Carlisle Companies Inc (CSL) 2005 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Carlisle fourth quarter earnings call. [OPERATOR INSTRUCTIONS] Now, without any further adieu, I'd like to turn the program over to President and CEO, Rick McKinnish.

Mr McKinnish, you may begin.

Thank you.

Good morning, everybody, and welcome to the Carlisle earnings call.

With me is Carol Lowe, our Chief Financial Officer.

In addition to the press release, that hopefully you've already seen, we have a summary presentation on our website at carlisle.com.

There's a lot of information in these two areas and so Carol and I are going to provide a very quick summary of the quarter and move quickly to your questions.

So with that I will turn it over to Carol.

Thank you, Rick.

As on previous calls, my comments will refer to results from continuing operations, unless I note they include discontinued operations.

This morning's release provides the highlight of a very strong fourth quarter.

And we would also like to note that the earnings improvement in the fourth quarter 2005 was without the benefit of any significant one-time event.

Fourth quarter 2005 sales were up 9% year-over-year, primarily on organic sales growth.

The brake business acquisitions in the last half of '05 contributed 11 million to the increase and the impact of foreign currency was negligible.

Full year '05 sales increased 11% over the prior year, with organic sales representing about 86% of the total growth, including approximately 3% of foreign currency impact.

Fourth quarter '05 EBIT improved 280 basis points to 8.4% and full year EBIT improved 80 basis points to 9.5%, as we continue to work our way to our stated goal of a minimum margin of 10%.

Fourth quarter income of $0.86 per diluted share increased 41% over 2004.

As noted in our release, the fourth quarter '05 results were negatively impacted by an after tax lease change on a closed facility of $0.08 per share.

Fourth quarter '04 results included a $0.09 tax benefit and a $0.06 asset write-off charge.

Full year income increased 21% to 429 per diluted share, with benefit from tax settlements and legal actions contributing $0.10 and $0.08 per diluted share respectively.

The labor strike at Johnson Truck Bodies impacted Johnson's year-over-year reduction in '05 full year income of $0.14 per diluted share.

As previously reported, the strike concluded in October, 2005.

The 2005 net loss from discontinued operations included income of more than 4 million for the fourth quarter and 10 million for the full year for Carlisle Systems and Equipment.

This income was more than offset by disposition and wrap-up costs for the automotive business.

Operating cash flows of 213 million compares favorably with 2004 operating cash flows of 108 million.

The operating cash flow results for '05 include collections on retained receivables for the automotive business, which were approximately $40 million.

With that, I'll turn the call back to Rick for some additional comments.

Thanks, Carol, I'm going to make a couple of comments about each of our reporting segments and then move into acquisitions and outlook.

First segment is the Construction Materials segment.

As you see in the release, the organic sales growth in this business was 18% and their EBIT grew 37%.

I really don't have anything to add to that.

But I will make one comment about our new plant out west.

We announced last year we were building a new membrane plant in Utah.

We have not been, quite frankly, as represented out west as we thought was proper.

The new plant is up and running in Utah and we are absolutely delighted and pleased with the reception that we've received from all the customers out there.

John Altmeyer and his team are just very excited about the opportunities for this new capability in the west.

The next business segment is Industrial Components.

This is our tire and wheel and belt business.

Had a very disappointing year.

They, quite frankly, probably outperformed many of their peers that are heavily weighted toward lawn and garden.

They grew earnings by 8% in the quarter in spite of a 6% reduction in sales, which has been driven by a soft lawn and garden market that, quite frankly, is well documented and we've talked about the entire past year.

As we enter '06, the inventories throughout this channel are a lot leaner.

And we are much more optimistic going forward.

We've taken the lumps to get our inventories right sized and so have some of our major customers.

So everybody has a better attitude about '06.

The last segment is Diversified Components.

It has a favorable comparison, as you see.

It continues to make progress, quite frankly, driven by past restructuring.

As Carol noted, the Johnson Truck Bodies strike is over.

I would like to make a comment about capital expenditures.

We get some questions on this.

Our capital expenditures in '05 were 101 million.

This has very little business maintaining expenditure in it.

I think it's important to note that.

These funds are primarily to fund growth initiatives and cost reduction.

And a majority of the funds are going into our roofing business.

So our CapEx is very little business maintaining and primarily to fund growth objectives in our roofing business.

As we noted last year, we placed 13 businesses, that Carol has talked about, in the discontinued operations.

The disposition process is proceeding well.

The businesses are appropriately valued and we don't anticipate any negatives in this disposition process.

I'd like to make a comment about acquisitions.

Obviously, our acquisition effort has lagged our peers.

Much of this has been by our own strategic planning, but we are determined to improve this area and are currently adding a lot of senior personnel to assist this effort.

But I want to assure you that we're going to remain focussed on our core businesses.

We don't see the need to venture into new space to meet our growth objectives.

We believe we can meet our growth objectives staying with our core businesses.

Finally, I'd like to make a couple of comments about our outlook for '06.

I would suggest to you that the fourth quarter provides some insight into our business as we wind down our restructuring.

We have been highlighting this restructuring.

I'm sure many of you are sick of it for several years.

We've shut down 29 plants.

But we are pleased to say it's finally substantially complete.

We think the fourth quarter was the first little window into what Carlisle looks like when they're not doing auto restructuring.

We enter '06 with momentum from the fourth quarter.

We enter '06 with solid demand across most of our businesses.

And quite frankly, we enter '06 with the most optimism ever.

With that, I'll turn it over to the operator and we'd love to have some questions.

Thank you, Mr. McKinnish. [OPERATOR INSTRUCTIONS] Our first question comes from the site of Deane Dray with Goldman Sachs, your line is open.

Thank you, good morning.

For the roofing business, could you give us a sense of whether weather was a factor this quarter?

Typically a mild fourth quarter gives you the opportunity to stay up on the roofs longer and so forth.

What kind of impact do we have there?

Deane, you're absolutely right, the weather was a positive in the quarter.

It's too early for us to tell.

We'll get some data on this as it unwinds.

But there's no question it was a positive factor for us.

I don't think as much as some of the penetrations we're doing out west and in the south with our new facilities, but no question, you're right, weather was a positive factor.

The Utah plant that's up and running, could you size for us what the contribution was there?

And is that all organic growth or is there any of that business that would have been shipped out of Carlisle Pennsylvania?

Well, you're right, some of that business would have been shipped from our Mississippi plant, so it's not all organic.

The plant is up and running and it was a slight factor in the fourth quarter.

Remember, we just started up late third and we're just getting going.

But John Altmeyer is ramping up the plant as fast as he can on the basis of the reception we're getting from our customers.

So the impact will be much more in '06 than it was in the fourth quarter of '05.

How about the operating efficiency of that new plant?

How does that compare to the original facilities?

Obviously, this plant incorporates some new technology.

We're really kind of excited about it.

We've used a certain technology to make our TPO membrane since we started the plant in Mississippi.

Our engineering group has come up with a better way of doing it, a more stable process.

And you take some risks when you change the process, but this has worked out beautifully today.

We're excited about it.

We think this new plant will absolutely operate at lower cost with higher productivity.

Great.

And then, Rick, could you give us a sense on the contribution in the quarter from the two most recent acquisitions, Kete and the Arvin brakes business?

Deane, as we reported within the earnings release, it contributed 11 million in terms of revenues.

We've not disclosed the earnings but it was accretive, both of the acquisitions, ArvinMeritor as well as the Kete acquisition.

Carol, could you give us some color about the contributions and what the contribution expected in '06 for the balance of the year?

Well, I guess we have elected not to provide specific details in terms of what those numbers are going to be.

We have just continued to say it will be significantly accretive for our braking business.

I don't know, Rick, if you want to provide a little color.

I mentioned the alt highway braking that goes in the mining industry and heavy construction.

We've been in that business a long time.

It's one of our better margin businesses.

So I agree, I think Carol's summary, it is going to be very nicely accretive Obviously this move with our on-highway friction business into China gives us a whole new cost structure we're excited about.

So both these acquisition, quite frankly, are going to be nicely accretive for us in '06.

Okay.

And then just to finish up with guidance.

At one point you talked about the impact of the divestitures of the non-core businesses being somewhere in the neighborhood of $0.30.

Is that included in your guidance as well as the $0.05 benefit from use of proceeds?

Deane, the guidance number is on continuing operations, so it would not include any impact from discontinued operations.

We do not anticipate losses associated with the businesses that are in discontinued operations in 2006 on the whole.

Got it.

Last question, what sort of organic growth rate are you assuming, let's just say, at the mid-point of your guidance?

It's in that 6 or 7%.

Terrific.

Thank you very much.

Thank you.

We move now to the site of Peter Lisnic with Robert W. Baird.

Your line is open, sir.

Good morning, Rick, good morning, Carol.

Nice quarter.

Rick, if I could ask a question about your 10% margin goal and how you're progressing there.

If we look at the guidance for '06, are you assuming there that you hit the overall corporate 10% target up from what you did this year?

Yes.

I think you're right on there, Pete.

We have said for several years that that was our minimum goal.

Through a whole host of restructurings and some raw material increases, we've been able to get there as quickly.

I think we ended the year at 9.5%.

You're right, I think we are going to make the goal and very much our plan to finally hit our minimum goal.

In no way do we see that as our long-term goal.

It was just an interim goal.

The first step was just to get to double digit EBIT margins.

If I take that as basically a given and maybe dive down one level deeper and look at Industrial Components, that basically this year for that business or those two businesses has been a tale of two halves, almost, on the margin front.

What are your expectations for margin in Industrial Components looking out next year or this year, I guess?

Our expectations are for improvement.

This business, obviously, has been through two years of really unprecedented raw material increases and then a well documented kind of meltdown in the lawn and garden business that occurred this year, as many other companies have talked about.

They've also taken significant amounts of hits on LIFO, which is charge day tape with these rapidly increasing raw materials.

This business is going to make margin improvements going forward.

We see all three segments at double-digit margins long-term.

But I can't speak to an individual goal there.

But their long-term goal is to return where they've been and that's double-digit EBIT margins.

Okay.

And then one more if I could.

Just the kind of the raw material outlook that you have embedded in your forecast for '06.

Well, we've got -- on a consolidated basis it's such a mixed bag.

Pete, as you know, it changes by the month.

But we've got more moderate inflation in our '06 outlook coming off a couple years of pretty substantial inflation.

We've got inflation in our numbers.

We think we're taking a conservative look at this, but it's obviously more moderate than we've experienced over the last two years.

Okay.

And I lied.

I have one more, if I could.

I've spent most of these questions asking about '06.

I'm sure people are interested in the roofing business in looking out past '06 into '07 and '08.

I know that is going to be a tough question for you to answer, but how do you think about the growth profile for that business outside of 2006 looking further into the future?

I think it's a good question, Pete.

One thing about this, we started talking about a new strategy at SynTec several years ago and we said that we're going to be investing money.

That we were going to take this business and build a national infrastructure to support the strength and the products that SynTec brings to the market.

And we're no where near the end of that process.

I think it's pretty clear, as we open each new plant, this business continues to be able to sell the capacity in these plants into the market.

I just announced at the beginning a very nice reception in the west with the plant we opened last fall.

I want to be clear, this process is early on.

You could say we're approaching '06 maybe the middle.

This process has a long way to run.

Okay?

We've been very strong in New England and the upper midwest and we're expanding our touch across the country with a company that, quite frankly, brings compelling value to its customers.

This is not a mature process we're in with our roofing business.

So by extension that we could assume that '06 and '07 will continue to see some more growth capital investment in that business.

Pete, they pay you to make the assumptions.

They pay me to ask for the assumptions.

You make the assumption, I'm telling you that we're not at the late stages of the cycle, the way we're executing.

Fair enough.

Thank you.

All right, thank you.

Saul Ludwig with KeyBanc Capital, your line is open.

Rick, I see you eked out another one.

Yes, Saul, we scraped by again.

Okay.

In your guidance you've always made a point that you bake into your guidance things you know about that are going to result in some special charges, plant moving, et cetera.

Is there anything that you've baked in to your '06 guidance of a special nature?

No, Saul, I think we've tried to be clear that we're winding down this restructuring.

As we've talked many times, we've had our full plate of restructuring over the last several years.

We're kind of pleased to get that substantially behind us.

But remember how we do guidance?

We used to give guidance in April, because our roofing business starts cranking up, the lawn and garden business.

But we've gotten, we feel like, better handles on our businesses.

Our forecasting has gotten better.

So the last year or two we've moved our guidance for the year up into February.

You know our style and how we do this.

But there's nothing special in the guidance except good solid feel that we're going to be able to do what we say we're going to do.

Okay, so no special item.

The cap spending in '06?

Saul, it's projected to be approximately 75 million, so less than what we spent in 2005.

And again, our maintenance CapEx, we only run somewhere between 25 and 30 million.

So the additional $40 million that we'll spend will be for some key organic growth for the company.

The assets that you have remaining to be sold, what order of magnitude of cash do you think you might get?

I know you can't nail it to the penny.

But what ballpark are we in in terms of asset sale proceeds in '06? .

The net book value of the total assets held for sale is approximately $66 million.

We have expectations that the proceeds, once all the assets are disposed of, will meet or exceed the net book value.

One thing that is important to point out is the systems and equipment business has a lot of long-term performance contracts and things like that.

A lot of it will depend on the structure of the sale.

We don't expect or anticipate any losses on disposition for these businesses.

But right now we wouldn't be in a position to say whether proceeds would be at a meaningful level in excess of the net book value.

If we were to think in terms of $60 - $70 million of cash that you actually get in '06 would be a reasonable way to think about it?

Yes, that would be very reasonable.

In the fourth quarter, in Industrial Components was there inclusion of some legal settlements or was that in a prior quarter?

That was in prior quarters.

Rick, your roofing business was up fantastic, $144 million.

Could you sort of give us kind of an idea to what extent was that 144 million, let's say, from rubber verses TPO verses, say, insulation?

I don't know if that's the three buckets that make the most sense.

Where did you get the 144 million from?

All three of the areas that you mentioned, Saul, are growing.

The one with the most significant growth has been the TPO membrane and the insulation, which are new areas for us.

But all our areas, our rubber business, our plastic membrane business, our insulation business, our accessory business, all the elements that are growing, quite frankly.

But because the combination of all of them together makes each of them stronger, for a lot of reasons, because the warranties involved in this and that pulls the whole thing together.

They're all growing.

But the TPO membrane, which we just built a new plant for in the west, is the fastest growing segment.

Relative to the $144 million of increase, would they have been 40 - 50 million of it?

I don't have a number, Saul.

But I will tell you, as we announced earlier, the demand for our TPO membrane outstripped our capability.

In other words, we were not able to satisfy demand on the TPO and that's why we built another plant and we're feverishly ramping it up.

The numbers right there I wouldn't want to give out because they're not reflective for the market.

We've not been able to satisfy the TPO demand.

And then in Diversified, what was the set of sales growth or detriment in let's say food service and Tensolite and Johnson Truck?

Trail King contributed the most significant growth.

We're not going to be breaking out specifics.

We had sales growth for Tensolite.

Let's say percentage change not dollars

Carol's right, the Trail King business has been growing at a healthy clip.

Johnson Truck Bodies you don't want to talk about because they have been on a work stoppage.

All the businesses are growing at a reasonable rate there, Saul.

Trail King was up almost 30%, Tensolite was up about 30% as well.

And the braking business saw nice increases because of the acquisitions as well as some key organic growth.

Really, the only negative within Diversified Components was Johnson Truck Bodies.

They were down how much, 10% or so?

No, Johnson Truck Bodies was down about 30%.

In revenue?

In revenues.

And then FoodService, what's going on there?

This has been sort of a bridesmaid for a long time.

Are they getting their act together, Rick?

Saul, this is a very attractive bridesmaid.

I know, we want it to be a pretty bride, though.

Exactly.

And so this is going to be -- remember this, a lot of these businesses we've gone through various stages of restructuring but a business becomes a growth platform, Saul, the day you create an advantage.

And so we did talk about our braking business, now we think we've got a growth platform in our braking businesses.

FoodService is going to be a similar story.

This is a good business.

It's got above average margins for us.

We like the segment.

It's a nice piece in our portfolio.

Have we achieved the result that we expect?

No.

But we've got much more aggressive plans going forward.

We consider it very much a growth platform.

You'll hear more about it in the future.

Key part of our long-term growth outlook.

And then just finally talk about the new executive you hired to head up the Diversified Components.

Is there any sort of new actions or initiatives or things that he's sort of brought to the party that you were hoping he would?

Absolutely, Mike Poplielec comes in with 18 years of global manufacturing experience, P&L experience and is off to a good start.

This is a business segment that we've talked about that our smaller businesses have tend to underperform our larger businesses.

Really these are some nice businesses with strong positions in their market niches.

We're just bringing a lot more attention.

For example, we've had several strategic meetings with each of the business units over the last couple of months.

So it's just a matter of creating some best practices and ramping up.

And some of these businesses that we've got in our portfolio are growth platforms but we've got some work to do.

We're off to a good start.

We think all our segments are going to put up some nice comparisons next year.

But, obviously, the Diversified we think we've got continued very favorable comparisons going forward there.

Saul, I want to correct something I said on Tensolite.

Their growth was under 10%.

I was looking at the braking line.

That's where they had the 30% growth because of the acquisitions as well as organic growth.

So Tensolite was up what, like 5%?

Approximately.

What was FoodService?

Theirs was under 10% as well, about the same as Tensolite.

Thank you, Carol and Rick.

Thank you.

Stuart Benway from S&P, you line is open.

Can you tell me how much capacity was added with the Utah expansion?

You know, I -- it's over 100 million.

Let's just use a nice, round number.

Depending on the product mix and the pricing and et cetera, let's just pick a number like that, let's say 100 million.

And how long do you expect it to be before you would need another plant of that type?

I got to tell you, I don't really know -- we have a lot of questions.

Our roofing business is, obviously, as a strategy we articulate certain elements of it.

We're excited about the opportunities.

We think we are going to make additional investments and grow this business.

But I don't really want to speak to the timing right now on additional investments in a specific product line.

On this, the $0.08 charge for the lease, I would assume that was a one-time thing.

Is there going to be any continuation of that because -- ?

It's a one-time charge.

That multi-year lease exposure has been completely reserved for.

Just to sound obvious, then without that charge you would have had $0.94 of earnings in the quarter is that right?

Correct.

Did you say that the Johnson Truck strike cost $0.14 for the year?

For the full year.

Was that less in the fourth quarter?

Yes.

Business was getting better each month.

We said it would be a minimal impact.

And it was not very much impact in the fourth quarter.

Correct, most of it was through the first three quarters of the year

The negative swing the first three quarters.

But obviously it wasn't back to full strength from historical perspective, but it was not losing money.

So you expect to recover that in 2006?

Absolutely.

And how does demand look in the heavy duty truck business?

Well, demand, as you know -- you know what's going on there, with -- there's a change in some technology.

The heavy duty truck business for us, our focus is the aftermarket.

The OE business is going to have a decent '06 and obviously a lot of issues with the changes for '07.

But the aftermarket business in the businesses we're in, is over two thirds of the market for us, and obviously, the aftermarket business doesn't fluctuate with this technology change for '07.

So we like that business.

We like things being made around the world and shipped into the two coasts and then they have got to be shipped all over the U.S.

We've got a nice position there, made some acquisitions.

We see growth, quite frankly, for us because of our focus on-highway trucking and our off-highway braking.

Does that help any?

Yes, that's fine.

Thank you.

That's all my questions.

[OPERATOR INSTRUCTIONS] A question from the site of Godfrey Brickhead with SBK- Brooks.

Pricing, Rick, for last year, how important was that for the top-line and going into 2006 are you raising prices anywhere?

Godfrey, obviously, as you well know, this has been some volatile period the last couple of years.

As we said, we believe we have the ability to pass through these raw material increases.

And I think we've gotten better and hopefully proven that we're not waiting to get this done now.

I think an overall statement we kind of fully -- we've caught up, to a certain extent, with the raw material increases.

As I mentioned earlier, we anticipate some further raw material pressure.

And yes, we're committed to recovering the raw material increases.

We've got businesses that are out, quite frankly, first quarter with price increases.

Once again we're committed to recovering.

As long as the raw materials are in flight, we're going to recover.

Are we talking 1 or 2 or 3%, that type of thing?

We're talking about a more moderate number then we've had up to the last couple of years.

Low-single digit, then?

Yes.

Okay.

Your gross profit margin in the fourth quarter, as I calculated it, was over 19%.

I've been following this company for a number of years and I've never seen a number like that before.

Is that something that will continue going into 2006?

Well, Godfrey, you say will continue, obviously we have seasonal businesses, our stronger quarters are second, thirds.

I think we've been clear that we plan to continue to improve our margins.

We're committed to it.

We've said for years we anticipate additional margin improvement.

One of the goals -- I've just left the Carlisle board meeting and one of my goals I set with the board every year is how many basis points we're going to grow our EBIT margins.

Right.

I have another goal for '06 that I'm going to try hard to meet that's got an improvement in our EBIT margin in it.

That important ingredient of that would be at the gross profit margin level.

Is that fair to say?

Yes.

Carol, the tax rates for '06, please?

33%.

It has creeped up about 75 basis points because as we continue to generate a lot of income within our construction material business, that's all domestic.

So that has impacted our tax rate.

Right now we're forecasting 33%.

Okay and another one like that, depreciation and amortization for this year, please?

Approximately 55 million.

Thank you both very much.

Thank you.

[OPERATOR INSTRUCTIONS] A question from the site of Peter Lisnic with Robert W. Baird.

Rick, I'm obsessed with the roofing business so I have to ask another question.

We are too, Pete.

For good reason, I guess.

When you look at your roofing business over the long run or maybe even what's been happening in '04 and '05 and what might happen in '06 in terms of growth, how do you separate or how do you look at what you are doing in terms of a market penetration growth versus what's happening in the underlying fundamentals for commercial construction?

Well, Pete, as we've talked before -- first off, two thirds of the market is replacement.

Replacement has been underserved by Carlisle SynTec.

We are getting better at it.

We have introduced products to it.

So that's a trend that's under way, is we are committed to growing our share and getting more of the replacement business.

We've always been a leader in the new build, new construction.

We've gone from a regional company to a national company.

We've got goodwill out there and we are expanding.

We coupled insulation with membrane with accessories with the warranty and we're committed to it to be the absolute best and bring the right value.

The numbers speak for themselves.

And so we're excited to have the opportunity to be able to invest in a business with this fire power.

Let's face it, do we think there's going to be opportunities down the line for consolidation?

I don't think it's always just going to be market share, there will probably be some consolidation in a situation like this.

We're committed to the space.

I just keep saying, this is nowhere near a mature cycle.

And that's on the replacement and the new construction side of things?

Yes.

I had to ask again.

Thank you.

Thank you.

Greg Macosko from Lord Abbett and Company.

Thank you, nice quarter.

Could you talk a little bit about the lawn and garden?

We've had some difficulties here, are the plants structured in size now for the demand?

Are you going to be supplying the customers out of the plants that you have in them?

Is there any further changes that we could expect going forward there?

Well,obviously -- the '04 year had a good lawn and garden season.

Everybody built inventory.

We built inventory, our customers built inventory.

Then for various reasons it didn't happen.

It was a double dose of low demand and inventory correction, both at the retail level, at the OE level and then our level.

We've got that behind us.

I was encouraged that we could take our tire and wheel business and run it at a plant utilization 20 points below the prior year and make more profit.

So to answer your question, we believe we enter '06 -- first off the inventories are better throughout the channel, but we enter '06, quite frankly, we've made some changes going from seven days a week to five days.

And you are right, we've right sized ourself and prepared ourself for a very moderate outlook in that business.

We plan to have a better year on a fairly pessimistic look at lawn and garden for '06.

But we have right sized.

Did you take any capacity out permanently?

We didn't really take capacity -- I mean, the changes we made, we're running some businesses with a lot of overtime and seven days a week.

We kept the capacity, but we went from seven days a week with four shifts to five days a week with three shifts.

We're continuing to look, obviously -- this business has a balance between Asian production and U.S. production and there's a constant looking at the right value points, how much to make in Asia and how much to make in the U.S.

And that's been altered somewhat too with more production from Asia.

So, yes, we think that we positioned ourself in a better fashion for '06.

If there needs to be further adjustments, you're well positioned to be able to shift it to different areas at this point, is that the idea?

That's correct.

We have a lot of flexibility.

This is the largest specialty tire and business.

It's totally nonunion.

We have a lot of flexibility here.

We like this business long term.

Household formation, the commercial lawn and garden business is growing, lawn service, et cetera.

We've got 80, 85% share of that.

We've got very good market shares here.

We've recovered these raw material increases, which have been unbelievable.

We enter '06 with a better inventory situation and more of a right sized production outlook.

So if I looked at lawn and garden versus -- or tire and wheel versus the other businesses, would you say that the margin swing has the greatest potential in this business versus the others?

Or is it really construction where the biggest swing is we would expect?

You talk about swings.

We think our Industrial and our Diversified segments have upside potential.

Obviously our construction material segment, we believe, is performing at a fairly high level.

You asked a question about margins.

We think the potential for margin improvement is more so with the Industrial and Diversified segments.

Okay, thank you very much, Rick.

Thank you.

Any sites have any additional questions, please pose those now.

Appears to be no further questions.

All right, well, we appreciate everybody taking the time to listen on the call.

And Carol and I will be back to visit with you in April and talk about the first quarter.

Thank you.