Beacon Roofing Supply Inc (BECN) 2007 Q2 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Beacon Roofing Supply's fiscal year 2007 second quarter earnings conference call. My name is Debbie, and I will be your coordinator for today. (Operator Instructions) As a reminder, this conference is being recorded for replay purposes.

On this call, Beacon Roofing Supply may make forward-looking statements, including statements about its plans and objectives and future economic performance. Forward-looking statements are subject to a number of risks and uncertainties. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including, but not limited to, those set forth in the Risk Factor section of the company's latest Form 10-K.

I would like to now turn the call over to Mr. Robert Buck, President and CEO of Beacon Roofing Supply. Mr. Buck, please proceed.

Thank you, Debbie. Good morning, ladies and gentlemen. A little over a week ago, David and I were very disappointed to pre-release our earnings. During the first half of this fiscal year, we endured several negative business events that we hope never happen gain in such a concentrated period of time. We can handle one or two of these events, but when they all occur at the same time in a six-month period, our life does get a little difficult.

As most of you know, I'm referring to the following things -- a harsh winter in our New England, Northeast, Canadian, MidAtlantic, and Midwestern regions affected our results. Also, the first six months of last year included sales from major storms like Katrina, Wilma, and others, whereas this fiscal year, we had little or no sales from the hurricane season. The new housing market has suffered a significant downturn and we can feel the effects of that downturn even though the majority of our business is associated with reroofing. Inflation has slowed significantly, from approximately 4 to 6% last year to about 2% or less this year. And, finally, we had five fewer days during the past six months, or basically, one less week of selling this year as compared to last fiscal year. And thank goodness this happens only one time every four years.

That's a lot to happen in a six-month period. These, however, are not excuses; just a brief recap of the major events that affected us during the first six months.

David will now give you a summary of our results and when he's finished, we'll be happy to answer your questions. And then after that period of time I will come back and do a summary. So I'm going to hand it over to David, who will give some details about our results, and I'll be back right after that. David?

Thanks, Bob. Good morning. I'll first discuss our results for our second quarter of fiscal 2007, which ended on March 31, 2007, and then a brief discussion of our first half results.

Net sales decreased 11% to $286.9 million in 2007 from $322.4 million in 2006. Our existing markets declined $41.6 million, or 13.9%, while acquired markets contributed an increase of $6. million in sales. Just as a reminder, the branches we acquired from our acquisition of Shelter in October 2005 are now included in our existing markets for the first time this quarter, although they will remain in our acquired markets for the first half results.

We attribute some of our second quarter sales slowdown to harsh winter conditions this year in the Northeast, Canada, and the Midwest. We are also up against unusually strong sales during 2006, partly a result of the extensive reroofing and reconstruction activities in some of our markets following Hurricanes Katrina and Rita and from the warm winter period last year. But the substantial slowing of construction activities, especially in new residential home construction, has also affected our results negatively.

We estimate inflation based upon our current inventory product mix and invoice cost as compared to the invoice cost of the same invoice costs a year ago. This method indicates inflation of 0 to 2% for the quarter.

We have opened seven new branches and closed one since the second quarter of 2006. We also acquired six branches since that time and we operate a total of 158 branches as of the quarter end.

We had 64 business days in the second quarter of both 2007 and 2006. Sales per day averaged approximately $4.5 million in 2007 versus $5 million in 2006.

Our second quarter gross profit decreased 14.9%, to $66.2 million in 2007, from $77.8 million in 2006.

Our existing markets, which include Shelter, for the second quarter, had gross margins of 23.0% for 2007 and 24.2% for 2006. Our overall gross margin rates dropped to 23.1% in 2007 from 24.1% in 2006. This decrease was caused by an increase in competitive conditions, amplified by the harsh winter and generally lower construction activity. We experienced the highest margin compression in the regions which had experienced the benefit of additional hurricane activity in 2006 and in our Midwest region of Shelter from increased competition due to the lack of reroofing activity during the harsh winter.

Although we have received some recent pricing concessions from our suppliers, because of the seasonality of our business we could not turn our inventory fast enough for the lower prices to significantly affect our gross margins.

Operating expenses in our existing markets increased $0.2 million, or 0.3%, to $61.3 million in 2007 from $61.1 million in 2006. Total operating expenses increased $5.0 million, or 7.6%, to $70.4 million in 2007 from $65.4 million in 2006, with acquired markets increasing $4.8 million.

While there was little overall change in our existing market 2007 operating expenses as compared to 2006, I would like to discuss the components of that change. Through cost-saving methods, we reduced payroll and related costs by $1.1 million, saved $0.7 million in other general and administrative costs. Unfortunately, we experienced an increase in bad debt expense of $1.5 million, mainly due to the write-off of problem accounts in the Midwest region of Shelter, which reduced the effect of our savings. Warehouse expenses also increased $0.5 million, principally from our seven new branches open in existing markets since March 31, 2006.

Existing market operating expenses as a percentage f net sales increased to 23.7% from 20.4%, primarily due to the lower sales and the relatively fixed aspect of our operating expenses. Overall operating expenses increased to 24.5% of net sales in 2007 from 20.3% in 2006 due to those same reasons and somewhat from higher operating cost percentages at Pacific.

As a result of all of the foregoing, our 2007 second quarter loss from operations was $4.2 million compared to income from operations of $12.4 million in 2006. Operating margins at our existing operations were a negative 0.7% in 2007 from a positive 3.8% in 2006, while our overall operating margins were a negative 1.5% in 2007 compared to that same 3.8% in 2006.

We had a net loss of $6.3 million in our second quarter of 2007, compared to net income of $4.8 million in 2006. Our net loss per share was $0.14, compared to diluted net income per share of $0.11 in 2006.

Now, a brief discussion of our results for the first half of our fiscal year. Sales increased 0.7% to $667.2 million in 2007 from $662.3 million in 2006. Our acquired markets contributed $46.8 million of this increase; our existing markets sales declined $41.9 million, or 8.8%. Inflation contributed less than 2% to overall sales increases.

The first two quarters of 2007 has 125 business days compared to 130 in 2006, which contributed to some of the contraction in our existing markets. After adjusting for these fewer days, our internal sales decline for year-to-date 2007 was 5.1%, with much lower price inflation than in past quarters.

Our overall gross profit decreased 2.2% to $157.9 million in 2007 from $161.5 million in 2006. Our overall gross margins decreased to 23.7% for 2007 compared to 24.4% in 2006, due mostly to an increase in competitive conditions. Our existing markets saw their margins decrease to 23.6% in 2007 from 24.2% in 2006, primarily due to the same reasons and a slight product mix to nonresidential roofing.

Existing markets and selling, general, and administrative expenses as a percentage of sales, increased to 18.1% from 17.0% as we saw a deleveraging of our fixed costs due to decreased net sales. Overall SG&A expenses as a percentage of sales increased to 21.1% in 2007 from 18.6% in 2006 due to those same factors and Shelter's higher operating costs as a percentage of their sales.

Included in SG&A is $2.6 million of stock-based compensation in 2007 as compared to $1.3 million in 2006. We also incurred $5.2 million in amortization of customer relationships recorded under purchase accounting in 2007 as compared to $3.8 million in 2006. The combined increase of these non-cash expenses is equal to approximately 0.5% of our sales.

As a result of the foregoing, 2007 income from operations was $16.8 million, a decrease of $21.2 million from $38.1 million in 2006. As a percentage of net sales, operating income decreased to 2.5% from 5.8%. Our net income from 2007 decreased $15.2 million, to $2.5 million in 2007, from $17.7 million in 2006. Diluted net income per share was $0.05 in 2007, compared to $0.41 in 2006.

Our net cash provided by operating activities was $10.1 million for 2007, compared to $35.7 million for 2006, principally due to the $16.8 million decline in operating income.

Inventory levels increased by $14.9 million, mainly due to four new branches and seasonal buying programs, with inventory turns consistent in 2007 and 2006.

Accounts receivable decreased by $57.8 million in 2007, mostly due to the seasonality of our business and the drop in our sales volume, but we have also increased our focus on collections during the sales slowdown. The number of days outstanding for accounts receivable in 2007, based upon our year-to-date sales, also has decreased.

The positive cash impact from the decrease in accounts receivable was offset by a decrease in accounts payable and accrued expenses of $58.9 million, mostly resulting from curtailed business due to the sale slowdown, some early payment discounts offered to us in 2007, and expense reductions that have taken place.

Net cash used in investing activities in 2007 was $17.2 million compared to $287.3 million in 2006, due primarily to our 2006 acquisitions, for which we paid $279.6 million.

Net capital expenditures in 2007 increased by $9.6 million due to a higher number of purchases of new transportation and warehouse equipment to service our larger number of branches.

Net cash provided by financing activities were $48.8 million in 2007, compared to $256.4 million in 2006. The net cash provided by financing activities in 2007 primarily reflects $350 million of new term loans to refinance and pay off our prior revolving facilities and term loans and to pay related deferred financing costs. The net cash provided by financing activities in 2006 primarily reflected borrowings under our prior revolving lines of credit and term loans, mostly from our acquisitions and the net proceeds from our secondary stock offering in December of 2005.

To cap key results for our second quarter, sales declined 11.0%, with internal sales down 13.9%, compared to industry channel results of suppliers down 25 to 30% and other public building materials distributors down over 30%.

Operating margins in our existing markets decreased 0.7% in 2007 from a positive 3.8% in 2006.

Our net loss per share was $0.14, compared to $0.11 in '06.

For the year to date, sales decreased 0.7%, with internal sales down 8.8%, but only 5.1% on a same-day basis.

Operating margins in our existing markets decreased 5.5% from 7.2%.

Our diluted net income per share was $0.05, compared to $0.41 in 2006.

Cash flow from operations did fall $25.6 million, to $10.1 million, but it's still positive during a very tough winter period.

And I'll turn it back over to Bob.

Okay. We'll open now for questions and then we'll summarize. So next question.

Thank you, Mr. Beck. (Operator Instructions) And, ladies and gentlemen, each caller is limited to one question and one follow-up. We will go first to Michael [Rehope].

Hey, guys, it's is actually Ray Holnut for Mike.

Hey , Ray, how are you doing?

Good. Just a couple of questions. What can you comment on your expectations for gross margins-- how they might trend for the next couple of quarters, for the rest of the year and also into next year?

We think the trend that we're seeing now may stay in place for a little bit, depending on our product mix. The winter period was a very slow period, which would cause those to be more compressed than is maybe naturally inherent in the marketplace. We really have to see what happens once the summer season starts and things start picking up again. But we still think that, over a longer period, we should be in that 24 to 26% range, which is below where we are right now. But we also have the opportunity to perhaps turn some of the inventory that we got from our vendors, which had some price concessions that we just weren't able to turn in the first quarter.

Great. How's North Coast going to affect the gross margins going forward?

They will drop the overall gross margins because they are a 100% commercial distributor and, in general, that's 400 to 500 basis points below what the residential products that we sell in the other regions is.

Okay. That's-- about the guidance that you guys gave on the last press release a couple of weeks ago. However, it doesn't apply to the margin expansion or it's a pretty strong sales growth the rest of the year. I wonder if you could kind of reconcile the remainder of the year to that $0.86 guidance?

We haven't changed our viewpoint from a week ago. We do have the added plus of North Coast Roof Depot Roofing Supply out in Oklahoma. And we are looking at the best months of the year ahead of us. So we certainly don't want to see a deterioration in business conditions from what we're experiencing now but that's basically how we see it.

Okay; thank you.

Thank you.

And our next question come Michael Cox with Piper Jaffray.

Good morning; thanks a lot for taking my questions.

Hi, Michael.

My first question is on the recovery that you've seen over the past four to six weeks. I was wondering if you could comment on any specific geographies that you're seeing the improvement or specific segments within your business.

Well, we are seeing an improvement, particularly as compared to the second quarter, where we had declines, and we're happy about that. The improvements-- we are seeing improvements in the MidAtlantic states, in Texas-- it's pretty much all over. The Canadian business is improving; of course, the weather is much better. So we are-- with weather improving, everyone kind of gets better. So commercial remains good and we're happy about that.

And my follow-up question relates to the gross margin. In terms of your expectations there, from a competitive environment perspective as the business improves, do you foresee the competitive environment easing?

And a second part to that -- when should we start to see the price concessions flow through to the P&L that you mentioned in your prepared remarks, David?

I think as far as the competition goes, I think once we get into the roofing season, as we call it, which is basically April through the middle of November, the competition will be less because the roofers are busier. And I think what settles out, especially in the commercial market, is you win jobs as they come up for bid so that you'll know pretty quickly how the market is going. But we still don't have a handle on that because most of the bigger jobs are done over the summer, especially the municipalities and the school work. But that's really what we're relying on is that the activity in general just goes up.

The second piece of your question was more towards-- what was that again?

Gross margins.

Gross margins.

The price concessions that you mentioned.

Yes. We should see some effect of that in April because we'll turn the inventory we bought in February and March. But we'll have to see what the reaction is from the suppliers. Some of them has still announced price increases. I'm not so sure if that's what's going to happen in the marketplace. Carlisle, for instance, announced that their iso is going up about 5% and that's the flat insulation that is used on virtually every commercial product. So I'm not sure what the future holds in that; and of course, it's not in our hands, anyway.

Okay, great; thank you.

Thank you, Michael.

Our next question comes Dan Levin with Robert W. Baird.

Thanks. Good morning, guys. First question, just to follow up on some of the pricing concessions you've gotten from some of your suppliers-- and help us think about how that's going to work through the selling season with some manufacturers possibly wanting to increase some prices as well as if there were other distributors getting concessions going out to the market and being more aggressive on price. Is it possible we could actually see inflation move slightly to a negative, to a deflationary standpoint in the summer?

It's possible. It would be very unusual in our industry for that to happen. Just let me explain one thing -- these price concession, up until probably 2004 or maybe 2005, when things really took off and the suppliers didn't have to do what we call winter dating programs and those types of things, this was a problem in the marketplace almost every single year. This is nothing unusual. I think maybe they reacted a little bit late, hoping that things would be okay during the winter period. But we used to get these programs every single winter period. So it's not unusual for the industry; it's just that it hasn't happened over the past couple of years. And we'll benefit from it a little bit because we're a large buyer in the marketplace, but it's very general in the industry. It's nothing new.

Okay, great. Thanks, that's helpful. The second question is, just looking at the expenses side on the SG&A line, we've been kind of in this $70 or a little bit above $70 million range for the last several quarters. Just wanting to know how-- what type of leverage do you have on the fixed-cost side in just keeping SG&A down as we ramp into the summer and the gross margin dollars jump up, presumably, over $100 million again?

Well, we're mainly-- or, not mainly, but the majority of our costs are fixed. When you think of leases and equipment, things like that, it's pretty fixed. We do watch our variable costs very closely -- all variable costs, including headcount, travel, overtime, things like that. And we're also conservative in adding those costs back until the summer and the busy season happens. So we're very cost-conscious. We started at the beginning of the second quarter as we saw the winter weather not improving. So going into the second half, we'll watch that very closely.

And the other thing to remember is there's seven more branches than there were the year before in those existing markets. And we've also absorbed the entire amount of converting all the regions at Shelter. The last one that we did was finished in January of this year. So some of those expenses, albeit we've saved in other areas, are offset by increased amounts there. Plus the fact that the amortization of the customer relationships is up over last year, as is the stock compensation expense, which is all non-cash, of course.

Just to add to that, we watch the integration costs. We move ahead because that's the most important thing to do and we think it costs between $250,000 to $300,000 for each of those Shelter regions. So basically, for every-- don't hold me to this, because it changes, but for every $100 million of business, it'll cost you that to integrate it, which is kind of the first cost we do. We want everyone on our computer system so that we can have consistent financial results. It is costly, but it's worth the investment.

And just to follow up on that, some of the actions you guys did take during the second quarter -- how much of that actually showed up in the P&L this quarter versus we'll see the impact in the next two quarters as some of those expenses roll off?

Well, as the quarter went on, the cost reductions increased. So it's not all in the second quarter. We did some in January, some in February; so that increased month to month. Those cost reductions will help us in the third quarter.

Great. Thanks, guys.

Thank you.

And our next question today is from Brent Rakers at Morgan Keegan.

Good morning. I was hoping we could start out a little bit and take us through-- obviously it's not consolidated yet, but maybe how North Coast performed in the March quarter, and maybe what you're seeing from North Coast in the month of April?

North Coast, in their final quarter of their fiscal year, which was our second, they had the same impact on weather. If you think of where they're located -- headquartered in Twinsburg, which is a suburb of Cleveland. So they are in Ohio, western Pennsylvania, Buffalo, New York, West Virginia, Indiana, and Chicago markets. So they had the same weather impact. Talking to the folks who are leading that organization, they're optimistic. The backlogs are good and we certainly hope that continues. So they will be in our third quarter results. It's a very good company; performed well last year. Their fiscal '07, they did extremely well, so we're looking for good things from them.

Could you also-- can you talk a little bit about why you believe complementary products performed so well on a relative basis in the March quarter? I mean, is there a geographic message in there or is it new versus replacement? Or maybe if you can walk us through that a little bit?

The main causes of that-- and if you think about it, if there's snow on the roof, there's not much you can do about it. But snow isn't going to accumulate on the side of a house. The major component of the complementary products, for us, is vinyl siding and some of the composite siding and then replacement windows and doors. That can still be done somewhat even during the winter period.

Where we saw most of the good activity in those complementary products is actually down in the Shelter Southwest region, from Lafayette Millworks, which is our specialty product group. So they've done quite well, and also--

The Southeast group.

In the Southeast region at JGA, which they also have a millwork facility and window and door facility. So I think that 's the biggest component that affects it is that you can still do that work in the winter.

Okay, great. One final question, if I might. You mentioned some outlying bad debt expense in the quarter tied to, I think you said, Shelter. Could you elaborate on that? And is that something that is going to increase-- do you feel comfortable lowering that back after this quarter or--?

Bad debt is always a focus for us. We do it on a specific account basis, we do it on aging; so it's very consistent, and it's conservative. When we see something we should write off, we don't defer that. We will take it in the quarter where it occurs. But it is a focus for us and acquired companies have to learn our credit policies, the way we do business; and it's a pretty normal practice.

On a go-forward basis, it will continue to be our focus and we're not more concerned now than before. But we have, obviously, a chance to recover those expenses; those are not-- we continue to watch those things, and if we recover them, that'll be a positive. So-- David, go ahead.

And one of the good things about our system, which is Mincron, which runs our operations, is that we have better controls on that as far as even releasing an order to a specific customer. And that takes a while for the acquired markets to gets used to; plus, one of the acquired markets was not on that system until this first quarter, and I think that's what brought out some of those results. And as Bob said, we've written these off our books and been conservative. We're still going to try and collect those funds and maybe it will be a benefit in the future, but maybe it won't be. So I think we take a conservative approach and that's what we should do.

Great. Thanks, guys.

Thank you.

Our next question today comes from Fred Taylor with MJX Asset Management.

Yes, I just had-- we talked about working capital a little bit, but I'm surprised that inventory was at the level of last year, given the sales decline.

And the second sort of cash flow question -- on the CapEx, you did say increased warehouse equipment. And would we expect that CapEx line to fall as we go through the year?

Sure. As far as the inventory's concerned -- one, we have seven more branches, which require some amount of inventory, probably in the $500,000 to $600,000 range apiece at least.

The secondary aspect is, some of those buying programs just weren't prevalent throughout 2005 or 2006. And what we're doing there is we're trying to help our suppliers smooth out their production. We get a price concession but that helps us carry it so we can increase the inventory level a little bit to offset it.

As far as the CapEx, we're fully in line with our budget for the year; we're not intending to go above that 1.5% of our revenues. We pre-bought a bunch of trucks to beat the emissions change; that's why it's front-loaded it the first half of the year. But I fully expect it to come out at budget for the end of the year.

Okay, so the inventory is a result of the buying program versus-- you're not worried there's stale inventory or anything like that.

No, absolutely not. Our reserve for obsolete and slow-moving has not changed substantially.

Thank you.

And inventory turns are still good despite a slow winter period. That always improves as we get into the busy season.

Sure; thank you.

Thank you.

Our next question is from Robert Kelly, Sidoti and Company.

Good morning.

Robert Buck and David Grace: Good morning.

A question on the NCCRS acquisition. The gap between the gross margin -- about 400 to 500 basis points. But by the time we get down to the operating margin line, are we closer to kind of the core existing markets?

Well, you won't be closer to the existing markets because of the customer relationship amortization. If you were to look at EBITDA, it's a couple hundred basis points below the existing markets. But that's pretty typical of the acquisitions we've done in the past. I fully expect that we can make some of the same improvements that we have done in the past, but it takes some time and, with them being 100% commercial, it may take adding other products or leveraging their system across some of our other regions to take advantage of their expert knowledge in the commercial marketplace.

Great. And then, just a question on-- you guys referenced the competitive pricing. Was that mostly contained to the residential side or does that spill over into some of the non-res as well?

Well, when it's that slow, it spills across the whole product line, including the complementary. You have to understand, if a roofer's only got five yards to do and normally he has 15, he's going to concentrate more on getting a better price; there's no question.

Or fill his backlog.

Or fill his backlog. And the other fact is that the competitors, if there's less market share, less product to be able to go out there, they may try to maintain their market share a little bit, too, and try to be more competitive to get that.

Understood. Thank you.

(Operator Instructions) And our next question today will come from Glen Primack, Broadview.

Hi; good morning.

Robert Buck and David Grace: Good morning.

Are there any branches that kind of came through unscathed over the past six months in terms of maybe less the level of business but more the margins remained somewhat more intact?

We'll talk regionally rather than branches because I think that might give you a better picture, if that's okay.

Okay.

I think one of our best-performing regions is in the Carolinas, which had some winter impact but not as much. And they're doing awfully well during the first six months. But that's a well-managed company, great leadership, and they're doing quite well. Their residential, through six months, is positive, which would give you an indication of the importance of reroofing, because that's also a new housing area down there. And-- go ahead.

Yeah, we probably had three to four regions whose gross margins were equal to last year. So there are regions, as Bob said. Down in the Carolinas; up in New England with Beacon Sales and Quality Roofing Supply; somewhat in the Texas-- they've been able to maintain margins. So it's not throughout the entire area. But that's on a year-to-date basis. For the quarter, some of them had some downturns because there's just less business to go after.

Okay.

Just as a follow-on, if you don't mind. Again, same days is very important it the first half, and the decline in total sales is 5%. And David, in his comments, compared that to other companies who are very related to new construction, where the percentages are down 25, 30, 40%. And on a six-month basis, ours are down 5. We're not happy with that, but we state those numbers just to give you a comparison because of the space -- our industry and how it's constructed. So I thought I would add that, if that helps.

Yeah, I appreciate it. I'm just-- if you look out the next 18 months or so on a more kind of normal environment, if there is such a thing-- there's nothing out there that would really-- I guess that I could see that would impair the model somewhat so that your margins don't get back towards somewhere near the goals that you have stated the past couple of years.

No, I think you're correct. And we try very hard to focus on where we're going to be and plan for it, make sure the talent is keeping up with the growth. But, yeah, this industry has been very solid over a long period of time and we look forward to those times that are back to normal.

In our prerelease conference call that I'd rather forget but you can't, we talked about trying to reconcile growth to more normalized times, and we've gone through that -- what is the impact of no hurricanes and winter? Slow down of housing and change of inflation? And these are estimates, so I don't want anyone thinking they're more than that, but hurricanes, on a comparable basis, is a 7% impact in the second quarter. I'm sorry -- hurricanes are 7%; winter is about 5% -- I'm talking top line. Housing's about 4. Inflation is approximately 2. If you add all those percentages together, it's 18% impact on the second quarter.

Our decline was 14% so if you compare the impact of the four factors we've talked about of 18% as compared to a negative of 14, a more normalized quarter, then, would look like the low end of our range -- the 5 to 10. So I hope that's helpful -- to try to look at it retrospectively, adjusting for those difficult times. It's not a prediction, but it gives an indication of-- there is science behind our growth of 5 to 10% and acquisition growth of 10 to 15%.

Okay, thanks.

We spent some time on that for you.

And, ladies and gentlemen, that concludes the questions. Now I would like to turn the call back over to Mr. Buck for his closing remarks.

Okay. Thank you, Debbie. And thanks to all of you for your questions and interest in our company.

I want to state, again, our long-term sales and profit growth objectives. We believe we can grow organically 5 to 10% and acquisitions will add 10 to 15%. We've exceeded those growth goals since the IPO three years ago. Also, remember that part of our plan to grow organically includes six to 12 new branch startups coming from our existing regions. We will make acquisitions that are accretive and acquisitions that add geography to our national footprint.

I do have to tell you, we are disappointed in these results, even in a difficult environment. We will continue to be candid about our performance, going through a lot of detail about the disappointments. If we aren't going to do well, we will admit it. When results exceed our stated goals, we will discuss, again, our long-term objectives so that everyone is reminded of those.

At times, I probably sound like a Sunday-morning preacher who sticks to his message week after week, but that's what we'd like to do. Our focus is on the long term as our way to build significant value for our shareholders, a group of which David and I are members. We have a solid business plan that's being executed every day. Our company, just as a reminder, is two and a half times larger than it was at the time of the IPO, and that includes both sales and EBITDA. Our future's bright because we are in a solid business and, probably more importantly, because we have a solid management team. And we really do appreciate your support and your call in.

And David and I will be available for questions post-call. Just to let you know -- I think most people want to talk to David anyway [chuckles] -- but I'm getting on an airplane in about an hour. David will be available. I will tell you this -- he's here in Herndon, Virginia, with me and you can use that number or you can use his cell number or e-mail. So we're available. I appreciate it. And we'll talk again soon in the future. Thanks very much.

Ladies and gentlemen, thank you so much for your participation. This does conclude the conference and you may now disconnect your lines.