Franklin Electric Co Inc (FELE) 2013 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to Franklin Electric fourth-quarter and FY13 earnings conference call.

At this time, all participants are in a listen-only mode. Later we will conduct a question answer session, and instructions will be given at that time.

(Operator Instructions)

As a reminder, this conference call is being recorded. I would now like to turn the conference over to Mr. Jeff Frappier, Treasurer.

Sir, you may begin.

Thank you, Saaid.

And welcome, everybody to Franklin Electric's fourth-quarter 2013 earnings conference call. With me today are Scott Trumbull, our Chairman and CEO; John Haines, our CFO; Robert Stone, SVP and President of International Water Systems; and Gregg Sengstack, President and COO.

On today's call, Scott will review our fourth-quarter and 2013 full-year business results. And then John will review our fourth-quarter and full-year financial results. When John is through, we will have some time for questions and answers.

Before we begin, let me remind you that as we conduct this call we will be making any forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, many of which could cause actual results to differ materially from such forward-looking statements.

A discussion of these factors may be found in the Company's annual report on Form 10-K and in today's earnings release.

Also, our press release and this call contain non-GAAP financial measures that include, but are not limited to, earnings after non-GAAP adjustments; fully diluted earnings per share after non-GAAP adjustments or adjusted EPS; operating income after non-GAAP adjustments; and percent operating income to net sales after non-GAAP adjustments, or operating income margin after non-GAAP adjustments.

The Company believes that these measures help investors understand underlying trends in the Company's business more easily. The differences between these measures and the most comparable GAAP measures are reconciled in the tables in our earnings release.

All forward-looking statements made during this call are based on information currently available. And except as required by law, the Company assumes no obligation to update any forward-looking statements.

With that, I will now turn the call over to our Chairman and CEO.

Scott?

Thanks, Jeff.

We are pleased to report that our sales and adjusted net income for both the fourth quarter and full year 2013 were again records for any fourth quarter and year in the Company's history. And we ended the year on a strong note.

During the fourth quarter our consolidated sales grew by 12%. And our consolidated operating income after non-GAAP adjustments grew by 14% compared to the fourth quarter prior year.

Our Global Water Systems business had a very strong quarter, with sales increasing by 13% and operating income after non-GAAP adjustments increasing by 18%.

While our Water Systems businesses grew in virtually all regions of the world, our water teams in the US and Canada were our star performers, providing 39% of our consolidated sales during the fourth quarter and achieving 25% sales growth, led by strong demand for mobile dewatering systems, residential and light commercial groundwater pump systems, and drives and controls.

The US demand for our Pioneer-branded mobile dewatering equipment grew rapidly in the upstream oil and gas market during the fourth quarter. In addition, we believe that Pioneer is gaining share in the US pump rental market because of that brand's reputation for efficiency and durability.

Our Pioneer team also achieved significant sales gains in the commercial construction market, particularly in Western Canada during the fourth quarter.

Our US and Canadian sales of residential and light commercial groundwater pumps increased by 25% during the quarter. During the third quarter of 2013, last year, our sales of residential and light commercial groundwater pumps declined. And we believe that this decline resulted in our distributors' inventory falling below target levels.

So we believe a portion of the 25% sales increase during the fourth quarter is attributable to distributors rebuilding their stocks to target levels in face of perceived growing demand in the residential construction market.

We also believe that during the fourth quarter a number of our distributors increased their purchases in order to achieve their annual sales volume rebate targets.

Our US and Canadian drive and control business grew by 18% in the fourth quarter. Our sales of drives and controls in the residential and light commercial market grew by over 20% during the quarter, a reflection again of anticipated more robust new-home construction activity.

Our line of drives for agricultural and industrial applications also grew at a strong double-digit rate, as we are having success selling the high-horsepower drive product line that we obtained in our 2012 acquisition of Cerus Industrial.

Our Water Systems fourth-quarter sales in Latin America represented 13% of our consolidated sales and grew organically by 8% after excluding foreign exchange.

Most of our sales growth in Latin America occurred in Brazil, and most of our growth in Brazil came from continued growth in demand for the line of four-inch groundwater pumps and motors that we launched in Brazil two years ago. In total, our sales in Brazil grew organically by 13% excluding foreign exchange. The new factory that we are building in Brazil to support additional growth is scheduled to open in the second quarter of 2014.

Our Water Systems sales in the Middle East and Africa represented 12% of our consolidated sales during the quarter and grew organically by 9% excluding foreign exchange.

Growing demand for our line of Impo-branded groundwater pumps and motors produced in our Turkish factory accounted for much of our growth in the Middle East and Africa during the fourth quarter.

Our Water Systems sales in Europe represented 7% of our consolidated sales and grew organically by 5% during the quarter.

Growing demand for our Pioneer-branded mobile dewatering equipment and for our newly-launched line of condensate pumps more than offset a modest decline in demand for groundwater pumps in Europe during the fourth quarter.

Our Water Systems sales in the Asia-Pacific region represented 7% of our consolidated sales during the quarter and grew organically by 11% excluding foreign exchange.

We experienced very strong sales growth in Southeast Asia and China for our high-horsepower groundwater motors and pumps used for irrigation, industrial, and municipal applications. Together our sales in Southeast Asia and China grew by 40% during the fourth quarter compared to the prior year. This growth more than offset a modest decline in sales in the more mature markets in the region, primarily Australia.

Our Global Fueling business represented 22% of our consolidated sales during the quarter and grew by 7%. And our Fueling-adjusted operating income also increased by 7%.

Demand for our Fueling equipment grew most rapidly in developing regions where there is an ongoing need for investment in new filling station infrastructure to support the burgeoning number of passenger vehicles on the road.

Developing regions represented 32% of our Fueling sales during the fourth quarter and grew by 24%, with most of the growth coming in Brazil, China, and the rest of the Asia-Pacific region. Our Fueling sales in the more mature North American and European markets grew by about 2%, driven primarily by the Flexing productline acquired in the fourth quarter of 2012.

So for the Company as a whole, 2013 was our fourth consecutive year of double-digit growth; and our balance sheet remains strong. Of equal importance, we continue to make progress on our three most significant strategic growth initiatives.

Number one, first our full-year 2013 sales in developing regions represented 37% of our consolidated sales and grew by 6%. And they grew organically after excluding foreign exchange by 10%.

While we recognize the currencies in developing regions are subject to periodic volatility, we believe that the most rapid demand growth for water pumping and fueling products will occur in developing regions over the next decade.

Second, our 2013 sales of electronic drives and controls represented nearly 10% of our consolidated sales and grew by 18% compared to the prior year. As the cost of electronic components continues to decline and their performance continues to increase, more and more of our customers want to include these devices in their installations in order to reduce lifecycle cost and improve system reliability.

We are the leader in drives and controls in many of our markets, and we view the growing demand for these products to be a major opportunity for the Company over the next decade.

Finally, we continue to make progress with new products. Specifically, we are pleased with the results we are seeing from the field trials of our new artificial lift product line that are underway with a number of large natural gas companies.

We are also pleased with the early marketed acceptance of our new solar-powered groundwater pumping productline.

During the first half of 2014, we'll be launching a new line of agricultural irrigation pumps and a new line of commercial pressure boosting pumps that will have better overall performance characteristics than those of the current leading suppliers in these markets.

Our Company has strong engineering and marketing teams that support a robust and disciplined new product development process. And we think this will play an important role in our growth going forward.

So with a solid 2013 behind us, looking forward to the first quarter of 2014, we expect that during the first quarter of 2014 our Water Systems sales will improve by 6% to 8%. And our adjusted operating income in Water will improve by 8% to 10% versus the record first quarter of 2013.

We estimate that our Fueling Systems sales will be flat in the first quarter of 2014, but that the adjusted operating income will grow by 12% to 14%, primarily due to improved sales mix.

Last year in the first quarter, the Fueling Systems business had large shipments of products to customers in India. While we anticipate Fueling Systems sales in India for the full year 2014 to exceed 2013, we do not forecast that increase in the first quarter of 2014.

In addition, last year we were in the process of consolidating the Flexing acquisition into our Fueling Systems business. And this year that acquisition is fully consolidated, and that will play a role in improving our margins.

Overall, we are expecting our consolidated first-quarter sales and adjusted EPS to grow by 6% to 8% compared to the first quarter 2013.

Now I will turn the call over to our CFO, John Haines.

Thank you, Scott.

Our fully diluted earnings per share were $0.27 for the fourth quarter 2013, versus $0.27 for the fourth quarter of 2012. As we note in the tables in the earnings release, the Company adjusts the average reported GAAP operating income as earnings per share for items we consider not operational in nature. We believe presenting these matters in this way gives our investors a more accurate picture of the actual operational performance of the Company.

Non-GAAP expenses for the fourth quarter 2013 were $2.4 million and included $1.5 million in restructuring costs, of which $1.3 million related to an asset write-down on the pending sale of a property in Oklahoma City, Oklahoma.

Additionally, relocation costs for the new corporate headquarters and engineering center in Fort Wayne, Indiana, were $0.2 million. And other legal and advisory costs primarily related to potential acquisitions were $0.9 million.

The fourth-quarter 2013 non-GAAP adjustments round to an EPS impact of about $0.03. The non-GAAP EPS adjustments in the fourth quarter of 2012 rounded to an EPS impact of about $0.01. So after considering these non-GAAP items, fourth-quarter 2013 adjusted EPS is $0.30, which is 7% higher than the $0.28 adjusted EPS the Company reported in the fourth quarter of 2012.

Overall, for 2013 fourth-quarter revenue, gross profit, adjusted operating income, adjusted net income, and adjusted earnings per share were records for any fourth quarter in the Company's history.

Water System sales were $178.4 million in the fourth quarter of 2013, an increase of $20.9 million, or about 13%, versus the fourth quarter of 2012 sales of $157.5 million. Sales from businesses acquired since the fourth quarter of 2012 were $0.6 million, or less than 1%.

Water System sales were reduced by $4.9 million, or about 3%, in the quarter due to foreign currency translation. Water Systems sales growth excluding acquisitions and foreign currency translation was about 16%. Water Systems operating income after non-GAAP adjustments was $26.1 million in the fourth quarter 2013, an increase of 18% versus the fourth quarter 2012.

The fourth-quarter operating income margin after non-GAAP adjustments was 14.6%, up 50 basis points from 14.1% in the fourth quarter of 2012. Operating income margin after non-GAAP adjustments increased in Water Systems primarily due to the fixed cost leverage on higher sales.

Fueling Systems sales represented 22% of the consolidated sales and were $51.3 million in the fourth quarter 2013, an increase of $3.6 million, or about 7%, versus the fourth-quarter 2012 sales of $47.7 million.

Sales from businesses acquired since the fourth quarter of 2012 were $2.1 million or about 4%. Fueling Systems sales were increased by $0.5 million, or about 1%, in the quarter due to foreign currency translation. Fueling Systems sales growth excluding acquisitions and foreign currency translation was about 2%.

Fueling Systems operating income after non-GAAP adjustments was $11.8 million in the fourth quarter of 2013, compared to $11 million after non-GAAP adjustments in the fourth quarter of 2012, an increase of about 7%. The fourth-quarter operating income margin after non-GAAP adjustments in Fueling Systems was 23%, flat to the 23.1% of net sales in the fourth quarter of 2012.

The Company's consolidated gross profit was $76 million for the fourth quarter of 2013, an increase of $7.5 million, or about 11%, from the fourth quarter of 2012 gross profit of $68.5 million. The gross profit as a percent of net sales was 33.1% and flat to the fourth quarter of 2012.

Selling, general, and administrative expenses were $52.3 million in the fourth quarter of 2013, compared to $47.4 million from the fourth quarter of the prior year, an increase of $4.9 million or about 10%.

SG&A expenses as a percent of sales were 22.8% in the fourth quarter, 30 basis points lower than the fourth quarter of 2012. The most significant increases in SG&A spending in the fourth quarter of 2013 related to certain strategic initiatives, including new product development expenses, the launch of the Company's pump rental initiative, the commercialization of the Company's new artificial lift product offering, and opening new product distribution centers.

Additionally, SG&A in the fourth quarter of 2013 increased. The increases were related to information technology expenses and higher billing-related costs, primarily depreciation on the new Fort Wayne headquarters.

During the fourth quarter, the Company incurred foreign exchange losses of $2.2 million, primarily as a result of rapidly changing foreign currency valuation versus the US dollar in many markets the Company does business in.

Third-party debt in our Turkish subsidiary denominated in US dollars drove a significant portion of the loss. The Company has borrowed US dollars in Turkey to obtain a favorable interest rate.

Other foreign exchange losses included certain US dollar denominated customer receivables in Europe and Latin America, and Canadian denominated customer receivables in the United States. These foreign exchange losses explain why the Company's consolidated adjusted operating income increased by 14%, and the adjusted EPS increased by 7%. If these foreign exchange losses had not occurred, the adjusted EPS for the fourth quarter of 2013 would have increased by about 18%.

The tax rate for 2013 was about 26%, down 200 basis points from the 2012 rate, which was about 28%. We believe 28% is a reasonable estimate for the full-year 2014 tax rate before discrete events.

The Company ended the fourth quarter of 2013 with a cash balance of $134.6 million, which was $31.2 million higher than at the end of 2012. The cash balance increased primarily as a result of cash generated from operations and proceeds from debt, offset by additions to property, plant, and equipment.

In 2013, capital expenditures were $67.6 million, driven primarily by the new building projects in Indiana and Brazil. The Company estimates this amount to decline in 2014 to about $35 million to $40 million. The Company had no outstanding balance on its revolving debt agreement at the end of the fourth quarter of either 2013 or 2012. I would now like to turn the call back over to Scott.

Thanks, John.

Today we've announced that after 11 years, I will be retiring as Chief Executive Officer of Franklin Electric following our Annual Shareowners Meeting on May 2 of this year. I will remain as non-Executive Chairman of the Board for a period of time.

My successor will be Gregg Sengstack, who's made great contributions to the Company's success over his entire 25-year career with Franklin Electric, and most particularly during his time as President and Chief Operating Officer, and prior to that as Chief Financial Officer. Gregg is a strong leader and excellent strategist, and I'm confident the Company will continue to grow and prosper under his leadership.

During the last 11 years, Franklin people worldwide have accomplished a great deal. We've transformed the Company from being a submersible motor supplier for pump manufacturers to being a pumping system supplier for distributors.

We've increased our sales in high-growth emerging markets to 37% of our total sales, and we've increased our market capitalization from around $500 million to around $2 billion.

As an employee, Board member, and shareowner, I'm excited about Franklin's future. And I'm very pleased that Gregg Sengstack will be succeeding me as CEO. Thank you.

This concludes our prepared remarks. We'd now like to turn the call over for questions.

(Operator Instructions)

Our first question comes from Matt Summerville from KeyBanc. Your line is open. Please go ahead.

Hi. A couple questions. First, in US-Canada you mentioned up 25%, if you were to bucket it or, excuse me, quantify the three buckets, how much of that growth would you say was driven by mobile dewatering versus growth in the residential light commercial versus drivers and controls, out of that -- if you divided up the 25% growth?

I would say 60% mobile dewatering -- no, maybe 50% mobile dewatering, 30% to 35% from the residential groundwater, and 10% to 15% from the drives and controls.

And then, I guess, how sustainable is what you are experiencing in the dewatering business as we move through 2014?

We think 2014 is going to be a good year for our mobile dewatering business for the Pioneer brand. And beyond that it is difficult to project, I don't think it is realistic for us to assume the growth at the same rate that occurred in the fourth quarter of last year to continue indefinitely into the future.

But our market share in this product line in the US is still relatively low, and so we think we've got pretty good headroom for growth. And of course right now the demand for pumping systems in the natural gas, oil and gas field, is very strong, and we all know that fluctuates over time. But we are looking at 2014 as being -- should be a very strong year for Pioneer pump.

What are seeing in terms of price versus raw material cost in both of your businesses right now?

In the fourth quarter and early first quarter, we will have increased our prices on average 2% to 3% across our global platform. We are seeing pretty stable cost at this point. We've been getting good support for the price increases, and the combination of productivity and purchasing programs has been able to keep the price and costs in line.

And then just one more on the well deliquification, can you talk about how much revenue you generated in 2013 and what your projection is as far as 2014? And then maybe update us as to how these test wells are progressing in number?

Okay. We sold $2 million worth of product in 2013. We are targeting $5 million with that product line this year, 2014. However, I don't think there's a great deal of downside to the $5 million, and there's potentially some fairly significant upside, and I think we can see -- start to see very good growth for this product, in particular as we move into 2015.

At the end of last year, in southern Africa we got our first $1 million order for equipment for this type, for this artificial lift equipment from a company that's developing gas fields in that part of the world. Just this week we received orders for eight systems from two of the national Chinese oil companies that, assuming success with these initial eight installations, could in relatively short order turn into very large orders for this type of equipment. We've got tests underway with several large natural gas exploration companies in North America that are going well, and that we believe also have the potential to turn into very large orders.

But as I pointed out in the past, the sales cycle for these -- this kind of thing -- we've got a new concept. It is proving itself out, but generally these customers want to buy a couple, put them in the ground, see how they perform, in many cases up to a year, before they will commit to ordering dozens of systems or large quantities. And we are just -- I know it is perhaps frustrating a little bit because it is just the way it is, but we are happy with the progress we're making, Matt, in this product line. And we think there's smoke now and before long, there may be some fire.

Got it. Thanks, Scott.

Our next question comes from Mike Halloran from Robert Baird. The line is open. Please go ahead.

Afternoon, everyone.

Hi, Mike.

Just on the dewatering on the share side, maybe just dig a little bit into what you are attributing it to; is it now that you've got a bigger piece of Pioneer in your portfolio you can do more in the marketplace, is it just brand recognition and momentum? Is there any pricing component to how you are gaining the share? Or is it just baseline blocking and tackling?

Robert Stone will respond to that, who, among other things, is responsible for our Pioneer business unit.

Hi, Mike. There is a lot of blocking and tackling, but the real story is that we have a superior product and we have a customer base that is winning in the marketplace, on top of a market that's picking up a little bit, as Scott mentioned, in terms of gas and oil. Gas prices have picked up significantly, and that's been a big help, and our customers are winning in the field.

In this case the customers you are referring to are those who would actually be doing the rental, and the work in the field?

Yes. These are -- I'm referring to our customers who have rental pump [leaks].

Rental companies.

Got it, yep. That's exactly what I thought. And then on the drives and control side, obviously very healthy growth on that side of the platform on that like commercial residential side, maybe you could talk little bit about what that sale process looks like today? When you talk to or the average consumer's decision-making process, why are they starting started to move towards these products? Is it as simple as it's become more cost-affordable with better visibility like you referred to? And just what that sale cycle looks like for the average consumer?

I'm going to ask Gregg Sengstack to respond to that question.

As these systems become more proven and more cost-effective, what you're seeing the customer has a choice, and they're looking at opportunities to have a better quality system, a system that provides constant pressure, and it is a desirable system, but it is a longer sales cycle being introduced to the customer where they can see the benefits and where we get the contractors comfortable with installing these systems. And we've had a long track record, and our contractors are getting more comfortable, we continue to train them, and they explain the benefits to the consumer, and the consumers are willing to adopt these products.

The products help reduce energy costs in the system. And more and more customers are receptive to sustainability arguments, and to product lifecycle cost arguments.

But a drive can not only -- will not only protect the motor, but can have a significant influence on the operating cost from a electrical consumption perspective. So as the cost of the product comes down, that economic equation improves and I think that's been a factor as well.

But in terms of pump companies that operate in the US, we are basic in drives. We make our own drives, and we are designing them to be very application-specific, and our principal competitors in this market are not basic, they buy an off-the-shelf drive and do some adaptation to it, and then resell it in the market. So we believe we are in a stronger position to develop products that really meet the needs of our customers, and evidence has borne that out.

That makes a lot of sense. And then could you talk a little about your ag expectations, as we work through 2014 and what you're seeing in the environment?

Certainly with the ag situation, last year we had an extremely wet situation in the eastern half of the country. You saw a very big change in the [draw mats down]. The conditions continue to be very dry in the western half of the United States, and we will just have to see how things unfold this year after all the snow melts, and that's specific to the US market.

And the Europe market was also very wet year last year, we'll have to see how that plays out at the margin as well as other northern hemisphere markets. You've seen our results in the southern hemisphere, we continue to have great double-digit growth in the developing regions of the southern hemisphere, and so that's a good part of our story, but that's a smaller part of our overall market.

What do the inventory levels look like at the distributors on the ag side right now?

Our fourth-quarter growth -- first of all, I assume you are talking about North America?

Yes, I'm sorry.

Our fourth-quarter growth in North America was really fueled by increases in our residential line of groundwater pumping products, not by our ag irrigation lines, our larger pumps and motors. So I don't have evidence that the channel is overly stocked with ag irrigation equipment at this the point in the year.

January was a pretty tough month because of weather, but I think the inventory levels for ag products are probably in line with where they usually are at this time of year.

Great. Appreciate the time, and congratulations to both you and Gregg, good luck with everything.

Thanks a lot.

Our next question comes from David Rose from Wedbush Securities. Your line is open. Please go ahead.

Good afternoon. A couple follow-up questions. One is if you could provide a little bit more color around the acquisition expense line item. Obviously you have some legal expenses, can I assume that since nothing took place that we will see something very similar in Q1, or did a product move away and we won't see that line item repeat in Q1?

David, this is John. Are you talking about the non-GAAP items that we called out -- business expense?

Yes.

Our pipeline right now for deals I think we would all agree we would say is pretty robust. We have both platform deals. We have bolt-on deals. Many of them are international opportunities. So just remember that when we go into these international acquisition opportunities, we are largely using professional service providers that speak the local language, that know the local rules, be it for financial due diligence, legal due diligence, those kinds of things.

So those are the kind of costs that we are bucketing here and saying it doesn't really make sense, because they all related to a specific transaction to kind of [firm up] the operations with those, if you will. But at the same time I will point out that the closed cycle on many of these deals is very long, and we have been working on certain transactions for six, nine months through the agreement, through the final negotiations, through the closing. So that's really what that is, and that's a little bit of why we call it out as non-GAAP.

I appreciate that, John, I guess the question is, is that something that we are going to see ramp up as you get closer to consummating a transaction or is that sort of an ongoing number?

I hate to say it is an ongoing number, I think it is going to fluctuate a bit, but as I said I also think there's some things in the hopper here that could keep that going. I guess I'd hate to guess too much about what that's going to look like, but if I think about some of the indications of interest that we are working on right now, which is very early in that process, and the countries that some of those are in, we're going to spend money just to complete those transactions, there's just no doubt about it. So I don't know if I'd hang onto that amount every quarter, but there's going to be some more like that, I don't think there's any question about it.

Okay, that's helpful, and then a couple quick ones. Can you provide us with a little bit more color on the DC, distribution center, updates? Just what you saw the last six months and what we should expect in terms of new openings for 2014?

Okay, we opened a new distribution center for our Pioneer product lines in Australia, and then we opened a hole for that Pioneer product line network of pump rental facilities in the UK. And the operation in Australia is up and operating and contributing to the Company and the pump rental facilities in the UK, which is a new business model for us, are up and operating. During 2013 they were a noticeable drag in terms of start up costs on our quarterly earnings. We think that we're going be in good shape in that business, it should not be a drag on our earnings in the first quarter, so we think we've got that up, stabilized and up and running, and hopefully will prove to be a platform for us to expand that business both in the UK and then into other regions, that business model into other regions of the world as well.

In addition, we opened a new distribution center for our Water Systems business at the end of last year in Sao Paulo, Brazil, and that has really taken off well, and is a reasonably important part of our growth story in the back half of the year, the last quarter or so of the year, in Brazil.

We opened a new distribution center in Bogota, Colombia, and that quite frankly has gotten off to a slower start. So we are working on that one, but it is not a material factor on the Company's overall performance. But it is something that we opened it with certain expectations and we intend to achieve them, but not quite achieving them yet.

India is really just now getting started. So it is a little early to say how the operation in Delhi is going to impact our Asia-Pacific Water Systems performance.

Okay, and then Zambia?

Yes, Zambia, that one is also not quite up and operating yet.

The Zambian operation, we've run into a couple of snags, so from a facility being operational standpoint, we are a little behind. But I can say that our presence there already is helping us win business by a significant measure. We will have it up sometime this quarter, and then expect greater growth in that area from that point on.

Okay, and then how many DCs can we model in for 2014?

Right now, we are at this moment not focusing on launching additional DCs in 2014; as John mentioned, we are focused on hopefully getting one or two transactions done that will give us additional distribution in areas of the world that we think have very good potential growth.

Okay. That's helpful. Thank you very much.

Yes.

Thank you. I'm showing no further questions at this time. I would like to hand the conference back over to Mr. Scott Trumbull for closing remarks.

Well, I've had a great ride over the last 11 years. I will be eternally grateful for having the opportunity to lead Franklin Electric, and thank you for your attention.

Ladies and gentlemen, thanks for participating in today's conference. This concludes our program. You may all disconnect and have a wonderful day.