Crane Co (CR) 2006 Q2 法說會逐字稿

Welcome to the Crane Co second quarter 2006 earnings analyst conference call. [OPERATORS INSTRUCTIONS] At this time, I would like to turn the call over to the Director of Investor Relations, Mr. Richard Koch, please go a head.

Thank you, operator. Good morning everyone. Welcome to Crane's second quarter 2006 earnings release conference call. I am Dick Koch, Director of Investor Relations. On our call this morning, we have Eric Fast our President and CEO and Bob Vipond our Vice President and CFO. We will start off our call with a few prepared remarks after which we will respond to questions. Just as a reminder, comments we make on this call may include some forward-looking statements.

We would refer you the cautionary language at the bottom of our earnings release and also in our annual report 10-K and subsequent filings pertaining to forward-looking statements. Also, during the call we will be using some non GAAP numbers which are reconciled to comparable GAAP numbers in a table at the end of our press release which is available on our website www.CraneCo.com in the investor relations section. Now let me turn this call over to Eric Fast.

Thank you, Dick. I am pleased with the company's performance in the second quarter. Earnings per share of $0.71 exceeded our guidance and were up 20% from the second quarter 2005. Solid core sales growth of 4%, improving margins and good cash flow were all evidence of continued solid improvement. Our core sales growth consisted of about half price and half volume. We have made and will continue to implement price increases to reflect increases in raw material cost. Operating profit increased 20% with strong performance in the fluid handling and aerospace and electronics segments. The increase in operating profit in the merchandising system segment was a reflection of the acquisition of CashCode in January, which offset a reduction in our vending solution results.

In the first half, we have spent $149 million for 3 important acquisitions in our merchandising system segment. In January, we acquired CashCode and in June, we acquired certain assets of Automatic Products International and the stock of Telequip Corporation. We will have a second payment of approximately 12 million for Automatic products at the end of the third quarter. We repurchased 12 million of our common stock in the first quarter and an additional 13 million in the second quarter. As a result, our net debt to capital ratio increased to 18% at the end of the second quarter of 2006, including 100 million of cash on the balance sheet compared to 13% at December 31, 2005. As I said at our December Investor Conference, we feel we on a position to more aggressively deploy our capital and we are doing what we said we would do. Turning now to specific segment comments. Starting with Aerospace and Electronics, in mid-May, we completed the sale of our Resistoflex Aerospace Unit.

Resistoflex Aerospace made high-performance hose and high-pressure fittings. After careful study, we determined that the business did not have sufficient strategic links with our other product offerings and that it was more valuable to Parker Hannifin who has a large -- much larger competitor in those product lines. In the Aerospace group both OEM and aftermarket sales were higher than their respective levels last year and contributed about equally to the 13% sales increase excluding Resistoflex Aerospace. This represented an acceleration in the sales growth rate over the 5% experienced in the first quarter.

The OEM aftermarket mix was 62/38%. Compared with last year's mix of 64%, 36%, providing good margins. Excluding Resistoflex Aerospace. Bookings in the quarter were strong. Up 35% overall with OEM and aftermarket both contributing to the increase providing a solid base for future growth. The Electronics Group sales increased 1.9 million and profits margins increased significantly over the prior year. While we've made progress in reducing past orders and production, cost on key programs we still have significant opportunities for continued operating improvements in this business.

We continue to focus on meeting customer requirements on several large programs at low margins, which are being delivered over the next 9 months. Our year-to-date bookings were lower than last year principally due to delays and awards of several large customer orders that we expect to partially recover in the second half of the year. In Engineered Materials, revenues increased 4% but operating profit was off 5.1 million or 28%.

Our sales were 9% higher in building products and 8% higher in recreational vehicles. More than offsetting a decline in international sales particularly in Europe. As we discussed in our April conference call, in the first half of this year, we have been experiencing product support costs in RV market and in addition, we have increased our spending to support the growth of our newer products, such as decorative panels and Zinacon thermal plastic products.

Our operating margin of 16% is a reflection of both of these product support and to a lesser extent than new product development cost. The expenses for product support costs are attributable primarily to two issues affecting our RV customers, which we discussed at the end of the first quarter. The first issue, which was caused by process changes associated with insulation of new, -- installation of new emission control equipment in our Jonesboro, Arkansas plant, resulted in some uncured FRP product being shipped to 3 customers. The second issue, which we called distortion, affects the exterior panels of RVs and has been caused in our view by either poor bonding of our FRP panels to backing or substrate material, most often a plywood type material called Luanne. Or a higher than normal moisture content in the Luanne.

Based on what we know at this point, we do not believe that the distortion has been caused by our FRP panels but we are attacking the issue on a number of fronts. First as the industry leader, we continue to work with our customers and outside experts to determine the route cause of distortion, because different OME and laminators use different bonding technologies and materials there can be a number of different factors involved.

In addition to our one-on-one discussions, we have conducted 3 user group meetings with our customers, to share information on this issue. Second, because we are a leader in the industry and therefore committed to maintaining our long-term relationships. We have provided customer assistance to help offset the costs of rectifying these issues. Third, we have developed a more robust FRP panel, which will be significantly stronger than the existing panels for this market and is currently being tested by several OEM customers with excellent results.

We are also moving to sell all of our product directly to RV OEMs and component suppliers rather than through distribution. In addition as part of this effort, we have opened a warehouse and service center in Elkhart, Indiana the heart of RV manufacturing. Before we begin this effort in late 2005, about 60% of our sales to RV OEMs were through distributions.

We have effectively completed this transition and are now selling direct to all our RV customers. Going direct has solidified our relationship with OEM community and substantially improved our customer intimacy. We believe that majority of these issues are behind us and our product support and warranty cost will be lower during the second half of 2006, with margins improving over the 16% experience in the second quarter.

Merchandising systems. In the second quarter the overall performance of our payment solutions business has offset substantially weaker sales and earnings from our vending business. In the second quarter of 2006, we continued to see weak orders for our vending machines. The weak demand is caused by route operators higher cost for gasoline and confectionary. Our vending machines sales in second quarter for 2006 were 7 million or 18% below 2005, with a substantial sales decline in both North America and Europe. We believe that what we are seeing is a vending industry trend, and that we are maintaining market share.

In spite of softness in our end markets, we remain confidence about our business model and the longer-term outlook for the industry. As we said in our last conference call, we expected additional severance cost associated with our Op-out program at our St. Louis facility. In the second quarter, we have severance of approximately $1 million, which was similar to the first quarter.

As a result of the weak demand experienced in the second quarter, we also reduced our workweek to 4 days for 2 weeks in April and took a 1-week shutdown as well. The integration of automatic products or AP as we refer to it, into our vending machine facility in St. Louis, and the sourcing of our third quarter production from AP's facility in St. Paul will result in one time transitioning cost that will depress our profits in third quarter. Once these transitioning costs are behind us, we are expecting that the fourth quarter will show substantial improvement from the third quarter.

These trends are factored into the third quarter total guidance included in our press release. I would like to spend a few minutes to put in perspective the 3 acquisitions we have made in merchandising systems this year. While the vending market has been declining due to de pressed operator cash flows. We believe long-term remains a 22 billion-consumer product channel and we want to be positioned as a leader.

In North American vending, we have been the industry leading with strong market shares across the food, coffee, and snack offerings with a direct sales and service model. AP has been a good competitor in the snack segment, selling to a strong distribution network with a large installed base.

Our plans are to continue to utilize the strong AP brand and distribution network, as part of dual channel to the vending operators. We are not buying AP's manufacturing facility, and over the next 3 months, we will be consolidating the manufacturing into our St. Louis facility. As many of you know, our lien activities have substantially improved this facility, and created the physical space to effect the consolidation. As we mentioned in the first quarter called the St. Louis facility also has a new union contract, which freezes existing wages for 3 years, and provides for new hires at 70% of current wages. Now let me turn to payment solutions. This is a $1billion addressable market comprised of 5 separate end markets. The 2 largest are vending and gaming at approximately 400 million each. With retail, transportation and amusement accounting for the balance.

National Rejector Inc. or NRI has had a long presence primarily in Europe in coin validation, serving many of these end markets. In January, we acquired CashCode a bill validation business, which allows us to offer both coin and payment solutions. The CashCode business has historically been focused in the gaming industry and the combination with NRI will now give us a more complete payment solutions offering to each of the 5 end markets. In 2005, we began selling our payment solutions with our vending machines.

It is noteworthy that Crane was the first vending company to offer a payment system capable of giving change in bills and coins. We are pleased with our progress in penetrating this part of the market. While a considerably smaller end market today we believe the retail channel for payment solutions has considerable potential particularly in self checkout.

The Telequip acquisition gives us strong retail market presence in coin dispensing in each of the major self check out manufacturers as we look to develop and provide a fully integrated system utilizing the coin and bill validation capability of CashCode and NRI. These 3 acquisitions fit our strategy as highly engineered products serving the niche market, that leverage and strengthen our existing businesses. While we're looking for strong growth from these acquisition in 2007, our 2006 results will be held back by substantial integration activities and costs. Fluid Handling representing 45% of Crane's sales had a very good quarter, following on strong first quarter results. Every major unit contributed to the growth and operating profit.

Our core sales in Fluid Handling increased 3%, before foreign exchange and acquisitions reflecting stable demand due to the late cycle nature of our markets, which include the chemical process industry, power, and non-residential construction. Operating profit was 30 million, up 50% from the second quarter of 2005. Excluding Westad, Fluid Handling cash flow provided from operations was 21 million in the quarter more than double the 10 million generated in 2005, and continued to strong improvement we experienced in the first quarter.

All 3 major groups in the Fluid Handling segment showed improved operating profit in second quarter. In our first quarter conference call, I noted margins approaching 10% and strong cash flow generation were a testament to our progress. Our performance in the second quarter was even stronger with margins of 11.8%, versus 8.1% in the second quarter of last year.

Let me restate what I have said in the past, our progress in Fluid Handling has been a journey reflecting strength and management teams, improving markets , excellent brands, reduced physical foot print, low cost country sourcing and improve planning and manufacturing processes. These broad based improvements and orders, excluding Westad, which were up approximately 15% in the quarter, provide a solid foundation for future growth. As we noted in our April call, during the second quarter we sold our Westad valve business located in Norway. The sale is consistent with our strategy of trimming the portfolio where we have a small business that cannot be leveraged in a larger unit. The sale generated cash proceeds of about 3 million and a modest loss. Now let's turn to the business in Fluid Handling segment. In the Valve group sales excluding Westad are up 5%.

Operating profit increased 48% over the second quarter of 2005 and margins from 8% last year to 12% this year, reflecting higher sales and improved operating performance. In Crane, Pumps and system profits nearly doubled and margin increase from 6% to 10% due to productivity gains realized from the sale of Ohio plant closure last year. Crane supply continues to post solid results with stronger sale and improved low cost country sourcing helping to offset higher prices for steel pipe and copper tube.

For controls briefly our controls business continues to grow, excellent markets in oil and gas and transportation, strengthen in management teams and a real focus on customer metrics and new products are driving the improved results. Now turning to our third quarter guidance, we expect our earnings per share to be in the range of $0.68 to $0.74. Including $0.02 for option expense versus $0.66 in the third quarter of 2005.

Based on the strength of our first half performance and overall view of business, we're increasing our total year earnings per share guidance from the range of 2.50 to 2.65. From a range of 2.60 to 2.70. This is the second time this year we have raised our guidance. We are tracked to comfortably exceed our record earnings per share we posted last year. Based on or confidences in the future prospect of company. We have increased the dividend by 20%.

Now let me turn the call over to Bob Vipond our CFO.

Thank you, Eric. As Eric mentioned we were pleased with second quarter results. Let me discuss a few other items impacting our financial performance. The miscellaneous income line was 2.6 million higher than the second quarter in 2005. The principle driver was the previously announce sale of Resistoflex and Westad which resulted in a gain of 8.3 million, which was partially offset by the sale of unused property from a previous plant closure and legal costs associated with previous divestiture. The pre-tax gain was 4.1 million in this quarter.

During the second quarter of 2005, there were gains on a few smaller transactions and therefore the year-over-year increase was 2.6 million. Our tax rate for the second quarter was 32.5%, above the 30% guidance we had given for the quarter and higher than the 30.2% tax rate in a second quarter of 2005. The rate was higher than our fact value solely because Congress did not renew the Federal Research and Development credit.

We continue to anticipate passage of this legislation during the second half of this year, which is reflective in our guidance for the full year tax rate of 31 to 32%. We have assumed that as in the past the legislation will be retroactive to January of 2006. And a quarter in which the legislation is passed, we will be required to report a year-to-date adjustment, which will result in a lower tax rate for that quarter. So our quarterly rate will then obviously vary.

Our corporate expenses increased about 3 million to 10.7 in the second quarter this year. Primarily due to expensing and stock options which we began this year. Higher provisions for incentive compensation and increased staffing levels. Next, I wanted to turn to asbestos.

I want to remind everybody as is our practice we do not intend to comment on our estimate of the company's asbestos liability beyond what we have said in our form 10-K. I encourage you to read the disclosure carefully as we are making every effort to make them complete and informative. I do want to comment briefly or on asbestos related payment terms that were disclosed in our 8-K which was released last night. First, we had been reaching in agreements in our coverage in place arrangements and other policies settlements with our excess insures and we received payment in 6.3 million the second quarter from these insures.

Second, there was a transition leg in our cash payments for settlement in defense costs as we move to a third-party firm specializing in processing these reimbursements. As a result, our net cash requirement for asbestos related matters in the second quarter was net inflow of 200,000. Payment out flows are expected to increase in the third quarter as we return to normalized payments, which will be partially offset by insurance recovery. Our overall disclosure included in the footnote released with press release provide additional details.

We continue to expect a total year net cash out flow for asbestos will be 45 million. Now, I 'll send it back to Dick.

Thank you, Bob. This marks the end of our prepared comments. Before we open the call for questions, remember that we take questions in the order received. As a courtesy to your colleagues, we ask that each of you limit the number of questions to just 1 or 2 at a time in order to give others a chance to ask questions. You're welcome to get in the queue again with additional questions. We're now ready for the Q&A.

[OPERATORS INSTRUCTIONS] We will go first to Deane Dray with Golden Sachs.

Thank you, good morning.

Good morning.

I had a question on the organic growth. I give comment that you're mix between price and volume, if you look at you're segments, where do you have the most pricing power in stage of the cycle, that would apply that you about a 2% boost from price, and how would that be distributed across you're segment.

Again, in Aerospace and Electronics we don't see any pricing there, as you know in the commercial Aerospace business we're given back a little bit every year to Boeing and Airbus. We have had in Engineered Materials that was roughly balanced, kind of 2% price, 2% volume and in Fluid Handling we really done, to get the kind of improvement that you see in margins, we've just, we've done a very good job of making sure that our prices are covering the material, so it's a chunk of the Fluid Handling as price.

And that has enough -- I'm sorry to interrupt. Did you have comments on the other businesses?

No, I think, you know volumes are obviously down in vending.

Okay. And does that allow you then to pricing to fully offset the material cost increase?

Yes, we're very comfortable with our discipline and our reaction times here on pricing and our ability to cover material costs as the general comment across all the businesses.

Terrific. Just to the last question, Eric. If you just a little more color as to which of the programs in Aerospace you can between OE and aftermarket were contributing to the gain this quarter? On the booking side?

We're, our, as you saw from the bookings up 35%. I mean, it's across the board. It's, there are powerful increases in Aerospace bookings across sensing, across the pump business, across brake controls. We like what's going on there, Dean.

Is there a particular platform?

Oh, well, we've got good content on, the A 320 and the 737 which are the work horses of both of them, but, nothing unusual there. I think it's just a broad up swing, you're going to see across the entire industry and it took us a while to see it. We certainly saw it in the second quarter.

Great. Thank you very .

Okay.

We'll go next to Ned Armstrong with Friedman, Billings, Ramsey.

Yes, good morning.

Good morning, Ned.

In the Electronics group you mentioned that the, electronic manufacturing solutions again had weaker sales and I was just wondering what you're thinking was regarding that unit and where you might go with it?

Well, our plans are to get some bookings in the unit. But it's the weakest part of our electronics business. Unfortunately, it's a relatively small piece. And so part of the goal is to get outside bookings. The second approach is to out, some of the out sourcing on circuit card assemblies in the Aerospace group and in our custom power, we're looking to he little -- to help release some of our capacity restraints by doing it in that facility but most of that is in a preliminary stage.

So is it fair to characterize it that you're still satisfied with that business and think there's, there's realistic potential there to be a contributor?

I am definitely not satisfied with the business, and I think we, we've changed the leadership. We're, again, very focused on improving the processes, and improving how they execute and with a new front end to drive bookings, but we're not satisfied with the performance there yet.

You're okay with the business, just not with the performance, is I guess the differentiation I was making.

We're okay with the business.

Okay. And then with respect to the Fluid Handling business, margins were obviously very, very strong. You commented at 12%. Was a realistic long-term goal.

Right.

Do you think now, are you comfortable in saying that, that the long-term goal can be better than the 12%?

I think the first thing we want to do is stop for a minute and celebrate the success of, the journey that we've been on, which is really driving substantial improvement in profitability of the company. I've been pretty consistent that, saying that we thought we could get, to12%. I mean, we need to get there and stay there for a while.

And pretty consistent in saying that, we do think that there is a lot more opportunity there, but that it's going to take some work in terms of physical footprint, in terms of organizational structure. But we continue to see a lot of opportunity in Fluid Handling. And I feel strongly based on the strategic reviews I did in last couple weeks in Europe that in the markets that we're, the end markets we're focused on, we should have a couple more years here of pretty solid and good end market demand.

Good. Thank you.

No, I haven't put a number on it yet.

Okay. Thank you.

Okay.

Well go to Scott Graham with Bear Stearns, please go ahead, sir. Yes, good morning.

I have a couple questions about some of the core sales trends and the acquisitions. Fluid Handling, 3% organic growth number that we saw was a little bit below what we'd seen in the last couple quarters, is there something to that number or difficult comparison?

I don't, I don't think so. The, one of the things I learned from Shell Evans when I first came here 60 years ago. Sales growth is nice but profitable sales growth is better. And so the real focus in Fluid Handling has been on profitable sales growth and making sure that the orders that we're booking are booked with a good solid price discipline and that we can execute on. And I think that's, -- that's, we are miles ahead of where we were 3 years ago in terms of doing that. And so sometimes you might sacrifice a little bit of volume, but frankly that's our first, first priority here as we've looked to recover margins.

Okay. On the merchandising business, do you think now with the second half approaching, where the comparisons get a little bit easier, have we seen the worst of the year-over-year. It actually looks like it did get a little worse in the second quarter relative to the first quarter on a year-over-year basis. Are we near the bottom of the sales decline in that business?

Well, I think that's a $64,000 question. We do start to have a little bit more favorable comparisons as you've talked about. I feel very strongly that we have dramatically changed and reduced our cost base here. And we've got that, we've got that behind us, so that we've got the plan actually we're going to be bringing on a lot of new people at the lower labor rates with the AP acquisitions, so I think we've got our cost base structured for lower involves and to make some margins if they do stabilize. You know , this is a book and ship business and one week I would tell you it's stable and the next week I would say I'm not sure.

Okay. Last question is kind of same thing coming from, on two different businesses. The merchandise, I'm sorry. The Engineering Materials business has been obviously looking into new territory, spending a lot of money to drive in future sales.

Yes.

And the Merchandising Business has made 3 acquisitions essentially using a different road map to get to the same end. To accelerate the top line. Could you talk about, Eric, when you start to expect the synergies of the merchandising acquisitions to start to click into the top line and when you expect a more definitive up surge in volume in merchandising?

Well, first off, we're going to be, synergies in merchandising start in the third quarter. It's good with the cost are there in the third quarter as we execute really a substantial opportunity in consolidating the AP facility into St. Louis, that in and of itself is a huge opportunity and it's largely going to be accomplished in the 120 days, so there is, significant and important savings thats happened from that. It's not going to be all tide up in a beautiful present in 120 days but that's a time frame that we've got to do it. I feel that, the dual, we feel strongly that dual channel presence with the distributors and our own direct sales force is broaden product line offering for AP is going to give us superior market penetration and frankly there's a 2 day sales meeting going on with everybody, yesterday and today, and in St. Louis.

On the payment systems side, first off, we've already benefited from the payment systems business by leveraging vending channel because we're selling, you know 20 to 25% of our coin, of the payment mechanisms now on vending machines are going out as our mechanism, whereas, a year ago it was zero. And secondly we're now able to take both a bill and coin validation solution to all these different channels, whereas before, we just had the coin and it's, it was a very difficult sale. So I, I feel, I feel very good about the, both the niche markets. The highly engineered nature of it, and our opportunity to leverage sales here.

And the engineered materials piece, I think I misstated the second part of my question. When do you start to see that spending start to come through?

Well, in engineered material for the Zinacon product we now can make it. So that machine is up and running and now it's a sales effort, and, let's wait and see how we do and then we'll talk about that is kind of my position. But it is new, and it has got some technology and some product characteristics in which we think will have a lot of benefits, and we spend some money getting it there and, this is all part of an initiative that we're trying to drive here to make sure that we're, we are taking these bets to drive growth the FRP design solutions picked up a little momentum in the quarter, but not enough for me to highlight or talk about at this point.

Great, thanks very much.

We'll go to Shannon O'Callaghan with Lehman Brothers.

Morning guys.

Morning.

Bob, if I could just ask you to repeat on a tax rate to clarify a lit bit. I mean, what kind of tax rate are you expecting then for the third quarter if this, R&D goes through..

Well, if you look at it Shannon, the, our guidance was for 31 to 32%, for the second half, and right now we made a call on the second quarter, we thought Congress would get it done. They didn't. So we aren't really I'm really giving you guidance for the second half as opposed to quarter by quarter. When it happens, we have to make a retroactive year to date adjustment .

So you're going to have like a catch up low tax rate in the quarter it happens.?

Exactly. Exactly. Just, and that will happen if it gets passed. There is some thoughts right now that it might get attached to one of the bills that gets done before Congress recesses but you know how things are in Washington. Counting on that is is problematic.

So you're third quarter guidance assumes it could happen in the third but factors in that it might not.

Like I said, use the 31 to 32% rate for the second half, and as for anything else I use them for both quarters when when it happens, it will happen , it will be different than that, balance which ever quarter it happens and it will pop back up. But our total year rate, the guidance we've given is between 31 and 32, as well. So it's, it's the same for the second half as we've experienced here in the first.

For interpreting the guidance provision. You had the, you had the gain the net gain in the quarter which is offset by the higher tax rate in the quarter, but for the year, that's not really going to be an offset because it's where you thought it is, so I mean, other than the gain, is there more contributing to the, to the upward division for the year and would this be mainly, better performance in fluid or where would you put it?

From our perspective, we are seeing better performance in Fluid Handling than we expected, and it's been more consistently and broad based and secondly we saw in the second quarter, really a strong surge in both shipments and orders in our Aerospace group, and profitability that kind of improved throughout the quarter in terms of a margins so here we've got, billion one, six hundred million, billion six or billion seven of our sales, where, we just feel pretty solid about it. I would say that's really the determining factor on the increased forecast, and we feel like a lot of the engineered materials is in terms of products support is behind us. We've got, it's not totally behind us, we're, -- we can go drive that, some improvement in that business also.

Yes, actually that sort of my last one on engineered materials, just in the margins, I mean, I think previously you kind of hoped they might get back to 20% in the second half. And I think in your prepared remarks you said greater than 16.

Right.

I mean, so 20 maybe looks like we're not getting there. What's the main -- the main belt in the expectations.

You know , it's a very astute judgment. I would tell you the target for the second half is 20% but we're very careful here, saying that we're confident it's going to be better, but and the reason why we're being careful is we are not going to make the short-term decisions to make the quarter here at the expense of protecting the most, one the most valuable franchises we've got, so if we've got to go in there and spend some money to support a customer or to fix it, or to make sure it's right, so that we come out of this year even stronger, we're going to do it in the quarter. And that was the total reason that we kind of were careful about, so we're thinking like owners and people own it privately versus trying to make the quarter. That's the only issue there.

Okay. Thanks a lot, guys.

You're welcome.

Once again, if you would like to ask a question, please press star one. We'll take our next question from Wendy Caplan with Wachovia Securities.

Hi, Just a question, you're, the EPS division upward. Why, is there a reason why your free cash flow remains unchanged?

We're just being careful again.

Okay. And then I guess, second just for between the direct versus distribution way of sales, isn't that harder to pass-through pricing in that type of a channel.

I didn't understand the question?

Well, I know you're switching, direct versus going through a distributor for sales.

Yes.

Isn't that harder, a harder means to pass through pricing.

No.

No.

Definitely not. I mean, we were selling 60% of our sales were going through one distributor who had a substantial discount in terms of volume discount and how we were supporting that distributor. And rather than doing that we're now going direct and we're passing along a lot of that discount directly to the end customer and using what we've kept to start to provide this local support with a warehouse, in cutting capability, all in the Elkhart, Indiana and in return we have . -- and we hired 2 key experienced salesman, to cover the markets so we have much better customer, intimacy and at the same time our end customers are getting better pricing and better service.

Okay great. Thank you.

And there are no other questions. At this time, I'll turn the conference back over to our presenter for any additional or closing comments.

Thank you for your time, interest, and investment in Crane Co. Good-bye, now.

This does conclude today's conference. Thank you for your participation you may disconnect at this time.