Carlisle Companies Inc (CSL) 2008 Q4 法說會逐字稿

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  • Operator

  • Good day and welcome to the Hawk Corporation earnings conference call.

  • Today's conference is being recorded.

  • At this time, I would like to turn the conference over to Mr.

  • Ronald Weinberg.

  • Please go ahead, sir.

  • - Chairman, CEO

  • Thank you.

  • Good morning, everyone, and thanks for joining us.

  • The purpose of this call is to discuss our 2008 full-year and fourth quarter financial results.

  • I'll be conducting the call myself, Ron Weinberg, the Chairman and CEO, together with Chris Disantis, who is our President, Joe Levanduski, our VP Chief Financial Officer, and Tom Gilbride, Vice President of Finance.

  • As you know, we released earnings today for the fourth quarter and the full year ended December 31.

  • During our call, we will review the financials, give you an operating report on the business, and after that we'll open up the call to questions.

  • I would like to remind you that statements made during this conference call which are not historical facts may be considered forward-looking statements.

  • Forward-looking statements involve risks, uncertainties, that could cause actual events or results to differ materially from those expressed or implied.

  • For further information concerning issues that could materially affect financial performance related to forward-looking statements, please refer to Hawk's quarterly earnings releases and periodic filings with the SEC.

  • With that, we'll begin.

  • As you know, if you've seen our results that were reported, we had an excellent results for 2008 that were driven heavily by the first three quarters.

  • In the fourth quarter we began to see signs of weakness, although we did have favorable comparisons.

  • Later in this call of course we'll discuss the guidance that we've issued for '09.

  • What I'd like to do is make a few comments and give you some perspective on our Company and how we're thinking of these current very unusual economic conditions.

  • First of all, we are responding to the softness by cutting costs.

  • It's one of the first orders of business, and you'll see this described in our release.

  • We, of course, are making sure that we get the effects of variable costs by lowering those, and we are working as well on fixed costs and discretionary spending.

  • We're doing it up and down the line, and we've given some indication of the extent to which we're doing that in the release.

  • The second thing, though, is that we're very fortunate to have a strong balance sheet.

  • It didn't happen by accident.

  • We did foresee several years ago that there would be a time where it would be smart to strengthen our balance sheet.

  • I can't say we had a perfect crystal ball and could foresee what has actually happened here, but we did see it was time to do that and we did whether we sold the powered metal division several years ago and our balance sheet, I think, is going to stand us in good stead.

  • We are using it as a confidence builder both with our customers and suppliers, and as I'm sure you can well understand, that's really an important factor in this climate.

  • Our customers know that we've got the wherewithal to support them.

  • No matter what happens, we will be here and we're making that very apparent to them, and our suppliers know when they do business with us they'll get paid.

  • And then internally, we're using this capability to expand where needed, and during the last 12 months, we have put on some expansion additions in order to be able to support business which was growing and we are continuing to be pleased that we've added that capability.

  • It was domestic capability in our [Bodina] plant and then during last year we expanded some other places as well.

  • We're also using our balance sheet in other ways.

  • We continue to look for acquisitions focused on friction-related companies.

  • We are able to give this probably greater effort internally because we've completed the divestitures of noncore businesses and I think it's safe to say we're focused more aggressively on that.

  • We've got the time and, of course, this is a good climate to be a buyer.

  • Other things we consider or work on, of course, is our stock buy-back program which has been announced in this information the extent to which we have acquired shares in our release that we make.

  • The final point I would remind the investment community about is the characteristics of our business.

  • We're a market leader in what we do on a global basis and we make wear parts.

  • So we're certainly not unaffected or immune to the softness that's going on in the world today.

  • It's probably more than softness, but at the same time we are cushioned to a degree that you don't get when you are completely capital equipment supplier.

  • Friction materials do wear out and there is a replacement cycle.

  • So we're the beneficiary of that on an ongoing basis.

  • So with that as background about what we are, let me turn this over to Chris Disantis, our COO, who will talk about the operations.

  • - COO

  • Thank you, Ron.

  • We're very proud of the fact that net sales for 2008 were a record $269.6 million, which was an increase of $53.37 million or 24.9% versus 2007 despite the slowing world economy which started to impact our numbers in the fourth quarter.

  • Sales benefited from strength in all of our end markets, which supported volume growth through the first 10 months of the year, new product introductions and pricing actions that were taken in accordance with some long-term supply agreements in effect which offset the increases we saw in raw materials and sales also benefited for foreign exchange, particularly with respect to the Euro in the first half of the year.

  • We saw a growth in all of our major markets led by the major segments that we sell into, those being construction, mining, aircraft, defense, and agriculture.

  • In particular, construction in mining was up 28.3%, the mining business was well supported by strong global commodity prices, agriculture was up 38%, strengthened by overall worldwide demand.

  • Aircraft and defense we saw being up 26.4%.

  • This was due to particularly high volume demands from the US military.

  • The heavy truck market finished up 6.8% and growth in that segment was particularly good in the first half of the year versus the second half of the year.

  • And our after-market brands of performance of [Belvitouch] were up 10.7% as we continue to invest in the marketing and advertising in those areas.

  • From our foreign facilities, we saw that in 2008 they represented a larger share of the total pie at 41.6% of our total sales versus 39% last year.

  • And on a local currency basis, we saw good growth at both of those facilities that we have in Italy and China, Italy in Euros grew 23.3%, and our China facility in R&D grew nicely as well at 33.3% during the same period.

  • And with that, I'll turn it over to our cover to our CFO to talk about the financial results.

  • - CFO

  • Thanks, Chris.

  • One thing I want to mention on our revenue numbers, both our full-year net sales for 2008 and our fourth quarter sales for 2008 were in line with our revenue guidance that we issued back in November of 2008 which was about the time that we first started seeing signs of the economic downturn that began impacting our order book.

  • Growth profit margins improved in the fourth quarter of 2008 versus the same period in '07 by a full percentage point at 23.3% versus 22.2%, and on a full-year basis improved to 28.6% versus 23.8% in 2007, reflecting the benefits of higher volumes and pricing actions that Chris mentioned offsetting the increase in commodity costs that we experienced.

  • Selling and technical, administrative expenses increased by 4.5% in the quarter and 19.6% for the full year showing the prudence that we managed our fourth quarter spending.

  • Over on the variable incentive compensation side, the programs that we have reflects the profitability of the organization and accounted for 8.8 percentage points of the 19.6% full-year change.

  • We have also increased our spending on R&D during the year, reflecting our dedication to technology advancements, spending $5.4 million or roughly 2% of our net sales in 2008 compared to $4.6 million in 2007.

  • Income from operations reported $39.2 million for 2008 or an increase of approximately $19.7 million or 101% compared to the $19.5 million we reported in 2007.

  • As a percentage of net sales, operating margins improved to 14.5% from 9% in 2007 and our Q4 income from operations of $5.4 million was slightly above the top end of our guidance range that we issued in November of 2008.

  • As a percentage of sales, Q4 operating margins improved by more than a full point compared to the fourth quarter of 2007, coming in at 9.4% for the quarter versus 8.1% in the fourth quarter of 2007.

  • Our effective tax rate decreased to 35% in 2008 versus 42.8% in 2007 primarily as the result of higher domestic earnings and lower statutory rates in our foreign operations.

  • Overall, income from continuing operations reported $2.40 per share versus $0.82 per share in 2007.

  • Our discontinued operations contributed a loss of $0.19 per share in 2008, reflecting the divestiture of our racing operation during the course of the year versus an income of $1.01 per share in 2007 which reflected the significant gain on sale of our precision components group in the early part of 2007.

  • Turning to the balance sheet, pleased to report that cash and short-term investments increased by $12.3 million during the year to $93.3 million as of December 31, 2008, versus $81 million at 12-31-07.

  • During the year, the positioning -- we really positioned ourselves well to provide stability to our customers and prospective new customers during this unstable climate.

  • The cash position also allows us to be more offensive minded in attacking the markets we serve to help us win market share and to continue our long-term strategic plan that includes supporting internal projects and potential acquisitions.

  • During 2008, the Company deployed $15.2 million in capital spending, slightly below the lower end of our guidance range that we have in the marketplace at $16 million to $18 million due to the timing of some projects and the economic uncertainty during the tail end of the year.

  • The $15.2 million reflects a significant increase over the $7.6 million that we spent in 2007 and positions the company well from a capacity perspective to take advantage of opportunities that will lie on the other side of this economic storm.

  • Turning to the guidance section, 2009 as you can well imagine is an extremely challenging year to forecast.

  • Virtually no market is immune from the current economic turmoil, and we have taken steps to adjust our activity in light of declining demand, including workforce reductions, a hard stance on discretionary spending and freezing of salary wages to name just a few of the initiatives that we have taken.

  • Our current incentive comp program will also act as a natural buffer as it is designed to fluctuate responsibly to the overall profitability of the Company.

  • With our current view of the economic climate that we're facing, we are expecting our net sales in 2009 to decline by 25.8% to 33.2% to a range of between $180 million to $200 million.

  • Operating income guidance reflecting this lower volume assumption offset by the Company's cost-reduction efforts, is being set at between $16 million to $20 million, down 49% to 59% from the 2009 levels.

  • Our capital spending is expected to be between $8 million $10 million which allows for completion of projects in 2008 and a prudent approach to new projects.

  • Depreciation and amortization will be approximately $8 million in 2009.

  • Our effective tax rate is expected to rise from the 2008 levels to a range between 43% to 45%, primarily the result of anticipated lower earnings at our foreign and domestic operations.

  • And, finally, we announced at the tail end of last year that we initiated a $15 million share repurchase program.

  • The company has allowed to purchase up to $11.3 million currently under this program, and from the inception of the program through the end of February, February 28, the Company has repurchased approximately 301,000 shares and approximately $4.6 million of our shares under this program.

  • With that, I'll turn it back to Ron Weinberg.

  • - Chairman, CEO

  • Okay.

  • Thanks, Joe.

  • At this point, we are happy to take questions.

  • Operator

  • (Operator Instructions) And we'll take our first question from Eli Lustgarten from Longbow Securities.

  • Please go ahead, your mic is open.

  • - Analyst

  • Thank you.

  • Good morning, everyone.

  • - Chairman, CEO

  • Good morning.

  • - Analyst

  • A nice 2008.

  • I wish it was the same about 2009.

  • Right?

  • - Chairman, CEO

  • Yes.

  • - Analyst

  • Can you talk about what you're seeing in the first half of this year.

  • You talk about volume down 25% to 33%.

  • I assume the first quarter was worse than that.

  • Can you be profitable in the first quarter?

  • And just give us some sense of what you're assuming to get a hold of the volume at 25% to 30%.

  • I assume we're down more than that in the first part of the year.

  • - Chairman, CEO

  • Yes.

  • We aren't giving guidance by quarters.

  • We can comment in the broad sense about our view of the economy.

  • And while we are not economists, and we certainly have no better crystal ball, but we have to operate with some assumptions, and we're using the inputs we see from other economic forecasters and our own sense of talking to our customers.

  • And we view the first half as being, let's use softness, probably a bit of euphemism in this climate.

  • And we see kind of a flattening in the third quarter and maybe a very slight uptick in the fourth quarter, and these are general conditions.

  • That's not a comment on our exact earnings because internally, as you know, there's several things.

  • There's business that we might get and we consider ourselves in a prime mode to increase market share, and we operate with parts that do continue to wear and get used throughout the year.

  • But that's the model we're using.

  • I mean, it's not a falling-off-the-cliff model, it's softer in the first half with some benefits in the second half.

  • - Analyst

  • Let me go back, can you stay profitable in the first half given the softness that we're seeing?

  • - Chairman, CEO

  • Yes.

  • I don't want to comment on it.

  • - Analyst

  • Is it conceivable that you may not be profitable in the quarter?

  • It looks like the first quarter is very difficult for you.

  • - Chairman, CEO

  • Yes.

  • I don't want to try to answer conceptions.

  • - Analyst

  • Are you seeing any change in business conditions as we get into March?

  • Are you seeing anything in order rates or movement or any change from customers, or are you seeing more extended shutdowns as we saw in the construction equipment industry in the last couple of days?

  • - Chairman, CEO

  • Yes.

  • You're asking the $64 question.

  • And we don't real have an answer for you but that's exactly what we're continuing to look for.

  • Our theory is that there's an inventory component mixed in with the kind of decrease that's you're seeing people talked about -- talk about.

  • And where that begins to turn, we don't know but that's exactly what we're looking for.

  • We are assuming that there is an inventory reduction component built into the really kind of tragic level of numbers you're hearing about in the economy today.

  • We don't have it first hand.

  • - Analyst

  • You're not seeing or hearing anything of any change from the beginning of the year at this point, is that fair?

  • - Chairman, CEO

  • Haven't seen it yet, no.

  • - Analyst

  • Any pricing movement or give backs going on given the status of the marketplace?

  • - Chairman, CEO

  • There is always price dialogue and as you can imagine, everyone is always talking about it.

  • Our goal and philosophy is to try to remain commodity pricing neutral.

  • Obviously, customers always want to buy things for less and suppliers want to get more, and I think we've been reasonably successful in trying to match those two in the past.

  • And that's where we're going to to continue to try to do.

  • You can see where commodities move and we pay the same prices as everybody else.

  • - Analyst

  • All right.

  • Thank you very much.

  • - Chairman, CEO

  • Okay.

  • - COO

  • Thanks, Eli.

  • Operator

  • And we'll take our next question from Ivan Marcuse from KeyBanc Capital Management.

  • Please go ahead.

  • - Analyst

  • Hi, guys.

  • Nice year.

  • - Chairman, CEO

  • Thanks.

  • - COO

  • Thank you.

  • - Analyst

  • Can you quantify the cost savings that you expect to get in 2009?

  • - Chairman, CEO

  • No, we really can't in total.

  • I think there's some numbers in the release.

  • We commented on the 19% reduction in our work force.

  • And we're --

  • - Analyst

  • I mean, are you expecting SG&A was, I don't know -- $37 million, $38 million this year?

  • Do you expect to save $4 million or $5 million out of there?

  • What's the breakdowns?

  • Mostly come out of cost of goods or -- ?

  • - Chairman, CEO

  • Yes.

  • We haven't talked about what we've achieved with fixed costs for two reasons.

  • I guess the most important is we haven't completed it, and we don't know where the number will end up.

  • We're in one of those modes where we look at everything and you can see a mention in the release of some of the larger areas that just deserve mentioning, and we've frozen salary levels, wage rates.

  • So-- we don't have an exact quantification of it.

  • - CFO

  • Yes.

  • Ivan, I think it's -- it's fair to say that the cost reduction initiatives that were taken will affect both the costs of it sold as well as the selling, technical, and administrative.

  • We're looking at all areas of our spending and the incentive compensation program affects both the cost of sales and incentive -- and administrative expenses as well.

  • So you'll see the lowering of the incentive comp expense in 2009 as I mentioned in our guidance reception that will affect both parts of the income statement.

  • - Chairman, CEO

  • Yes.

  • That cost-reduction program is included in the guidance and we have confidence we're going to be able to get around that.

  • - Analyst

  • Okay.

  • What's the utilization rates of your plants right now?

  • - Chairman, CEO

  • That's a good question because it's fairly dynamic.

  • I mean, if you compare it to last year, we had the capabilities with the asset base that we had to be at $300 million business.

  • And we were expanding accordingly to go beyond that.

  • - Analyst

  • Right.

  • - Chairman, CEO

  • Right now, there's certainly some excess capacity in the business.

  • We are very strategic about the cost reductions and the work force changes that we've implemented to allow us to have some additional capacity within the Company such that if either the market comes back we're able to accommodate it or it allows us to continue to be offensive.

  • To the extent that we can go out there and secure new pieces of business, we'll be able to deliver on those.

  • So I don't have the exact percentage for you, but there is additional capacity in the business and we can respond quick three market changes.

  • - CFO

  • And factor into that answer the fact that we did some plant additions toward the end of last year.

  • - Analyst

  • Okay.

  • - CFO

  • And they barely --

  • - Analyst

  • So you have additional overhead?

  • I assume you will, but will it be --?

  • - CFO

  • Say that again.

  • - Analyst

  • Unabsorbed overhead, where do you think how much that's going to be in the first quarter?

  • - CFO

  • Well, what we seek to do is adjust overhead.

  • - Analyst

  • Okay.

  • - CFO

  • So overhead sometimes is people, sometimes it's all sorts of costs.

  • We go down the P&L and look at everything.

  • - Analyst

  • Okay.

  • Then one last question.

  • The third quarter of this year, you guys had -- never really quantified it, but appeared to benefit from pricing to what the costs were flowing through your cost of goods.

  • So as pricing was going up and didn't catch up, so now in this half, with it opposite, is that going to impact you equally as it did benefit you in the first quarter of this year or the second quarter?

  • - Chairman, CEO

  • Well, we're always seeking to neutralize it.

  • Last year we had prices going up and we had commodity costs going up.

  • - Analyst

  • Right.

  • - Chairman, CEO

  • This year to some extent they've come down.

  • Our goal is to not be commodity speculators, we try and neutralize it.

  • Sometimes there's a lag in different directions and it does happen.

  • We haven't -- we haven't tried to break that out our quantify it.

  • - Analyst

  • Lag --

  • - CFO

  • I mean, we did indicate in the third quarter the speed at which it went up in the third quarter --

  • - Analyst

  • Right --

  • - CFO

  • And the fact that we -- the lag that we had with regard to purchasing and the pricing increase that we proactively took, we weren't expecting that to continue on into the fourth quarter.

  • So we really feel that fourth quarter and '09 to date through '09 we're better matched in the way of costs and price.

  • So we're not seeing that same -- I think that was just an anomaly in the third quarter the way it went up so quickly, commodity costs went up so quickly.

  • - Analyst

  • So even with commodity costs unfortunately falling as fast as they went up, you won't have that lag?

  • - Chairman, CEO

  • Yes.

  • We were not expecting that same lag.

  • We were expecting that the matching of costs and pricing was going to take place in the fourth quarter.

  • - Analyst

  • Okay.

  • Great year.

  • And keep up the good work.

  • - Chairman, CEO

  • Thank you.

  • - CFO

  • Thank you.

  • Bye.

  • Operator

  • (Operator Instructions) And we'll take our next question from John Walthausen from Walthausen and Company.

  • Please go ahead.

  • - Analyst

  • Yes.

  • Good morning.

  • - Chairman, CEO

  • Good morning.

  • - Analyst

  • Yes, I guess the couple questions I had with regard to your pension plan, obviously you took a hit there.

  • Is built into your guidance a significant expense and we expect to make a significant pension contribution this year?

  • - CFO

  • Yes to all those questions.

  • I think as it is spelled out in our 10-K, while the deterioration in the market value of the assets have impacted us, the expense, pension expense in 2008 was nominal, something like $200,000.

  • - Analyst

  • Right.

  • - CFO

  • The 2009, and this is built into our guidance, we expect that expense to climb to $1.7 million, incremental $1.5 million of expense that is embedded within our forecast.

  • And given the status of the pension assets and the performance related to the funding of our frozen pension plans, you have to remember all our pension plans are frozen at this state, we have put in in the first quarter of 2009 an incremental contribution to those plans to fund up to the 80% level and it approximated about $3.9 million in totality of all the plans and the contribution to those plans.

  • - Analyst

  • Okay.

  • Good.

  • Then the other question I had was on regarding your comments about the outlook for 2009 and the impacts of inventory correction.

  • Is that sort of working through that inventory correction the major factor in your surmise that perhaps by the third quarter we still see some stability and maybe even a little better comparison in the fourth quarter?

  • - Chairman, CEO

  • That's only part of it.

  • I think our assessment, and we're not practicing economists, is that when you've got governments around the world spending trillions of dollars, it will begin to make a difference.

  • Sooner or later it will make a difference.

  • And we think there will be some impact of that and some restoration of just fundamental confidence by the third or fourth quarter.

  • - Analyst

  • Okay.

  • - Chairman, CEO

  • So you put those things together and that's our model of what's going to happen.

  • - Analyst

  • Right.

  • And (inaudible) about probably an inventory correction going on there.

  • That would apply in the after-market sales as well as in the OEM sales?

  • - CFO

  • Yes.

  • I mean, after-market people adjust inventories just as well.

  • And as I'm sure you know, whenever you have a correction in a sales level as you look, as you push back through the distribution channel, you get a larger percentage correction as everybody seeks to true up their inventory levels.

  • So you can get some of that in the after market, too.

  • - Analyst

  • Okay.

  • That's good.

  • And then I just wanted to comment that if given the magnitude of the sales decline you're expecting, if you're able to achieve your expectations on operating income, I would consider that a management triumph.

  • - Chairman, CEO

  • Thanks.

  • We'll have that in our press release next year.

  • That's our goal.

  • And thank you.

  • Thank you very much for the comments.

  • Operator

  • And we'll take our next question from [Tony Venturino] from Federated Investors.

  • - Analyst

  • Good morning, gentlemen.

  • How are you?

  • I just wanted to ask another question regarding the cost cutting.

  • Could you give us a timing of that, is that expected the majority of that in this quarter, Q1, Q2?

  • I mean, how does that play out over the course of the year?

  • And do you expect to have that completed by the end of the year?

  • - Chairman, CEO

  • Yes.

  • I mean, it's an ongoing program that goes throughout the year.

  • There's a lot of different components to it.

  • We saw what was starting to happen in the market in the fourth quarter of 2008 like a lot of companies did.

  • And we made a very conscious choice to start acting on those programs and those initiatives in advance of, you know, what you're seeing right now.

  • Our program has traction, is in place, and there's still things remaining to implement on the to-do list.

  • - Analyst

  • Is the majority of them -- are the majority in place?

  • Do you have a lot left?

  • - Chairman, CEO

  • Yes.

  • I mean, there's a -- I can't go through every single element of the cost program.

  • I mean, basically every category that we spend money in in one way, shape or form applies to the program.

  • But you can see for instance through the headcount numbers that we've ordered publicly that there's been a substantial cost reduction already in the --

  • - CFO

  • Yes.

  • I think you're trying to figure out where to put it in and we've done a lot of the things.

  • We're not talking about things that we might do in June, for example.

  • What we're talking about has been done in the very early parts this year.

  • You can assume it's been done the last 60 days.

  • - Analyst

  • Okay.

  • - Chairman, CEO

  • Yes.

  • It's not all back end-loaded construction if loaded if that's --

  • - Analyst

  • Okay.

  • Just kind of two things regarding the talks you're doing with the labor, with the unions and whatnot and then with the banks, too.

  • Can you comment on how those are going?

  • Do you see any problem with that?

  • - CFO

  • First of all, by and large we don't have unions one --

  • - Analyst

  • In Italy basically.

  • - CFO

  • I'll let Chris comments on that.

  • In terms of our bank lines, we don't have a bank -- we have a bank line, but we have no borrowings under it.

  • We have the cash that you see.

  • Any debt that we have is high-yield, long-term debt, that matures in 2014.

  • - Analyst

  • The facility doesn't it expire this year?

  • - CFO

  • Yeah.

  • That's correct.

  • The bank facility does expire in November of this year.

  • And we have begun discussions with our existing credit provider as well as others.

  • We see no difficulty in putting something in place.

  • Obviously, we're sitting with a very strong balance sheet.

  • We aren't utilizing our current facility.

  • And despite all the turmoil in the marketplace, we're still very good credit out there.

  • So we are this dialogue.

  • There's nothing at this point to report upon other than the dialogue that is positive and progressing along.

  • - Analyst

  • Okay.

  • - COO

  • With respect to the -- the situation with the union in Italy, there are two different perspectives you can take on this.

  • I mean, we're looking at it in a positive way in that one of the advantages of having contract negotiations in this kind of environment is people's expectations become much more reasonable.

  • So if you're taking a long-term view of the business and you expect to be around and be successful for a long time, we're not reticent in any way about entering into a long-term contract with the union as long as the terms reflect the times right now, and we think we'll be able to achieve a contract like that.

  • So I don't see any problem there.

  • - Analyst

  • Okay.

  • And then how about regards to kind of your different end markets.

  • Do you see them all each equally affected or do you see strength in any areas?

  • Any one worse than another area?

  • Could you maybe just give color on that, the visibility there?

  • - COO

  • Yes.

  • I mean, I -- this is certainly a global situation that's happening.

  • I mean, it's definitely affecting all of our end markets.

  • It's not as if one or two of them are very bad performers and then some others are excellent.

  • I guess the only sign of strength that we would see from a volume standpoint would be with respect to any business that we're doing right now with the US military.

  • - Analyst

  • Okay.

  • - Chairman, CEO

  • We also think where we have a large play in the construction industry to the extent that infrastructure is the beneficiary of a lot of the stimulus programs going on around the world, we see that as helping us.

  • - Analyst

  • Do you see that being a big help or a small help?

  • - Chairman, CEO

  • I don't know how to quantify it because we've got different governments.

  • I mean, the numbers sound huge.

  • - Analyst

  • Yes.

  • - Chairman, CEO

  • But I think whenever you listen to any economic stimulus discussion, it always leads to infrastructure, roads and bridges and all that.

  • And so I think that's going to help us.

  • And when you hear them talk about even things that are definitely infrastructure, everybody is looking to have shovel-ready projects that's become the phrase of the year.

  • And I suspect a lot of organizations do have shovel-ready projects, stuff that they're waiting to do for a long time.

  • So as soon as there's money, they'll begin to do it.

  • And any time you build things, it will help customers of ours like Caterpillar and Kamatsu.

  • - Analyst

  • Okay.

  • Thank you for answering my questions.

  • - Chairman, CEO

  • Yes.

  • Thank you.

  • - Analyst

  • Have a good day.

  • Operator

  • It appears that we have no further questions at this time.

  • I'll now turn the program back over to our presenters for any closing remarks.

  • - Chairman, CEO

  • Okay.

  • Well, thank you, everybody.

  • Thank you for joining us.

  • We're always happy to talk with you.

  • - COO

  • Thanks.