CACI International Inc (CACI) 2014 Q3 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the CACI International third quarter FY14 conference call. Today's call is being recorded. At this time all lines are in a listen-only mode. Later we will announce the opportunity for questions and instructions will be given at that time.

(Operator Instructions)

A special reminder to our media guests who are listening in, please remember that during question-and-answer portion of the call we are only taking questions from analysts. At this time I would like to turn the conference call over to Dave Dragics, Senior Vice President of Investor Relations for CACI International. Please go ahead, sir.

Thanks, Kevin and good morning ladies and gentlemen. I'm Dave Dragics, Senior Vice President of Investor Relations of CACI International, and we are very pleased that you are able to participate with us today. And as is our practice where providing presentation slides. Let's move to slide number 2.

Now about our written and oral disclosures and commentary, there will be statements in this call that do not address historical fact and as such constitute forward-looking statements under current law. These statements reflect our views and as of today and are subject to important factors that could cause our actual results to differ materially from anticipated results. The factors that could cause our actual results to differ materially from those we anticipate are listed at the bottom of last evenings earning release and are also described in the Company's Securities and Exchange Commission filings.

Our Safe Harbor statement is included on this exhibit and should be incorporated as any part on any transcript of this call. I would also like to point out that our presentation today will include discussion of non-GAAP financial measures. These non-GAAP measures should not be considered in isolation or as a substitute for performance measures prepared in accordance with GAAP.

Finally, we here at CACI are in midst of our planning process for FY2015 we would ask you limit your questions today to our third-quarter results and our outlook a reminder of FY2014. At the end of June, we will be issuing our annual guidance and be in a much better position to discuss our outlook for FY2015 at that time.

Let's turn to slide 3, and to open up our discussion this morning, here's Ken Asbury, President and Chief Executive Officer of CACI International, Ken.

Thank you Dave and good morning to everyone. Thank you for joining us. With me this morning are John Mengucci, our Chief Operating Officer and President of US Operations, Tom Mutryn, our Chief Financial Officer, and Greg Bradford; Chief Executive of CACI Limited is joining us from UK.

Slide 4 please. Last night we released our third quarter results; they are in line with our expectations and we are reiterating our guidance for the remainder of the fiscal year. We generated strong cash flow, continued to deliver excellent program performance to our customers and experienced solid contract award activities in an uncertain and highly competitive market. The integration of Six3 Systems is progressing well and the Six3 team is performing according to our expectations.

Let's turn to slide 5 please. The environment in which we operate remains challenging, both domestically and internationally. We have seen little change in customer buying behavior since passage of the bipartisan budget agreement. Awards continue to be delayed and run rates on our professional services business continue to see pressure.

As we have noted on many of these calls in the past, the world remains a dangerous place. Within the past month global dynamics have shifted markedly. In the Pacific rising tensions on the Korean Peninsula and China's growing assertiveness have caused significant concern to our allies and friends.

Simultaneously, the US and Russia are in the midst of most serious confrontation since the end of the Cold War. These global flashpoints compound the burden of our customers who are already buffeted by an uncommon series of internal and external challenges, budget cuts, sequestrations potentially return in FY2016, reset of the national defense strategy, the future scope of the mission in Afghanistan, and difficult choices regarding investments in people and technology.

We all know that what is at stake is the long-term security of our nation. Given these circumstances, we are confident the government will continue to rely on the sophisticated solutions and services we provide.

In this uncertain and highly competitive market we are capturing more business which is reflected in the significant year-over-year increase in contract awards. Over a quarter of those wins are new business for us.

We are retaining are current work through the sustained delivery of value to our customers. Our team's skill, talent, and expertise are indispensable to the development and delivery of innovative and affordable solutions, services, and products that align with our customers' spending priorities.

With Six3 Systems as part of CACI we are now positioned to expand our support to those customers who are charged with staying abreast of potential adversaries evolving capabilities and safeguarding the nation's ability to operate across the electromagnetic spectrum. Six3's highly specialized signals intelligence and cyber products and solutions are vital to national defense and position CACI to play a larger role in this important growing area.

Looking forward, we are confident in our strategy. It is producing solid results and positions us to create long-term value for our shareholders. With that, I'd like to ask Tom Mutryn to give us some insight into our financials, Tom.

Thank you Kenny. Good morning, everyone. Let's go to slide number 6.

We are pleased with strong cash flow we generated, the awards we won, and the solid funding we received during the quarter. For the quarter, CACI's revenue was [slightly] below last year's level. As we indicated on our call in April, this decline is primarily driven by reductions in run rates on existing contracts and reductions in low-margin material purchases related to work we have in Afghanistan.

Indirect costs and selling expenses include a full quarter of Six3's indirect expenses and about $3 million of severance expenses. We expect our indirect and selling expenses to be lower in our fourth quarter due to the sequential positive impact of the severance expense in certain expense actions we took in quarter three.

Depreciation and amortization expense increased primarily as a result of the amortization associated with the Six3 acquisition. For the quarter, Six3 generated $7.1 million of net income from their ongoing operations and $3 million of net income including intangible amortization and acquisition related retention expenses.

Slide 7, please. Our diluted share count in earnings per share were impacted by the additional shares associated with our convertible debt. Today, May 1, we are paying $300 million of principal and accrued interest to holders of the note.

At the same time, we are issuing approximately 1.43 million shares of CACI stock to the convert holders which will be fully offset by shares we received from the bond hedged counterparties. Recall that the shares we expected to receive from the bond hedge were considered anti-dilutive and never entered into our diluted earnings per share calculation. Exiting the year, we expect to have about $24 million diluted shares assuming the $70 stock price.

Slide 8, please. We generated strong cash flow in the quarter of $102 million. This was the result of strong collections with some customers paying earlier than we had expected.

On a trailing 12 month basis, free cash flow was $239 million or $9.53 per diluted share. This translates into free cash flow yield of 13.6% at a share price of $70. With $1.3 billion of total debt, our net debt to pro forma EBITDA ratio, which includes six months of Six3 results is at [3.55].

Slide 9, please. We are reiterating the guidance we issued in early April. Fourth quarter net income results will benefit from an additional billing day, higher award fees, lower interest expense, and additional high-margin product sales. With that, let me turn the call over to John.

Thanks Tom. I am pleased to say that our third-quarter results we're driven by successfully executing our strategy in a difficult market environment. We continue to invest in new technologies and capabilities and appropriately size our organization, delivering affordability for our customers.

Let's go to slide 10. We won $700 million of contract awards which is 26% higher than the same period last year. 27% of those awards came from new business wins and approximately one-third are in our high-growth market areas. Overall, we are proud of our Q3 awards as I reflect the cost-effective quality and value we consistently deliver.

We also booked $794 million of funding orders in Q3, which is 21% higher than the same period last year. This brings our funded backlog to $1.6 billion. We currently have on contract total backlog of $7.3 billion, which is 24 months of backlog at our current revenue run rate.

Please go to slide 11. I am pleased to report our FY2014 revenue guidance now consists of 99% existing business and minimal recompete in new business. In addition, with the $794 million of funding orders received in Q3, we are virtually 100% funded for the remainder of FY2014. This is a direct result of the important missions we serve and the levels of funding those missions continue to receive even in a tough budget environment.

Six3 is performing consistent with our original expectations. We are progressing towards full integration of CACI in Six3 no later than July 1, the start of FY2015. At that time we will begin including Six3 contributions to backlog, pending contract awards, and bids to current submitted bids.

Our pending contract awards total approximately $7.3 billion. Approximately 75% of those pending awards are new business for CACI. In addition we plan to submit another $9.3 billion in qualified opportunities that we will bid over the next six months reflecting our large addressable market; 80% of those bids will be for new business.

Our focus on business development and the integration of Six3 to maximize its value to the CACI Enterprise remains a priority. We are confident in our market driven strategy and committed to support what will continue to be enduring missions in support of our nation. With that, I'd like to turn the call back over to Ken.

Thank you very much for that Tom and John. Slide 12, please. Before we go to Q&A, I would like to reiterate my confidence in CACI's future. We continue to execute our three-part strategy, win new business, drive operational excellence, and deploy capital for growth opportunities through our M&A program.

Our strategy is showing results which we can see in strong contract awards, cash flow, and the successful integration of Six3 into CACI. We are in the process of building our FY2015 plan and as is our custom we will provide guidance on FY2015 at the end of June.

I want to personally thank everyone on the CACI team for their talent, resilience, and outstanding character in serving our customers and supporting our strategy. We have an exceptional team here who share a deep commitment to our customers' national security missions.

We also share a commitment to supporting military men and women with career opportunities when they enter civilian life. We are honored that Military Times has just ranked us number three in the nation in their Best for Vet survey based on our program for actively recruiting, hiring, and mentoring veterans.

Looking ahead, we are harnessing the strength of our remarkable people and building on the fundamentals of our business for long term shareholder value. With that, Kevin, let's open up the call to questions.

(Operator Instructions)

Our first question comes from Brian Gesuale, Raymond James.

Hi guys, thanks for taking my questions here.

Good morning, Brian.

I wanted to focus initially on Six3's performance, confirming that it's still slated for doing $275 million to $325 million in revenue for the fiscal year. Wondering if you could confirm that and add some color to the moving parts with that business. I assume there are some products or something else that drives an acceleration in revenue in there -- in the June quarter.

Brian, thanks, this is John. If I were to look at -- I guess, let me start off with, if I look at Q3 of their FY2013 as it compares to the FY2014 quarter, revenue was slightly down, profits slightly up. As we previously noted, Six3's business consists of intelligence services, in addition to their high-value products and solutions in the signal intel in the cyber areas. Very similar to CACI's core business, and I think we mentioned this during our last call, Six3's intel services business is not immune to the uncertainties in our market, and has been impacted by both run rate changes and delays in their current contract awards.

In addition, we are seeing the impact of a program awarded to Six3, actually going through its second round of protests by an unsuccessful bidder. The product and solution side of their business did see some of these impacts but to a much lesser extent. In fact, it's these high-margin firm fixed price prime position solution projects that made Six3 so appealing to us as an acquisition. So while Six3 is likely to close our FY2014 closer to the lower-end, closer to the $275 million range of our expectations, their profit contribution still remains healthy and they have many, many long-term prospects across their entire portfolio.

Bryan, if I were to look sequentially then, at growth from our current Q3 to Q4, we are very comfortable with Six3's Q4 forecast. The revenue increase is part of their natural phase of product and projects delivery in Q4, as well as a few part deliveries that actually pushed from our Q3 into Q4. These are all booked awards, not something that needs to be won. If I looked at net income side similar to CACI's core business, they have some increased product sales that they are going to be delivering in Q4. If you add that to extra billing day in Q4, that will contribute to their sequential growth on the net income side.

Overall, very, very, very confident in them meeting our expectations, albeit on the lower-end of revenue side, a very strong, profitable and long-term growing business.

Great, John. That's great color there. Wondering if you could comment -- a competitor last night had spoken about a resurgence in business development activity, a real prospect for a bottoming of the industry and a pickup in award activity. Can you maybe comment on how you see that macro?

Brian, good morning, this is Ken. I will take this one. In the opening remarks, we've continued to see the same sort of behavior.

We had anticipated that the Ryan/Murray bill would take some of the tension out or at least speed up some of the award activity. The award activity that we have spoken of here, where we've won more is really based on sort of doing better and improving our whole process around pursuing and capturing business. We have not seen a significant change in award activity on part of the customer.

While we don't want to get into 2015, and we will talk more about that in June. There are some things we do see. Ryan/Murray should add some money into this year and into next. However, with our customers' attention now being drawn to other parts of the world and we are not sure how all that plays out. We think the conditions that we see today and we have been experiencing, for the next 13 months my will slowly attenuate, but we don't see a big change in front of us right now.

Thanks very much, guys.

Our next question comes from Bill Loomis with Stifel.

Good morning. You talked about how you are not seeing a pickup in bids. When I look at CACI and I look at the awards in the quarter, obviously, they are very good -- better than the others that have reported. Your TTM awards of over 1.0 book-to-bill, your backlogs flat year-over-year which is better -- quite a bit better than most are reporting, but yet your organic growth in the quarter was down about 12%. If the awards, even though they haven't picked up per what you said Ken, they are still good and better than what we are seeing generally in the space. Why isn't organic growth either declining less our starting to turn? Are they just -- the what you have won just not ramping up?

Yes, Bill thanks. I think there's really a factor here that says the overall budget has been reduced and we are seeing the impact of that. If we were winning -- if our capture rates were in a more normal market where we were seeing government award on schedule, I think we probably would be matching the decline. But with the slowness of contract awards, we're still winning more this year over last year of fairly healthy improvement in capturing dollars. We are seeing the run rate impacts, along with the contract delays just give us a problem. Once that begins to normalize, let me say the stability word. If we see some stability, let alone some optimism about more spending then I think we've situated ourselves in a very good place.

For right now, given sort of the dynamics of budget reduction and a reluctance of customers to spend, even when they are funding as we talked about a month ago, we will continue to emphasize our business development, but the environment has got to sort of level out before I think we get to see the full advantage of that.

Okay and just a follow-up to that on the 12% negative organic growth. Can you just clarify how much was material pass-through reductions and what the remainder was? Related to that, what the organic direct labor change was in the quarter? Thank you.

Yes. This is Tom. Similar to the second quarter we had organic declines in both ODC and in direct labor. Direct labor organic decline was approximately 10% and our other direct costs. Which is not only material, there's subcontractor labor and that statistic as well, was down approximately 15%. The significant decline was the Afghan related material purchases which we previously referenced.

Thank you. Our next question comes from Edward Caso with Wells Fargo.

Hi, good morning. Curious on the 20% new business, how much of that is greenfield work and how much of that is taking business from others? Within that context, how sensitive is the pricing?

Bill this is -- Ed, sorry this is John. If I take a look at that the majority of the 20% which was new business was take-away from others. On the price sensitivity, still seeing a lot of pricing pressures. We have been working on the investment side, working on the cost structure side. So that our ability to bid to our end customer lower price wasn't just a pure reduction in fee. Still exists a lot of pricing pressures out there, still seeing a larger share of LPTA out there as well.

My other question is, I want to make sure I understand the severance comments. Is that related to Six3 personnel, including the movement of Bob Coleman to an advisor role? Or is that severance efforts elsewhere in the organization?

It is the latter. The severance is elsewhere in the organization. None of that was really related to Six3.

Thank you. Our next question comes from Robert Spingarn with Credit Suisse.

I was wondering if you guys could talk about your expected book-to-bill this quarter. Ken, this is in the context of what you just said about the activity not ramping materially off of recent periods. I'm just wondering if we are going to be looking at like a 0.88 again here in the quarter?

Rob, thanks this is Ken. I think what we expect is to continue at the same of award rate that we've seen over the last few quarters. If I look at January and February in terms of just using DoD as a surrogate for the federal government, their spending was down -- they were 48% of the previous two years. We saw that tick up in March. I have not seen the April numbers yet to know if spending -- that the trend has begun to improve. We know there's more money in the system as a result of Ryan/Murray, we don't know when that will show up and frankly, we don't know when that is.

Being a little bit conservative, I'm going to say I'm pretty confident that we will continue to win at the same kind of rate that we have. If there's an up-tick in spending and there is an up-tick in contract awards, I think we will continue to win a bigger share of that. As to how that translates to book-to-bill, I would say nominally. Think of it as we've had done for the last three quarters. If there's any upside to that, I think we would welcome it.

Okay. And then if we could just spend a minute on Six3 and the revenue decline because it looks like that is now since acquisition. $49 million in sales in the partial December quarter and then the $104 million in the March quarter here. Your guidance then implies $122 million at the low end for the June quarter, which is a pretty good-size step up. You've talked a little bit about the moving pieces there, I'd be curious to know the revenues from the protested contract and just how you get there and at what point we should expect positive revenue growth in Six3, closer to the type of teens growth we saw when you acquired it?

Rob, this is John. The number of $122 million, you know, spot on there. Their fourth quarter is very heavy in product deliveries. We are confident in getting from roughly the $105 million level to the $125 million between Q3 and Q4.

You mentioned the protested contract. Since that is being adjudicated now, I am going to elect to not share what that revenue number is, but it was a factor in Q3 being a little bit lower than we originally expected. I am not sure that, that job will get fully adjudicated by the end of our Q4, but it was yet one factor that we wanted to make people aware of. Overall Six3 is in a very large growing market for us in the signals and intel space and within the cyberspace. That area continues to grow. It is somewhat being offset by the intel services piece.

Overall, we are very, very pleased what we are seeing in the first seven and a half months. We're in the middle of fully integrating Six3 into CACI. We like the products and services that the products side has. We've got 160 MultiPort IB I2s that we're starting to understand other customers out there that have the same needs. We are looking for better things in the future from that very sound acquisition.

Thank you. Our next question comes from Lucy Guo with Cowen and Company.

This is Lucy filling in for Cai von Rumohr. Just wanted to ask, so there was some product sales at Six3 that slipped from Q3 to Q4 it sounds like. Was that contracts that weren't adjudicated you just referred to? What kind of margins, approximately, were on that?

Yes, thanks, Lucy. This is John. Some of those slips were customer directed. Looking to have some of those end item products be delivered at a slightly later time. If we look at margins across Six3, they're somewhere in the roughly the 13% to 14% EBITDA across of the business. That is well within our expectations that we announced back in October and we are still seeing them create those margins today.

Great and then also maybe if you can give a little more color on your bookings prospects for the June quarter, specifically, what do you expect there?

I think, Lucy, we expect a similar run rate based on the conditions. We are not forecasting that our fourth quarter is going to be any better than the third quarter. I would say that it would be similar.

It has always been a challenge to do a lot of different things, but one is to forecast bookings and there is a certain choppiness in awards, in particular. We recently received an award that was submitted over three or four years ago. It is challenging to predict that. The funding is a little bit more predictable because we have existing work and existing work needs to be funded for us to continue to perform that work. At the last quarter of the government fiscal year typically we see a huge surge in funding -- ourselves and the rest of the industry. That has been a fact for many, many years, but for a particular quarter, it's challenging and we are reluctant to lean forward making those predictions.

Thank you. Our next question from Steven Cahall with Royal Bank of Canada.

Thank you. My first question is on the non-Six3 defense sale. It looks like to me they were down high teens in the quarter and suggests maybe similar next quarter. Can you give us a sense of what the OCONUS versus CONUS declines were because that is something you had flagged in the pre-announced? If we had a signature of the Status of Forces agreement would that be a positive event for maybe the OCONUS revenue and the pass-through in Q4?

Steve, thanks. This is John. I guess if I looked at the same factors that were evident to our call about one month back still exist today, still looking at similar run rate reductions. The actual change in our Afghanistan revenue has not changed since our last call. We, I believe, we reduced our low margin material ODCs by around $50 million.

That number is still solid as we look forward to the fourth quarter. You know Status of Forces, there's a lot of US government decisions that still need to be made. We don't see any threats to our OCONUS work Afghanistan related through the fourth quarter. Clearly, we are just starting to look at our FY2015 and we will take to look at the US government providing some additional certainty around what the Status of Forces will be and that will be very evident in our FY2015 guidance that we share towards the end June.

Thank you. Just as a follow on, just a question on the direct labor in the quarter seeing a nice step up in percentage of direct labor. I know you're not giving FY2015 guidance yet but with now Six3 fully in the business, is that reasonable run rate percentages to think about for direct labor, or is there still a lot of unpredictability in what that will be?

Yes. You are right, we are not providing guidance for FY2015 and the increase in direct labor in the quarter was driven by the acquisition of Six3. Organic direct labor as I mentioned kind of was down. Too early for us to comment on FY2015 trends with direct labor. For the simple fact that we are unable to [do it] with any level of fidelity and confidence right now. We're in the process of kind of reviewing our plans. A lot of work has been done, but we have yet to go through that thorough a review and it would be imprudent right now for us to comment upon these numbers until we have a degree of confidence in them so we are, reluctantly, are passing on that question.

Thank you. Our next question comes from Brian Kinstlinger with Sidoti.

When you acquired Six3 you had forecasted it would add about 5% to GAAP earnings. I think in the first full quarter you added about half that to the total quarterly earnings. Can you talk about if you expect going forward this company will still add about 5% to GAAP earnings or has something changed?

Brian, this is Tom. For the second half of 2014 -- excluding the retention expenses, we put in some advisable retention in programs to retain some key people that will generate at least 5% accretion for our third and fourth quarter and beyond that, given all the things we've been expecting, it should be additional accretion. I will mention that 5% GAAP accretion includes a relatively sizable non-cash intangible amortization charge and on a cash basis, which is in my mind more relevant, it would be generating at least 10% accretion for the back half of FY2014.

So with that said in FY2015, it should be about 5% of GAAP earnings, including the amortization?

Yes. We would expect it to be performed better because it is a strong growing company. If it was adding 5% in the back half of 2014, for all of 2015 it should be adding more than that, yes.

Thank you. Next question Tobey Sommer, SunTrust.

This is Frank in for Tobey. Wanted to see if I could get some color on the breakdown of contract funding and awards related to Six3 or excluding Six3? The balance there.

Yes, Frank, this is John. We haven't yet moved Six3 as part of our standard bid submitted, bids awarded, percentage of our market. Some of those traditional metrics that you all have become accustomed to hearing us share on a quarter-by-quarter basis, we will be adding them on July 1, as we get into FY2015 side. What we have been doing on the backlog side is we have been adding Six3 backlog equivalent to their quarter revenue just so we could start to begin that process. You will see us provide full CACI metrics, including Six3 when we get into our FY2015.

Okay great, and one more question on the cyber and intelligence side, what percentage of the business is that and is anything changing in terms of the margin profile? Are you seeing pricing pressure in cyber or intelligence at this point?

Yes, Tobey this is Ken. This is -- that part of the business that is approximately 65%, 70% of the business and kind of heavy on the solution side with some product orientation. A lot of that is sole source and fixed-price. While we have seen some customers come in and want a little bit more economy, I think it's just we have not seen much of a change in the fixed-price nature and sole-source nature, a big slug of that business. We will probably see a little bit of pressure, but it is still in the double-digit range that John was talking about before.

Thank you. Our next question comes from Mark Jordan with Noble Financial.

Of the $7.3 billion of bids that have been submitted, what percent of that new business has an incumbent and what percent of that represents new tasks where there is not an incumbent?

Mark, this is Ken; I will take that. Typically in this marketplace we're seeing 90% to 95% incumbency because we haven't seen a great deal of new starts. If we see some new starts, we will see it in the healthcare arena. We will see it in the markets that are typically the higher-growth kind of markets. For the most part, the kind of market that we are playing in right now -- with the exception of the work at Six3, which would be new start kind of problem -- the product and solution side, a new start kind of problem. The typical work we are going after usually has an incumbent in it.

Okay. Relative to that $6.3 billion of submitted bids, how much of that do you think will be awarded by calendar year-end and how would you gauge your visibility of when you think those decisions will be made?

Yes, Mark, some of that $7.3 billion that's impending awards now should have been awarded last year. The ability to predict when those are coming out, we -- part of what we have been describing is the environment with contract delays is, the government puts a procurement plan out, we kind of factor it. Last year or in previous calls we have talked about how we add 6 months to it. Some customers may be 4 months late, other customers may be 12 months late.

As we look at 2015, we're going to try to refine our practice for doing that. As far as predicting the $7.3 million -- I would love if all those $7.3 million got adjudicated in the next 30 days because I think we would win more than our fair share of it. It is sort of one of the uncertainties that our symptomatic of the marketplace right now, being able to predict when those awards will come in.

Thank you.

(Operator Instructions)

Our next question comes from Joe Nadol with JPMorgan.

This is actually Chris Sands on for Joe. Just a quick question on the Six3 backlog since you're not including it, can you give us some insight into what the sequential and maybe year-over-year trend and funded backlog was there?

Chris, this is John. I can't give you an exact number, but let me try to help shape it for you. Their services side of the business is about 25% of the year-to-year revenue. That is going to have an award and a funding look very similar to the services side of CACI. On the other 75% of their work which is more a fixed price product solutions based, that is more longer-term where you will see awards made one to two years worth of funding. A larger percentage of that funding coming up front, Chris, so that's a little bit different from some of the solutions work that CACI does today. Try to give you some level of shaping and again, when we get to July 1, that will -- all of that information will be part of the CACI numbers.

The 75% is just chunkier is what you're getting at, so the awards in any giving quarter might be lower?

Absolutely right, Chris.

So fair to say the kind of book-to-bill would be for Six3 in the quarter was probably lower than the overall Company?

Yes. What we have to do is take a look at which specific funding orders came in, so that we can come up with the specific book-to-bill number. Overall, I think if we use that 75%, 25%, at least to get us through fourth quarter then we will be to a much more of an exact number as you get into FY2015.

Okay. Great. Thanks, guys.

And I am not showing any further questions at this time. I'd like to turn the conference back over to our host.

Thanks, Kevin. Thanks for your help today on the call.

We would like to thank everybody who dialed in or logged onto the webcast for their participation and interest as well. We know many of you will have follow-up questions and Tom Mutryn, Dave Dragics, and Jeff Christensen are available for calls later this morning and throughout the day. This concludes our call. Thank you and I wish all of you a very good day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.