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Operator
Good morning, and welcome to Acuity Brands 2012 fourth-quarter financial conference call.
After today's presentation, there will be a formal question-and-answer session.
(Operator Instructions)
Today's conference is being recorded.
If you have any objections, you may disconnect at this time.
Now I would like to introduce Mr. Dan Smith, Senior Vice President, Treasurer, and Secretary.
Sir, you may begin.
Dan Smith - SVP, Treasurer, and Secretary
Thank you.
Good morning, all.
With me today to discuss our fiscal 2012 fourth-quarter and full-year results are Vern Nagel, our Chairman, President, and Chief Executive Officer, and Ricky Reece, our Executive Vice President and Chief Financial Officer.
We are webcasting today's conference call at www.acuitybrands.com.
I would like to remind everyone that during this call, we may make projections or forward-looking statements regarding future events or future financial performance of the Company.
Such statements involve risks and uncertainties, such that actual results may differ materially.
Please refer to our most recent 10-K and 10-Q SEC filings, and today's press release, which identify important factors that could cause actual results to differ materially from those contained in our projections or forward-looking statements.
Now let me turn this call over to Vern Nagel.
Vern Nagel - Chairman, President, and CEO
Thank you, Dan.
Good morning, everyone.
Ricky and I would like to make a few comments, and then we'll be happy to answer your questions.
First, let me say we are very pleased with our results for the fourth quarter and for the full-year 2012.
We reported strong top and bottom line growth in spite of continued soft economic conditions.
As we will explain, our reported results included the impact of our previously announced streamlining activities which mask the significant improvement in performance of the Company this quarter.
This is the 10th quarter in a row where we achieved unit volume growth in an environment where spending for new nonresidential construction remains sluggish and inconsistent.
I believe this is, yet again, strong evidence our strategy to diversify the end markets we serve and extend our leadership position in North America is succeeding.
These strategies include the continued aggressive introduction of innovative, energy-efficient lighting solutions, expansion in key channels and geographies, and improvements in customer service.
Our profitability and cash flow for the quarter and full year were again strong, even while we continued to fund areas with significant future growth potential, including the expansion of our solid-state Luminaire and lighting controls portfolio.
As you well know, the economy in North America continues to be fragile, as consumer confidence lags and job growth remains anemic.
Having said this, we believe the many channels and markets we serve are, for the most part, on the road to recovery.
Also in the quarter, we continued to encounter rising costs for items such as freight and lamps.
Overall, we estimate our pricing initiatives have allowed us to recover these higher input costs.
I mention these macro factors because it provides a backdrop against which you can again see the outstanding performance of our Company.
I know many of you have already seen our results, and Ricky will provide more detail later in the call, but I would like to make a few comments on the key highlights.
First for the quarter.
Net sales for the quarter were $514 million, an increase of almost 4% compared with the year-ago period.
This level of growth is significant given general economic and industry conditions.
Reported operating profit was $61.2 million or 11.9% of sales.
We took a special charge in the current quarter for previously announced streamlining actions, and incurred expected inefficiencies associated with these actions, which in total reduced operating profit by $6.5 million in the quarter.
Ricky will talk more about these special charges and these inefficiencies later in the call.
I find it helpful to add back these items to the current quarter's results to make them comparable with the prior year.
Doing so, one can see adjusted operating profit was $67.7 million, up 21% over the year-ago period, while adjusted operating profit margins improved 200 basis points to a strong 13.2%.
Diluted earnings per share were $0.78.
Again, adding back the impact of these items noted above, adjusted diluted EPS for the current quarter was $0.88, up 11%.
As Ricky will explain later, fluctuations in foreign currency reduced our diluted EPS by $0.04 in the quarter, while it benefited diluted EPS by $0.03 in the year-ago period.
You can do your own math to get a true apple-to-apples comparison between quarters from an EPS perspective when eliminating the impact of these currency fluctuations.
As you would expect, the growth is similar to the 21% growth we achieved in adjusted operating profit.
Strong results indeed.
For the full year, net sales at Acuity were more than $1.9 billion, up almost 8% from 2011.
Adjusted consolidated operating profit margin was 11.7%, up 120 basis points compared with the year-ago period.
Adjusted diluted EPS was $3 per share, up 24% from 2011.
In addition, we generated over $172 million in net cash provided by operating activities.
This is the eighth year out of the last nine years where we have generated more free cash flow than our net income, a significant accomplishment.
As Ricky will discuss later, we've meaningfully enhanced our already strong financial position in 2012 as net debt to total capitalization net of cash is now just over 7%.
Lastly, I'm pleased to report that we once again earned much more than our cost of capital, and our cash flow return on investment was a robust 24%, 300 basis points better than last year in spite of these challenging economic conditions.
These results for the quarter and full year were significant improvements over the year-ago periods.
We believe you will find these results even more impressive upon further analysis.
So, first let's look at the quarter.
On a consolidated basis, net sales grew almost 4% compared with year-ago.
Approximately two-thirds of the 4 points of growth were due to greater product shipments, with the balance coming from the benefits of better price and product mix.
The impact of acquisitions and foreign currency on net sales were not significant.
The increase in net sales was reasonably broad based along most product lines, partially offset by a decline in renovation due to the timing of projects for certain large corporate accounts in the year-ago period.
Growth in our largest channel, commercial and industrial, was well above this quarter's average due to continued emphasis on selling higher value added lighting solutions, especially LED-based Luminaires, which again grew by more than 2.5 times compared with the year-ago period, as well as a continued focus on smaller- and medium-sized projects of various types.
We continue to enjoy solid growth in important geographies in channels in North America, as well as key markets internationally, all of which is very encouraging in spite of the variability in demand within the nonresidential construction market.
As we have noted before, it is impossible to precisely determine the separate impact that price and product mix changes have on our net sales.
Having said that, we estimate the positive impact on sales from price mix was primarily due to the benefits from previously announced price increases to recover rising input costs.
We estimate our pricing actions helped offset approximately $4 million in higher input costs compared with the year-ago period.
Looking at all this a bit more closely, there are some interesting points to note.
First, we believe spending in key segments of the nonresidential construction market was up modestly in the quarter compared with a year ago, as was the lighting market.
This is in contrast with our unit volume growth in North America, which was up more than 3%, and even more in the C&I channel.
We believe our channel and product diversification, as well as our strategies to better serve customers with new, more innovative lighting solutions, and the strength of our many sales forces, have allowed us to yet again outperform the markets we serve.
Our solid growth in a challenging market is due in large part to our focused strategy to diversify our portfolio, to be less reliant on new building construction, and more focused on growing portions of market including renovation and lighting control solutions that enhance the visual environment while optimizing energy usage.
Before I turn the call over to Ricky, I would like to comment on our profitability and the strategic accomplishments in the quarter and the full year.
Excluding the impact of the special charge and the expected inefficiencies with plant consolidation, adjusted operating profit margin for the fourth quarter was a strong 13.2%.
Again, up 200 basis points from the year-ago period.
In fact, we earned more adjusted operating profit this quarter than any quarter since 2008, and this was our highest operating profit margin in the last four years.
Further, as Ricky will discuss later in the call, adjusted gross profit margin expanded 140 basis points to 41.8% due to higher shipment volume, a better mix of products sold, and improved productivity.
Next, selling, distribution, and administration expenses were 28.6% of net sales for the quarter, a decline of about 60 basis points from the year-ago period.
Total SD&A was up only 1.7%, on a sales increase of 3.6%.
Productivity improvements help to offset other increases in SD&A expenses, which were primarily related to activities focused on longer-term growth opportunities including market diversification, and investing in innovation and technology, primarily for solid-state Luminaires and integrated intelligent lighting systems.
Investments in these key areas are starting to pay off, as our new products and solutions gain traction in the marketplace, driving revenue growth.
As a point of reference, SD&A that is not directly variable with sales volume was slightly less than $90 million this quarter, in line with the expectations noted in our last quarter's earnings call.
On the strategic front, we continued our rapid pace of introductions of new products, significantly expanding our industry-leading portfolio of innovative, energy-efficient Luminaires and lighting control solutions.
The rapid introduction of innovative, more energy-efficient products and services have been key contributors to our improved performance over the last few years.
This, contrary to the view of some, has allowed us to extend our market leadership position, and is one of the cornerstones of our growth strategy going forward.
As I mentioned earlier, our solid-state lighting portfolio is expanding rapidly, as are the sales of these Luminaires.
Today, LED-based products are now approximately 12% of our total sales, and we continue to fund the development of other light source technologies such as organic LEDs where we continue to expand our award-winning portfolio of these innovative products.
More impressively, our adjusted operating profit margins continue to expand this quarter, while sales of LED-based solutions have become a larger portion of our overall business.
Acuity is a clear leader in digital lighting solutions.
It is because we understand the sophisticated needs of our expansive customer base and are able to offer each tailored solutions from our industry-leading portfolio.
Customers understand it takes more than just a chip, which is quickly becoming a commodity, or a fluorescent lamp, to be a true lighting company like Acuity Brands.
At Acuity, we offer customers superior quality lighting and energy-efficient solutions for virtually every indoor and outdoor application regardless of the light source.
This is again why we are extending our industry-leading position.
As I have noted before, our Organization has a long and distinguished history of leading and innovating during eras of technology disruption.
Today is clearly no different.
Acuity Brands is leading the evolution to intelligent lighting solutions with its broad and deep portfolio of indoor and outdoor solid-state and traditional energy-efficient Luminaires and lighting controls.
And we are delivering profitable growth and strong financial returns for our stakeholders while making these important investments.
For the full year, we performed exceedingly well in spite of another year of weak economic conditions.
Just to note a few of the key highlights -- net sales grew almost 8% to over $1.9 billion, while adjusted operating profit margins expanded 120 basis points compared with the year-ago period.
Our solid growth in this challenging environment was due in large part to our focused strategy to diversify our portfolio, and be less reliant on new building construction cycle, and to expand in underpenetrated channels and geographies.
Innovation and the record pace of new product introductions continue to fuel our growth.
Interestingly, we sold as much LED-based Luminaires in the fourth quarter of 2012 as we did in all of 2011.
Our formidable strength in innovation was on full display earlier in 2012 when, as I mentioned before, Acuity won a total of 11 industry awards at two key industry events for its indoor and outdoor LED lighting solutions.
These awards included the prestigious best-in-class designation at the next generation on Luminaire solid-state lighting design competition.
No other competitor even came close to this level of success at these events.
Again, we are a lighting company.
We are extending our leadership position because customers understand it takes more than simply slapping a chip on a board and shining it in someone's eyes, and then claiming to be a real lighting company.
These accomplishments have diversified and strengthened our foundation, and will further serve as a robust platform for our future growth that is less reliant on the new commercial construction cycle.
We have been able to produce these results because of the dedication and resolve of our 6,000 associates, and the progress that they have made in four key areas of strategic focus -- customer service, pricing and margin management, geographical channel and product portfolio expansion, and company-wide productivity.
I will talk more about our future growth strategies and our expectations for the construction market later in the call.
I would like to now turn the call over to Ricky before I make a few comments regarding our focus for 2013 and beyond.
Ricky?
Ricky Reece - EVP and CFO
Thank you, Vern, and good morning, everyone.
I will highlight a few items regarding our income statement, including the special charge and production inefficiencies related to our streamlining activities.
I then will discuss our cash flow and financial conditions before turning the call back to Vern.
Vern covered the primary drivers for our sales growth and our profitability, so I will not repeat these items, but I would like to provide a bit more color on certain aspects of our fourth-quarter and full-year results.
Let's first look at our streamlining activities.
In the fourth quarter of fiscal 2012, we recognized a pretax special charge related to the previously announced closing of the Cochran, Georgia production facility of $2.1 million or $0.03 per diluted share, which related primarily to the cost associated with the transfer of production.
In addition to this special charge, we incurred $3.2 million or $0.05 per diluted share of higher costs related to manufacturing inefficiencies directly associated with the closing of this facility.
As well as a $1.2 million of non-cash expense or $0.02 per share related to the abandonment of usable inventory at the facility because we concluded that the cost to move and warehouse the inventory exceeded the benefit.
We had pretax special charge and production inefficiencies this quarter totaling $6.5 million or $0.10 per diluted share.
As Vern said earlier, we find it useful to adjust our results for these items to make them more comparable, and we have included in our earnings release a full reconciliation of our GAAP amounts to these adjusted results.
The closure of the Cochran facility began in the third quarter of fiscal 2012, and is expected to be principally completed by the end of the first quarter of fiscal-year 2013.
We expect to record an additional pretax special charge and production inefficiencies of approximately $5 million associated with this closure, which will be recognized primarily during the first quarter of fiscal 2013.
Annualized pretax savings associated with this closure are currently estimated to be approximately $8 million, and are expected to be fully realized following the completion of the transfer of production and closure of the facility, which we currently estimate will be by the end of our first quarter of 2013, assuming we can receive all necessary government permits and approvals timely.
You may recall, in addition to the special charge for the Cochran closing, we also recognized a $2.7 million pretax charge in the first quarter of fiscal 2012 for other streamlining efforts, which are expected to yield annualized savings of roughly $5 million, and an additional $1.2 million pretax charge in the second quarter associated with a reduction in workforce, primarily in our operation in Spain, which we estimate will generate annualized pretax savings of approximately $1 million.
Therefore, if you total all the streamlining actions for the full fiscal-year 2012, we recognized a pretax special charge of $13.3 million or $0.21 per diluted share, plus pretax costs of $4.4 million or $0.07 per diluted share associated with the production inefficiencies and abandonment of inventory.
We currently estimate we will record an additional pretax special charge of $2 million, and incur additional pretax costs associated with the production inefficiencies of $3 million, primarily during the first quarter of fiscal-year 2013.
However, these amounts could vary, depending on the timing of the production transfers.
We estimate that these streamlining actions, in total, will generate annualized pretax savings of approximately $14 million, of which approximately $1 million was realized in each of our second and third quarter of fiscal-year 2012, and approximately $2 million in the fourth quarter of fiscal 2012.
We hope to be at the full annualized savings rate of $14 million for all these actions by the end of the first quarter of fiscal 2013.
As Vern mentioned earlier, our adjusted gross profit margin expanded 140 basis points to 41.8% largely due to the incremental profit on our higher shipments and favorable price mix.
In addition, we are continuing to see profitability improvements due to productivity gains in our manufacturing facilities, and early savings from the transfer of production from the Cochran facility to other manufacturing sites.
Partially offsetting these improvements, as Vern previously mentioned, was increased input costs of approximately $4 million.
While we are experiencing reductions in certain commodity costs, such as steel and solid-state components, these savings are being partially offset by increases in other areas such as freight and lamps.
Also, most of the recent reduction in commodity cost and solid-state components have not yet been reflected in our financial results because of our FIFO inventory cost and methodology, and higher inventory levels.
Rather, these recent favorable movements in cost are reflected in our year-end inventory cost in the balance sheet until these inventory items are consumed in production and sold.
Let's next turn our attention to some of our results below the operating earnings line.
Miscellaneous expense is due primarily to the impact of exchange rates on foreign currency items.
In the fourth quarter of fiscal 2012, we had miscellaneous expense of $2.8 million compared with $1.7 million of miscellaneous income in the prior-year period.
The unfavorable impact of exchange rates on certain foreign currency items, primarily the Mexican peso-denominated items, negatively impacted fourth-quarter earnings by $0.04 per share compared with a $0.03 favorable impact in the prior year fourth quarter.
For the full fiscal year, we actually experienced miscellaneous income of $1.7 million compared with expense in fiscal-year 2011 of $1.2 million.
The relative value of the US dollar to the Mexican peso has fluctuated greatly during this year, impacting our foreign currency gains and losses on our Mexican entities' US-denominated receivables and cash, resulting in these earnings swings.
The effective tax rate this quarter was $34.4%.
This is 270 basis points higher than the prior-year quarter.
This higher effective tax rate negatively impacted diluted EPS by $0.03 compared with the prior-year period.
The effective tax rate for the prior-year period was favorably impacted by various discrete items, including federal and state tax credits which did not occur in the fourth quarter of fiscal 2012.
The full-year tax rate was 35% compared with 33.1% last year.
We currently expect fiscal-year 2013's effective tax rate to be approximately 35%.
Now let's look at the cash flow for the year ended August 31, 2012.
Cash flow provided by operations for fiscal-year 2012 was a strong $172.2 million, an increase of $11.1 million compared with the prior year.
The higher level of cash provided by operations this fiscal year was due primarily to higher net income.
Operating working capital, defined as receivables plus inventory minus accounts payable, was basically flat with the prior year, but improved 90 basis points to only 11.6% of sales, which we believe leads our industry by a wide margin.
Inventory and accounts payable both increased by seven days compared with last year.
These offsetting increases of just under $30 million each, compared with last year, primarily reflects higher relative cost of raw material used in products based on newer technology such as solid-state lighting, temporary build of certain inventories in order to maintain service levels during the production moves associated with our closure of the Cochran plant, and certain strategic purchases of commodities and components.
We would expect to be able to bring down our inventory by several days as we complete our production transfers in the coming quarter.
In fiscal-year 2012, we spent $31.4 million on capital expenditures and $3.8 million on the acquisition of businesses.
We currently expect to spend approximately $40 million in capital expenditures in fiscal-year 2013.
We ended fiscal 2012 with a cash balance of $284.5 million and total debt of $353.5 million.
At August 31, 2012, net debt to total capitalization excluding cash was 8%, and debt to EBITDA was a mere 1.4 times.
On January 31, 2012, we executed a new five-year $250 million revolving credit facility.
At August 31, 2012, we had additional borrowing capacity of $244.3 million under the new facility that does not mature until January 2017.
So, we continue to maintain a significant amount of financial flexibility.
Thank you, and I will now turn the call back to you, Vern.
Vern Nagel - Chairman, President, and CEO
Thank you, Ricky.
As we look forward, we see significant long-term growth opportunities, while short-term economic challenges are now the norm.
While we don't give earnings guidance, we would like to offer a few observations about what we see for 2013.
First, we expect the business environment to continue to be challenging, as business and consumer confidence wanes due to the macroeconomic and political uncertainties in the US and globally.
The consequence of these uncertainties is continued volatility and demand.
Forecasts by independent organizations for industry growth vary widely.
The consensus is that unit volume growth for key segments of the nonresidential construction market in the US will be in the lower mid-single digits in 2013, while sales for lighting fixtures are expected to be modestly higher.
This suggests that expected growth in the broad lighting market in North America to be in the mid single-digit range for our fiscal 2013.
This is reasonably consistent with the outlook in our previous filings.
Therefore, our expectation, results of the US election notwithstanding, is that overall demand in our fiscal 2013 will be choppy in the first half, yielding to more consistent and positive growth in the second half of the year.
Our order rates so far for the first quarter seem to reflect these inconsistent, yet modestly improving, conditions.
Again, we still see wide variability in demand amongst channels, reflecting the tepid economic recovery in the US.
Second, the industry continues to experience volatility with respect to input costs, particularly for rare earth elements, mostly used in lamps, and oil-based items.
While some commodity costs have waned recently, others continue to rise.
As of now, we expect material input costs to be relatively flat, except for certain LED components, which should continue to decline.
Further, we expect employee-related costs will rise due to wage inflation and the negative impact of Obamacare on healthcare costs.
Of course, we will continue to be vigilant in our pricing posture and productivity efforts to help offset rising costs.
Additionally, as I've said before, we will defend our market position vigorously from competitors should they attempt to use price as their only point of differentiation.
Third, we expect to outperform the markets we serve, just like we have done over the last several quarters.
Looking more specifically at our Company, we are excited by the many opportunities to enhance our already strong platform.
As I noted in our last several conference calls, our strategies to drive profitable growth remain intact.
We continue to see opportunities in this environment, including benefits from growing portions of the market, further expansion in underpenetrated geographies and channels, and growth from the introduction of new lighting solutions.
As the industry leader in North America, we are uniquely positioned with key suppliers around the globe to bring greater and more differentiated value to our customers, incorporating advanced technologies, providing superior lighting quality and more sustainable energy solutions.
Our product and solutions portfolios continue to expand at a record-setting pace for us, including the addition of five strategic acquisitions over the last few years.
And we expect to make more.
Our strategy is straight forward -- expand and leverage our industry-leading product and solutions portfolio, coupled with our extensive market presence and our considerable financial strength to capitalize on market growth opportunities.
This all takes focus and resources.
We are funding these activities today because we see great future opportunity.
Through these investments, we have significantly expanded our addressable market.
As I have said before, we believe the lighting and lighting-related industry will experience significant growth over the next decade, particularly as energy and environmental concerns come to the forefront.
We continue to believe the many markets we serve as part of the broader lighting industry could grow by more than 50% by the year 2015, providing us with significant growth potential.
As the market leader, we are positioned well to fully participate in this exciting industry.
Thank you, and with that, we will entertain any questions you have.
Operator
(Operator Instructions)
Rich Kwas, Wells Fargo.
Rich Kwas - Analyst
I had a question on the incremental margin performance of 65% this quarter on a year over year basis, very impressive.
Vern, I think last quarter you thought -- you were pretty optimistic about incremental margin performance, and this is the third quarter you've seen acceleration.
Just broadly speaking, anything that was unique this quarter, and what do you think?
I would expect that's not sustainable but if you could provide some color on what you think direction of incremental margins are going forward that would be great.
Thanks.
Vern Nagel - Chairman, President, and CEO
Sure.
I think you saw this quarter the leverage [hour] that Acuity has on incrementally higher volume.
We continue to drive productivity throughout the business.
We did have a more favorable price mix option this quarter, and so I think all of that served well to help drive incrementally higher margins.
Our fixed SD&A was slightly below the $90 million that we had talked about before.
So I think the combination, again, of higher volumes, better mix, price mix, if you will, and productivity improvements gave us the opportunity to do that.
I think if you look at the full year, our adjusted variable contribution margins were roughly 27% so we had good productivity improvement, reasonable mix, but we made investments in the business.
If you look at our total fixed SD&A for 2012 compared to 2013, we were up about $11 million or about 3% total fixed SD&A was $348 million, suggesting about an $87 million per quarter run rate.
We feel more comfortable with that number, probably is $90 million or so, so now it's how do we continue to drive new product introductions, how do we continue to drive the better mix of products sold and to look at one quarter does not necessarily give you the full picture but I think to look at the full year it shows you how we can continue to, we believe, drive future profitable growth as we grow our business.
The other thing I would comment on, LED products sold this quarter represented almost 12% of our total revenues, and yet we were still able to improve our operating profit margins.
I think that may be in contrast to some others that are out in the industry more broadly.
So we continue to focus very narrowly on how can we drive profitable growth in our business.
I would expect that as we think about 2013, we hope to continue that trend.
Obviously not necessarily at the rate of the fourth quarter but more broadly building on what we did in all of 2012.
Rich Kwas - Analyst
Okay, that's helpful.
Then just a follow-up, Ricky.
On the miscellaneous line item, should we think about a headwind going forward if current FX rates of the peso maintain, or is there anything that -- any other color on that just from a modeling perspective?
Ricky Reece - EVP and CFO
Yes, you should.
Currently, we are exposed because of the receivable balances and some cash that we have in our Mexican entities that get translated, so to the extent forecasts are showing the peso strengthening against the US dollar that would create some head wind for us.
As you know, the peso tends to move fairly tightly with what oil prices move because of their large resources down in Mexico that drive their currency.
We are looking at options of how we might minimize some of this variability, either through reducing some of these balances if we can do that on a tax efficient basis, or through some form of potential hedging that might make sense for us.
Clearly the volatility this last year of the peso roughly see-sawing each quarter up roughly 9%, 10% a quarter, down the next quarter, up, and then down.
We've seen that kind of fluctuation all year, and it has made it difficult to try to predict our results below the operating earnings line.
So right now, you're correct, the peso continues to strengthen to the dollar.
We'll have that head wind, but we are going to explore some alternatives if we can do it on a tax as well as an otherwise efficient basis to maybe minimize some of this volatility.
Rich Kwas - Analyst
All right.
Thanks so much.
Operator
Ahmar Zaman, Piper Jaffray.
Unidentified Participant - Analyst
Hi, sorry this is Shawn for Ahmar.
I wanted to just talk a little bit, or ask a little bit about your -- in terms of how you are looking at your LED sales for fiscal '13.
You've obviously made some good progress in '12.
Any sense of how we should look at that in terms of percentage of your sales or what your goals are for fiscal '13?
Vern Nagel - Chairman, President, and CEO
As you know, and there are many forecasts out there of people calling for by 2015, a percentage of the total market being LED.
I've seen numbers as high as 60% of the total market by 2015.
I've seen numbers as low as 30%.
We continue to robustly build out our portfolio.
I believe that we have the industry leading portfolio in terms of the ambient indoor market today.
Our outdoor portfolio, similarly strong, and so now it's just leveraging our access to market to continue to drive both market share gains as well as the overall market converting to LED based luminaires.
We don't have a specific target of what that number is going to look like for 2013, but we are focused on continuing to drive meaningful market share gains, so it's a one-two approach.
We have fairly consistently, at least for the last three quarters, expanded our LED sales as a percentage of the total compared to the year-ago period by over 2 times.
So I think that that trend should continue for awhile, though one quarter does not necessarily make a trend.
That's why I think when you look at what we've done in all of 2012, and please note that we're just really gaining traction right now as the portfolio has been out there, specification cycle kicks in, and that, again is for both indoor and outdoor.
I would expect us to continue to make meaningful progress as we did 2012 in 2013.
Unidentified Participant - Analyst
In terms of the outlook, sort of the choppy outlook for nonresidential construction over the next few quarters, would you expect to see sort of flattish growth in LED, or would you expect it to continue to grow meaningfully?
Vern Nagel - Chairman, President, and CEO
Two comments.
One, I think that the choppiness is due to the uncertainties both with the upcoming election here in the US as well as global uncertainties so the choppiness, I think until we get clarity around several key points, what's Europe going to do, the fiscal clip, the election, all those things.
Once those get past, I believe that you are going to again see more business as usual so hence the choppiness.
I don't know that that choppiness is going to have an impact one way or the other on how LED grows.
I think it's more market -- overall market driven that will impact both the order rate and then assuming orders, I think the LED conversion will continue.
Ricky Reece - EVP and CFO
I would also add, a lot of LED sales we're seeing today are not much dependent on new construction as they are on renovation, in at fit-out, those type of opportunities because of the value proposition, the solid-state lighting and the varied up with the controls are offering.
So while certainly if we were able to see some of this choppiness in a more consistent growth in new construction, that would be helpful.
A lot of the activity we're seeing today is in that renovation part of the market.
Vern Nagel - Chairman, President, and CEO
I would also like to be very clear.
As a lighting company, as a wholesome lighting company, we again are indifferent to the light source.
We want to provide our customer base with the right types of lighting solutions that are best for them.
I personally believe that by 2015, a meaningful percentage of the market will be LED based because there's a great value proposition there, but be clear, it won't be 100% and so our ability to continue to provide the kinds of solutions that customers are calling for is a growth opportunity for us.
And we expect to fully leverage that.
Unidentified Participant - Analyst
Very well.
Thank you.
Operator
Peter Lisnic, Robert Baird.
Peter Lisnic - Analyst
Good morning, gentlemen.
Vern, I guess first question, if you look at gross margins, appears to be the highest since at least fiscal '04, according to my numbers.
How should we think about that gross margin as we progress forward and LED becomes more of the mix?
Vern Nagel - Chairman, President, and CEO
Sure.
First of all, the gross profit margin again is a -- gives you view as to what volume can do over our fixed footprint.
We continue to drive productivity into the business so we're very pleased about how our supply chain not only leverages its cost structure but also leverages its service capability.
We continue to invest in that.
Product mix obviously has an impact.
It's difficult to predict each quarter what that product mix is going look like.
But I think if you look out over the full year, we would expect to continue to drive improvements.
Operator
Please continue to stand by.
Sir, you may begin.
Vern Nagel - Chairman, President, and CEO
This is Vernon Nagel.
I apologize.
We had some technical difficulties here.
Obviously we try and drive expense control into our business but maybe someone carried it a bit too far.
Anyway, I apologize for that.
So back to the questions.
Peter Lisnic - Analyst
Yes Vern, I don't know if you can hear me, it's still Pete.
I don't know if we ever got -- or if I ever got the gross margin answer.
Got cut off in the middle.
It sounded like, as we look to 2013, even with LED growing the way it is, that we would still expect some good gross margin improvement.
Fair answer?
Vern Nagel - Chairman, President, and CEO
As Ricky pointed out, the fourth quarter for us is our seasonally high quarter.
Volume obviously benefited the quarter's gross margin, product mix benefited and productivity improvements.
We would expect to see certainly productivity improvements, mix, it's very difficult on a quarter-by-quarter basis.
Obviously it does it have an impact.
But we are driving to a higher gross profit margin.
I think that the fourth quarter's gross margin gives you insight as to what it could be as volumes continue to build.
Peter Lisnic - Analyst
Okay.
Got it.
And then for the follow-up question, it sounded as though C&I was a bit stronger in the quarter, or maybe the order book looked stronger for C&I either way.
Just wondering where some of the -- perhaps offsetting volatility or weakness might be, if could you give us a little color there.
Vern Nagel - Chairman, President, and CEO
Sure.
As I mentioned in my comments, some of the renovation for large corporate accounts, we had some particularly large orders in the year-ago quarter that didn't repeat themselves, and that business is -- it's a very solid business, but it tends to be volatile, if you will.
So in the year-ago period, it was just the timing of some of those projects for very large corporate accounts, a couple, and our expectation is that that business will continue to be robust.
It just didn't manifest itself this quarter.
So in the C&I channel, which is a primary channel for us, our growth rate there was quite nice in terms of what we saw, and above what the Company's average was for the quarter.
We were approximately 4% top-line growth.
C&I was better than that.
Peter Lisnic - Analyst
All right.
That is helpful.
Thanks for your time.
Vern Nagel - Chairman, President, and CEO
Thank you.
Operator
Christopher Glynn, Oppenheimer.
Christopher Glynn - Analyst
Thanks.
Good morning.
I had a question about the comment from mid-single-digit and markets growth plus outperformance given that right now kind of coming off mid single digits.
You kind of addressed it, Vern, talking about maybe first half lighter and second half bigger.
So my question is, are we at the stage now where you see that larger project pipeline emerging now and then it's just a lag to the fiscal second half where that's kicking in to give visibility?
Vern Nagel - Chairman, President, and CEO
Yes, I would say that in talking to our very diverse and broad customer base, people are cautiously optimistic about what the future holds, but in the nearer term, they are not as optimistic.
People are really, I believe, taking more of wait and see approach.
We see that in our orders so far for the first quarter again, orders are favorable to the year-ago period, but they're choppy.
One day your input rate is high and the next day you say what happened.
I believe that that will continue to be the norm until we get clarity around what is going to happen both in November and what is going to happen with some of the policies around the fiscal cliff.
I just think that that void of leadership is creating a bit of a vacuum.
I think all of you read and see that or hear that in the marketplace.
We are expecting growth, and given what we see right now, and I think that the opportunities for our fiscal 2013, while the forecasts do vary widely, we're of the belief that we will see growth in the lighting side, in kind of that mid upper single digit range, and we believe that we have fairly consistently outperformed the growth rates of our markets, and that has allowed us to gain share.
So we're, based on what we see right now, expecting that that growth rate in the kind of upper mid-single digit range, and we would expect that we would outperform that.
Christopher Glynn - Analyst
Okay.
It was my understanding that for the large projects cycle, you can get specified in some cases, quarters in advance of actual orders.
So I'm wondering if you see that ramp taking shape.
Vern Nagel - Chairman, President, and CEO
Well, again as I said in our prepared remarks, we see more medium and smaller type projects, as Ricky pointed out, tenant improvement, which is the churn in employment, we're seeing favorability in absorption but these aren't the huge projects that you may have seen in 2008.
I don't see a meaningful change to your question in large projects relative to where we've been, say six months ago to where we are today.
We still see positive activity.
I want to be clear about that.
And from our perspective, we continue to see the opportunity of selling lighting solutions into these projects, whether they be small, medium, or large, and as Ricky pointed out earlier, it's a leverage point for us because of the value proposition that we can bring to the table.
Christopher Glynn - Analyst
Okay, and then lastly, the margin tail wind coming from the LIFO dynamic and component cost decreases, can you address the -- is there any acceleration in your keeping those decreases?
Vern Nagel - Chairman, President, and CEO
Let me just make a quick comment.
First of all, we're on FIFO.
And so our two cents is is that, and then I'm going to turn it over to Ricky to respond as well, that input costs continue to vary widely as well.
As I said earlier, we see some input costs decreasing, but we see others increasing, and it may not be intuitively obvious why are some of these other items increasing.
It could be capacity issues, it could be the individual components that we're using, but overall I think in 2013, what we see right now is a fairly benign cost environment in total.
In other words, you'll have pluses and you will have minuses, and so we're not seeing meaningful -- we're not expecting meaningful change, but as you know, that's a crap shoot, and when it happens, it happens quickly and we have to respond to it.
We do see higher input costs from some wage inflation, but we'll look to offset that with productivity.
We do think healthcare costs will continue to meaningfully rise.
So we're trying to balance all of that off both with future price increases with the potential of those, as well as how do we drive productivity into our business.
We have a good track record of doing that to help offset those costs.
Ricky Reece - EVP and CFO
Just to comment a little bit Chris, we did see, as most of you all are aware, some decline sequentially and steel costs, certainly LED components, solid-state components, we've seen some decline.
As I mentioned in the prepared remarks, a lot of that is hung up in our balance sheet at the moment because of the FIFO inventory and the inventory build that we did for the reasons that I've previously described.
So yes we'll have some benefit as those lower sequential costs that we've seen recently convert through costs of goods sold here in the first quarter but would want to be cautious, as Vern said, we are seeing some other input costs that are mitigating some of that benefit.
Operator
Glenn Wortman, Sidoti.
Glenn Wortman - Analyst
Could you just update us on your end market breakdown between non-res construction, tenant improvement, and re-light and residential?
Vern Nagel - Chairman, President, and CEO
More broadly defined, we believe that we are probably 90%, roughly speaking, in the non-residential side but very broadly defined.
That would include renovation, tenant fit-up, and then directly, associated with about 10% resi, but we're also indirectly associated with resi when you imagine how neighborhoods are built, street-roadway type of construction, schools, malls, those kinds of things are all reasonably dependent on residential construction.
So it's very positive, in my view, that residential is now starting to rebound after a very low base, both for our direct sales and our indirect sales.
When it comes to a further breakdown between renovation and tenant improvement, we really -- the way we kind of look at it is right now, and it's hard to say, because we don't have real empirical data around the difference between a renovation project of a school, because it looks to us like it's new construction, but I would say that that number is probably 70% new and 30% some type of renovation or tenant improvement.
But that's just a swag on our part.
Glenn Wortman - Analyst
Okay.
And then just on the fixed SG&A of about $90 million, would you expect any major variation up or down as we move through fiscal '13?
Vern Nagel - Chairman, President, and CEO
I don't, and that's why we wanted to continue to provide you with that information, based on the structure of the organization as it is right now we would expect to continue to leverage that number for a while, and, believe me, it has ramped up, and as you go back into 2011 at the first quarter, we were probably spending in the $82 million to $83 million range, and now we're roughly $90 million.
It varies again by quarter because there is some variable in there, but I think that that is a good number and a leveragable number for us to continue to drive our business, and we can do that with the kind of product and new product introductions that are in place, so I feel pretty good about that number for a while.
Glenn Wortman - Analyst
Okay, thank you.
Operator
Noelle Dilts, Stifel Nicolaus.
Noelle Dilts - Analyst
Good morning.
Just expanding on some of the questions earlier about raw materials, can you just give us an update on maybe, I don't know if it's better to do it on a tons or a dollar basis or percentage of sales, I'm sorry, percentage of input costs, but can you remind us how much steel accounts for your cost to goods sold?
Vern Nagel - Chairman, President, and CEO
We believe that steel and aluminum, I believe it was posted in our last K, is roughly 100,000 tons.
Is that what we're saying?
That's probably a reasonably good number.
Ricky, on fuel costs?
Ricky Reece - EVP and CFO
Again, I would have to refer you to the K. I'm not remembering off the top of my head but we do give you a sense in our last K of what gallons of diesel fuel that we would roughly consume directly and indirectly, but I don't remember it off the top of my head.
Noelle Dilts - Analyst
Okay.
Thanks.
That's it.
Operator
Jed Dorsheimer, Canaccord.
Jed Dorsheimer - Analyst
A lot of the questions have been asked.
Just two clarifying.
First, on the fixed costs of SG&A, Ricky, just curious how we should look at this on a go forward with the streamlining activities.
Do you see this figure trending down, or do you see wage increases keeping this at more of a neutral level?
How should we look at this component?
Ricky Reece - EVP and CFO
I think as Vern indicated, that fixed component of around $90 million we think is a good number.
Yes, we will have the benefit from additional streamlining.
As I said, we had about $2 million this quarter, and we'll be getting at an annual rate, so that's an annual rate of obviously $8 million and we're going to escalate that to an annual rate of $14 million as we exit the first quarter so you'll have that benefit but then offsetting it is Vern's comments that we're going to have some wage inflation and higher healthcare costs.
So we're working hard to keep that as a pretty fixed number but the streamlining benefit will offset it now.
Some of the streamlining is up in gross margin and we should see some of those benefit because the closure of Cochran which is $8 million of those streamlining savings and most of the incremental savings come from Cochran and most of that will be up in the gross margin line.
So it's not as if we're having to offset all of that incremental in the SD&A costs so it's productivity gains helping us to offset the wage inflation and all and then the incremental benefits you're going to see from the streamlining should more come through in the gross margin line versus fixed SD&A, Jed.
Jed Dorsheimer - Analyst
That's helpful.
And then Vern, I was curious, as you move to more of a system solution that you are providing your customers versus historically providing products, I'm curious where you are in that evolution from a margin perspective.
In particular, for the LEDs, do you feel that the commoditization that's happened relatively faster than what a lot have anticipated in terms of the actual components, do you feel that you're neutral to accretive position in those products based on largely a function of the component commoditization or do you feel that it's more towards -- the movement towards a system solution and how should we think of that sort of two or three years out.
Vern Nagel - Chairman, President, and CEO
That's a great question.
I believe that we in the industry are in our infancy around the types of solutions and integrated systems, holistic integrated systems that we can offer.
In the past, as you know Jed, it's been take a series of components, put some control devices in the room and if someone's in there, turn them on.
If they're not, turn it off.
I think as we continue to evolve, we'll see much more opportunity to make those luminaires, instead of being the dumb terminal in the ceiling, that sophisticated terminal that will allow for much more two-way communication, much more control so that energy savings will be able to be achieved while you're using the space, so the notion of daylight harvesting and how we take advantage of that.
All of those types of capabilities are really I think evolving.
So I would say we are early in that game.
When you sell the holistic integrated systems.
So imagine a complete school, or a healthcare complex, or a commercial office building, or an industrial warehouse space, or outdoor roadway.
The ability for us, for Acuity, to take advantage on the indoor side of it's nLight systems with its sophisticated control capability and then on the outdoor side with ROAM, really provide us the opportunity to sell to an end-user, a full value proposition that gives them optimal lighting capability while deriving extra energy savings while their using it.
So I would say that we are early in that game and I see it as a unique opportunity because now you are selling a full-value proposition, a full total cost of ownership, and it gets you away from arguing about what's that discrete component cost, and now it's about how do you pay for it through the entire total cost of ownership.
Jed Dorsheimer - Analyst
That's helpful.
Thanks.
I will pass it on.
Operator
Shawn Severson, JMP securities.
Shawn Severson - Analyst
Thank you.
Good morning.
I was curious.
As you're talking with customers these days and approaching from kind of the energy efficiency side, are you finding that you are being part of larger energy-efficient retrofits, or are you finding that these are oftentimes really lighting-specific projects associated with either a tenant moving or something like that?
Just trying to get an understanding of where you're fitting into the bigger picture here.
Vern Nagel - Chairman, President, and CEO
I would say that the answer to that is both.
When you have energy management companies that are calling on clients they're looking for the quickest hit to provide a total cost of ownership solution.
The greatest opportunity typically is in lighting.
It's the one where you can get the biggest pay back the fastest.
So energy management companies are an opportunity for us and we sell to them as part of their overall system.
I think that the bigger part of the market for us at this point in time is working with customers directly who actually own spaces whether it's large retailers or it's an owner of industrial space or a commercial office building or a school to work with various partners that have access to those channels, as do we, to bring a lighting solution to them that is more specifically lighting solution.
But yet many of these customers are very sophisticated in their knowledge about where they can get the benefit of energy savings but virtually all of them care about what the lighting experience is about.
They want to make sure that they are at least being neutral or enhancing it.
That really gives us a leg up over a number of competitors because we know how to sell quality of light while providing a significant payback on energy savings.
Shawn Severson - Analyst
Are you still finding that kind of that three-year mark is the hurdle for projects and obviously some of the lighting can be a lot shorter than that, but is that still the cut-off that people are thinking of and if so, how is LED fitting in that today from the pricing standpoint and efficiency standpoint?
Vern Nagel - Chairman, President, and CEO
So the answer is that it depends on the channel.
It depends on the project type.
For example, a parking garage, they would be looking at paybacks that would be less than three years.
But if it's a corporate office building of a Fortune 500 company and they're located in an area where energy costs are fairly low, their objective is more around sustainability and quality of lighting.
So the paybacks could be more than three years.
So it really depends on the channel project and what you're attempting to do.
LED solutions are really -- people want to discuss what type of solution will be best for their application.
They want to know what good-better-best would look like, both in terms of performance as well as costs.
And today, still a meaningful portion of renovation is being done with some type of fluorescent capability, and again, Acuity has the full product portfolio to offer that whole good-better-best solution irrespective of the light source.
So it's interesting to us that as sophisticated buyers continue to weigh these decisions, today they're still moving forward with fluorescent because it's a compelling value proposition and my guess is, is that two or three years down the road, as LED, in their particular area or application become cost effective and can provide a total cost of ownership and a payback that is less, or attractive to them, they'll convert again.
Shawn Severson - Analyst
Are they still -- are they asking you for LED solutions, or at least a bid on the solutions when you go in and you're comparing the traditional fluorescent with LEDs, are they at least saying what would this be using LED technology versus the fluorescent and then obviously making a decision based on that?
Or are they not asking that?
Vern Nagel - Chairman, President, and CEO
No, no, no.
I want to be very clear about this.
I believe that the marketplace in general is now very open to LED technology.
The problem is, is that, as I said earlier, you have so many folks.
All of us could run out to Radio Shack, buy an LED chip, slap it on a board and shine it at each other and call ourselves a lighting company.
The problem in the marketplace is there's so much noise out there around LEDs because of these companies that really don't provide a quality lighting solution.
So if there's any skepticism, it's more around well who is actually providing this.
Because at the end of the day, this is a light source and how you put it into the space and create that lighting environment that you're after is critically important.
So, yes, people are asking and people are saying what are my alternatives.
Again, as the preeminent lighting company in North America, we're able to say, here are the various choices that you have for this particular application, and we offer various light sources for those, and that's what gives us strength and that's what's giving us the ability to gain share and significantly grow our LED business.
Shawn Severson - Analyst
Great.
Thank you.
Operator
Colin Rusch, ThinkEquity.
Colin Rusch - Analyst
Thanks so much.
You're at fairly low net debt levels here.
Can you talk about the attractiveness of the acquisition environment, and if you could talk about that and then in the context of a slightly changing competitive environment as move into this area where you're really dealing more as a controls company and running into, I would imagine, some different folks in terms of the value proposition of the solution.
Vern Nagel - Chairman, President, and CEO
So from a strategic perspective, and then I'll turn it over to Ricky for further comment, but from a strategic perspective, we are looking at acquisitions that will allow us to either enhance our product portfolio, extend our access to market, or bring technology that will allow us to offer more innovative lighting solutions, fully integrated lighting systems to our customer base, and we continue to look at attractive acquisitions.
Sometimes, as you know, price and the desire to sell, all of that come into -- that's the art of the deal, come into play.
But we are continuing to look at and will look at acquisitions as an opportunity to expand our capability.
Ricky?
Ricky Reece - EVP and CFO
We certainly are seeing quite a large number of potential candidates.
Most of them are although relatively small.
What we tend to see are a $20 million to $50 million revenue companies, not dissimilar from the recent acquisitions you've been seeing, or a start-up kind of technology company that's very early in their revenue.
Most of them are at least getting some revenues, but some are almost pre-revenue stage, that are of some interest to fill out some technology capability and so forth.
Not seeing a lot of larger opportunities out there.
There are a few, but not a lot.
But I would say it's not dissimilar from what we've been seeing over the last few years other than a few more start-up type companies in the technology space that are now getting at the level that they realize they need to find an exit, either for monetizing their investment or if they've gotten to just a stage without market access and so forth, that they need to team up with a strategic.
So busy out there, but I would characterize it, as Vern said, more plug-in, tuck-in type acquisitions or some technology related opportunities as opposed to larger type of acquisitions.
Colin Rusch - Analyst
Great.
Just changing gears a little bit, regarding seasonality, when you're talking about the choppiness over the next several quarters, are you at all concerned about there being a more than seasonal dip in the November and February quarters?
Vern Nagel - Chairman, President, and CEO
Well, I mean, am I concerned?
Absolutely.
But everything that we see and hear and read suggests that these markets, particularly the lighting market, will continue to evolve because the value proposition that we can sell has a payback associated with it.
I think what people are seeing right now are folks standing a bit on the sidelines.
Look at the accumulation of cash by US-based companies.
They're taking a wait and see approach.
We have a compelling value proposition for many of these types of companies in terms of updating their lighting and having it paid for through energy savings.
So how the election plays out, how we resolve some of these uncertainties to get our economy moving again, I think all of us have concern about how we do that.
And we are no different than that.
The benefit that I think again Acuity has is that we do have a value proposition out there that -- for folks, we can enhance again their visual environment while giving them better operating costs because of lower energy.
So we like the position that we're in frankly.
Colin Rusch - Analyst
Great, thanks a lot.
Operator
Andrew Abrams, Avian.
Andrew Abrams - Analyst
Two quick questions.
On the LED side, the LED luminaire side, when do you think will you start to see the SSL chip level improvements starting to kind of help your margins there, and in that same regard, when would you expect margins on the LED product side to begin to rise above what would be your standard corporate average for non-LED products?
Vern Nagel - Chairman, President, and CEO
So for us, I believe that the notion of continuing to drive margin improvement in total was on full display in our fourth quarter, and that was a combination again of productivity, product mix, as well as greater volume of products sold.
So our expectation is for continued growth to driving the volume, productivity.
When it comes to the product mix side, as we, we believe, as we sell more higher value added integrating lighting systems into campuses overall, where folks really can derive even more energy savings while they're using the space, we think that that will help us sell more value per square foot and therefore higher margins.
As I answered to Jed earlier, I believe that we are in our infancy in that, but yet the early returns on that, if you will, are very compelling.
And so it's how we can continually transform the market to look at again these integrated lighting systems as opposed to just discrete components I think will be accretive to our margins going forward.
With regard to LED, I feel that as an individual product, and again, we sell so many different LED products now, it's difficult to say that what's your margin on this compared to fluorescent or some other lighting alternative.
We feel that we're now in the range, so for us it's really -- we're indifferent to the light source.
We are very focused on providing the best lighting solution for our customer.
Personally, I believe that by the time we reach 2015, you'll see a market that is very compelling for LED luminaires and it will be because the efficacy of the chip and the price of the chip and those components become more similar to what a fluorescent lamp ballast combination costs today, and that will happen.
Andrew Abrams - Analyst
Got it.
Just lastly, would you expect, if we're talking about the kind of trade-off between some costs rising and some costs decreasing for the balance of this year, would you expect there to be any price increase this year or would they balance out and probably not to have pass that along?
Vern Nagel - Chairman, President, and CEO
So where we stand today, we believe that our pricing is appropriate, given both the cost structure.
What we attempt to do is leverage, again, the mix side of things, selling higher value added products that have greater value for the end customer, as opposed to saying here's an existing product and I'm going to increase my price by X. I think that where we stand today, we're pretty consistent, or we feel our pricing is pretty consistent with the cost structure that we have.
But as you know, it's going to be clear to everybody.
It can change instantly as we have seen over the last three years with the kind of volatility in commodities.
Ricky Reece - EVP and CFO
I would just add, many of the people on the call know this, we have a very robust process in looking at product lifecycle management, looking at pricing of individual products.
Yes, we as an industry, and certainly Acuity often leads, will pass on changes in input costs, certainly if they rise, we've been able to pass those on and see across the board type announcements.
We continue to be pretty proactive in managing the price, and when we think we can because of the value proposition and the paybacks look to expand that pricing or sometimes as you get to the end of a life of a product, you can raise the price.
Many of others have gotten out of the market, and we can take advantage of that.
Conversely, obviously there are times that you need to recognize it's commoditized to a point or become to a value proposition or value engineered to a level that you need to lower it but I just want to make it clear, we are very proactive in the managing our price, despite just following whatever is happening in our cost structure.
Andrew Abrams - Analyst
Got it.
Thanks very much.
Operator
I would like to turn the call back over to Mr. Vernon Nagel for closing remarks.
Vern Nagel - Chairman, President, and CEO
Thank you for your time this morning.
We strongly believe we are focusing on the right objectives, deploying the proper strategies, and driving the organization to succeed in critical areas that will over the longer term deliver on the expectations of our key stakeholders.
I think our fourth quarter was very indicative of just how well this team is managing this Company.
Our future is bright.
Thank you for your support.
Operator
This concludes today's conference.
Thank you for participating.