Carlisle Companies Inc (CSL) 2009 Q3 法說會逐字稿

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

Today's conference is being recorded.

At this time, I'd like to turn the conference over Mr.

Ron Weinberg.

Please go ahead, sir.

Thank you.

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

The purpose of this call is to discuss our 2009 third quarter and nine month year-to-date results.

I'm conducting the call, Ron Weinberg; as well as Chris DiSantis, President and COO of the Company; and Tom Gilbride, Vice President of Finance.

As you know, we released earnings today for the third quarter ended September 30, 2009.

During our call today, we will review the financials and give you an operating report on the business.

After that as we usually do, we will open 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 and 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.

I'm going to begin with a few overall comments about the business and the quarter and then turn this over to Chris and Tom.

We are beginning to see signs of life in the economy.

As you will have noticed, our third quarter was up 11% over our second quarter, which of course is a nice and desirable trend.

We also believe at some point in this process, not that we have seen it yet, there will be a bullwhip or a multiplier effect which will really be the mirror image of what we experienced earlier this year, where our actual sales went down to a greater degree than the sales of some of our end markets as suppliers were cutting inventories.

I'm pleased that we have a good balance between our operating results which have run smoothly, and I talk a lot about our operating capabilities on these calls and I think it served us well as well as our new initiatives.

As far as how the operations have serviced us, we had good margin maintenance in a very down year which is good.

At the same time, we lowered our inventory which is what you're supposed to do when sales are declining, while we continued to build cash.

We look at our operating capabilities not only as something to keep the balance sheet in trim and provide us with financial discipline, but we also look at it as a competitive weapon which have I've talked about many times on this call.

Good operations particularly for the OE market, vitally important.

At the same time, we've maintained long-term projects.

We talk a lot about our fuel cell and our carbon work and we have continued those.

And at the same time, we have lots of new business opportunities and growth opportunities that Chris will cover in just a minute.

One thing that we have found is helpful to those analyzing the Company is our response to a question we get fairly often which is -- well, you're in the friction business and what does that enable you to do to grow on a worldwide basis?

Because we do continue to keep our business model very focused.

We think we have a great niche, a niche that we are one of the dominant world leaders.

And as we focus on it, we want to make sure that we convey the opportunities to the investment community that we see ourselves.

A way that we started characterizing this that seems to be helpful is we look at it similar to market portfolio analysis where we talk about a beta mode of growth or an alpha and then something we have coined which is sort of the (inaudible) if you will which is longer-term projects.

In our beta which is similar to the way you look at the financial community, is the part of our business that moves with demand.

When we are on a given application, we're very sticky there.

We work hard to stay that way.

We are engineered in.

And the results of the usage in that application will be -- it will be what it is.

In other words, this year if a customer needs 3000 parts or 2000 parts or 5000 parts on a given application, that is what it is; not a lot we can do to influence that in the short run.

What we can do, however, and we look to this as the alpha part of our business, we can constantly be seeking new applications, new geographies to go after and new product extensions.

We have lots of opportunities to do that.

And as a matter of fact, we have accomplished new business rewards during this year and Chris is going to cover more of that in detail and give you a flavor for it.

So we look at those two modes of how we operate.

There is a third which we call the C mode and that is our long-term projects.

That's fuel cell, that's carbon.

These are new blue sky opportunities that really have enormous potential in the future.

The fuel cell is alternative energy.

I think that those of you who have followed the Company have seen we have begun to express the sales that comes from that.

And the carbon which is an outgrowth of our friction business also has opportunities in non-friction applications.

We have developed a new way of making a carbon material.

So those are backgrounds and we will go more into that.

And we found and some of our people we talked to [found in a helpful way, look, it's a company].

We continue to work on acquisitions.

Nothing to report right now, but we do have very active effort going on in that regard and certainly at some point do hope to have something to report.

At this point, I'm going to turn the call over to Chris DiSantis who will cover operations and other business matters.

Thanks, Ron.

I'm going to go through our sales numbers and then provide some commentary on the markets.

In the third quarter this year, we still saw a large sales decline relative to the third quarter of 2008 as a result of general economic global downturn.

But on the positive side, we do believe we have come out of the bottom of this cycle as evidenced by our sequential sales improvement since the second quarter this year and here are some numbers.

The net sales for the third quarter of 2009 came in at $43.5 million which was down $30.7 million, 41.4% from the prior year period.

The way that that breaks down is all volume.

41% of that is volume.

Foreign exchange was 0.7% to the negative and we had a modest offset pricing benefit of 0.3%.

In looking at the end market comparatives for the third quarter of 2009, mining and construction which is our largest segment was the hardest hit, down 56.9% with the smaller equipment used in the construction sector being the piece of that that was most affected.

In the third quarter of 2008 by comparison, this slice of the business, mining and construction, represented 46.3% of our total sales and in the third quarter of 2009, it represents only 34.1% of the total.

Aircraft and defense combined were down 27.4%.

The weakness in that segment is largely driven by poor demand in the aftermarket, particularly on the older aircraft platforms.

Agriculture was 40%, particularly with respect to weaknesses from our customers there in Europe.

And heavy truck was down 35.6% on both weakness in OE builds in North America and also overall freight mileage being down which hurts both the aftermarket and the OE service channels.

The direct aftermarket business which was VelveTouch and HAWK Performance was down only 9.7%.

And all of this decline was on the VelveTouch side which serves the industrial aftermarket.

Our HAWK Performance brand which is disc brake pads for the fleet, street and race markets actually did very well; increasing 24.2% versus the same quarter last year.

And finally, alternative energy, fuel cells, albeit still a small percentage of our overall business, was up almost three times since the prior year and we are glad to see that segment of the business starting to get some nice traction.

The foreign facilities, sales from the foreign facilities represented 26.7% of our total sales in the third quarter.

That's a large decline compared to 39.9% of the pie in prior year.

Now the domestic operations have been holding up better due to their revenue diversity as well as the larger aftermarket flavor to the domestic businesses.

On the international side, there's particularly large concentration in OE construction mining and agriculture.

Sales in our Italy facility were down 60.6% in the third quarter.

This one plant as by far experienced the largest contraction versus any of our other plants.

And in local currency terms, sales in our China facility were down 47.4%.

On the new business front, we're happy to see that we continue to secure new programs from our existing OE customers like Caterpillar, CNH and others.

And we continue to develop products that launch directly into the aftermarket, particularly in our HAWK Performance business where we've introduced a lot of new shapes for a lot of applications and we have been able to grow that business nicely.

Additionally, we have been adding both value-added operations and producing more unit volume for our main customer in the alternative energy area which has helped our numbers.

So despite the declines, we are pleased that we have have also seen no major loss of customers, loss of programs or loss of share in any of our businesses

On the positive side for the first time this year, we have started to bring back workers.

We started to increase our headcount for current production needs and we're also evaluating making a considerable investment in sales, R&D and engineering resources in 2010 to staff a variety of these growth initiatives that we have in new geographies, places like India, and also to staff a lot of the new growth programs we have like carbon composites and [power supports].

Going forward, we do expect that market conditions are going to improve.

We think the worst of our sales decline in this cycle is behind us and we're seeing the order boards for all of our major customers starting to increase.

So with that, I'm going to turn it over to our VP of Finance, Tom Gilbride, to talk more in depth about the financial results.

Thanks, Chris.

What we're here to talk about today is the income statement for the third quarter period ended September 30, 2009.

As Chris has indicated, sales for the quarter were down 41.1% to $43.5 million from the prior period quarter.

One thing we should emphasize is that the sales -- our results in 2008 including sales were a record for any quarter reported by Hawk.

So the comparison is off of a very strong quarter.

We do believe the real story in the third quarter of 2009 is the comparison to the second quarter of 2009.

As Chris said, our results are up 11 -- our sales results are up 11.3% and that -- we got a benefit from all of our facilities.

So even the foreign facilities which Chris had talked about provided a benefit when we compare second quarter to third quarter.

As we look at this improvement quarter to quarter, we saw pickups for most of our major markets and customers.

Construction and mining was up 14% from the second quarter to the third quarter of 2009.

Aircraft and defense was up 19%, ag up 22% and truck up 4%.

So we are seeing the benefit of these early signs of pickup in the third quarter results.

Looking at our gross profit, we reported $13.6 million compared to $25.1 million in the third quarter of 2009.

As a percent of sales, gross profit was 31.3% compared to 33.8% in the 2009 quarter.

I believe what we are seeing here is that the ability of us to hold margins in spite of the large volume decline.

The decline was primarily the result of the reduced sales and production volumes throughout the facility in the quarter.

Our cost of goods sold percent increased from 21.5% to the 31.3% as we went from the second quarter of 2009 to the third quarter of 2009.

Again, we saw the benefit of the volume increases quarter to quarter and that in the absorption of fixed overhead helped us in that upward trend.

SG&A expenses for the period declined $2.2 million from 2009 compared to 2008.

Clearly the reduction there was primarily from the reduced incentive comp and wage reductions during the period.

As we have talked about on past calls, our incentive comp is a big portion of this number and it's based on profitability.

So as we compare last year to this year, clearly profitability is down; and as a result, incentive comp as a portion of SG&A has dropped accordingly.

We also saw declines in sales and marketing expense quarter over quarter as we responded to the lower volumes.

We reduced advertising and trade show expenditures during the period.

As a percent of sales, SG&A was 16.8% in third quarter of 2009 compared to 12.6.

And again, this is mainly attributed to the volume declines that we saw during the period.

Looking down at other income, we reported $1.5 million or $0.12 per diluted share related to a decision we made with a partner to accept a cash payment in lieu of developing a new product with them.

There was a similar payment in 2008 of $1.3 million or $0.09 per diluted share.

We bring this out because it's clearly not a recurring event.

It just so happened that it happened in the third quarter of '08 and '09 but it's not something that we expect quarter to quarter.

As a result of all of these items, net income was $3.8 million in the third quarter of '09 and that compares with $10.3 million in the third quarter of 2008.

Moving over to the balance sheet, cash at 9-30-09 was $86.3 million.

This compares to $93.3 million at 12-31-08.

Again as we look at the end of June, going to September 30, our cash increased $7.6 million during the quarter.

Accounts receivable dropped $10.6 million from 12-31-08 levels and this is due primarily from volume declines during the period.

Our day sales increased by three days to 55 days from 52 at 12-31-08.

The primary cause of this increase was really due to the sales activity through the end of the third quarter.

So we are seeing that sales pickup as the year has gone on.

Our receivables remain of excellent quality.

We feel that there are no real issues with the quality of any of the customers that we are dealing with at this point.

Inventory levels are down $12.8 million to $28.6 million at September 30, 2009.

Clearly we have instituted a number of inventory programs with the goal to reduce inventory in place throughout the organization.

We feel we've been very successful in getting inventories down to optimal levels.

Also inventories have gone down in relation to our sales volume declines.

So we did expect that inventory would go down based on the revenues we saw during the period.

Day sales and inventory dropped by two days when we look at 9-30-08 compared to 12-31-08.

It is up from June 30, 2009 levels of 71 days.

Again this is a result of our increased sales and production activity in the facilities during the third quarter.

We spent $2.1 million on capital expenditures during the third quarter.

As we discussed last quarter, we did enter into a new three-year revolving credit facility with KeyBanc and that facility expires June 2012.

So we do have long-term financing in place that we will have available to us.

Under that facility, there were no borrowings at 9-30-2009.

Last thing really on the balance sheet is looking at the change in shareholder equity of $2.9 million, going down at $74.5 million at September 2009.

It was primarily driven by of course the earnings of $4.8 million during the nine-month period.

We did see an FX translation adjustment of positive $1.8 million.

As everyone is aware, we do have that one-third of our business in euro.

That currency has strengthened significantly during the last few months.

That has benefited us in the translation adjustment as of 9-30-2009.

And then offsetting that and really the reason for the decline in equity in spite of an earnings is $11.2 million in stock buyback.

We did indicate that we had a $15 million stock buyback plan.

Under that plan, we have approximately $1.7 million left available under that plan.

And to date, we have purchased approximately 989,000 shares under that plan.

Moving over to guidance, there's really no significant changes to our previous released guidance.

We have tightened our revenue range to $165 million to $175 million for the year.

For the fourth quarter, this would indicate revenues of $38.2 million to $48.2 million.

However, we do indicate in our release that there could be some year-end working capital actions taken by our customers.

At this point, we're not aware of those.

In our guidance, we've indicated our revenue range the best we can.

However, there could be some non-anticipated actions taken by customers as we do get to the end of the year with possible plant shutdowns during the holiday period.

Operating income we now expect to be in the range of $15 million to $17 million for the year.

Again fourth quarter has always been the slowest quarter for us on an historical basis and this is typically because of reduced production and shipping days during the quarter because of holidays.

The other thing we do expect in the fourth quarter is there will be some mix issues which will have an impact on the operating income range during the last quarter.

And CapEx will be between $8 million to $10 million in 2009.

This compares to $15.2 million in 2008.

And with that, I'll turn it back over to Ron.

Thanks, Tom.

At this point, we will open the call up to questions.

Any of you have got them, please queue them up.

(Operator Instructions) Ivan Marcuse, KeyBanc Capital Markets.

You are doing great on the gross margin part, on the profitability part.

In the second quarter, you said it was a better comp to go third quarter versus second quarter.

But in the second quarter, volumes were down probably in about the same range, maybe a little bit more.

And your gross margin dropped, year over year dropped 800 basis points.

But in the third quarter, we only saw -- it was a 200, 300 basis point drop.

I understand that volume increased sequentially, but is there anything else [new] that you benefited from in cost of goods like a FIFO benefit or a price cost match difference?

What was the main driver of the profitability?

I think it's more of a phenomenon of what -- this is Chris.

It's more of a phenomenon of what happened in the second quarter as opposed to strictly the volume increase to the third quarter of the year.

There were some major inventory changes in the second quarter of the business that affected us.

But I don't know if I would describe it as a FIFO issue.

No, I mean there weren't any one-time inventory adjustments that affected either of the quarters.

Clearly we reacted -- we did react with reduced employment levels and things like that.

I think we are seeing some of that pick up in the third quarter as volumes strengthen.

But, yes, there's no one-time or any adjustments that would have affected the margins.

There were some cost savings initiatives which were beginning to be implemented in the second quarter of the year that we didn't get the full benefit of until the third quarter related to manpower reductions and so forth.

So would you expect that you could maintain this type of profitability on a go-forward basis if you're just looking for a slight increase of volumes, you get that kind of bump up?

Well we haven't put out guidance for '10 and to comment in detail on it would lead to that.

There's always a lot of factors that we end up jockeying with.

You all know it's the kind of things we end up talking about -- product niche, commodity prices and volumes.

But I think what is going to be the important factor that's going to play out over the next 12 months will be of course volume.

That's powerful.

And I think to the extent which we have cut our costs and will be very stringent and careful about how we bring on any additional costs, direct labor, etc.; that's going to be the overriding factor.

Commodity prices always affect us in terms of timing.

We have talked extensively about our philosophy which is to try to neutralize that as much as we can.

In other words, we try to price and buy our commodities so that we neutralize the spread.

But sometimes we will get a time gap in there.

So those are the things to consider.

I'm giving you some of the factors.

I'm not giving you the exact answer.

But there certainly were no extraordinary items of any real size in here.

Okay and then secondly, in the new product development, sounds like you're doing a great job there.

What end markets do you see you I guess growing at the biggest rate?

Is it new products going into construction and mining or is it aerospace?

Where do you see most of your new business wins coming out of and what do you think is driving that?

Let me divide -- when we talk about new products, let's clarify it and then we will ask Chris to comment on the markets, per se.

When we talk about really new products, of course we talk about the fuel cell and the carbon.

And then when you go back to our call it basic businesses, than there are a lot of new applications and new product extensions might be a better word, and geography.

Chris, do want to add anything to (multiple speakers)

Yes, it depends on the time frame that you're looking at.

If you look at short term and going into 2010 where we're going to get the biggest impact, the biggest changes that you're going to see in sales are more economic driven.

If you look at the mining and construction market, I mean it's a segment of the business that's just been absently killed in 2009.

And I think if you're -- think about growth going forward and where you're going to see the biggest change the fastest, I think it's going to be in the cyclical end markets.

The growth programs that we talk about that are more longer-term in nature, things like carbon composites, fuel cell, power sports, new geographies like picking up new business in India and getting more serious about our ventures into Russia and picking up new business there, product line extensions; those are the things that are going to provide support to the growth I think in 2010 but things that have more longer-term breakout potential than what you would see next year.

Great and then one last question, more of a quick modeling type question.

On the [SG&A], would you expect in the fourth quarter sort of the same type of magnitude in drop that you saw in the third quarter (multiple speakers)

Magnitude drop versus --

You were down $2 million in the third quarter.

Would you expect that to drop in the fourth quarter since profitability (multiple speakers)

You mean for the last year?

Yes.

Well, I think you have to squeeze that out from what our guidance is for the year and it would be consistent with those things.

SG&A as you know is a mixture of a lot of fixed costs and semi-variable costs, maybe a few that vary somewhat and overladen with where it would be with our incentive comp.

My question -- I understand it was more or less you said you were going to sort of amp up a little bit of the sales spending in R&D.

Do you think you'll see any of that in fourth quarter or is that more of a 2010 type budgeting phenomenon?

No, I don't think we anticipate a pickup in that kind of stuff in managed costs during the fourth quarter.

Great, I'll get back into queue.

Thanks a lot for taking my questions.

Eli Lustgarten, Longbow Securities.

Let me just follow up in the same vein.

When I look at the income statement, you had a little over 10% profit margin, operating margin in the friction business in the first quarter.

Inventory and the drop in volumes took it down a little over 3% and now you are at 14%.

That was a huge, huge step up in profitability in the quarter and how much -- is that mix?

Is it better cost management and how sustainable is that level of profitability?

Because I think you indicated you have some mix issues in the fourth quarter.

So I assume you're sort of telling us that the profitability will be a little bit lower.

The comparisons you just made, were you comparing our Q1 to Q3?

Q1, Q2, and Q3 is what I just referenced.

Well a part of what you were seeing in Q1 and Q2 of course is we were cutting costs.

A lot of those hadn't really happened yet.

So we were catching the lag effect of that.

Volume was terrible in those quarters of course.

So we were really getting hit from both sides.

The volume in the third quarter and the volume in the first quarter are very similar.

It's actually lower in the third than the first, but the profitability is 14.1 versus 10 on an operating (multiple speakers)

What happens is there are mix issues.

But it takes time to adjust.

You've got to look at what we did in the third and fourth quarter of 2008 and this rapid, massive decline going into the first quarter of '09.

Yes, I guess my question is the sustainability of the 14% of that kind of number as we go forward given the volume levels are going to be similar.

He's talking about operating income, he's asking (multiple speakers)

Oh, that's the 14% you're talking about.

I mean I think, again, we're not giving guidance for 2010 but there's nothing happening right now that's not sustainable, especially if volumes start picking up.

Yes, well I guess your fourth-quarter volume (inaudible) fourth-quarter volume is very similar to the third-quarter volume in your range if you take the midpoint.

But you mentioned that you have some mix issues in the weaker quarter.

So I was asking is the fourth-quarter operating margin going to be similar to what we've seen or do we lose a little bit because of mix as you indicated?

We think the third-quarter mix is likely to be more favorable than the fourth-quarter mix and that's reflected in the (inaudible) values.

I think if you look at our operating income guidance, it does show based on comparable revenue levels, that the operating income, if you squeeze out the operating income, it does go down a bit.

That does incorporate some of those mix issues that we expect.

And then the second part was the sustainability of that level of this profitability should be able to go into 2010 without much issue depending on where volume levels turn out to be.

Is that a fair statement?

That's a fair statement.

One clarification.

Tax rate, you said 36% this year.

Is it fair to assume that it will go up somewhere between 36 and 40 next year?

Because you expected 39.9 I think originally.

Assuming your profitability -- you get better business outside the US, that you have a little higher tax rate next year than this year.

The difficulty that we have with tax rate and you can see it over these calls that we have is that it does fluctuate and it's because given the income or loss within one of the geographic issues, because of that rate did move pretty dramatically.

So I think right now, we really don't know where we're going to see 2010 if the effective tax rates (multiple speakers).

I would like to say it's within the range that you gave, but it's too early for us to do that right now.

But the structural question I was asking is that if we are at 36 this year and all things being equal, the US business will get better and as you would expect the overseas business to get somewhat better, would that tend to drive the tax rate up?

Here's the reason we don't know the answer to that is it depends on the proportions.

If the foreign taxes went up more or less than -- foreign profit went up more or less than domestic, it could affect it.

Are you profitable overseas right now?

As we go through the nine months, yes.

But in the last quarter or so?

Second quarter, we were not.

Third quarter, we were (multiple speakers)

I think modestly.

Yes, modestly.

Okay and when you talk about alternative energy, with the percentage that you gave us in the Q, alternative energy business is running right around -- a little under $1 million a quarter right now.

Is there any material change expected over the next year in that business?

Is that the rate (inaudible) some events happen?

We are trying to get the fixed rate (inaudible) you're looking at (inaudible)

We think it's going to grow.

Everything we comes from United Technologies in the sense of information.

We see it as a growing industry, getting good support for all the things as you're well aware alternative energy does, tax benefits in various states for users.

They have embarked on a market segment which ironically enough is green supermarkets, which a supermarket, they want to be able to make a green statement, some of them particularly.

And they also if the power is out even from mundane stuff, storm, hurricane, it's very expensive for a retail business.

So adds a little frosting on the cake to the cost.

It becomes less than just a pure cost per kilowatt hour for these.

So we think business is going to be good.

I can't give an exact growth rates but you can see it is a dynamic area.

I understand the long-term potential, but you have not seen any business activity today to orders or something that would give you any insight as to what would happen in 2010 at this point?

We think it will certainly be better in 2010 than 2009.

We have positioned ourselves with this customer in such a way that we're providing more value added operations than we have before.

So our relative revenue for each unit that they ship, even if they were to ship the same number of units, is a pretty substantially.

How much do you have per unit at this point?

Can you give us some measure of what you would ship?

We haven't disclosed that.

So we better not (multiple speakers)

I'd rather not disclose that.

But what I can tell you is that it's one that we have a lot of confidence in.

Our customer, a big multibillion dollar corporation, is putting a lot of capital behind it.

We do think they will sell more units next year.

we do have more value added operations but it is -- look, it's a business.

If you followed alternative energy and fuel cells, you've got to have a large standard deviation around.

All right, thank you very much.

[Zahib Saadiq], Gabelli & Co.

Couple of questions.

First on the share buyback program, in the quarter you didn't buy I guess any material number of shares.

What is your plan with the remaining authorization outstanding under the November plan?

Sure, you're correct.

We had very few shares purchased in the third quarter.

As we had indicated on prior calls, the limit under that share buyback also has a sublimit driven by the indenture.

As we ended the second quarter, we were at the limit under the indenture.

As we go through the end of the third quarter, the indenture limit now equals the Board approved limit of $15 million.

So we do have the 1.7 million that we can buyback at any point in time.

The plan is still an open plan and just depends on I think market conditions as to whether we do that this quarter or next quarter.

Our philosophy will be to continue to buy back stock as we deem appropriate and to the extent we make money in the future, that increases the pool or the amount that could be used.

So it will be a matter of individual cases.

But our philosophy remains the same.

Okay and my next question is on the quotation activity.

I was wondering if you could comment on that activity and the order activity.

You had touched briefly in your comments but if you could expand a little bit more on that?

By quotation, you mean just our rate of incoming RFPs or new business?

Right.

We haven't quantified that but we can comment qualitatively is that we have seen the beginnings of a pickup in certainly new business and I think in quotations as well.

Yes, we don't disclose actual quantity shipped.

But what I can tell you is if you were to look at it on a consolidated global basis for [Wellman], you would see some numbers which were not great in January, February and March continuing to get worse until about the May/June time frame when they started to stabilize.

And now we're starting to see -- get a nice trend of improvement and the order board as it carries us out into 2010 shows a level of demand which is improving, not one that is flattening out or one that is declining and that is the trend you want to look for on a monthly basis.

Sure and I guess looking into 2010, I know you don't give guidance, but directionally, would you expect the revenues to be up and profitability compared to '09 or down?

Well, we haven't given guidance.

We won't go into detail but you can tell from what we're saying is we see the beginnings of an economic upturn.

We certainly expect to be participants in that.

So I couldn't imagine things being down.

(Operator Instructions) [Anna Pinna, TA McCain].

My question is pretty brief.

I was just wondering if you could provide a status update on your search for a new CFO.

There is no search for a new CFO.

We have Joe Levanduski who continues to be part of management of the Company as a Senior Vice President.

He doesn't have the CFO responsibilities.

Those various responsibilities have been assigned to other people in our financial team.

We have got good depth and John [Braunsdrup] and Tom Gilbride are handling certain various issues that the CFO position handled.

Joe has been spending a lot of his time on other things, particularly corporate development and M&A work.

It appears there are no further questions at this time.

Mr.

Weinberg, I will turn the conference back over to you for any additional or closing remarks.

Okay, well thank you, everyone.

We're always glad to take questions and visit with you in between calls and we will see you next quarter.

Thanks (multiple speakers)

That concludes today's conference.

Thank you for your participation.