Donaldson Company Inc (DCI) 2005 Q4 法說會逐字稿

At this time I would like to welcome everyone to the Donaldson Company's fourth-quarter and fiscal-year 2005 conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer period. (OPERATOR INSTRUCTIONS) Mr. Sheffer, you may begin your conference.

Good morning, and thank you, Crystal.

I am Rich Sheffer, Donaldson's Assistant Treasurer and Director of Investor Relations.

I would like to welcome you to Donaldson's fourth-quarter conference call and webcast.

Following my brief introduction, Tom VerHage, our Vice President and Chief Financial Officer, will give us a brief review of our fourth quarter results.

Tom will then turn the call over to Bill Cook, our President and Chief Executive Officer, who will discuss our outlook and the business conditions shaping that view.

Following Bill's remarks, several members of our management team are available to field your questions.

Next on the agenda is the reading of our Safe Harbor statement.

Any statements in this call regarding our business that are not historical facts are forward-looking statements, and our future results could differ materially from the forward-looking statements made today.

Our actual results may be affected by many important factors including risks and uncertainties identified in our press release and in our SEC filings.

Now, ladies and gentlemen, here is Tom VerHage.

Thanks Rich, and good morning, everyone.

Operationally, we had a good fourth quarter.

Sales remained strong and our global Business Units delivered solid results.

Excluding two unusual items, our earnings and operating metrics were in line with expectation, even after absorbing some rapidly increasing commodity costs.

As noted in our press release, we accrued an additional $6.4 million or $0.05 a share as a result of the appeals court decision in the EPC patent litigation case.

And we also took a tax charge of $4 million or $0.05 a share for our previously announced $80 million foreign earnings repatriation plan.

So excluding these unusual items, the quarter came in on track with our expectations.

As we discussed during last quarter's call, we again experienced some gross margin pressure from petroleum-based raw materials, specifically plastics, adhesives, and urethane, and also from fuel surcharges on freight.

The cost impact was approximately $2 million, and only a small portion of that was recovered through price increases.

Given that oil prices seem to have plateaued at their current high levels we do not expected this margin pressure to ease any time soon.

Start-up costs at our new Thai disk drive plant also had a slightly adverse impact on gross margin.

Our disk drive filter customers weren't able to test products and approve our plant as quickly as anticipated due to their very high production levels.

The good news is that we have now received most required customer approvals, and production is ramping up quickly.

So these start-up costs will not be an issue in future quarters.

We have completed our Sarbanes-Oxley testing, and I am pleased to say that we expect to report no material weaknesses when we issue our 10-K in a couple of weeks.

The compliance efforts cost us around 3 million in incremental cost this year, not to mention a lot of very hard work by our colleagues around the world.

Going forward, we expect that these costs will be somewhat less than the run rate in 2005.

As noted in the press release, our tax rate was impacted by the charge for our earnings repatriation plan.

Our tax rate from normal operations is expected to continue to be approximately 27%; but of course it can be impacted from time to time by nonrecurring items.

Regarding the repatriation plan, we have already brought back approximately $50 million in fiscal 2006, and have reduced short-term debt with this cash.

As we look forward to fiscal 2006, we again expect gross margin to be around 32%, assuming that commodity costs remain near their current levels.

We expect operating expenses to be between 21% and 21.5% of sales.

Now I would like to point out just a few items that we have factored into our 2006 assumptions.

First is CapEx.

We spent approximately $50 million on CapEx in 2005 as we built our new Thailand plant and expanded our plants and Australia and Italy.

Looking to 2006, we have several new projects planned, including two new plants in China, a new plant in the Czech Republic, a new distribution center and warehouse in South Africa, and several other projects that are in the proposal stage.

With these projects and our ongoing maintenance CapEx, we are anticipating an increase in capital spending for 2006 to a range of between 85 and $95 million.

We expect depreciation and amortization expense will continue to run between 45 and $50 million.

Next is start-up and plant rationalization expenses, which were $3.6 million in 2005.

Due in large part to the new plants I just mentioned, we expect these costs to increase to approximately 5 to $6 million in 2006.

Third, we will begin expensing stock options in the first quarter of 2006, and we expect the impact for the year to be between $0.03 and $0.06 per share.

Fourth, as you know, we need to revise the assumptions for our pension calculations each year.

For 2006, we are reducing the discount rate for our obligations from 6.25% to 5.5%, which is the key contributor to our expected increase in pension expense by nearly $2 million.

Finally, we expect net interest expense to increase by approximately 3 to $4 million.

This increase is driven by high interest rates, and a reduction in interest income resulting from the reduction of cash in our foreign entities due to our repatriation plan.

So to summarize, we had a solid fourth quarter.

Our first year of Sarbanes-Oxley efforts have thankfully been concluded, I just want to personally thank the hundreds of very hard-working colleagues around the world who have contributed to this successful result.

Finally, in 2006, we will continue to make major investments for our future growth.

Now I would like to introduce Bill Cook, who will discuss our outlook.

Bill?

Thanks, Tom.

While we have covered our fiscal '05 results in detail in both our press release and Tom's comments, I would like to offer you my own perspective on the past year.

In a nutshell, while we had a number of challenges, ranging from commodity price increases to the unexpected legal decision, all-in we still had a great year.

We added $180 million or almost 13% to our revenue line, posting a new revenue record of $1.6 billion.

As Tom mentioned, to support this, our organization continued to grow.

We expanded our plants in Australia and Italy, opened our first plant in Thailand.

Currently we have major expansion projects underway in China and the Czech Republic, with more to follow.

We now have over 11,000 Donaldson employees in 35 countries around the world supporting our global OEM, aftermarket, and industrial customers.

Our EPS for the year including all the unusuals Tom mentioned was $1.27 and represents our 16th consecutive EPS record.

Bear with me while I repeat that.

We just made our 16th consecutive EPS record.

So the bottom line, as Tom said, is we had a very good year.

Now I would like to switch gears and talk about our outlook for fiscal '06.

We're entering fiscal '06 on very solid footing, as most of our end markets are strong.

Our overall starting order backlog was up 11% over the same point last year.

Taking that down a level to talk about some of the specifics by business, in our engine business, our North American heavy truck customers are expecting strong build rates to continue through the end of calendar 2006.

Our North American construction and mining OEMs continue to see robust conditions.

Overseas, our European and Asian engine businesses have solid backlogs; so we are expecting another strong performance from both of those regions as well.

So to summarize, our engine filter customers continue to see strong conditions globally, and we are expecting our sales to the upper around 10% in fiscal '06.

Now I would like to switch to the industrial side of our Company, starting with our Industrial Filtration Solutions business.

Global conditions are good, and we continue to execute our growth plan around the combination of our ultrafilter and dust collection product lines.

In our special applications business, we had a very good year in fiscal '05 and are expecting another good year in fiscal '06 due to the continued strength in both our disk drive filter business and membrane business.

Finally, in our gas turbine business, we're seeing conditions there improving modestly.

Although we are not seeing much near-term growth in North America in gas turbine, we're seeing good growth opportunities internationally.

So putting all the pieces of our industrial businesses together, we are expecting on the industrial side sales growth in fiscal '06 to be up in the high single digits.

Now I would like to talk about two of the growth initiatives we've covered in most of our calls, and the first is PowerCore.

I just wanted to give you an update on that.

We're very pleased with the continued success of our PowerCore technology.

Our engine PowerCore sales continued to ramp up in the quarter and the year.

Sales in the quarter were up 31% and for the year up 42%.

Since the last time we talked about PowerCore we have added five more wins.

We now have 36 PowerCore platforms, 27 of which are now in production, with several of those having started in the past quarter.

In addition, we have another 67 PowerCore proposals out there for new platforms at our OEM customers.

The bottom line on PowerCore is we continue to expect to see sales growing in 2006 to about $32 million.

The second opportunity I would like to talk about and give you an update on is our diesel emissions opportunity.

There are a couple of components of this.

First, the retrofit opportunity.

We have talked about this in the past.

We had set a target for ourselves for last year of $12 million in revenue.

I am very pleased to announce that we hit that target.

We continue to see that business growing as we move into the next couple of years.

The second part of the emissions opportunity is related to the 2007 federal regulations.

Since we last talked, Donaldson has won another OEM platform around these '07 regulations.

There are another five platforms out there which will be awarded over the next year.

All-in we expect to see our current $50 million truck combination exhaust and emissions business in North America grow from $50 million to $150 million by 2010.

So to summarize, fiscal '05 was a very good year, our 16th consecutive year of record EPS; and we expect fiscal '06 to be another record sales year and earnings year.

We remain very optimistic about our prospects going forward.

We see our PowerCore technology, the diesel emissions opportunity, the execution of our Industrial Filtration Solutions model, and our international growth opportunities all contributing significantly over the next couple of years.

That concludes our prepared remarks, Crystal.

Now we would like to open up to your questions.

(OPERATOR INSTRUCTIONS) James Gentile with Sidoti & Company.

You mentioned that you are essentially doubling your capital budget for fiscal 2006.

I was wondering, with the two new plants in China and the one in Czech Republic, where is the majority of the growth going to be seen?

Is it perhaps in the engine, industrial business, PowerCore platforms, etc.?

James, it's Bill Cook here.

We are investing for both sides of our Company, both the industrial and engine.

As you heard in our guidance, we're looking at slightly more revenue growth on the engine side fiscal '06.

But the numbers are pretty close.

All of those investments are really -- we're not making them just for fiscal '06, for the long run.

Of course not.

But I meant, is the Chinese plant going to be solely perhaps aftermarket?

Are you penetrating better OEM platforms in China?

The two new plants we are doing in China, one is for the industrial and one is on the engine side.

So it is sort of split.

We're also making investments around the world on the distribution side to help grow our replacement parts business, both to support our OEMs and for the independent aftermarket.

Great, thanks.

Kevin Monroe, Thomas Weisel Partners.

I was hoping that the -- in your engine segment you had a good growth year-over-year but your operating income is actually down.

I was wondering if you could explain why the margins declined so significantly in that business.

This is Tom.

That margin reduction in engine is principally due to the additional charge related to EPC, the $6.4 million charge that we announced in the fourth quarter.

Okay, so that was in the engine segment?

That's right, Kevin.

So that won't -- okay; that is helpful.

Good, thank you.

Richard Eastman with Robert Baird.

Bill, a quick question.

You had mentioned in your prepared remarks that the U.S. emissions business was currently about $20 million.

Is that for the quarter?

Rick, what I mentioned was the retrofit business.

Okay.

The retrofit business is where we're retrofitting (multiple speakers) equipment on existing fleets of school buses.

But in your remarks, where you talked about the platform wins for the '07 emissions, you had mentioned a $20 million number going to $150 million.

50 million going to 150.

Okay, so the annual exhaust business essentially is currently 50 million of the 175 that is transportation?

Is that the right way to look at that?

Right, yes.

Okay.

All right.

Rick, that is just the North America piece.

Yes, but that is the only piece that would be '07 impacted, correct?

Primarily, right; yes.

Just a question on the gas turbine business.

The business looked like it came in a little bit light, maybe, of your earlier expectations in the fourth quarter.

Has the trend softened a little bit going forward?

Or is there some backlog built there?

How should we view gas turbine right now, heading into '06?

Jim here.

Fourth-quarter gas turbine revenue came in a little lighter than we had forecast.

Actually we had talked about it on the call last time.

But we had a couple of significant quarters that we delayed shipment on, into the first quarter.

So that explains the shortfall to our forecast.

So we may pick up 4 or $5 million heading into the first quarter?

Yes, although what is the general outlook? (indiscernible) say that the tone (ph) is just maybe slightly better than it was a quarter ago.

Our forecast is our revenue will be up slightly in the fiscal year.

But quarter-to-quarter, the numbers can flip around a little bit.

So I think the best forecast I can give you right now is it looks like in the first half of our fiscal year we're going to be just -- our forecast is we will be about flat or slightly higher than prior.

Then if we get growth, it's going to be in the second half of our year.

Okay.

If it materializes?

Okay.

Yes.

That is our best visibility right now.

I think the market conditions are pretty much the same or slightly better.

What we're concentrating on doing is making sure we pay attention to things that we can do, which is take care of General Electric, Siemens, Solar (ph), the key players in this business, and pick up as much share as we can and fill our (ph) aftermarket.

Okay.

A question on the Class A build rate.

I think what is projected now -- and I realize it is a calendar '06 number -- but the build rate projection is about 7% for '06.

Calendar '06.

Is that kind of in line with where you are seeing things?

In a mid to high single digit?

I would think it is more like 5 actually, because if you look at it we're actually running ahead of where the projection was, I think, for 2005.

So it will be up significantly.

But the 2005 number is probably going to exceed the last forecast we had.

Understood.

Then just the last question.

On the operating expense line, assuming that -- and I realize we absorb some SOX costs here in the fourth quarter, $1 million or so.

But can you just give some color?

It is a very good number.

I am curious; is some of that reduction structural, or was it cost-containment efforts in the fourth quarter?

How should we view that SG&A number?

This is Tom.

I think in any one quarter, we're going to have some ups and downs, and some items that are going to impact the quarter more or less.

I think you did the math; and if you back off the EPC litigation charge, our operating expenses were about 20.8% in the quarter.

That is close to the guidance that we are giving for next year, 21 to 21.5.

Again I expect in any given quarter, we're just going to be right around that range.

But there was nothing structural in the quarter that would have contributed to that.

Was there an overall restructuring cost that you ran through the income statement in this fourth quarter?

No, no.

Nothing really other than we pointed out the start-up costs related to the Thailand plant.

What was that number?

That impacted operating income by about $400,000 in the quarter.

Okay, very good.

Thank you.

Charlie Brady with Harris Nesbitt.

Apologize if this question has been answered already;

I hopped on the call a little late.

Just getting back from the impact on Thailand plant; you said it is 400,000.

Is there a breakout for the impact of what the higher freight costs and raw material costs were on the impact?

On gross margin, Charlie, we think that impact was approximately a half a point for the quarter.

Combined, both of those?

Right.

Okay.

Can you talk about on your gas turbine business, if I look back to what your commentary was on the third quarter, it seemed as though the results might have been a little bit weaker this fourth quarter than you were thinking three or four months ago.

Anything slip into fiscal year '06?

Or was it just a little bit softer there?

This is Jim.

It is going to be a test for me to see if I can give the same answer twice now.

I apologize for that.

That is okay.

That's fine.

Yes, we thought we were going to do better in the fourth quarter.

We had some shipments that slipped over.

The shipment dates got postponed into the first quarter.

So nothing really changed in the outlook.

We just missed a couple of shipments at the end of the year.

I think that was about $3 million of shipments that we missed.

So I think that accounts for the difference between what we actually posted and what we told you we were going to do.

Okay, great.

Thanks.

I appreciate your repeating the answer.

No problem.

Have you guys given guidance on what your tax rate is going to be in '06?

Charlie, this is Tom.

We expect in '06 that the tax rate from our ongoing operations is, again, going to be approximately 27%.

Obviously there could be onetime events that increase or reduce that.

But from ongoing operations, we think that range of 27% is in the ballpark.

Thanks very much.

I appreciate it.

Andrew Obin with Merrill Lynch.

Just a question about revenue growth targets.

Just thinking about your industrial customers and trucks, Cat is talking about under producing retail demand; we have some Deere shutdowns; you noted that North American NAFTA trucks are only going to be up 5%.

Yet as I look at your engine business, the forecast is fairly robust.

A, how much were the pricing and currency?

And B, obviously you talk to your customers, how consistent is this forecast with what you're hearing from your customers?

Andrew, Bill Cook here.

First, a couple of comments.

On your comment about the truck, what we were referring to there was the calendar-year numbers, when we were talking about 5%.

The first half of our fiscal year is basically the second half of calendar '05.

There is still a more significant increase there.

So we have got all that factored into our guidance.

I think in terms of talking to our customers, we do that all the time in trying to get the best guidance that we can from them.

I think of the areas, the end markets that we serve, probably -- and you mentioned Deere -- the farm, the agricultural line is probably the one that has slipped a little bit, at least in the short term.

But we see continued strength in the other heavy-duty diesel equipment markets.

I mentioned the trucks already; but construction and mining, both in this country and around the world.

So we have got all that factored into the guidance of the engine business being up 10% our fiscal year over fiscal year.

So basically, the reason why I was asking this question, because one of the concerns that I have been hearing is that big equipment manufacturers are getting to be capacity constrained.

I am not questioning the demand.

But basically from what you're hearing, they're planning on raising production in your fiscal '06, right?

Exactly.

We take a look at their build rates, not their orders.

But that is exactly right.

The second question is, do you comment on how much of this increase is pricing versus volume?

We are assuming it is all volume.

We don't factor in pricing or exchange because we don't forecast the exchange side.

So it is a volume number.

Fantastic, thank you very much.

Charlie Brady with Harris Nesbitt.

With regard to the Thailand plant and the ramp up there, first of all, when do you expect to get full production at that plant?

Are you shipping product out of that plant right now.

What was the cause of some of the slower than expected ramp up in the quarter?

This is Jim.

Yes, we sure are shipping product out of the plant now.

We are on our regular ramp up; so everything is back on its original schedule, only delayed a couple of months.

Really the delay has to do with the fact that we have to deal with customers.

We have to get customer approval on the new site and the production out of the new site.

Anytime you're dealing with a customer, a third party, you can't always dictate the time line.

So we worked through it, and we're back on the schedule.

Everything is going forward on track now.

One of the issues, Charlie, related to that was our customers are very busy during that time period.

So this wasn't as high on their list as it was on ours.

But we have worked through it, as Jim mentioned.

Great, thank you.

Richard Eastman with Robert Baird.

Bill, I just wanted to follow-up on the emission.

We talk about the platforms for the emission product, and there's 13 platforms.

That is a number that you have been consistent with.

I presume these platforms are engine platforms, not trucks.

Is that right?

In other words, are we right now securing business from the engine manufacturers or the truck manufacturers?

This is Lowell.

From the engine manufacturers, but actually the way we have those calibrated they are really done by truck lines, truck platforms.

But in reality they are mirrored by engine platforms.

So you can look at it either way.

But actually in terms of securing the business, you do have to work with the engine manufacturers.

So for instance, there's maybe a half a dozen large engine manufacturers; and they will each have perhaps two or three platforms so to speak or lines?

Yes, that is one way of looking at it; right.

Pretty close.

Obviously, you would be locked out of I guess four of those platforms perhaps?

Yes, four of them we had no chance to get.

So that left basically nine.

And of the nine, four are -- I believe is the right number -- four have been awarded and five are still yet to find out what is going to happen.

Of the four, we have two.

Okay.

Could you just say if the two that you have are with either Cat or Detroit Diesel?

No;

I can't say that, sorry.

Okay, thank you.

Simeon Wallis with Gabelli & Company.

Just looking at the aftermarket side with the engine group, it was up 7%.

I think on the prior call you had mentioned that it was up 10% so far for the year.

What accounted for the slowdown in the fourth quarter?

This is Lowell again.

Basically, a lot of the slowdown in the fourth quarter was in Asia-Pacific, where we actually had a reduction.

The reason we had a reduction was in prior years we actually had a discount program to increase sales in the fourth quarter.

That process always increased costs into producing plants and decreased margin and revenue in the sales channel; so we decided not to do that this year.

So you will have better comparables next year.

Are you saying that going forward that you're going to stay away from that program?

Right.

Thank you.

Andrew Obin with Merrill Lynch.

Follow-up question on engine platforms.

Of the platforms that are left, are you expecting the percent win to be in line with what we've experienced right now?

Or do you feel you have better chance on those platforms versus the four platforms that have been awarded already?

This is Lowell again.

I don't think I can comment on that.

There are a lot of things happening in the marketplace; and we just are not going to know for a while.

We originally expected we would know already how those were going to go.

In fact some of them we might not know for nine to 12 more months, which is a surprise to us.

But I can't really say any more than that.

I think that would be wrong.

Andrew, we're working them all really hard.

Why is the delay?

Could you just describe what is happening, without naming any names or anything?

What is delaying the process?

There are a lot of real technical challenges, and customers making strategic direction decisions that are not final yet.

Until they finalize what they want to do, they are not going to finalize their relationship with suppliers or anybody else.

Are these decisions related to 2010?

Is that how I should be thinking?

That people are really already thinking about aligning for the next set of regulations?

Is that what is going on?

There are some customers thinking about 2010 and the strategy of where they are going with emissions.

So that is a fair statement with a couple of customers.

But in reality, there are still a lot of unresolved issues for 2007 as well.

Are those technical issues?

Because I thought the technological solution was fairly straightforward, given that the engines were already -- the '02 engines were pretty much designed with '07 in mind.

I guess I am a little bit --

I don't think the 2007 solutions are easy at all.

We think we are in a very good position, and we still have lots of work to do.

We have a system that works in the field reliably.

But if you look at the constraints the EPA has put on these systems, and how they have to last, and how durable they have to be, they are a real challenge.

To put them on multiple -- if you take a look at all the configurations of trucks there are in the marketplace, the truck and engine combinations, finding systems that are going to work with all those combinations is very difficult.

I mean just -- I apologize;

I keep asking questions.

But does this have anything to do with availability of ultra-low sulfur fuel in the fuel for testing the engines?

No, although that has been an issue.

We have had people tell us they had trouble getting it.

But one of the big cost items for us has been, in doing the work, is we have actually had to truck in ultra-low sulfur fuel from California to do our testing.

So that is a very expensive process.

So there are concerns about the availability of that material, but that is not really the issue.

The issue is making these systems reliable enough to function in all environments.

If you take a look at how these trucks run in northern climates, it is actually hard to, in some applications, to get the exhaust temperatures high enough to actually cause the particulate to burn off.

So there are some real challenges in this work, and it is not simple.

Thank you very much.

(OPERATOR INSTRUCTIONS) Stewart Scharf with Standard & Poor's.

I was wondering how much production is being shipped to Mexico, along with some of your other facilities around the world. (technical difficulty) continuing to ship more production to Mexico?

It's an evolutionary process.

Generally, we site our plans to support where our customers are going or where they are.

So it is not that dramatic a shift.

We have two plants in Mexico and they have been there for a number of years.

They support both the Mexican market and some production in North America or in the U.S.

We also ship a lot of product from our U.S. factories into Mexico.

So it is a product by product decision; it's an evolutionary process.

I am not sure if I really -- did I get your question?

Yes, that is basically it.

Also what are your plans for buying back stock?

Our long-term plan as we have talked about over the years is that we try to repurchased on an average basis annually 3% of our outstanding shares, which after option grants would net a 2% reduction.

That is actually what we have achieved over the past 15, 16 years, that average.

But we don't comment specifically on what we're going to do in any one year.

We just say that over time that is our target, and that is what we have done.

Okay, thanks a lot.

Craig Stone with Kayne Management.

You have a long history of improving your gross profit margin.

Would you remind us of the drivers and how much better you expect you can make it?

As Tom mentioned -- he gave guidance earlier in the call in terms of our gross margin for fiscal '06; and that is probably all the guidance that we give.

We are trying to reach a balance between maintaining gross margin of around 32%, and growing our top line, and then delivering it on the bottom line.

So I think in terms of modeling the only guidance I would give is the 32% Tom mentioned.

More recently, you have done a more effective job with working capital.

Are you satisfied with where you are now, or is there more to come?

Frank, this is Tom.

We are maybe never really satisfied.

We think we have done a pretty good job; but we do think there are some opportunities in a couple of areas.

We continue to work on inventory.

We have had a lot of ramp up in our plants, we move a lot of inventory around the world; but there is always opportunities for improvement.

We will keep working it and do our best.

You have historically held a low share of your replacement filters.

PowerCore was supposed to change that.

Is that happening?

Yes.

This is Lowell Schwab.

That is happening on those applications.

What you have to keep in mind, building a business like that, is that the complete product cycle for a given group of products is probably five to six years.

To have all the applications in a market be using PowerCore or some other new technology takes a five or six-year period.

And then the replacement filter businesses all grow after that, after that implementation of the first (indiscernible) equipment.

So it takes over five years before you really see a dominant position due to putting a new technology in the market; and we are about three years into that process right now.

So you are saying it is too early to know whether competitive replacement filters will come to market for PowerCore?

Yes.

We do.

Well, there are competitive filters with at least one other company.

But we have not seen replacements for our filters yet, and we have invested a lot in -- if you take a look at our spending, between what we have invested in new products and what we have invested in the intellectual property for those products, we will be very disappointed if we don't get a high market share on those filters.

(technical difficulty) distribution to capture that?

Because it doesn't go through your normal OEM relationships?

Yes, it will go through our normal OEM relationships, as well as our own aftermarket.

But we would expect to have very good distribution to handle that.

We also in some cases sell products, proprietary products, to competitors and sell through their channels.

We sell quite a few million dollars to competitors, and we buy some. so distribution should not be a problem.

We're offering PowerCore to every channel that we can think of.

There you very much.

(OPERATOR INSTRUCTIONS) There are no further questions.

Thanks, Crystal.

I will just wrap it up then.

To all of our participants today, I would like to thank you for your time and interest in our Company.

To my fellow employees, I want to say that I am very proud of the record that we have built and that we just extended.

And I wanted to thank you for your contributions and support.

Together we did it again.

So thank you all, and goodbye.

This will conclude today's conference call.

You may now disconnect.