Circor International Inc (CIR) 2012 Q1 法說會逐字稿

Good day, ladies and gentlemen. Welcome to CIRCOR International's first quarter 2012 financial results conference call. Today's call will be recorded. At this time, all participants have been placed in a listen-only mode. There will be an opportunity for questions and comments after the prepared remarks. (Operator Instructions).

I'll now turn the call over to Mr. David Calusdian from Sharon Merrill for opening remarks and introductions. Please go ahead, sir.

Thank you and good morning everyone. On the call today is Bill Higgins, the Company's Chairman and CEO, and Fred Burditt, the Company's CFO. The slides we'll be referring to today are available on CIRCOR's website at www.circor.com, on the Investor Relations page.

Today's discussion contains forward-looking statements that identify future expectations. These expectations are subject to known and unknown risks, uncertainties and other factors. For a full discussion of these factors, the Company advises you to review CIRCOR's Form 10-K for 2011 and other SEC filings. The Company's filings are available on its website at circor.com.

Actual results could differ materially from those anticipated or implied by today's remarks. Any forward-looking statements only represent the Company's views as of today, May 3, 2012. While CIRCOR may choose to update these forward-looking statements at a later date, the Company specifically disclaims any duty to do so.

On today's call, management will often refer to adjusted operating income, adjusted operating margins, and adjusted EPS. These metrics exclude any pre-tax special charges as well as asbestos and bankruptcy charges related to the Company's Leslie Controls' subsidiary.

The reconciliation of CIRCOR's non-GAAP adjusted operating income, adjusted net income, adjusted EPS and free cash flow to the comparable GAAP measures are available in the financial tables of the earnings press release on CIRCOR's website.

I will now turn the call over to CIRCOR'S Chairman and Chief Executive Officer, Bill Higgins.

Thank you, David and good morning everyone. I'll start with a few brief opening remarks before turning the call over to Fred for the financial overview. We executed well this quarter, and achieved top and bottom-line results that exceeded our expectations. Revenues were up 5% year-over-year, driven primarily by strength in the North American short-cycle energy business.

Bookings were up 12% year-over-year with solid gains in almost all areas. We made progress in our effort to improve margins in the Energy group. And as we expected and communicated last quarter, we shipped a portion of the low-margin orders that were in our backlog from prior years' bookings. We continue to drive cost improvement actions and pricing in the current backlog is better. In addition, bookings for the large international project business improved over the fourth quarter of last year.

So with this as background, I'll turn it over to Fred to review the quarter in more detail. After Fred reviews our results, I will describe our end markets and provide guidance for the second quarter.

Thanks Bill. So, please turn to slide three and I'll begin with consolidated financial results and then get into the segments. As Bill mentioned, consolidated revenues for the first quarter increased 5% year-over-year to $214.3 million compared with the first quarter of 2011, and were down 1% sequentially from the fourth quarter. The year-over-year increase was comprised of 6% organic growth and 1% acquisitions, partially offset by 2% negative foreign exchange. Organic growth was driven by Energy and Aerospace. Our backlog was up 3% year-over-year and 9% sequentially.

Our adjusted operating income was $13.7 million, down 1% from the first quarter of last year. Net income for the quarter was $8.6 million, or $0.49 per diluted share, compared with net income of $7.9 million, or $0.45 last year. Q1 2011 net income included pretax Leslie asbestos and bankruptcy charges of $1 million. Exclusive of this impact, adjusted earnings per diluted share was $0.49 for Q1 2011.

Now I'll turn to segment performance, beginning with Energy on slide four. Energy bookings were up 19% year-over-year due to very strong short-cycle business and moderate growth in pipeline. This was partially offset by lower international project orders, which had a challenging comp from Q1 last year. Sequentially, bookings were up 57% with double digit strength in all areas including large energy projects. Ending backlog of $195.9 (sic - see Press Release) million was down 9% (sic - see Press Release) year-over-year, but up 15% sequentially.

Energy revenues of $109.3 million increased 10% year-over-year with 10% organic growth, 2% growth from the Brazilian acquisition and 2% negative foreign exchange. The segment's adjusted operating margin was 8.2%, up from 6.4% in the first quarter of 2011, primarily due to increased volume and the associated leverage in our North American business, as well as improved pricing in our large international projects. This was partially offset by results in Brazil as we invest in this new geographic area.

Within our Aerospace segment on slide five, bookings were up 22% year-over-year and up 12% sequentially from the fourth quarter. The year-over-year growth in orders was due to increases in military projects and other programs, primarily medical. We ended the quarter with a segment backlog of $161.1 million, an increase of 19% from last year.

Revenues of $38.1 million were up 19% year-over-year, driven entirely by organic growth across most areas with the exception of military landing gear spares and repairs which have been depressed by reductions in military operations and government budget reductions. Adjusted operating margins were 10.8%, down year-over-year from 11.6%, primarily due to the increased R&D for large future programs, partially offset by favorable volume and the associated leverage. Sequentially, however, margins were up 8.6%, primarily on volumes.

Now, let's move to slide six and Flow Technologies. Bookings were down 3% year-over-year due to the LED equipment market. Exclusive of this market area, orders were up double digits. Sequentially orders were up 14% and we ended the first quarter with segment backlog of $76 million, down 6% from last year, again due to low LED equipment and shipments of our Navy backlog. Backlog was up 9% sequentially. Revenue decreased 7% year-over-year to $66.9 million, due to lower LED equipment shipments, partially offset by organic growth across most of our other markets.

And Flow's first quarter adjusted operating margins were 11.3%, down from 13.7% in the first quarter of 2011 and down from 12.9% in Q4. The margin decrease was the result of deleveraging from the lower LED equipment volume and higher spending on growth initiatives, particularly in the power generation market.

Slide seven includes highlights from our consolidated P&L, most of which we have already focused on. Corporate expenses were up 12% year-over-year to $6.9 million from $6.2 million due to higher professional fees. And the adjusted effective tax rate in the quarter was 31.2%, slightly higher than our anticipated 30% due to certain discrete tax items in the quarter.

Now turning to Slide eight. During the first quarter, we used $7.1 million of free cash flow compared to $0.5 million generated in first quarter of 2011. The use of cash was due to a greater reduction of payables and higher capital expenditures, including investments in India and other growth initiatives.

Now, I'll turn the call back to Bill.

Thank you, Fred. Please turn to slide nine where I'll be covering our market assumptions and key growth and profitability drivers.

So, let's start with Energy. As we mentioned earlier, the North American short-cycle business was very strong in the quarter. Rig counts remain high and we continue to win new customers and grow with our existing customers. We have become a preferred source for distributors because of the dependability of our Lean production system and resulting short lead times, flexibility, and fast responsiveness.

Demand for large international energy projects is getting better, along with a gradual improvement in pricing. In general, capacity utilization in the industry seems to be improving, which is supported anecdotally, as we see some suppliers and competitors extending lead times.

As I mentioned at the outset of the call, we're pleased with the progress we are making and we are on track to ship the bulk of the lower margin project backlog in the first half of the year. The last of our three Energy markets pipelines continues to see steady demand, particularly around shale formations where infrastructure is being built. So overall, we are cautiously optimistic about the Energy business going forward. The short-cycle business continues to be strong, the long-cycle business is improving, and we are taking aggressive actions to improve operational performance.

Turning to our Aerospace markets, beginning with commercial aerospace. Passenger traffic worldwide was up in the high-single digits in the first quarter of 2012, and OEMs, such as Boeing and Airbus, continue production rates above last year. We expect the commercial OEM market has been and is now entering a prolonged production up-cycle.

Business aviation, I know, again, it continues to be weak in general, but there has been a bright spot in the production of larger business jets that has been resilient through the downcycle on business aviation.

On the defense side, budget constraints point to a flat market for the foreseeable future. In addition, the winding down of wars in Iraq and Afghanistan has already pressured demand for aftermarket repairs and spare part sales for the CH47 program. And as we have discussed previously, we have won new defense programs, such as the Black Hawk landing gear, that help offset weakness in other areas.

Looking at the Flow Technology end markets. Most of our process in industrial end markets continue to be steady. As we noted before, the LED equipment market is expected to remain weak in 2012. We believe there is still a very good long-term growth potential for LED lightings and the associated production equipment. And as we saw in the prior cycles, demand can come back quickly, and we will be prepared for it.

As part of our long-term growth strategy, and Fred mentioned, we are investing in the power generation market, where we expect tremendous long-term opportunity worldwide. Currently, there is steady demand for MRO and efficiency upgrades to existing power plants in North America and Europe, with a growing interest in conversion, particularly in North America, conversion to natural gas-fired power plants. And there is new construction demand in developing regions such as India and China.

The chemical, refining and petrochemical demand environment remains mixed. Globally, we see excess capacity in refining. However, there is new interest in investment in the US due to the low priced natural gas. Overall, we expect instrumentation type end markets to modestly improve with economic recovery. The Navy markets are primarily MRO driven with occasional new programs, such as the new aircraft carrier program that we're currently shipping. There is still long-term uncertainty in this market due to defense cuts and budget constraints. That said, our near-term shipment outlook is positive due to a solid backlog.

In HVAC and steam markets, demand for energy efficiency upgrades continues although the unusually warm winter slowed MRO activity at the start of the year. There is still little new construction-driven demand in North America and Europe.

So that brings us to our expectations for Q2. Given our market outlook and the investments that we are making in future growth and operational improvements, we expect revenue for the second quarter of 2012 to be in the range of $219 million to $224 million. And we anticipate earnings to be in the range of $0.44 to $0.54 per share.

So with that, we'd like to go to your questions. Thank you.

Thank you. We will now be conducting a question-and-answer section. (Operator Instructions) Nathan Jones, Stifel Nicolaus.

Good morning, guys.

Good morning.

Good morning.

Just on your guidance to start with. At the midpoint, you're looking for kind of $8 million higher revenue and the same EPS. Can you maybe talk about why that is, is there a different mix, increased investments, or is it just conservatism on your part?

Well, it's obviously an outgrowth of the mix we see in the quarter. We do expect Energy probably to be -- and it's about the same, when you talk about profitability wise, about the same range as we were in Q1, as we still have some of the older backlog. Aerospace will probably be down, we had actually a better quarter than we thought in Q1, some of the project expenses will be higher in Q2 and to some extent, that's true also in Flow Technologies. So, it's a little bit of a mix and timing of expenses.

And on the LED market, have you seen any change there in the demand outlook, or is it still low and staying low, any improvement that you're seeing coming?

We haven't seen any improvement yet and we're watching both the equipment manufacturers that produce in Europe as well as the construction demand, which is the primary driver in China, but it's still too early to say. We haven't seen any movement yet and we didn't expect to see anything yet.

And just one more on the large international projects with orders roughly flat and demand not really strong there. You talked about improved pricing. Can you just give a little bit more color around why you think the pricing is improving there?

We very rigorously watched pricing on all the orders that we bid on, all the orders that we consider, when we select what to bid on and we're constantly watching that around the world. So, we are seeing gradual improvement in pricing worldwide. And then anecdotally to support that we've seen lead times extended in the supply base and not just in any one region, but in different places around the world from suppliers. And we've seen quoted lead times from competitors going out. It's not a huge amount, but slightly enough to indicate that things are getting a little tighter.

Okay. Thanks a lot.

Thank you.

Kevin Maczka, BB&T.

Good morning.

Good morning, Kevin.

Good morning, Kevin.

Bill, first, just to clarify on Energy orders, very strong in the quarter, but did you say the project orders were actually down?

Well, go ahead Fred. Fred, do you want to answer? They were up sequentially, quite significantly.

Bill said it right. We were down year-over-year, but we had a very -- last year was by far strongest quarter was Q1. We were up sequentially to Q4 and actually it was our highest quarter in last four.

Got it. And in the short-cycle side, it sounds like that's still driving the strength, no big surprise there. But with rig count growth slowing for sure that's a rig count sensitive business, it doesn't seem like you're seeing any headwind from that yet, but is that something we should be expecting?

We haven't seen it yet. Rig counts are up a little bit with obviously the strong growth in the oil side, with slowdown on the gas, natural gas side. But overall, rig counts have been holding up slightly, if you look at the latest Baker Hughes' numbers. And so, we also saw in the quarter some restocking from demand that was probably stronger at the end of the year, some restocking in the first quarter. So, we saw particularly strong quarter that we might not expect to continue at that rate, but overall with rig counts being healthy, we would expect demand to continue at a good pace.

So, just a follow-on to that thing. It sounds like this level of orders, your message is that appears to be sustainable, and that's the first part. And the second part, do you see any benefit from rigs relocating in this whole transition from gas to oil?

Yes, the first part of your follow-up question, Kevin, I would say, is there was some restocking orders in there. So we'll have to see how the quarter plays out. There might have been a little bit in Q1 that wouldn't continue in Q2, but overall we view the short-cycle market is healthy based on what we're seeing through this month. So we do expect it to continue at least in the short term to be healthy.

The switch from gas -- switch to gas, or say from gas to oil on the rig activity, generally, we would say we are agnostic. There is a mix change in valves depending on the infrastructure that's being built. We've seen a lot of demand in the Eagle Ford area, for instance, and it really is a function of mix. So it might change a little bit, and the overall aggregate, it's really hard to discern how much impact that mix is going to have.

Yes, the other thing Kevin just to add a little more color to Q1 orders, we did -- as we had announced earlier we did put a price increase in towards the tail-end of the quarter. So there is a possibility some of the orders were little higher than usual just because of that.

Okay. Maybe some pull ahead. Okay. And then just finally, you mentioned again this $50 million in backlog that was lower-priced, lower margin, you're still working through. Where are we to the extent you can tell us in working through that, and what's the delta, if you can comment on that between what's your booking now and replacing that lower margin backlog with?

Well, the old backlog is -- again that the margins that we were experiencing last year pretty consistently. So, as we talked before, we were losing money in that business last year at those older margins. And during the quarter, we booked close to half -- I think, we closed about 40% of that old backlog that we had entering the year.

Okay. So, 40% has gone and the remaining 60% goes in Q2, or does that bleed into the second half?

It will bleed a little bit into Q3, but we would expect Q2 to be close to the Q1 take down.

Okay. Thank you.

Charlie Brady, BMO Capital Markets.

Hey thanks. Good morning guys. Just kind of on the back of the last question as we work off the slow-margin backlog, can you give us a -- do you expect in second half or I guess, maybe by fourth quarter to get Energy into a double-digit margin?

Charlie, we're going to work our best to get profitability up, but we want to take it one quarter at a time. As you know, we were at a position out there last year to do that in the fourth quarter, we ran into some issues to get it done. So, let us work through it right now. We are on track to the plan that we put together and we'll take it one quarter at a time here, if we could.

Fair enough. And I don't know if I missed this or not, can you give us the organic -- how much was order growth just organically and what was the acquisition FX impact on orders and total sales?

The FX impact would be similar to our sales impact. I don't think there is any dramatic change. They are probably 1% to 2% down on a year-over-year basis. I'm sorry, I forgot. I apologize, I missed the second half of your question.

Organic growth excluding acquisitions, organic growth and bookings.

Yes, there was very little -- the only -- we had very little acquisition activity. We had, again, Brazil was the only acquisitions that we had last year. So, I think it's 1% to -- less than 1% impact on the whole Company.

Okay. Thanks. And did I hear you currently. When you were going through the segment on Aerospace, did you mention that orders were up due to military and medical?

Well, we have part of our business for us, because -- some of our -- we have a very good machining operation in one of our facilities. So we have won couple of customers in medical field that were particularly important in the quarter. It's not a focus area for us, but it happens to impact the quarter.

Okay. And then can you give us an update on how the Aero facility on the West Coast, the upgrading or fixing up of that facility is moving along?

We are working through it. As you know, it's part of the program for the new landing gear and the wins that we are getting with, most recently with Airbus, in the Black Hawk. So it really supports our long-term landing gear growth program. So we have invested more in it than we originally anticipated and it could take us more time to keep working through that. So, we're making progress, but we've got a lot more work to do there.

Okay. Thanks.

Thank you. (Operator Instructions). Matt Summerville, KeyBanc Capital Markets.

Good morning. I want to spend a couple of minutes on Aerospace. Could you guys provide some color around what you saw in Q1 in terms of commercial OEM, commercial aftermarket, military OE, military aftermarket. What kind of growth rates you are seeing in those businesses?

Yes. Perhaps the strongest growth area is the commercial OEM. So the production in -- after the Chinook CH-47, that's our biggest customer segment, our sub-segment. The supply that we provide to Boeing and Airbus. So that's really the strongest and you can read about the production ramp ups and expected continued ramp ups in large air transport production rate. So that's really the biggest effect that we are seeing in, let's say, the OEM side of the military defense. There is programs that are at risk with the defense CapEx, but the good news for CIRCOR is we've been winning new programs that we didn't have before.

So the Black Hawk, the Joint Strike Fighter, we have products that have been growing on the Predator and Reaper have offset any of the sort of OEM side of the military and will more than offset that. So we will actually be growing there. And the aftermarket side of military, we already talked about. I think starting back in -- probably this time last year, the drop-off or at least the second quarter 2011, the drop-off in spare sales to, for instance, the Chinook program is pretty dramatic. So we've seen such a big drop-off there.

There is still a question on our mind is, will we see a couple of spikes or increase in orders just to maintain the fleet. So it's [dropped off] significantly already and we experienced most of that in the second half of the year. The commercial aftermarket side of -- aftermarket for commercial for us is a smaller portion of the business that we're strategically trying to grow. So, it's a mixed picture I think. But we don't have a huge dependence on it at this point. We'd like to have more business on the commercial aftermarket side, but it's a future growth area for us.

Okay. I was also curious within Energy, more on the international project business. Can you talk about where CIRCOR is at with the operational metrics that you guys would care about most like on-time delivery, quality? How have those things been evolving over the last 90 days?

Yes, the international project business, I would describe it's not being as advanced or as mature as some of our other businesses are today, that are, I would consider, world-class leading operationally. We're doing a lot of work particularly in our site in Italy. So, I'm tough and I would grade ourselves as a mediocre in our performance from a delivery standpoint. Our quality and our product reputation is quite good. But the delivery systems and the improvement opportunity we have in front of us is, I still believe, is tremendous.

To that point Bill, are you able to share maybe where on-time delivery rates have bottomed and where you've been able to bring them to and what do you think they can be. And I guess, what I'm trying to get on the context there, I would assume that you guys incur penalties if you don't deliver on time. I guess, I'm wondering, how much that's weighing on margins and therefore how much margins can snapback if this gets remedied over time?

Yes, it is standard in the industry, in the project industry, there are penalties and we approve them when we book or if a project goes late. There is an opportunity as we improve on-time deliveries, we shorten lead times, there's definitely an opportunity there to help the bottom line by reducing penalties. It's also a matter of managing projects well, customers move, projects [goes around] quite a bit as well. So, it's really about improving the overall process, but you're correct. There is a bottom line target we've targeted to improve with the improvement of on-time delivery.

The caveat so that we don't get ahead of ourselves here is, these are very long lead time business. So we're dealing with forgings and material supply that's half a year or more. The improvements are slow to come. So we're working on it right now, but I don't want you think it's going to be 30 or 90 days later we're going to get it. We will get and we know how to do it. We've done it in our other businesses and we've got a full team working at right now.

And then can you also talk about how would you characterize, two things, first, the channel from an inventory standpoint in North America short cycle. I apologize if you already addressed that, I may have missed it. And then two, how would you characterize your supply chain from a raw material standpoint with input availability in your long-cycle international business, if lead times have begun to extend?

Yes. So, I did talk a little bit about the short-cycle business. Our customer channels there have been quite strong. Rig activities held up. There has been a -- as you know, there has been a shift to oil or liquids based activity, but the total is what drives our overall valve demand and that's been quite strong. On top of that, it's sort of a contrast to the project business that we are working now.

The short cycle business we started our Lean activities there a lot earlier and our lead times there are probably the best in the industry. And we deliver our standard products in two days and our customers know that. So we're winning more businesses of them and we're winning new customers and with the activity being strong, if the call goes to a competitor and they can't deliver it in the short time and they call us we can. So, part of what we're seeing, we believe, is just great response and is encapturing that short-cycle business through the existing distribution channel partners, but also we're adding some new ones on as we go.

The second question you had the supply chain, raw material supply chain, that is an area for us to work quite a bit. We are working it -- on both sides, on both counts, extending our supply chain for the short-cycle business with the kind of volume growth we've seen. And as you may recall, we have a facility that we built in, do a lot of our own machinery and manufacturing in China in a low-cost area. But that also depends on Chinese suppliers and we work very closely with them.

And on the long-cycle business, we have to very carefully manage the long lead items, in particular, the forgings and the large bodies and balls that are used in valves, particularly larger sizes. We have to manage that very carefully when we're quoting projects and making sure we are putting correct lead times in. So, it has to be managed when we quote and when we accept an order and so we're focused on that intensely.

Thanks, Bill.

Kevin Maczka, BB&T.

Thanks Bill. I just wanted to go back to Aerospace with two questions. You mentioned the prolonged up cycle you are seeing now in the commercial side. I'm just wondering with such strong growth in that segment this quarter, if you can parse out at all, how much is a function of this better environment in those existing customers buying more of your products versus some of these new programs that you're involved in, that you just weren't involved in previously? And on that point, the second question, it might be helpful if you could give a run down, you've mentioned a number of them like the Black Hawk and the Joint Strike Fighter, if you could maybe talk about which ones are moving the needle now and which are coming attractions in the out years?

Yes, Kevin, [there's a lot of] part to that question. The commercial OEM is -- the good news about that is with the great job we've done for the OEMs such as Boeing and Airbus, and I might add, we did announce a little bit back, we were awarded Supplier of the Year at a recent conference in Toulouse with 250 plus critical suppliers to Airbus in the audience, we were one of the two in one category and four in total suppliers recognized for outstanding performance over two year period.

So we've really built a strong reputation with Airbus. And what's good about the OEM production is production rates are set well and ahead, so that's -- we tie our production system into the firing line, the firing order of the production line, so we can see that going forward. So that will be a gradual ramp up, but the good news is, you're hearing talk about increasing other aircraft as well as the one that have already been increased.

On the military question about what's driving improvement. Right now, it's really the only -- there is only one program that's -- we're seeing revenue and income from, that's the Joint Strike Fighter. So the other one is the A350, the additional work on A330, the additional work on A340, the Sikorsky BLACK HAWK, a set of actuators that also go into the Airbus family and other work we're doing on the US side, it's really future revenue and income. The number we use it for is generally about $200 million of programs won last year that we're still looking to commercialize.

Yes, we expect very little, maybe a little bit of traction on that in Q4, Kevin, but really we'll see some of that start coming in next year.

And again that's one of the issues that's pressuring margin as you've invested to build these capabilities but you don't have the revenues hitting yet. So does that sort of slowly ramp in 2013 and then bigger in 2014 and beyond, or is 2013 a really big year as those handful of programs you just mentioned all kind of start to come to fruition?

I would characterize 2013 is a transition year. This year would be [continued] investments as we've been. 2013 will be a transition year because, you're right, some of those will start to ship and therefore we'll get the revenue improvement, but there are other -- first of all be the first year of those programs. So that's how -- not as -- as you are really running at full speed. And then the second piece is some of them like the A250, we're not really going to see much out of that, certainly next year.

Yes.

Okay. Thanks again.

Probably better to think of it as a gradual pick up, as we go through 2013.

Okay. Got it. Thanks again.

Thank you. Matt Summerville.

I just want to ask a follow-up related to the growth investments that you're making in all the businesses, whether it's new Aerospace platforms, or whether it's what you're doing more I believe on the power side inflow, trying to build out Brazil in Energy. If you kind of [put] all of those together, what -- in dollars, what would your incremental ramp be in, we'll call it, growth related investments for CIRCOR in 2012 versus 2011? And it would be helpful to get a little bit of historical framework, how would that have looked in 2011 versus 2010?

It's a really good question.

Let's see. Yes, I know that I can answer very succinctly as you're probably asking the questions, very good. But, in Aerospace, we were talking about 200 basis points of investments today. Probably that's higher than last year. I was probably maybe last year it is like 150 to 100 basis points. So that is the investment in R&D and new programs in Aerospace. Over and above that, we've got the Sylmar facility, which also has been an additional drag on the Aerospace piece.

In Flow, around 100 basis points this year, last year, that's an incremental over last year. Last year, we really just sort of started that investment piece. And, in Energy, I mean there is nothing -- there is not one unique growth program. We're obviously trying to grow across the board and we do have some investments we are making at the group level [to gain].

But, in addition to that, we are building out India. We're building a new facility there, we've invested in Brazil, and each group has got new product development. We don't break out R&D as a percentage of sales like a lot of companies do. But there is investment there as well, that maybe not compared to last year, but compared to two years ago, it will be higher.

Got it. That helps. Thanks.

Thank you. There are no further questions at this time. I would like to turn the floor back over to Mr. Bill Higgins for closing comments.

Well, thank you everybody for your continued interest in CIRCOR and support. And we look forward to speaking with you on our next call.

And that concludes our conference call. Thank you for joining us today.