crops other than corn, our granular soil insecticides had solid performances as well. Our primary THIMET continues its strong presence as a preferred insecticide in peanuts, sugarcane, and potatoes.

Our nematicide, Counter, grew significantly in the quarter in corn, sugar beets, and bananas. With stronger supply availability, our Mocap and Nemacur posted first-quarter sales considerably higher than the prior year on potatoes, bananas, pineapples, and a number of other vegetable crops.

Our fungicide, PCMB, returned to the US marketplace, and we look forward to reestablishing the preferred position of this product in 2012. We remain very excited about the market prospects of our potato sprout inhibitor, SmartBlock, despite the delay in commercialization until next year.

Our international business more than doubled in the first quarter versus a year ago, with our insecticide and nematicide products leading the way. As David described, our non-crop business declined somewhat in the quarter, as channel inventories of Dibrom reduced first-quarter shipments. We expect that this segment of our business will continue its multiyear growth pattern with the resumption of PCMB sales in the United States for turf application, the steady growth of our NUVAN commercial and consumer pest management franchise, as well as an expanded mosquito control offering.

So to conclude, what is the near term takeaway message for American Vanguard? These results demonstrate that we are experiencing volume-driven revenue growth. We are achieving gross margin expansion as a result of greater operating efficiencies. We are managing our operating expenses to a smaller fraction of sales, and we are bringing significant additional profits to the bottom line.

We expect to be able to continue this positive trend throughout the coming periods. As we have mentioned before, American Vanguard finds itself in a great place. In a world that must double farm production in the next two decades, in an industry that must adapt to the ever-changing challenges of Mother Nature, American Vanguard has positioned itself to be a significant part of the solution.

We have great confidence in our ability to identify and position ourselves to capitalize on the many growth-oriented strategic possibilities. We hope that you share that confidence and benefit from our continued success.

I will now be happy to entertain any questions that you may have. Rob?

(Operator Instructions). Michael Cox, Piper Jaffray.

Congratulations on a great quarter, guys. My first question is on the capacity expansion plans. I was hoping you could give us a progress update on the BASF constraints on the Impact herbicide, where that stands on building that out for next season?

We have had communications with the demands that we are looking for for the 2013 season. I think we are fairly confident that we will meet our expectations. Whether we have projected right in the market is still a question, but we do see very strong collaboration with Monsanto in growing that market segment.

Is it something that we should look for from -- hearing from you in the next, say, 3 to 6 months? What sort of lead time would you need to have that deal inked to be prepared for the 2013 application season?

Well, as I said, I think we are confident that we will receive the material that we are looking for for the 2012, 2013, basically the 2013 growth season.

Okay. Considering the demand that you saw this year for corn insecticides and the likelihood that we'll have another big corn planting season next year, how are you sizing up capacity expansion plans for next year's application? Is there a particular acreage target that you are working towards to have in place, and then what sort of flexibility would you have to further expand capacity if the demand proves to be higher?

This year, we had input from our customers that ranged anywhere from this would be up nicely to don't ever shut off your equipment. And so that becomes -- overall, we surveyed and tried to get a feel for it; we talked with each of our customers and laid out what we thought their needs would be. I think they were appreciative.

We are continuing to get input for this upcoming season, but we are positioning ourselves to have considerable gain over what was put on the ground -- or what we put on the ground for this 2012 season. Like you, we do see, also, strong corn season for 2013, but I think more importantly, it is the acceptance of using our corn soil insecticide products as part of a supplement to genetics. I think regardless of where this goes, we see that -- a resurgence of that market.

We don't have -- we have some internal targets for production that we are working on. We are expanding the plant. We put in, actually, a separate unit in our Axis facility to manufacture tribufos, which is our cotton defoliant, Folex, so that we could expand the use of our existing product for more corn -- our corn products, both Aztec and our SmartChoice.

We have capacity at Hannibal for Counter, and that manufactures Counter and THIMET, where we have the ability to expand production there. I think when we took over at the facility it was running about 4 or 5 months out of the year. We are getting close to running round the year, but we have not gone to -- that could increase fairly dramatically if we go to 24 hours instead of just single shift. So we have got considerable upside there.

As far as formulation, we have gone to 24/7 and our facility in Alabama. We are in the process of putting a system in in Hannibal to do the formulation and packaging of the SmartBox systems, lock and load, and that will be a primary driver for the corn market, really more for the 2014, season as we will probably start that production in the second quarter of 2013.

That is great. One follow up on the SmartBox side, you have a sense for the number of systems that are in the field today? And you had mentioned stepping up your capacity to manufacture those delivery systems. Could you maybe quantify what that increase might be?

It is not -- we don't have exact numbers on how many systems are in use today. What we are seeing is that the size of the units is growing. I think a number of people who had been using SmartBox systems were using those to manage their refuge acres, and that's -- that shift is now starting to go into total acreage rather than 20% or 10% of their corn acreage.

Our SmartBox systems that we sold this year were approximately double. We expect that to be more than double that number in 2013. Correlating that to expanded uses is not easy, because as I mentioned, it is a matter of utilization. Growers, if they are adopting more towards total acreage, that just means they will be using their SmartBox system more than they might be using it if they were using it for refuge.

So there is not a direct correlation between the number of systems that we put out there and translating it into actuals. Now we do know what the volumes that we are doing, we are also going to be purchasing considerably more SmartBox containers themselves to facilitate this upside, and that was a restraint for us.

We did purchase quite a bit more for this season, for the 2012 season, but effectively, we saw demand was greater than what we could supply for that market. So we are using our best estimates here for what we think 2013 will hold for us, and we are producing and securing accordingly.

Okay, great. One last question on the gross margin. Of the 200 basis point improvement versus last year, how -- in just ballpark figures, how would you estimate the fixed cost absorption versus a more favorable product mix?

Well, I think the absorption was the major part of that. When you look across, I think, our insecticide -- you saw on the insecticide line there was more favorable margin. I think in our fumigant line, we did not have the same margin that we had from prior year, so that was a little offsetting to growth in the soil insecticide base.

Brent Rystrom, Feltl.

A couple of quick questions. Out of curiosity, would you view your corn soil insecticides at this point -- are they being used as a preventive measure, or are farmers using them more to react to what they are seeing in the field? So when they get out there, I'm assuming they are looking at beetle counts or something like that to give them an indication of what worm is coming in, but I'm just curious how you view the farmers' approach to this.

I think it is a preventative approach. I mean, traditionally, farmers are very sophisticated. They go through -- as they go through, they have got a yield map that tells them exactly what their harvest is by every sector of their field. They pretty much know year-to-year whether they are in a high-pressure area.

They have the ever increasing corn-on-corn acreage of greater than 30 million -- a third of the acres are being -- corn-on-corn. And that non-rotation certainly builds pressure.

I think the majority -- to answer your question, I think the majority of the people are viewing $20 to $25 an acre investment in their -- protection of corn market that is so strong, coupled with the yield benefit that we have shown now for 7 consecutive years at the universities, it is a strong message.

More importantly, I think we are not seeing, contrary to when traits came into the market in, I'll say, the 2006 season, where trait companies were looking to displace insecticides. Now I think there is greater exception of the thought that we need all the tools in order to continue to drive yields. And so the trait companies are working on great technology that will continue to improve the yields, and our position is that we are there as a supplement to help grow those yields as well.

From a -- you mentioned some of the studies. When you look at the University of Minnesota study, and you look at the 4 best performing plots they had, all 4 of them were your individual 4 products, as far as what I can see. That has got to be a pretty effective marketing tool for you to go out and use that, I would imagine.

It is. And as I mentioned, we are a small company at AMVAC, and we were pushing the message largely on our own. I think, finally, having some greater talk about it -- at some point you hit the tipping point, and I think that is where we are today.

There not too many people out there at this point that are staying insecticides are a waste of time. The initial push, again, was about convenience. And at this point, given where corn is, it is return on investment. So if you are in an area that has pest pressure, it just -- from our standpoint, it just makes complete sense to supplement your planting.

Who would you say your biggest partner is in the field? Would it be agronomy centers? Would it be your agronomist that is working with the farmers, or would it be some of these larger companies you are marketing with?

I think it is our customers. Our customers have grabbed a hold of the messages. They are talking through it with farmers. I think a difference from previous seasons is the seed and the trait companies are no longer -- I mean, they are in fact recommending that if you're in a heavy pressure area, you need to look at adding a soil insecticide.

So I think part of it is we don't have that force in a negative position. In fact they are enhancing our message, but our customers have taken this -- taken it to retailers. It is certainly supported by all the studies that we have done and the universities have conducted as well on their own. And I think it is just weight of evidence at this point -- makes it a pretty easy decision.

Did you take any price increases on the CSIs compared to last year?

We did.

Can you characterize the range?

It was in the 7% range.

I would imagine, given the growth you are seeing, there is very little resistance. So clearly, this product is very important for those who need it. Do you anticipate that pricing increases could be something not necessarily annual, but a regular part of the package over a couple of years cycle?

Every year we look at the opportunity for price increases. I mean, it is not about looking specifically at our margins. It is what is the value of the product in the market. And we see this is -- at the cost to the farmer today, it's a very strong return on investment.

You mentioned corn-on-corn. I was looking at some of the studies coming out of Iowa here just a couple of weeks ago -- qualifying, they believe, corn-on-corn acreage in Iowa last year yielded 28 bushels less per acre then rotated corn. And that was up, I believe, from about 20 bushels a year prior. I'm curious if your farmers or your agronomy centers have gotten back to you and said how your corn-on-corn treated fields have fared compared to the averages?

We did have the results for 2011, and again, we saw considerable upside. The 2012 -- of course, we won't know that until the end of the year. By the time the numbers --

The numbers I'm talking were just released for last year.

2011, right. I don't know that we had specific -- that I have seen in the breakout of corn-on-corn; we certainly know whether it was corn-on-corn or not, but that's a good point, and one that I will bring up with our sales and marketing team.

Finally, kind of an oddball question, but do you guys have any plays for the spread of HLB out there from the Asian citrus psyllid? Is that something that you guys could participate in, or is there just really no hope for that?

So we initiated, last year, Dibrom in Florida. If you pull up on our website and on our video, there is a nice segment with the grower that puts juice out under Nobel.

He is a significant grower in Florida, and he talks about the change that has happened in his production, from about $1200 an acre production costs to now $2400 an acre because of the Asian citrus psyllid. And with that, the primary treatments have been pyrethroids and neonics.

Dibrom offers a completely different class of chemistry and is highly effective. So yes, we did participate to a small degree in 2011. We see upside here in 2012. There are issues down in Mexico, and our group down there is working with that. It has also expanded over into Texas, and I think here in --

Just found in LA, yes.

Yes. Here in California they are scared, because it was found in a residential area. Those diseases can be devastating, and when the vector hit the Oleanders that were so big on the drive in -- just totally decimated the Oleander market along the highways. That was not so much a commercial issue, but certainly from a cost standpoint, the concern that hit the grape industry that did not expand into Napa in any great way, but certainly had a devastating effect down in the Northern San Diego County area. These diseases can go rapid and can be completely distractive.

So we are participating with Dibrom. We think it is a very good solution as part of a rotation of a number of tools to help control that pest pressure.

(Operator Instructions). Jay Harris, Goldsmith & Harris.

You have not said it, so I will say it. This is an astounding quarter. It is the all time record revenues for any quarter in the Company's history, all time record earnings per share for any quarter in the Company's history.

Now my question is, how should -- over the decades, your business has -- I remember when you couldn't report $0.01 a share of earnings in the March quarter, but because of corn, we now have a very heavy revenue capacity during the first 6 months of the year. What are the factors that are going to be the principal vehicles for the June quarter and the September quarter? Can you give us some insights as to the growth, undulation, the quarterly revenue profile that we should looking towards as you penetrate more of the corn opportunities?

Well, I guess you were right up until the last, as we penetrated corn opportunities, but I was going to talk a little bit about is that second and third quarter, fourth quarter, the flow.

When the 2009 period hit, and all of a sudden our customers were faced with considerable write-downs of glyphosate and fertilizer, there was a pretty big shift at least within our business of moving product more towards actual use. And I think part of what has happened here with corn is it has allowed us to shift our business to more at the time of need than stocking programs.

And there is nothing wrong with stocking. There is a lot of concept of the loaded is loyal position -- if you don't get your products in and somebody else does, then you may have missed out on an opportunity.

But I think the pressure from the customer base has been more towards -- you know, let's try to get product -- I don't want to say just in time, but let's make sure the product is available, but let's also try to manage their inventories as well. So what we have -- our cotton insecticide, Bidrin, which was really largely a fourth-quarter and first-quarter sales period for second-quarter and third-quarter use, is now moving towards a second-quarter -- maybe third-quarter sales and use period. So I think that is certainly part of it.

Our fumigant business is going to remain the same. It is driven by third-quarter and fourth-quarter usage. It is such a big volume that, storage being the issue, most of our customers don't have the ability to take huge volumes anyway, even if we wanted to move that forward. So with corn, there is production schedule. We are going to be producing, we are going to need to produce starting in the third quarter, particularly the soil insecticides.

I don't know that that would necessarily -- that does not necessarily have to translate into sales, because we can warehouse the material, but we are not -- even with the production at Hannibal, which would start, maybe, not in time for next season, but for the following season. We are still going to need to produce maybe 9 months out of the year to meet that demand.

So I think overall we are more balanced, and I think that is a good thing. But again, we are -- there are always timings of various things that can fall in one quarter or another. Also, from the international side, where we are seeing some considerable growth opportunities there. A lot of that is sold in the other side of the hemisphere, so that will also help average things out.

What is the principal quarter this year for Impact?

We will have material in December. There will be some sales there. The first quarter of 2013 will probably be a pretty good number in that. So between first -- probably will be fourth and first quarter. This year we had certainly good sales in fourth and first quarter. But we are looking for a considerable upside from that as we have supply availability for the upcoming season.

With the corn crop being earlier, will the remaining part of your Impact sales show up all in the June quarter this year?

I think we are probably pretty close to done with our Impact sales. David, I don't know if you know where we are inventory-wise, but I think it has got to be pretty low. We really had nowhere near the demand that was there, so we did sit down with our customers and lay out a volume by customer. I know they committed to everything. I don't know whether everything got built in --

I don't think it did.

Yes. There is probably some material still left for the second quarter.

So what will be the products that will dominate the June quarter?

Well, we are finishing up on -- we had some soil insecticides that we are finishing for corn in April. We had -- we have got our other -- certainly Bidrin should be strong for us. The THIMET will be strong for us. I think those are -- Counter, certainly on the international side, Counter being positioned as well. So --

And Dibrom.

Yes, and there will be some Dibrom, right.

(Operator Instructions). Jay Harris, Goldsmith & Harris.

I'm looking at the balance sheet. I see that there was a considerable amount of -- what do you call it? Bear with me for a second.

While you are thinking that, Jay, I just want to supplement one other product. So Folex, which we are just -- the plant is just going to be starting. We are doing it in the original unit, but we will be starting that up here the first part of June. But we will have some pretty strong sales in the second quarter, and even stronger in the third quarter, that being the cotton defoliant.

The program, somewhere in here I read about reserves for program expenses. That number is up $20 million in the March quarter. Is that a reduction in revenues? Is that how you record it?

Yes.

In fact, all the programs -- and Jay, you may recall that prior to -- we had some amount was in expenses and some is in revenue reduction, but this is now 100% revenue reduction.

All comparable quarters are reported the same way.

Right. And the program with Monsanto has increased the program dollars as a percentage, as it relates to Impact.

What is the likelihood that you will have some acquisition cost this year? And versus a very material reduction in your debt levels?

Well, we are always in the throes of negotiating various acquisitions. That is part of our business model. It is not something that we can predict and say, this deal is going to close and this deal isn't. We really don't know that until we sign the agreement.

But we will continue to look for those opportunities. Obviously, if we don't, cash at the end of the year will be pretty strong. That also being said, though, we are making considerable capital investments in our expansion of our plants. But we are probably, void of making material acquisitions, we are probably not going to go into our revolver. So that could give you an idea.

And capital spending this year will be?

Significantly higher than last year.

Yes, yes. The plant, the tribufos plant, you can see there that -- well, you have not seen it yet -- I guess -- is it on our -- it's on our --

Yes, the capital spending in the first quarter is primarily on that.

Right, plus $5.7 million.

Not exclusively, but it is primarily on that. I mean, we are also re-equipping the laboratory space.

Right.

Refresh my memory, what was the capital last year?

Total for the year was about --

For the full year was about $6 million.

And where could we be this year? Triple that?

We could be 4 times that.

There are no further questions at this time. I will turn the floor back to management for closing comments.

Okay, well, again, thank you everybody for listening in, and it's great questions. We are very optimistic about the future, not just the balance of 2012, but through the balance of the decade. So I look forward to reporting to you at our next conference call. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.