切遲杜威 (CHD) 2006 Q4 法說會逐字稿

All right, folks. Good afternoon. I am Jim Craigie, the President and CEO of Church & Dwight, and with me today is Matt Farrell, our Chief Financial Officer. It is always a pleasure to meet with you, especially when we have good results to report. I would like to say I'm also very optimistic about my Company's future. We enter 2007 with good consumption trends across most of our categories. We are going to be launching more new products this year than we have ever launched before in the Company's history. We are going to supporting our brands and our new products with better marketing campaigns and more marketing spending than ever before. We have improved our focus on our weaker categories through organizational changes that will drive improved results. And the integration of our recent acquisitions is on track, which will deliver meaningful synergies and growth to our business. And last but not least, I have a very talented and motivated management team that will make all this happen.

Today, Matt and I are going to share with you the recent quarterly results and we are going to share our Company's viewpoint on delivering total shareholder return, which is very important to all of us. And then we will open the floor to questions.

Now as always, I have to read this to you before we begin. I have been asked to remind you that this presentation may contain certain forward-looking statements regarding the Company's financial objectives and forecasts. These statements are subject to risks and uncertainties and other factors that are described in detail in our SEC filings. So with that, let me move ahead to more fun things to talk about.

Church & Dwight, as you may know, is a very exciting history. We build upon the great success of the ARM & HAMMER brand launched back in 1846 and we developed a broad portfolio of leading brands through acquisitions. This strategy has required a strong focus on building great brands, launching innovative products, and maintaining tight management of our operations. This approach has enabled us to consistently deliver a superior total shareholder return while improving our portfolio and position the Company for strong future growth.

While our track record of delivering excellent results speaks for itself, we are never satisfied. And my team is constantly chasing every opportunity to ensure that our future is as bright as our past. Our vision has a few critical components. We are focused on building number one or number two brands for those defendable niches that sustainable competitive advantages. We are explicitly, and I emphasize explicitly, focused on total shareholder return. We believe the total shareholder return, or as we call it, TSR, is the right metric. To start with it, it is how you judge us, but also it helps us understand how revenue growth, margin, and free cash flow will contribute to shareholder value creation. And we aspire to deliver TSR that places us in the top quartile in the S&P 500 over the long term.

We have stayed true to our vision, with our brands are in number one or number two positions or defendable niches and almost all of our markets. And these strong market share positions provide clear advantages. There are scale advantages in manufacturing and marketing. There is merchandising benefits with our retailers and there is pricing strength. And this is one of my favorite charts. This is something new we have never shown you before, but I love this slide because it is how we work to have an impact on consumers everyday, from helping to bake over 688 trillion chocolate chip cookies, to being part of 450 million loads of laundry every year. It just shows how Church & Dwight products are an integral part of the consumer's life.

Now the fun fact in this slide tell me how deeply penetrated our products are in consumers lives, how broad our portfolio is. You will see we are over 115 countries. We have both household and personal care products and even categories like animal nutrition. It also shows how flexible the ARM & HAMMER brand is, which I will talk to in a minute. And we have grown this Company from one terrific brand, ARM & HAMMER, into a diversified consumer packages Company with a portfolio of leading brands.

We are continuing to improve our branding capabilities, innovating exciting new products, and look for TSR accretive acquisitions, all while improving our supply chain. We believe that combining these capabilities with our continuing financial discipline will lead to continued strong TSR. And importantly, and you will hear this from Matt later on, we are becoming increasingly explicit about our focus on creating shareholder value.

And this is how we think about value creation. Our goal is to deliver top quartile TSR, relative to the S&P 500. We rely on our leading brands to help us reach that target. They provide us with pricing power, natural demand for our products, and make us important to our key retailers. We are focused on a portfolio of leading brands that enables us to drive profitable growth through impactful marketing campaigns and innovative new products. And combining this leverage provides our strong brands with a disciplined marketing team enables us to continually improve margins and maximize cash flow.

We believe that TSR is the capstone metric that in consumers use and you use, so it is a lens through which we judge our own success. We are internalizing this thinking. We are training our line managers to view the outcomes of their decisions in terms of shareholder value and our business is developing strategies that maximize TSR over the long term. We believe becoming a TSR-focused organization will lead to better management decisions and higher value for our shareholders. You can tie the main drivers of our shareholder value, growth, margins, and cash flow, directly to our strategic priorities. In that context, we will continue to remain focused on our brands by improving their positionings in the marketplace, on new products by accelerating the rate of innovation, on increasing our global leverage into new markets and greater breadth in existing markets by driving costs out of our systems through both supply chain and overhead costs, and again pursuing TSR-accretive acquisitions to build upon our strong foundation.

Let me take a few minutes to talk about each of these strategic priorities. First on brand positioning, our brands are the cornerstone of our success so improving and strengthening them is vital. I would like to walk you through two examples of our two more well-known brands. First the ARM & HAMMER example shows how we are leveraging iconic brands to other categories and creating a master umbrella brand. And I will talk about TROJAN, which focuses how we are segmenting the market and driving category growth.

Many of you know ARM & HAMMER, but you may not know it is one of the most powerful brands in America. This chart displays all the different forms it is in. In fact, there is one missing. Last year we launched into the vacuum bag category through an alliance with Electrolux. This brand started back in 1846 and over the years, we have expanded it to all these categories -- laundry, animal nutrition, carpet deodorizers, you can read the rest of the list, but a very powerful broad brand. This brand shows that consumers think very highly of ARM & HAMMER. It is an iconic brand and we test consumer attributes all the time. And consumers come back and tell us this brand stands for the kind of leading attributes they think of many other major brands in America.

This is one of my favorite slides. You will find the ARM & HAMMER brand in more isles of the grocery store than any other brand in America. We really talk about this master brand, it is not economies of scale so much, but economies of scope. And while we do have economies of scale, with ARM & HAMMER we also have those economies of scope, which give us a brand across multiple categories. And that provides us with increasing marketing efficiencies and effectiveness, the ability to supply better value to our retailers as a supplier, and opportunities for profitable growth. It is far easier for ARM & HAMMER products to get to trial for new products with retailers because we are leveraging a strong, omnipresent brand.

But the issue we found when we talked to consumers that while almost 60% of households have one form of ARM & HAMMER, much less have more than one form. So we went about attacking that issue. And we talked to consumers and said to them that if you use ARM & HAMMER in one category, would you use it in another? And in many cases, they came back at said, of course, I just didn't know you existed in different categories.

So we went after them with a very holistic marketing campaign. We put out more creative TV ads and public relations efforts to build consumer awareness of all the ARM & HAMMER products. We also spent more time putting out appealing new products and we also put out a better packaging for us to make the line look as one trademark. And last but not least, we put on additional trade and promotional events to drive trial of all forms of ARM & HAMMER. Let me show you for a second the new ARM & HAMMER master brand commercial, which began last year. (Video playing) That campaign is a very successful. We have built on that with a whole line of new products, some which we will talk about later today. And in the end, it is the results that count and we have taken a brand that was only growing 1% in 2004, up to 4% in 2005, and over 6% in 2003 -- 2006. Very happy with that.

And this is a shot of TROJAN. This is a fascinating story where we are taking a strong number one brand that has potential in our eyes to double or triple in size. Now this slide may shock you if you haven't heard my story before on this. Look at this slide. There are 65 million people in this country today that have an incurable sexual transmitted disease. 15 million new cases a year, one in four people under the age of 25 will soon have an STD.

Folks, this is America. This is not a Third World country. Sexual transmitted disease are a major problem in this country and we believe that we have the brand that people will naturally turn to as they become more and more aware of this problem. So we have talked to consumers a lot. Why does this problem occur and it is kind of amazing to listen to consumers. Very concerned about getting pregnant, but sexual transmitted diseases, a kind of glaze comes over their eyes and they talk about they are going to stop that by being careful who they have sex with. And that is just not possible. And it is really frightening the fact that when two people are having sex that don't know each other's sexual history, only one out of four times do they use a condom. And a condom is the only way to stop an STD.

So we have gone about we call this cracking a code of sexual behavior. It is cracking a code of other problems and we are bent on trying to find a way to try to stop that. We have had for some time, we continue to have a very holistic marketing campaign attacking this problem from all different angles. We have launched new product. By upping the ante here, we have come up with products that are condoms are thinner, new shapes and sizes, those for latex sensitive people, and new lubricants. Starting in 2005, we doubled the advertising spending in this category. And we launched a very provocative new advertising campaign that I would like to show you for a second. (Video playing) And all this is working. The category growth rate has jumped significantly since we started this. Our shares have reached record highs. We are up over a 73 share. But I will tell you I am not satisfied.

While the brand has record shares, record sales, and record profits, we still haven't cracked the code here. We still haven't definitively increased the rate of sexual compliance with condoms to over 25% of the time. So we are launching more new products to do this, like the Intense Ribbed.

We have also expanded into adjoining categories of sexual health with a whole line of vibrating rings and by the way, we only sell these vibrating rings with a condom. And you will shortly see, within a matter of about 90 days, a new TV commercial which I think will do an even more impactful job of getting people to wake up to the risks of sexual diseases.

Let me talk about our second strategic priority, which is accelerating new product development. We are very focused on creating great new products. We reorganized the company to enable an increased focus on new product development by creating a special new product team that does nothing but spend all day, 24 hours a day, thinking about new products. They are scouring the world for new product ideas and entering joint ventures with entrepreneurial companies to improve our pipeline of new products. Here is a picture of some of the products this year I'd like to talk about for a second.

First of all, OxiClean has a new instant spray, or instant stain remover product you will see on the counter over there. It is entering the new fast-growing market for instant stain removal. I mentioned the TROJAN product a minute ago, the Intense Ribbed product that derives great pleasure from the product. SpinBrush has a number of new line extensions. This is a product we took from P&G and, basically, inherited a pipeline with nothing in it. Within 12 months later, we are launching three new products. One is a new slimmer handle product that will be the lowest price point in the marketplace. And one is a very innovative two-speed product, which is the first two-speed battery powered SpinBrush in the marketplace. And we are also announcing today we are launching into the rechargeable category, with a price point that is five dollars lower than the cheapest Oral-B product out there.

Also you will see on the shelf over there ARM & HAMMER Essentials, which is a new line of detergents for those people who are very environmentally oriented. It's a terrific product made out of baking soda and plant-based soaps. NAIR Pretty, a very interesting product over there. It is the first line of depilatories for teens and tweens. It's specially formulated for sensitive teen skin, very cool graphics, very neat fragrances that were developed by our French subsidiary, and very successful in Europe last year.

We are very excited about all these new products and I told you we are launching more new products in this year, 2007, than ever before in our Company history. Our third future priority is increasing global leverage. Here we are talking about expanding our core categories into existing markets, with efforts like expanding our laundry business in Canada, expanding our first response business into Europe. We are launching core categories into large existing markets like Brazil and China. A year ago, we bought a depilatory business in Brazil. You will see us doing something shortly in China.

Also developing sustainable niche strategies for local blends brands and globalizing our R&D and supply chain functions. This is all paying off. Our international business now represents 20% of our total worldwide franchise and it has very strong growth potential.

Our fourth key priority is achieving lowest cost. We told you that we would improve margins and later Matt will take you through the numbers to show you how we have done so. What I will point out on this slide is that we expect to continue reduce supply-chain costs. We are going to be selling higher-margin products, we are going to be increasing our scale to drive margins higher, and we are going to be enjoying the benefit from the rollovers from 2006 price increases.

We'll also control SG&A spending by leveraging the systems to drive more inefficient trade spending. And while we are constantly focused on innovation, which requires launching new products and SKUs, we need to be sure we keep our existing SKUs in check. We reduced our SKUs in half over the last three years, but it's a continual problem we face and we're trying to reduce our SKUs by 10% annually going forward.

Our fifth future priority is on mergers and acquisitions, an area we have been very successful in the past. TSR-accretive acquisitions are very important to us and the way we do this is we buy good brands at a reasonable price. In addition for every acquisition, we identify synergy opportunities. We have identified very significant ones in the past, for instance on OGI, which is all outsourced. We bring that into our own plants and drive a very significant synergy cost.

We are also focused on finding brands that are building on our number one or number two brand, higher growth margin categories, and source-sustainable competitive advantages. And we will continue to realize our ability to buy, integrate brands to deliver TSR to our shareholders. This is a very impressive list. Look at this list since 2001 of the brands that we are brought into our portfolio. Big brand names, great additions to our portfolio, and in total, we have a very formidable brand portfolio.

Look how it has changed our portfolio. In the past, we were more than 50% of household business. Going forward now we're a very balanced between household and personal care, very well-balanced, very much like Procter & Gamble. Let me talk about two of our recent acquisitions.

SpinBrush was a great buy. This was an opportunistic situation. When P&G* bought Gillette, they were forced to divest SpinBrush because Gillette have the number one battery powered brand in Oral-B. We paid $75 million for this business, plus some costs for inventory. Keep in mind, Proctor & Gamble four years earlier had bought this from the entrepreneur who started the business and paid $450 million because they the growth potential of this business.

So it was a great chance for us to buy a great brand in the toothbrush category, to build our oral care business. It also gave us capabilities for sourcing out of China, which is relatively new for us. Now that is an interesting buy. Nice job, guys, on the buy.

Let me talk about the growth potential here, which really excites me. The toothbrush category is a $4 billion business. Over 60% of this business is still manual toothbrushes. Now, battery-powered toothbrushes provide superior benefits -- 70% better plaque removal at only a slight premium price. And, folks, if you have been watching what is going on in the health journals of the world, you are realizing more and more that good oral care just isn't good for your mouth, it is good for your whole body. They are linking viruses in the mouth now to heart attacks and everything else, so you see a lot of manufacturers talking more and more about good oral care.

So you take this great brand and we don't have an incentive here to not grow it. Other people in this category before us also had a big share of the manual toothbrush category. And they didn't have any incentive to, obviously, grow battery-powered toothbrushes or you are going to cannibalize manual toothbrushes. But we don't have that disincentive. We have no risk of taking apart the manual toothbrush category.

Look what we have done with this business. We actually bought this business in the middle of a recall. And after we bought it, we relaunched those products that were recalled and we have driven his back to market share leadership versus Oral-B, on both a four-week, a 13-week, and a 52-week basis. That is just the start.

As I told you a few minutes ago, we are launching at least three new products in 2007 to continue to drive share leadership in this category. There is a picture of those three products, which are on the table -- well, two of on them on the table over there. The slims on the table, the Pro-select, which is the two speed product. And I also told you we launching into the rechargeable category this year.

Let me talk about OxiClean for a minute. This was our acquisition of late 2006. It is example, again, about buying a leading brand in a very niche-potential category. OxiClean is premium priced. OxiClean is also in a growth category, laundry additive.

What I love about this product, it has the frequent purchase cycle of a household product and the high margins of a personal care product. It is also a bolt-on to our obviously big and strong laundry business. For us, a great synergy opportunity. But that is, again, a nice buy, guys. Tell me the growth potential. This is what excites me. Laundry category worldwide is a $26 billion category, of which about $6.5 billion to $7 billion in the United States.

But most people don't realize is the cleaning efficacy has declined in this category over time as consumers have shifted away from powders, which provide the best cleaning benefits, to liquids. It has gone from 80/20 in powders about 10, 15 years ago to 80/20 liquids today. Also what has grown significantly in the last 10 years is that the value segment of the liquid laundry category. It has about doubled in size.

But here you have a product that actually boost the cleaning power of liquids back to what powders once were. And here you have a product when you added to value liquid laundry detergents, it gives you the cleaning power of premium liquid laundry detergents. Well, folks, we are value liquid laundry detergent. We now have a product to add to our portfolio which could take the cleaning power of our products and make them equal to the premium products. And guess what, you can do that for less than the cost of the premium product.

So we love this category. It is a great growth category with significant growth potential ahead of it. And also, as I said, we are taking in the new segments as the on-the-go spot stain remover. So just tremendous opportunity and here's the product I just talked about. Tide to Go was launched recently, has had tremendous success in the marketplace, and we have launched our version of this product to take advantage of the market trends out there. And we think we will have a significant growth opportunity. And of course, if you haven't seen the following commercial, then you are not watching TV. Let me show you the OxiClean commercial. (Video playing) If you haven't heard that and you are asleep, that will wake you up. Let me tell you what this all adds up to in terms of our shareholder return model going forward. This is our long-term model. Year-by-year may vary, but we are going to target for growth of 3% to 4% a year on organic basis, with gross margin improvement of 125 basis points a year.

We are going to be limiting SG&A spending, which should bring operating profit growth in the high-single digits. Resulting margins will increase 60 to 70 basis points a year. Now the power of this business model is that it generates substantial cash. We're going to use this cash to reduce our debt levels and this should yield an EPS growth in the low double digits.

Additionally, our intention is to continue to use M&A to create value. We have a very strong platform of both household and personal care and the ability to integrate other CPG brands into it very effectively. And finally, we are going to continue to return cash to shareholders via dividends.

While particulars in the given year, like I said, may vary, we plan to use this model to deliver top quartile TSR over the long term. Wouldn't be fair if I didn't talk about my management team. And my management team has very, very strong experience. We are all seasoned veterans. They were largely trained in major CPG companies. We're all excited by the opportunity to work in a smaller setting, where our contributions could have a measurable impact to the employers, employees, the customers, and our investors.

You have heard a lot in the papers lately about compensation. I just want to tell you that we are not going to get rich by having company cars, which we don't, by having club memberships, which we don't, or having corporate jets, which we don't, or having great looking offices with fireplaces, which we don't. Our net worth will increase when your net worth increases.

Just to build on that, we are fully committed to creating shareholder value. Our bonuses are tied to key drivers of TSR. Our stock options are only worth something when the value of the stock increases. And the senior team is personally invested in this Company.

And it all comes down to this, folks. You have a lot of choices to make about where to allocate your capital and there are a lot of great companies out there. We know that you are almost required to have an opinion about the large-cap players like Kimberly-Clark and P&G. And we need to shine to get your respect.

Well, if you look at our history, we delivered a tremendous amount of TSR to our shareholders. Church & Dwight was a better investment for the last 10 years than every company on this list. $100 invested in our company 10 years ago would have been worth $624 at the end of last year. In contrast, a medium return of 10.9% a year from this list would have meant $100 invested in 1996 would be worth $281 today. Quite a difference.

Now, I'll be discussing with you today we are focused on building a great company and delivering strong TSR. I want to thank you for having faith in us and assure that we are going to do everything we can to create value and manage risk in the future.

I would now like to introduce Matt Farrell. Matt is our new CFO. He joined our Company in September of last year. I think many of you had a chance to meet him. For those of you who don't, let me give you a little history about Matt. Matt spent his first 16 years on the dark side as a partner in Peat Marwick -- little joke -- He then saw there was a fun side of the world and he jumped off into the companies that make products out there.

He spent six years with AlliedSignal working for a guy called Larry Bossidy, who is very famous. Matt was the CFO of the specialty chemical business there. He then spent about two years at Ingersoll-Rand handling investor relations, media, corporate media. And then he went to Ephrata for six years. Ephrata was a turnaround situation where he was the CFO. The company was in trouble, he went there, and righted the ship and made his living growth in the company. Just the kind of guy we look for, kind of a similar history to myself in the past. So without further a do, Matt please come up here and entertain the troops.

Okay. Thanks Jim. I'd like to go back to what Jim discussed a few minutes ago. I want to re-emphasize that we are focused on creating shareholder value. This Company has a great history of creating value not only through the management of its brands and its portfolio, but also by making some smart financial decisions. And I intend to continue in that tradition.

I am going to cover three things today. The first I'm going to start with a little discussion on shareholder value and how we intend to create it. I'm going to spend the bulk of my time then on reviewing the results for the fourth quarter as well as the full year. And then I am going to conclude with some remarks on the full-year guidance.

I call your attention to this slide. Our goal is to achieve top quartile TSR performance versus the S&P 500. And there are three boxes I want to call your attention to -- sales growth, margin improvement, and free cash flow yield. As Jim explained, we have a comprehensive effort under way to generate a lot of exciting new products. In addition, we continue to seek ways to reduce our cost (technical difficulty) and our plants. We have 17 plants around the world. Some of the things we did during the past year while we worked on reformulations and repackaging as well as automating some of our lines.

And over the past 18 months, we have made two significant acquisitions. You know them as SpinBrush and OGI. We're a pretty vigilant about the realization of synergies from each of those acquisitions. Bottom box on the page, free cash flow yield. On the free cash flow side, we think we can make further improvements in the management of our working capital. I'm going to show you a slide a little bit later on and talk a little bit more about working capital. And secondly, we expect to grow without significant increases in our CapEx.

2006 was just a terrific year for the Company. On the left-hand side of the page, you will see some of the major financial metrics that we use to measure ourselves. We performed well on all of these metrics, the EPS margin expansion, M&A integration as well as free cash flow generation. And if you look at the right side of the slide, you will see what the reward was to our shareholders. So we had a 30% increase of return in total shareholder return in 2006. So just a great story.

Now let's look at some numbers. Here is the fourth-quarter headline, turning now to the fourth quarter. Our fourth-quarter net sales grew 22%, and I will comment on our organic growth in a few moments. I have a slide on that. Gross profit at 38.8% was an increase of more than 600 basis points over the fourth quarter of 2005. And recall that our number one priority this year was to have gross margin recovery in 2006. So you're going to see that not only for the fourth quarter year-over- year but also for the full year.

Remember that last year's fourth quarter we had a significant plant charge. Even after allowing for that, we had just a very wide expansion in gross margin year-over-year. We said at the end of the third quarter that we intended to really dial up the marketing spend in the fourth quarter. If you look at this slide you can see that we came in at a spend rate of 12.6% revenue. And finally, this resulted in a 100 basis point increase in operating margins.

Something else that is worthy to note with respect to SG&A, SG&A in the fourth quarter includes trademark charges which added about 200 basis points to SG&A as a percentage of sales. So that accounts for the year-over-year comparison.

If we go now to operating income and look at some numbers below the line, we had interest expense was much higher this year. That is included in the other expense line. Of course, that relates to the interest on the debt for the OGI acquisition. Our effective tax rate in the quarter came in at 25.1% versus 22.4% last year. The big benefit that we got in the quarter, of course, was the R&D tax credit which was signed in December by Bush. All in, all we had a $7.7 million increase in net income, which translate into an $0.11 per share increase year-over-year.

Now let's spend some time on the full year. Our net sales grew 12% on a full-year basis and operating income increased 18% from $213 million to $252 million year-over-year. Of course, the big story again is that we expanded our gross margin by 240 basis points. I have a bridge we are going to go through in a moment to do a comparison year-over-year.

The other point is that we expanded our operating margin by 70 basis points as well. And two things to note with respect to operating expenses on a full-year basis; first, the marketing expand. The marketing spend just as we saw in the fourth quarter, on a full-year basis we expanded that 60 basis points, came in at a spend rate of a 11.1% of sales full-year in comparison to 10.6% the prior year. And in SG&A, remember we had stock option expense in '06 versus '05, and that added about 50 basis points of expense as a percentage of sales.

Again, let's look below the line as we did before, look at EPS. On a full-year basis, EPS grew 13%, an increase of $0.24 per share. Our effective rate for the full year came in at 34.8%, and this was significantly higher than last year. Remember last year was 29.8%. Last year benefited from the reduction of tax liabilities in 2005.

Something else that is noteworthy is that the 2006 number of $2.07 includes $0.09 of stock option expense. Without this expense, our EPS growth would have been 18%. It's also important to note that this EPS growth did come while we were still reinvesting in the business.

Now here is the gross margin bridge that I made reference to earlier. As promised at the beginning of 2006, this was the year of margin recovery and we executed a number of margin improvement programs during the year, including price increases on a number of our products. Raw material input costs, I want to start there. Raw material input costs really put us behind the eight ball this year. These increases came in the form of higher costs from a number of areas, resins, soda ash, surfactants, diesel, as well as packaging materials.

The Company responded with a comprehensive cost reduction program, coupled with price, as I mentioned before, some help from mix, as well as some promotion efficiency. That along with a reduction in plant charges year-over-year and some other savings got us to 130 basis points of net improvement. And this is beyond our target of 125 basis points, as Jim and made reference to earlier. And the capper, of course, is on top of that, our acquisitions contributed another 110 basis points in margin improvement. So our track record is what gives us confidence that we can continue to deliver expansion of our gross margins in the future.

Now, let's take a look at the quarterly sales growth. When commodity prices increase at the end of '05 and again early '06, we decided to increase price for a number of products. As is common when you have price increases, oftentimes that can stunt the organic growth, as you can see that that happened to us in the second quarter. However, our organic growth has largely recovered in Q3 and Q4. You can see we had a 3% organic growth rate in the second half of 2006.

So as we enter 2007, we have maintained our market share in all of our major categories. We significantly improved our margins and we are poised for organic growth in 2007 and beyond. Here is a little more granular now. On a product line basis, we are proud of the strong organic growth in household products, led by liquid laundry, pet, as well as baking soda.

Personal care is a different story and it deserves some attention, of course. The organic growth was flat in 2006 and this reflects the nature of our portfolio, which I will tell you a little bit more about that now. Part of the portfolio includes TROJAN, First Response, Nair, all having growth year-over-year. However, as you probably are aware our value oral care and antiperspirant and deodorant have very challenging growth characteristics.

Nevertheless, the fourth quarter, the good news is, was our best quarter for the year for value oral care as well as antiperspirants and deodorant. And we have also formed a team dedicated to try to reverse the trend with respect to those categories. And just some data with respect to what were our market shares. We are entering 2007 with very good momentum across most of our categories. '07 you probably know that our sweet spot is two to three times EBITDA, so we are right within our range. And Moody's recently in December raised our credit rating to Ba1. And while we have increased our debt last year to finance our acquisitions, we do remain very focused on paying down debt and in a moment I will take you through what our prioritization is with respect to our uses of cash.

Looking at the top of the slide, on a dollar basis, we had an increase in working capital. And working capital for purposes of this discussion is the inventory receivable less trade payables. So we measure that in relation to our sales. So this year, we would come in the raw numbers would suggest 13.8% working capital as a percentage of sales, compared to last year's 11.4%. Partially that is due to the fact that we don't have a full-year of sales of our acquisition, so with OGI, particularly OGI.

I will say we do remain committed to managing working capital going forward. Here is another illustration of the fact that our businesses are not capital intensive. Here we have CapEx as a percentage of sales. We came in at 2.4% in 2006. You can see the numbers for '05 and '04. If you think ahead to 2007, we expect our CapEx in '07 to be in the range of $40 million to $45 million, which will maintain a similar relationship as a percentage of sales as you have seen in the past.

Some examples. What do we spend our CapEx on? Think back to 2006. We have spent some money on new surfactant systems, new machinery in our condom plant, new filling and pal letting for liquid laundry, and of course all of these investments are directed towards efficiency and quality and, ultimately, with the goal of expanding our gross margin.

Just one more measure. Lets look at the relationship of free cash flow to net income. Church & Dwight converts a very high percentage of its net income into free cash flow. This is a very important indicator not only of the quality of the earnings, but also, again, our focus on cash. And as you can see, our cash conversion rate was about 100% in 2006, even higher in 2005. And looking ahead to 2007, we expect a high cash conversion rate once again.

Now, here is EBITDA. This is just to show you a look-back 2002 versus 2006. Our EBITDA has grown a great deal over the last several years. As disclosed in our releases as well as in our filings, we measure EBITDA as defined in the bank loan agreement. And this is just one more measure that we use to monitor our cash generation ability.

And now the prioritized uses or free cash flow. I mentioned I would get to that. So the question is how do we intend to deploy our free cash flow? Now, this is an important decision and certainly one of great interest to shareholders. And we regularly evaluate the best way to use cash. These are prioritized for you on this slide, so we will start at the top.

Currently, our plan is to reduce debt levels. This has a double benefit, of course. It provides a guaranteed return to shareholders, but it also creates some additional financial flexibility for the Company for future acquisitions if we choose. We want to be responsible and we want to responsibly invest in new product development to raise our organic growth rates. We also want to maintain our CapEx levels to protect our brands. And since we are in a scale business, we will make acquisitions, but only when it increases our total shareholder return and when it makes some strategic sense.

And finally, we always review the potential for share repurchase. Right now, our priority is growth, but if it becomes appropriate to return additional cash to shareholders that will be considered. A quick slide on capital structure. I am not going to read it to you. This is a good leave-behind. While we are continuing to focus on debt reductions, we are very comfortable with our current ratios as well as debt level.

Return to what are our key priorities for 2007. So no surprise here -- organic growth, number one, we have margin expansion, number two, and finally, free cash flow improvement. With respect to our organic revenue growth, lots of new products in line and line extensions coming, as Jim pointed out. Margin improvement, we have detailed plans with respect to how we are going to expand our margins next year and how we are going to achieve the synergies from the businesses we acquired. And also, you will see under margin improvement, maintain some price discipline with respect to the price increases that we have put in place for 2006.

And finally free cash flow. We see an opportunity with respect to inventory reduction. So that is a big focus for us. And finally SKU reduction. There is lots and lots of cost that are dragged along when you have lots of SKUs. So there's a great benefit to us to the extent we can reduce that in 2007.

And I am going to conclude on guidance and then we will get into Q&A. We are comfortable right now with our forecast of 13% to 14% EPS growth at this point, which factors in our current views on commodities as well as competitive pressure. OGI will be a contributor this year. It will help us fund investments in marketing and supply chain and this will position us better for 2008 and beyond. We are planning higher marketing spend in 2007 compared to 2006. Why? Simply to build our brand equity.

There is a comment here, as well, the last sentence, because of the price increases announced in early 2006, which drove an exceptionally strong Q1, we expect that the earnings growth in '07 will largely occur after the first quarter. So to be clear, said another way, we are targeting to match the Q1 '06 performance in Q1 '07. In closing, I would just like to say we are very excited about the 2007, lots of new products, lots of good plans to deliver value. And we have a very energized Company entering the year. And with that, I will close and we will take questions.

Thanks Matt. I'm sure you probably have some questions, so fire away.

Can you just talk a little bit more about long-term rollout plan cost savings also? (technical difficulty)

Very good question, very important question. Laundry compaction, for those who don't know what it refers to, is the removal of basically water out of laundry detergent bottles. Truth be told, about 60%, 70% of what is in a current laundry detergent bottle is water. There is no need for us to put the water in, the consumers can add the water right through the washing machine. This effort has been pushed heavily by Wal-Mart and I give them great credit for this. It is part of what they call their sustainability strategy, which is to try to take unnecessary waste out of product that will good for the environment.

This effort was started last year through the Unilever company, which launched compacted or smaller size forms of their All liquid laundry detergent. They have expanded their Whisk form. What you will see over the course of this year is other manufacturers have all signaled their intent to follow. The big effort will really happen in the third quarter this year when Procter & Gamble, who is by far the industry leader in laundry detergent, will -- has announced, at least, that they will be starting a phased rollout across the country of compacted forms of their brands like Tide, and Gain and things like that. So we will be right on the heels of Procter & Gamble doing that.

We will actually be going into the marketplace today see accounts like Wal-Mart and Target actually have one or two forms of sizes. We have a 50-ounce ARM & HAMMER, which is half the size of the 100-ounce bottle, in Wal-Mart today. So do other manufacturers, so the trends are beginning. It will really start the benefits, as far as seeing the new forms, later half of this year.

On the margin issue, Bill, there isn't of anything taking the water out of the bottle. The savings come, if any, from the smaller size of the bottle, which is plastic which has increased a lot in cost in the past year or two, and also the transportation charges to ship lighter weight bottles out to retail. The bottles themselves are going to deliver the same number of wash loads to consumers as the old bottle. Still going to be 40 or 50 loads per bottle.

The retail price points at this time are pegged to be the same as the old retail price points. So as far as a benefit to consumers, the same number of wash loads. The savings, if any, I would start with don't forget the price of oil has doubled since just before this time period began. Surfactant costs have gone up, resin costs have gone up. We still, I will tell you right now, so far this year, the resin suppliers have actually announced price increases. We have not accepted that, but there is still -- the upward pressure on price has not stopped with oil.

So as this thing settles out, again, the effort right now is to still sell the laundry detergent at the same prices as before. To the extent there is margin improvement from that, where it ends up is anybody's guess. I will tell you the retailers have asked for some of it. We are manufacturers, were capitalists, we wouldn't mind getting some of it. And some of it may end up in consumers' pockets, but that is kind of the big question mark that will be played out particularly starting in the third quarter this year, when you see all the manufacturers, including us, start the rollout of all of our lines, all of our sizes across the country. But it is a very big effort.

(Inaudible question - microphone inaccessible). (technical difficulty)

In the fourth quarter, we added about $0.01 from OGI, but the expectation, frankly, is we are not to get much benefit until we get into the second half. The reason for that is because the second half is when we expect to be bringing the product into the co-packers and from the co-packers into the Company. But even then, we have to work off our higher-price inventory that we purchased from the co-packers. So it's good to be even later until we get the throughput from stuff we make, lower cost per unit. So that will be later in the year.

(Inaudible question - microphone inaccessible). (technical difficulty)

No.

(technical difficulty) somebody in 2008.

(technical difficulty). As you see it -- (technical difficulty) and how you would market (technical difficulty) highlighted on their call that (technical difficulty) and would you be willing to fight on price or are you (technical difficulty) by only one product quality and you have (technical difficulty) innovation coming in that brand.

Obviously in the laundry additive category, Clorox is by far the leader in that category. OxiClean is a very strong product in the category. I will be honest, OxiClean has enjoyed tremendous growth over the last few years. Last year, it was double-digit growth in OxiClean. I don't see any reason why to change OxiClean's positioning in the marketplace nor its pricing.

We are just going to keep on -- we have got some product improvements planned for the brand, some line extensions, like the on-the-go instant stain remover for the brand. We have got a bunch of stuff. I would just tell you at this point, time pricing is not part of the equation and just continuing to pour on the gas with marketing and new product innovations are our key. I was unaware of the Clorox news you told me today. I am not overly concerned by it, because this brand is just -- OxiClean is on a tremendous roll and I don't see why that won't continue.

I will tell you one of the benefits of buying OxiClean, I think I showed it in one of my charts, is that there is quite a few distribution voids out there that the little company OGI had trouble closing. We are a big company, we expect to close those voids. So we expect to expand the distribution of the brand. We expect to continue or expand the marketing support behind the brand, so I see nothing but bright stars ahead for OxiClean. And with Clorox does I don't think will help at all.

I would say too, Alice, the laundry additive category is still a growing category. Household penetration, I believe, of OxiClean is only in the 15% to 20% zone. So there is tremendous upside in my eyes to increase household penetration of laundry additives. So actually Clorox doing something in color safe bleach to me is only building on our advertisements category can increase household penetration of it. So I think it can be a win-win for both of us, honestly.

(technical difficulty) raw material costs stay where they are(technical difficulty) do you think what kind of price (technical difficulty)

If commodities were to stay the same, you should assume relatively stable pricing. Again, we will get one quarter of benefit because the price increases last year didn't take effect largely until the second quarter of 2006. So we'll get a benefit in the first quarter of 2007 from higher prices that were launched a year ago. After that point in time that commodities stay the same, I wouldn't expect to see any price increases in our plans going forward.

Finally what tax rate(technical difficulty) are you (technical difficulty)

We came in at 34.8 on a full-year basis, so what we are calling next year is a range of 36% to 36.5%. And we will probably sharpen that up when we get the end of the first quarter.

In terms of the gross margin up 125 now longer-term versus, I think, 100 was your business before. I mean is it compaction, is it a combination of all the different levers that you -- right before, that the main driver here. And I guess if your operating margin (technical difficulty) 50 basis points lower. So I guess can you talk a little bit about the marketing side?

The gross margin, we did change our long-term model in gross margin from 100 to 125 basis point. That was just, honestly, we thought we could up the ante. It wasn't necessarily anything tied compaction or that, but about two or three years ago, we started a rate program we called Good-To-Great in our Company as a cost-saving program. It's across-the-board things from just lower costs of manufacturing, pushing back on our suppliers for better costs, everything.

Actually, we have a monthly meeting in which there must be over 100 projects we look at constantly every month, update them, where they stand, whatever. Certainly compaction is one of those, but it is just our ability based on our current thinking that we can deliver steadily at least 125 basis points of gross margin improvement. I think if you go back in the company's history in 2004 and 2005, we averaged 120 point of gross margin improvement. It was only in 2006 when we had the big oil shock where we stepped back. So we have had a history of the being in that zone. As Matt said, without the acquisition synergies, we would've been 130 basis points this past year. So we feel very comfortable upping the ante on gross margin improvement and being able to deliver it. What was the second part of your question?

If you look at the operating margin assumptions you are making, 50 basis points lower than the gross margin. So is this more spending on the marketing and near 60% premium, 40% --

Yes, you are going to see us -- we historically have been in the 11% to 12% zone. I think this last year with everything going on, we averaged a little over 11%. You are going to see us closer to 12 in the marketing -- spending that revenue in the marketing side going forward. And SG&A, we (technical difficulty) all we can is keep to keep the SG&A cost from net revenue down.

And it is part about leveraging our scale too. I will give you a couple of examples. OGI as a company had 160 plus employees. When all is said and done, we'll end up with only 50 employee spots coming out of that acquisition. So again, we are bringing in a $200 million business and covering with one third of the people they had doing the business, had all of the synergies.

We're all the time fighting medical costs and changing plans with our -- give our employees great benefits, but at the same or lower cost. So leveraging the assets of the Company, to me, is a great strategy for growth and all about CSR. And that is what we constantly try to do. So it will end up with the targets we told you about operating margin improvement in our eyes. It's been a good model and I think we competitively going forward.

And on the SG&A side also, in terms of the infrastructure, I mean, as you grow in the emerging market. I think you mentioned something about China, maybe an acquisition down the road.

I didn't say an acquisition. I just said enter China. You will see us do that smartly. You'll see us do it very smartly. We are going to look at international overhead just as aggressively as domestic overhead. Constantly re-look it, find ways to restructure it and save money, and we will have those efforts going forward. We're not about to build a big house in any emerging market before we sell product. So we're going to be entering those markets very carefully with either distributors, through JVs, or whatever. So we are not about to jack up our SG&A to develop international markets.

Just a last question. For some of the new innovation that you're talking about, as you go with the retailers are you going to get some additional shelf space that is going to cannibalize existing product?

We will make every effort to get additional shelf space out of it. Truly most of those, in my eyes, are additive to what we have today. We have done a pretty good job of building it. Again, we took businesses that didn't have the retail strength that we had, in terms of OGI, and are going to go in there and we will probably close 50 to 100 voids this year on Orange Glow products that, again, for us, relatively easy to do compared to them because of our strength as retailers.

And the same thing through other parts of our product line. New products like ARM & HAMMER Dental is a whole new product, the whole environmentally-friendly detergent product detergent product. We drive current (indiscernible) distribution on that. The Fridge Fresh, with a whole new form of ARM & HAMMER baking soda drive (indiscernible) distribution on that. So it is always what we want. And we have been pretty successful in doing that in the past.

How far along are you guys on (technical difficulty) operating efficiency program. How much more upside do you have there?

I will give you rough numbers. We have spent over $200 million a year on trade spending. We have done various studies of that, which have shown. I would call them as a wildest expectations, it may be $80 million of that is inefficient. To date, we have captured at least $25 million of those inefficiencies and we push every year for getting more and more of that potential $80 million.

Now let me be careful to say that does not all drop to the bottom line. We may go to a retailer who is spending, lets say, $1 million of money that we think is inefficient, doesn't mean we are going to take it away from them. It means we get them to spend it in a way that is efficient, that does drive profitable growth for both of us. So carving out that inefficient spending doesn't mean we just take it back. We do sometimes, but other times, it means we just re-spend in ways that make money for both of us.

So it has been the steeple system we have had employed. It's doing very well. It took us a year or two to debug it. I heard a number today that was a shocking about how many promotional events are put -- we are talking tens of thousands of promotional events they put into this machine every year day-by-day at accounts. And it is a very labor-intensive project with a machine that marries it with consumption data and tells us whether or not a deal is profitable not.

As we learn that information, we go out there and go to challenge the retailers to work together to do something that is profitable for both of us. So there still is opportunity in our eyes to keep chipping away at that. And I think it is a very common issue among almost all EPT companies. I know Colgate had a big emphasis on it a year ago in that. And it is just something that is contributed to our bottom line and we will continue to push against it. And we have a system that can do it for us.

In terms of the '07 guidance, I assume it incorporates your long-term targets in terms of (technical difficulty) percent organic growth (technical difficulty)

It is in incorporated in there because the trade spending is captured above the net revenue line.

Couple of questions. First back to compaction. You talked about what the transition is going to be. Will you have to fund the discounts of the larger size bottle? Do you think that process will be disruptive to the second half sales growth or do you find you think it will be through then? How many quarters do you think it will take for the new industry standard?

Connie, when you say discount you mean the sell-through of the older size type bottle.

Getting rid of the older bottle.

No because what you're going to see happen is there is still going to be large-size bottles on part of the shelf. Most retailers are going to keep a small selection of larger-size bottles of the key pack sizes. So today our key pack size in most markets is 100 ounces. You are going to still find 100 ounces on the shelf when this is all done. Maybe about a quarter of the shelves, because there are some consumers who will just refuse to switch or won't want to switch. You will see two thirds or three quarters of the shelf go to the smaller size bottle, so we won't have to fund any discount of this conversion of the old bottle. So there will still be a selection of the old bottles.

I will tell you, too, what you have to be bold with kind of respect to Bill's earlier question. Not all retailers are in sync with what they want to do here. There are some retailers who really wish this would never happen. Who really don't want to change and they are going to be very resistant to moving to the smaller size bottles. And they will want to keep the older bottle for as long as possible. And they're our customers and we are not going to go in there and force them to switch.

So I think some of them believe larger size bottles will make their customers, the consumer out there, think they are getting a break versus the smaller size bottle. I don't know. We don't control it. The consumer goes for the pocketbook, the retailers control the shelves, so we are going to have to go along with what each retailer wants to do here.

I do think eventually the market will be mostly sold-through on the smaller-size bottles. Consumers are going to see the benefit of not having to lug home these big jugs of liquid laundry detergent and tie up their pantry space at home and just be difficult to handle. But there will be no conversion cost of doing that. And then the process is retailer by retailer. I will tell you right now in Publix supermarkets in the South will be shortly switching all their shelves to smaller-size bottles. They want to be very progressive on this, very advanced, even faster than Wal-Mart. Wal-Mart's conversion will go largely on the third quarter this year. So every retailer is on a different timetable. And we are doing our best to accommodate that as it moves out there. But I don't see any discounting of old sizes at all.

Is there going to be any unusual inventory build as you ramp up production of smaller sizes?

That's a good question. Again, that relates to how the retailers react. To the extent -- and again we only know a portion of the retailers. Some retailers haven't even dealt with the issue yet. But if there are retailers that want to stay more in the larger bottles, we would probably have a little bit of an inventory increase to have enough bottles to appease -- all the different sizes to appease all the different retailers.

It is going to be one of the more challenging supply chain issues going forward, trying to figure out what the right mix of production is (technical difficulty) and keep our high customer service levels, which we are very good at, through all the retailers out there. It is also true the retailer can do what he wants to the shelf, but the consumer going to end up being the one who votes. So even if a retailer shifts one way or the other or halfway in between, the consumer is going to be the one pulling the product off the shelf and then we will have to react to how the consumer thinks in the end. So it is going to be a very challenging supply chain issue for the next 12 to 18 months.

Then another question on Inverness. As P&G is not known with being comfortable as a distant number three position, what do you make of its planned investment in Inverness?

What Connie is referring to is a company named Inverness, which is a leading player in the diagnostic area, has announced a joint venture with Procter & Gamble. It is not exactly clear what the focus of that joint venture is. Obviously, any time competitors like Procter & Gamble enter into a category, anybody, including us, will be concerned. I just don't know. I don't know what P&G's intent is. I don't believe their intent is so much to go after the pregnancy and ovulation kit business, which is the bulk of the business today. I don't know. I really can't answer for what P&G intends to do there, but we are taking the announcement seriously.

We have had tremendous growth on First Response brand. In total, we are a leader in that category right now. We overtook Pfizer last year. Another switch is the Pfizer business was sold to J&J, so this business has gone from Inverness, our Company, and Pfizer to our Company, J&J, and P&G in the space of 12 months. So it is a whole new competitive set and my folks are very aware of it and working very hard as to how we think the world will change. But that is just how we think. Other questions?

Can you talk about the [BSD 500]. I guess Durex has their partnership with Futura Medical (technical difficulty) see that guys competitively talk abut that being introduced possibly in the fourth quarter (technical difficulty)

Could you elaborate more because I am really not aware of what are talking about?

They have a product, it's Zanafil, chemical compound (technical difficulty) a Viagra-like effect (technical difficulty)

I've heard of that. I believe it is only in the U.K. right now. I think I would have to do more checking. There is different government regulations concerning the use of products like that in the U. S. than in the U.K. To my knowledge, the product they launched in the U.K. cannot be launched in the U.S.

Has that impacted sales at all? I mean, our share is so high (technical difficulty)

Again competitive-wise, I have a very, very, very small business in the U.K., which was launched two plus years ago. Insignificant. Durex has not launched that product in the U.S. So there is no competitive issues right now. I honestly couldn't tell you how well it has done in the U.K. or not. I could just tell you I think they face significant regulatory hurdles if they are to bring that into the U.S.

Can you talk about the sell-through on the Elexa products? I know we talked about that a lot on three-piece calls.

Yes. Elexa was a line of a female-oriented condoms and other associated products being launched in 2000 -- late 2005. Elexa drove about a two-plus share increase for us in the condom category, so we were very thrilled with that. That is part of the reason we're up at almost at record levels, up around 74% of the condom market. Again, over all, it drove the TROJAN business to record shares, record sales, record profits. Honestly, we had higher aspirations.

Again, it was all about what we call cracking the code on sexual compliance, getting people to use condoms more than one out of four times. I can tell you women's purchases of condoms have gone up slightly. So we had some crack through in it, but not of what we had hoped for. The product is still out there, product is doing fine. It is part of the record share levels out there. And we constantly are re-thinking, re-looking at how we can do better in that area. But, no. Again, over all, very happy that specific product line had higher aspirations. And we've got to find a different way to try to meet those aspirations.

Final question, previously we talked about the EBITDA level that (technical difficulty) make share repurchases. Can you tell us what we're thinking as now at this time?

Where would it share repurchases figure in our thinking?

I think previously we said that if EBITDA got below -- I don't know if it was two times. I think that's what we said previously that we (technical difficulty) share repurchases that (technical difficulty) thinking.

If you think about when I went through what our priorities are for free cash flow, the top of the list would be debt reduction. Number two would be investment in new products that are -- and last on the list is share repurchase. And the reason for that is because we are focused on growth right now.

(Inaudible question - microphone inaccessible).

Yes specialty products is about 13% of our revenue base. It's the part of our business that is a specialty chemical business, it's an animal nutrition business. The business has always been historically linked to the animal nutrition side and for those of you who -- the dairy economy has been one of it's low period of cycles with low prices. And that has affected our business.

We actually make a product out of baking soda-type materials which is fed to cows to get cows produce more milk. We actually tell the farmers that if you feed this product to your cows, they will produce $100 more profit per year in milk production for you. It is a great story. And at the end of the day, though, farming is a cash flow business. And when the farmers aren't getting paid much for the milk, they don't have much cash. And they have cut back on everything.

And that has been the historical nature of this business that when milk prices are high, this business was rock 'n roll and when milk prices are low, it suffers. And we're in one of those suffering phases right now with low milk prices. So if the dairy business comes back, that business will go back up. The specialty chemicals business had a very good year. And so overall, that business -- but animal nutrition is such a meaningful part of a business that when the diary economy takes a hit, that takes a hit. So again, we are not worried at all about that business. We just like to see a pickup in the price of milk and that business will be just fine.

(Inaudible question - microphone inaccessible). Talk about what the impairment charges were about and with toothpaste and deodorant brands were affected. And also what is the outlook for those (technical difficulty)

I am not going to get into specific names with respect to those impairment charges. Suffice to say it was about $11 million and there were four brands. One of them was international through U.S. and it was a combination of value oral care and antiperspirants.

What do you intend to do with those products? I mean, are they in the portfolio for quarter or are they going to be phased out?

They are in the portfolio for the future. Value oral care since we bought it was a declining business when we bought it from Unilever. It's continued to suffer from all the competitive activity in that category. I would tell you we made a lot of fixes in the second half of 2006. We restored the value to those businesses. We actually had the best quarter of the year in the fourth quarter of 2006, with only a minor low single-digit decline in those businesses. And even some forms like Close Up had a double-digit growth quarter.

We have also, importantly, put those businesses into a new team, we call it Tiger team, to address the situation there. And we are excited about the prospects. We took some of our best people and assigned it to that team and their whole goal is to stem any further declines in those business. And if there is growth opportunity, to grow them.

So we have reorganized, put greater focus on them. We have already put in place actions that are already leading to improvements in the consumption trends of those businesses. I would also tell you those businesses are very profitable. They contribute strongly to the Company's cash flow. And all of those are good things for us because that cash really drive our strong brand. So we don't see any reason to divest those brands at all. And we're doing everything we can to prudently fix them without taking our focus off the big brands.

Do we have any questions from anybody outside, David? None? All right, we have time for any more questions? Hey folks, I would tell you what I started off with. We had a great year in 2006. I think we enter 2007 with good momentum across our businesses. We're launching a lot of great new products this year. We will be stepping up our marketing spending behind those products and doing -- controlling our other costs very well. I have got a great team. They are very motivated. If you own our stock, they are very motivated. And I hope I can stand here next year and tell you the same kind of story. That is our goal. Thank you very much.