Armstrong World Industries Inc (AWI) 2009 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Q3 2009 Armstrong World Industries, Incorporated earnings conference call. My name is Caitlin and I will be your operator for today. At this time all participants are in listen-only mode. Later we will conduct a question-and-answer session. (Operator instructions.)

I would now like to turn the call over to your host for today's call, Ms. Beth Riley, Vice President of Investor Relations, Communication and Diversity. Please proceed.

Thank you, Caitlin. Good evening and welcome. Please note that members of the media have been invited to listen to this call and the call is being broadcast live on our website at armstrong.com. With me this afternoon are Mike Lockhart, our Chairman and CEO, and Bill Rodruan, our Interim CFO.

Hopefully you've seen our press release this evening and both the release and the presentation Bill will reference during the call are posted on our website in the Investor Relations section.

In keeping with SEC requirements, I advise that during this call we will be making forward-looking statements that involve risks and uncertainties. Actual outcomes may differ materially from those expected or implied. For a more detailed discussion of the risks and uncertainties that may affect Armstrong, please review our SEC filings, including the 10-Q that will be filed tomorrow. We undertake no obligation to update any forward-looking statement.

In addition, our discussion of operating performance will include non-GAAP financial measures within the meaning of SEC Regulation G. A reconciliation of these measures with the most directly comparable GAAP measures is included in the press release and in the appendix of the presentation. Again, both are available on our website.

And with that, I would like to turn the call over to Mike.

Thanks, Beth. Good afternoon, everybody, and thanks for participating in today's call.

Like most of the companies you're hearing from, our third-quarter results were influenced by declining global commercial and residential volume, lower costs, and positive cash flow. AWI's reported sales declined 19% for the quarter. Excluding the impact of foreign exchange, sales declined 17%, driven entirely by lower volume. Lower costs significantly offset the margin impact of lower volume, which was down 13%. Operating income benefited from lower flooring raw material costs, reduced manufacturing and SG&A expenses, and modest price realization.

Third-quarter cash flow of $117 million was nearly 30% better than it was in 2008, due to working capital reductions and lower cash taxes. Our liquidity and balance sheet remain notably strong.

Let me now turn to segment results. Worldwide, Building Products, our ceilings business, remained solidly profitable despite volume declines of nearly 22%. In the quarter US commercial volume was down about 19%. Western and Eastern European volumes dropped nearly 30% and Asian volumes were down about 24% in the aggregate. Manufacturing and SG&A expenses were reduced and the combination of price and mix was modestly positive. As expected, WAVE's income declined approximately 20% on lower volume. This had a negative impact on segment margin, because we do not consolidate WAVE's sales.

Our global Resilient Flooring business increased operating income nearly 50%, with lower costs more than offsetting reduced global volume and less profitable product mix. North American Resilient sales declined 16%, with residential volume down approximately 12% and commercial volume down about 14%. Nonetheless, operating income increased approximately 50% on the benefits of raw material cost deflation, lower freight costs, reduced manufacturing costs and lower SG&A spending. In constant dollars, European Resilient third-quarter sales declined just 6% due to lower volume and less profitable product mix. Raw material deflation and reduced SG&A expense contributed to a modest operating profit, which compares to the prior year's loss.

Wood Flooring had 18% lower sales, as the domestic residential housing markets continued to decline. Benefits from reduced manufacturing expense, raw material cost deflation, and lower SG&A offset the margin effect of reduced volume. Operating income increased more than 30% from the prior year as a result.

Cabinet sales declined approximately 20% in weak domestic residential markets. The margin impact of reduced volume more than offset lower manufacturing expenses to result in an operating loss.

For the full year we expect to continue to outperform our markets. We've raised our operating income guidance from a midpoint of $125 million to a midpoint of around $150 million, based on our strong performance in the third quarter. Further reduction in SG&A expense is the largest contributor to the increase. Our full-year cash flow expectations have also improved, due to higher expected earnings.

We continue to expect a longer downturn and a more shallow recovery than some others are forecasting. As a result, we continue to focus on coming out of this downturn substantially better positioned than we went into it, and to remain profitable throughout the period. We can't make our markets grow, but we can work on increasing share, improving mix, reducing cost, and generating cash. We want to receive a fair value for our product and recover inflation where we see it. We will continue to compete by offering consistent quality and great service, as well as by continuing product innovation. We're continuing to invest in advertising and promotion to support the Armstrong brand as a safe haven for our customers.

We have reduced, and will continue to reduce, production capacity to be in line with our sales. We announced three plant closings in the first half of this year. We also announced the closure of a cabinets plant in the third quarter. Based on our current market outlook, these actions, plus crew reductions, should keep our North American capacity utilization rates over 80%.

We need cost-effective, high-quality manufacturing facilities. Therefore we continue to invest capital, both financial and human, in the plants we're keeping open. We have significantly reduced, and will continue to reduce, SG&A expenses as volume falls. Our headcount is down 1,200 people from 2008 year end, and when the announced cabinet plant closure is completed in the next couple of months, we'll realize a further 200-person reduction.

I'd like to finish up by talking about two subjects I suspect are of interest to you, 2010 and the investment by TPG in Armstrong stock.

The big unknown for 2010 is the rate of decline in the commercial markets. Our commercial businesses in North America are only 20 to 30% affected by new construction. Now, we all know new construction is going to be off a ton, because starts are so weak. The bigger question is what's going to happen to renovation. Our models suggest renovation could be flat, assuming we actually realize a GDP growth in the 1.5 to 2.5% range, which I think is what most forecasters have. But the question is, are the traditional economic relationships that our model captures still relevant in what is a very unusual downturn, or has the structure of short-term demand changed.

The micro indicators worry us. We rely on state and local spending, and there's no state and local entity without budget problems. Occupancy rate and office employment trends also worry us. So as we go into 2010, while our models tell us that volume will be down 5 to 8%, we're going to plan for low-double-digit decline. So if volume is worse than our model suggests we're not chasing costs down all year and if the market is better, we'll be solidly profitable.

TPG -- in July I was sitting in Paris kind of exhausted by a flight from Christchurch, New Zealand to Paris -- which I will -- I am pleased to tell you takes exactly 24 hours in the air -- when the head of the AWI Trust, which is our majority shareholder, called to tell me he was going to make my life more complicated. He then described the deal that they had struck with TPG. And it has been a fascinating journey since then. The simple facts are that TPG bought around 14% of our stock from the Trust. The Trust and TPG have entered into a voting agreement which requires them to consult with one another on important issues relating to the Company, and to vote the same way on those issues.

We believe that, on balance, the effects of this deal for us are very good. The Trust gains considerable liquidity, allowing us to be more growth focused when we look to allocate capital. And the time horizon of a liquidity event has been pushed out significantly, again, allowing us to be more growth oriented. As a result of the deal, we have more cash to invest over a longer period of time to grow profits at AWI, and we find this to be an exciting prospect. Of course, we also have considerable pressure to take more costs out and to do it faster. All of this should be a positive for our shareholders.

With that introduction, I'll turn it over to Bill for a review of the quarter's financial results.

Thanks, Mike, and good afternoon.

My comments will follow the slides that are posted on our website, so please refer to them. Before discussing our operating performance, I'll review several significant items that impacted the income statement in this quarter.

Slide 2 shows our results from adjusted operating income through net income. Within reported operating income a $32 million noncash charge was taken due to the accelerated vesting of stock compensation issued to employees and directors. The vesting occurred when TPG and the Trust entered into a shareholders' agreement in August of this year. This agreement triggered a change in control in our long-term incentive program, which in turn caused all the outstanding shares to vest.

Next, we have a $25 million income tax benefit this quarter, $46 million of which relates to the IRS finalizing their audit of our $170 million 10-year carryback tax refund. The $46 million came from two items. First, we had accrued $10 million of interest, which we would have owed the IRS if a portion of the refund was disallowed. The interest accrual was reported in prior periods as income tax expense. The IRS audit, which was completed in July, upheld the full refund, which we received back in 2007. So the interest accrual was reversed in the third quarter.

The remaining $36 million of IRS audit-related tax benefits involves foreign tax credits. Until the IRS ref- -- the IRS audit was finalized, we were uncertain as to how much of our foreign tax credits could be utilized. Therefore, we maintained a valuation allowance on our FTCs. The valuation allowance was necessary because a repayment of a portion of the refund would have prevented us from utilizing the FTCs within a reasonable time frame. Upon receiving IRS approval of the refund, we expect to be able to utilize the FCTs -- FTCs, sorry -- in the future. So a large portion of this valuation allowance was removed in the third quarter.

Okay. Let's now turn to our operating performance. Slide 3 shows the key metrics for the quarter. As Mike described, net sales on an adjusted basis declined 17%. This decline, as Mike described, is really volume related, and was slightly better than our expectations. Operating income, adjusted for nonrecurring items, and excluding the impact of foreign exchange movements, was 11% off of 2008's level. Comparing the change in operating income to the change in sales yields a fall-through ratio of 4%, the best quarterly performance this year and well below our variable manufacturing margin, which is approximately 40% of sales. In calculating fall-through, we exclude the impact of WAVE.

We generated $117 million of free cash flow, or $25 million more than in last year's third quarter. The free cash flow generation puts us in a negative debt position at quarter end, with $522 million of cash and $483 million of debt.

Slide 4 shows the change in sales and operating income by segment. The bars reflect the change in operating income, while the line depicts the percent change in sales. Mike has already covered the details by segment. This slide graphically shows that Resilient Flooring and Wood Flooring exceeded last year's operating income, despite lower sales. But the volume declines in the Building Products and Cabinet segments drove lower operating income.

Slide 5 shows our consolidated adjusted operating income performance versus last year. The pattern of performance is similar to that from prior quarters this year. Market-driven volume declines continue to dominate the year-over-year performance.

Operating costs were lower than last year, but not enough overall to offset the margin impact from lower sales. Input costs provided $34 million of benefit. Raw materials represented approximately two-thirds of this benefit. Freight costs represented the other one-third of the $34 million, and this was from both rate and activity declines.

The reductions in manufacturing and SG&A costs are the result of our continued efforts to improve our cost structure. Like Mike said, the gains came from idling facilities in prior periods, improved manufacturing efficiencies, and making conscious decisions to reduce spend.

Slide 6 depicts our free cash flow versus last year. Cash earnings benefited this year from lower payments for cash taxes and interest expense. We reduced working capital by $43 million this quarter. In the third quarter of 2008, we reduced working capital by $27 million. So, working capital provided a year-over-year benefit of $16 million to free cash flow. Working capital was reduced this year primarily due to lower receivables, which was driven by our sales performance in the quarter, and lower inventories. We have reduced inventory levels each quarter this year in response to lower market opportunities.

Slide 7 shows the year-to-date key metrics. For the first nine months, our fall-through ratio, again, ex-WAVE, is 18%.

Slide 8 depicts the consolidated operating income bridge from 2008 to 2009 on a year-to-date basis. As you can see, the results are similar to those from the quarter, so I won't repeat the explanations.

The year-to-date free cash flow bridge from 2008 to 2009 is shown on Slide 9. The majority of the cash benefit from working capital came from inventories. As I said before, we reduced inventory levels each quarter this year, with the year-to-date inventory reduction equaling over $80 million. In the first nine months of 2008 we actually increased inventories by $18 million, so the year-over-year change in inventories accounts for roughly $100 million of the $139 million working capital benefit.

The key guidance items for 2009 are on Slide 10. As Mike explained, we are increasing our adjusted operating income guidance from July's range of $115 million to $135 million, to our current view of $148 million to $156 million. We have also increased estimated free cash flow.

Slide 11 provides more inputs into our current forecast, and we've highlighted those inputs that have changed from July's forecasts. First, we expect more benefits from purchasing raw materials and energy. And that's especially in the Resilient and Wood segments. We expect total year cash taxes to be less than $5 million for the year. We expect the fourth quarter's adjusted operating income to approach 2008's level, plus or minus a few million dollars. Finally, the exclusions from adjusted operating income increase from our estimate in July. This is primarily due to the $32 million stock compensation charge taken in the third quarter that we had already talked about.

As Beth said, we plan to file our 10-Q tomorrow afternoon.

With that, I'll turn the call over to Beth.

Thank you, Bill. All right, Caitlin, I believe we're ready to take questions now.

(Operator instructions.) Keith Hughes; Suntrust.

Thank you. The question was on European Flooring. Some very good performance, the modest profit you talked about in the quarter. Is that a number that you could repeat in the near future? Was anything unusually positive during this period of time?

No. The single biggest contributor to that is better sales. And amazingly enough, we see year-over-year increases in sales in several of our large markets in Europe. There's an interesting contrast between Floor Europe and Ceilings Europe in market mix. Floor Europe is very much focused in Central Europe -- Germany, Switzerland, Austria, and Scandinavia, whereas the Ceilings business in the UK and Russia. So we're seeing very different market dynamics. And the Central European market has been strong. And so we expect the results to continue to be better than we had expected.

You've been talking about a lot of restructuring in that business. I think you had a breakeven run rate goal by the end of next year. Will the restructuring activity still continue?

Yes, sir. Yes, we haven't changed our mind on the business. It's a difficult business. I think what we're seeing is the benefits of some of the European stimulus spending, which has been very helpful to us.

Within Ceilings, you had discussed kind of your revenue view for 2010; I guess that was for the whole Company. But within Ceilings, will you have more restructuring activity in that business over the next couple of quarters to prepare for a difficult 2010?

I think we will certainly be taking cost down. When you think about restructuring, the biggest question for us is when we close another plant and what are the mechanics of that. There's some difficulties associated with that in terms of having a plant where all of the products they make are made somewhere else. But clearly, if volume really is down in the mid-teens, we're going to be in a situation where we can think about closing another plant. And that's the thing that would give us the biggest chunk of MPE cost. But, we're not at a point yet where we can make that decision.

Okay. Final question. With you net cash positive, and that's a number that's only going to grow, most likely, in the future, what is the Board's feeling, particularly with TPG's involvement now, on the use of cash moving forward?

Well, again, we start with the question of -- the point that we're here to make value, to create value for the shareholders. And the discussion with TPG has been as focused on growth as it is on cost reduction. And we were clearly in a situation in our strategic discussion where we couldn't fund all of the growth opportunities because of the potential of having to pay a large dividend to shareholders. And I think we're now in a situation where we can look at funding our growth.

But even with funding our growth, we would expect to generate significant cash over the next three years. And we're not here to pile up cash. We think $500 million -- it was certainly a perfectly comfortable level of debt. We're perfectly happy with that. We'd be happy with a little bit more. If we continue to pile up cash in excess of what we need to invest, we'll dividend it or by share buyback, or find a creative way to return it to the shareholders.

All right. Thank you.

Jim Barrett; C. L. King & Associates.

Hi, everyone. Mike, could you take us through the current pricing outlook in each of your key businesses domestically?

Sure. We have -- if you look at the -- in the vinyl business, in commercial vinyl we tend to recover roughly what inflation is like. We tend not to recover much in the way of price in the residential vinyl business. We -- in the Wood business, we have seen prices come down at about the same rate or a little slower than raw materials. And so there's been a slight benefit from prices coming down a little less than raw materials. But they -- we look at that as they move together. In the Ceilings business we have not done a price increase this year, despite seeing somewhat higher raw material costs. And over -- historically we've been able to recover more than inflation. We're at a situation now where we would be -- we would happily recover inflation in that business, and we're going to continue down a path of trying to do that.

A competitor indicated that he foresaw the remodeling market in the US as bottoming, to appearing to stabilize. Is that a view you share when you look at your businesses that are -- that play to that market?

Are you talking about residential remodeling, or --

Yes.

Yes. I guess we would say that. We don't see things getting worse. And so we don't -- but it's at an uncomfortably low level. But yes -- no, we don't see things getting worse at this point. When we talk to our distributors or our retailers or we look wholesale to retail -- the year-over-year comps are going to change a lot because we hit a brick wall last year in the fourth quarter. So as we get through, we'll see some more favorable comparison. But I think we're sort of like everybody else in that we're hoping that they -- we're seeing a bottom and what we're hoping is it's not the edge of the drain, you know what I mean, that we're not going to slip over the edge and be gone.

Okay.

Okay?

Okay, that's helpful. Thank you.

John Baugh; Stifel [Associates.]

Thank you, and terrific quarter. Couple of questions. First on Wood, I think you indicated units down 18%. Housing completions year over year for the quarter are down a lot worse than that. Is that laminate performing better? Are you taking share? Is remodeling picking up? Help me understand that.

Well, there's -- the first thing is, laminate, we include laminate sales in the Resilient sales, not in Wood. So with the Wood bus- -- the Wood thing there is really wood. So the second element of it is that the wood is -- we've seen, as new housings come down -- if we went back three years ago we'd have said that new was 55% of the total in Wood. It's come down to the point we're probably 45% today. And I think what we're seeing is that the remodeling is a little better and we're picking up a little share. And if we look at what we're hearing from other people, we believe we're picking up a little share.

Okay. And is there anything -- two questions on the Resilient side of the world. Number one, or it was referenced earlier, the restructuring -- so that's still on course and my recollection was we were talking about the impact of that being more 2011 in terms of favorable EBIT than 2010, and that number being at least a $20 million delta from sort of where we were in '09. Is that correct and is that going to be on top of now breaking even?

That's the right comparison -- or the right recollection. And we're on track. It's like everything you do in Europe, that the negotiations with unions take longer than you think it's going to. But we had some of that built into our plan. So we feel like we're still on track to do that.

Okay. And then on domestic Resilient, is there anything happening with any of your three primary competitors? Is that landscape changing?

The only -- not substantially. The only thing that's -- we're sitting and going to be curious about is that Congo will be filing a revised plan or reorganization next week or -- and so we'll be interested to see what that says. But other than that, we don't see a lot. We feel like we're probably doing more than the average competitor in terms of new product introduction. And having just worked on it yesterday, I know we're spending more on advertising than our competitors are. So it's very quiet out there right now. I think it's an uncomfortable place to be.

So it's -- so I think what people are doing is working very hard to retrench from a cost point of view. And we're seeing -- one of the things that's happening is we're seeing customers -- you know, where the big box guys are doing okay, we're seeing some small retailers who had obviously been -- kind of benefited from local builders and stuff. We're seeing some small builders go out of business in places like Florida and Arizona and stuff, where they just don't have the -- they've seen too much of a downturn and they can't make it. So that's obviously putting pressure on some of our competitors more than us.

And the last question, Michael. Your commercial -- you mentioned wanting to maintain more than an 80% utilization rate in Ceilings. Are we sequentially still going down in that business? Obviously year over year the comparisons start to get easier, but they'll still be pretty negative in the first half of '010 at least. Is there almost a certainty we have to close another facility there, or is that more a question mark at this point?

Still a question mark.

Okay. Thank you.

Ben [Loper]; Longbow Research.

Thanks and congratulations on a great quarter. When we sort of look at WAVE earnings being down and start to think about lag between trough and non-res commercial construction and the trough between WAVE earnings. Is that something we should be worried about in 2010, or what are your thoughts on non-res construction through that year?

Well, I don't think you should worry about it any more than you worry about Ceilings. I mean, they kind of -- they are moving pretty much together. What we're going to be planning is kind of a low double-digit decline in the business for other -- because of the -- we're only 20- -- our sales are only 20, 30% of the new construction. The thing that we don't know about for sure is renovation. But I'm not worried about grid independently of the ceiling business. I think they'll perform comparably to one another.

Okay, thanks. And next question -- you mentioned some benefit from raw materials. And with petroleum and wood beginning to rise again, what are your thoughts on when that starts to reach the P&L through 2010?

It'll be -- you know, the wood stuff will kind of wander through -- it'll get the P&L in the first quarter. We're seeing slightly higher prices now. We went from over $500/1,000 board feet to $400 and we're up to $415, $420 now. So think of it taking about three months to work its way through sort of the green lumber inventory. And so we'll see some of it in the first quarter. And the question will be, as it hits everybody, will the wood industry be able to generate some price increases.

Okay. Thanks.

(Operator instructions.) Ivy Zelman; Zelman & Associates.

Good evening, guys. It's actually Dennis on for Ivy.

Gee, Ivy sounds very deep-throated today.

Ivy's here, too. I'm letting Dennis ask, though. Hi, guys. Great quarter.

I was going to say it's just because it's 5:30 at night. The first question -- the comment that you made, Mike, about the TPG investment on the positive side. The phrase you used is you expect considerable costs to come out and you'll be forced to do it faster. I would think that the results show that you guys have been pretty proactive. So can you just elaborate on that as far as the pressure you're feeling or the discussions you've had to take more costs and do it more aggressively?

I think you're -- I wouldn't use such dramatic language about it. What I would say is that what they're very interested in us telling them what we can do, given the relaxation of the constraints on ourselves, what can we do over the next three years. And as I said, they're as vigorous in their discussions about the growth side of the equation as they are about the costs. But when you look at our company, we have a lot of SG&A. We've taken a bunch of SG&A out; we're going to take a bunch more of SG&A out for next year as a hedge against what we're doing. So that's going to be that.

The one area that they do believe -- and I think this is -- I don't think they believe it about us. I think they believe it about everybody -- that we under-invest in plant-level process improvement resources. And we've done some initial work which suggests that there may be some truth in that. And so we're going to run some tests and you actually may see us spending a little more in MPE, but getting it out in terms of direct-cost productivity in the business. So there -- that's an area which is going to -- where hopefully the stuff will pay for itself in the same year. It's scheduled to and we'll see how that works.

And on the growth side, we have been incremental in our approach in China. We don't need to be incremental. We have the money to build plants. We can do that and we'll continue to do that, and look at adjacencies that we previously didn't have the money to chase, so.

So I think I look at it as a balanced thing. You will see -- but, so -- but I wouldn't describe it as pressure so much as, "Look, put this stuff together. You guys no longer have cash constraints." Because before, to be honest with you, we were shoving five pounds of stuff in a three-pound bag, and it didn't fit. And so we're -- now we don't have that problem. We can look at stuff and we're pretty excited about it.

I think that makes sense. If you combine the $50 million or so of SG&A costs that you guys are expecting for this year and the raw material energy inflations, you're a little over $100 million combined. How much of that would be hitting in the second half of the year versus the first half of the year?

We're grimacing here while we think of whether or not we have a way that we can answer that right now. I think the answer on this, Dennis, is we're going to have to get back to you with that.

Okay.

Because we'll have to, we'll have to get back to you.

Okay. And then two questions on the revenue side. On the Wood business, you mentioned taking some share. I think you guys had some product introductions during the month -- or sorry, during the quarter. If you could maybe talk about whether that aided the results, if there was any sort of benefit to the quarter that wouldn't be sustainable as you loaded the channel.

And on the residential side, on vinyl, I hear a lot of vinyl taking share from other categories, as builders move down price points. Can you talk about what you're benefiting from there, if anything, and what your expectations are for that as you move forward?

Sure. Well, on the Wood side, there's nothing spec- -- there's no hot product which contributes to the results in Wood. I think what we're benefiting from is times are tough. We have a lot of people who deal with small wood competitors and, given a choice, they'd rather be with somebody they're confident is going to be in business. In addition, of course, we've spent a lot of time making sure we have a better assortment of wood. So those things come together, I think, to help us.

On the Resilient side, there's no question that -- while, we don't report residential vinyl -- the residential vinyl order numbers and sales numbers are surprisingly strong. So if you think about the decline in residential sheet, our orders are down, sales are down, in the mid-single digits, and so it's much better than the business overall. And I think it's exactly what you say. Builders are trying to hold a price point. People who are doing remodeling are not sitting there saying, "I can recapture no matter. I can recapture anything I put in the house." And as a result, they're making what I think of as more intelligent investment decisions. But, now, if you've been out looking at houses at all, Dennis, there was a period of time a couple of years ago where people would buy one of these 1950s ranch houses, tart it up with ceramic floors and granite countertops and then try to sell it for twice what they made. You're not seeing that. You're seeing people say, "Gee, I'm not sure what my house is worth. I'm going to put vinyl in." Because, in truth, we've never made better products. It's functionally very good and it's extremely affordable in today's market.

So you expect that that's a business that could grow even if housing starts to kind of languish at the levels they're at then?

Well, yes, if the housing starts don't go down, we should -- we have a potential to grow that business if we don't see something different. We're certainly planning -- we're just in -- one of the things we're just finishing up is a conversion of our Lancaster floor plant to make fiberglass-backed products. And orders for that in the United States are up double digits this year. Sales are up even -- up well into double digits because it's a better mousetrap. And because it lays flat, doesn't have to be full bonded, can be perimeter bonded. And so as a result, it's easier to install and is a far better DIY product than felt sheet is. It actually probably makes sheet vinyl a viable DIY item.

Okay. Well, thanks again for all the color.

You have no further questions at this time. I would now like to turn the call back over to Ms. Beth Riley.

All right. Thank you, everybody, again, for joining us. Certainly appreciate you accommodating our unusual schedule this quarter. And, as always, I will be available for follow-up calls. Have a good evening.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation and you may now disconnect. Have a great day.