Federal Signal Corp (FSS) 2005 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to your quarter one 2005 Federal Signal earnings conference call. My name is Jean, I will be your conference coordinator. At this time all lines are in a listen-only mode and towards the end of the conference call, we'll be taking questions. If you need operator assistance, please key star 0. At this time, I'll turn the call over to your host, Ms. Stephanie Kushner, Chief Financial Officer. Ma'am, please proceed.

Good afternoon and welcome. I'm sure you've noticed that our earnings call was scheduled later than usual this quarter. We expect the timing of these calls to continue to be later than in the past, at least for the foreseeable future. Given the new requirements of Sarbanes-Oxley Section 404 and the fact that the timing on the release of the 10-Q is accelerating, it seemed to us that it makes sense to routinely delay the earnings release until our auditors have completed their sign-off on our 10-Q. That way the quarter will be fully buttoned up at the time we release earnings and hold our conference call. As the year progresses, we will work to tighten up our timing such that we can move all of these dates closer and provide information to you, our investors, more quickly.

As usual, some of our comments contain forward-looking statements about the future prospects of Federal Signal, so please refer to our latest annual report to shareholders, our recent SEC filings, and the press release issued in conjunction with this conference call for a more detailed discussion of the risks involved in our forward-looking statements. The press release is available on our website, federalsignal.com.

I'll now turn it over to Bob Welding for his initial comments.

Thanks, Stephanie. Good afternoon, everyone, and thanks for attending our Q1 conference call. Before I jump into the details of the quarter, I'd like to begin by saying that I'm pleased with our performance this quarter, and I'm excited about our position going forward. Achieving our internal projections this quarter represents a significant milestone for us as we move into the second phase of our restructuring.

We've made some important progress in Fire Rescue and Refuse in the past quarter, and these are the two businesses that received much of our focus throughout last year, as you know. As I've said on previous calls, one of the most important factors in our turnaround is to stabilize our production and operating performance in FRG and Refuse. We're getting closer on that goal.

I'm confident in the management teams we now have in place, and I'm becoming increasingly confident in our ability to deliver stable and predictable results in these areas of focus. This quarter I'm comfortable saying that the trajectories of those two businesses are heading in the right direction, as margins have improved since Q4 and should continue to improve throughout the year. We're also increasingly confident that we will be able to make the improvements that are necessary to achieve the milestones that we outlined late last year.

Having said that, I'd like to review the quarter in more detail. I'll first cover current conditions in our broad markets, then comment on the performance of our four business groups individually. Finally, Stephanie will discuss the financial details and provide some comments about guidance for the rest of the year.

Total new business for the quarter was up only 2% over last year, but the market fundamentals were actually much better than that combined number suggests, with only a couple of specific areas dragging on an otherwise robust market condition. It's important to note, as well, that this combined new business number was impacted by several timing issues related to orders, which I will further explain in a moment.

We continue to see strength in our municipal markets, as our municipal orders were up 16% overall, driven by Fire Rescue, which was up 37%, Refuse was up 13%, and outdoor warning was up 20%. The only area that wasn't stronger relative to last year was sewer cleaners. And sewer cleaners were below last year, but still at a very respectable level. In addition, we had a huge quarter in sewer cleaners in Q4 last year, so we think there's some averaging out that's going on.

Sweeper orders were just slightly above last year. Q1 last year was very strong, so we're happy just being able to match that level. In addition, March and April were strong for sweepers so we have some good momentum underway. Overall, we expect municipal orders to continue to strengthen in the coming quarters in all of our business segments.

In the U.S. industrial and commercial markets, we were even with last year overall. Refuse was down due to orders from one large commercial hauler coming in later than expected, and sweepers were off as a result of the timing of contractor fleet orders. On the positive side, Guzzler vacuum trucks and hydro-evacuators are up nearly 80% over last year. Hydro-evacuators are a growing segment, and we are enjoying a nice pull-through from contractors and municipalities alike as a result of the quality and reliability of our other brands, and as a result of our long-term relationship with those customers.

Parking orders were strong during the quarter, nearly double a year ago, continuing to indicate recovery in this market. Hazardous lighting products were strong due to expansion in mining projects and oil exploration. And still on the industrial side, orders in the Tool Group were flat compared to last year in most markets. About 40% of our business in this group is in the automotive sector, which is struggling, as many of you know.

Export orders in EPG and FRG were off in the quarter, but these orders are very lumpy and April was strong, so we're not concerned. For example, we landed an $8 million order from the Middle East for a sweeper fleet and originally we expected this order to fall into Q1. Export orders for the Tool Group were flat with last year, although export orders for safety products were higher by 15%. Orders at our non U.S. businesses continued to grow strength with the exceptions of our Bronto unit in Finland, which was down 33% due to timing issues. And Tool, which was down 7% due to weakness in all global regions except France for this time.

I will now move on to discuss the group performance, and this time I will start with Fire Rescue. The market for fire apparatus is very active right now and we booked a very nice level of business during the quarter in North America, as I indicated earlier. Incoming orders in North America were not only strong, but of a nice rich mix, so we're very happy with the start of the year. Overall, new business was down -- excuse me, overall new business was flat from last year, with foreign order weakness offsetting the strong U.S. performance.

Export orders are lumpy anyhow, and last year Q1 was unusually strong, making the comparison difficult as well. Export orders booked in April were strong and we believe Q2 levels will be such that they will, for the most part, offset the weakness in Q1.

Revenue in Fire Rescue Group was up 5% from last year. The production throughput problems from late last year spilled into January, but since then our folks have made steady progress. Our average weekly completions have grown steadily since January and continued to improve through April.

Other solid signs of progress, our own on-time completions to schedule have now improved for the last five months running. Our build quality as measured by the number of issues we have at customer inspection has improved steadily over the last six months. Safety is improving. In fact, Ocala just completed 1 million man-hours without a lost-time injury.

Raw material and WIP inventory are continuing to decline. Productivity continues to improve. DSO has improved significantly. And customer deposits are up. All great indicators that the efforts of our people are producing results. However, losses at FRG were at the same level as last year, although results for Ocala improved by more than $1 million, reflecting the elimination of fixed costs at Preble, New York and improved gross margin.

We are still experiencing higher material costs. Although our mid-2004 price increases are starting to flow through, we will not experience the full benefit until later quarters. And we're still seeing some uptick in some of our component, and particularly fuel-based materials and freight costs. Consequently, in the second quarter we introduced an additional 4% price increase in this business.

The improvement in gross margin was partially offset by additional costs incurred to rescue a failed dealership in one of our very important markets. We were very pleased to announce that we've appointed a new very strong dealer in the Texas market who has been successful in the loose fire equipment market for many years. Our dealer network is critically important to the business and we think this appointment will help us gain share in 2005 and beyond.

In mid-April, E-ONE participated at that FDIC fire show in Indianapolis where we generated exhibited a number of innovative products and generated excitement among the consumer base and enthusiasm in our dealer body. We hadn't made a big splash at FDIC for a few years, but this time we're trying to be very clear in our message that E-ONE is back, and we fully intend to reestablish the brand as the truck that firefighters around the country aspire to.

We rolled out our new tag line that resonates extremely well with professional and volunteer firefighters alike. And that line is, "When lives are in the balance and seconds count." This phrase really captures the spirit, the bravery and the determination of these national heroes, and it strikes a nerve in regard to their pride and their commitment to their important work.

In FRG we have new products, our employees are pumped up, our dealers are energized, and we have the attention of the marketplace. The transformation is underway. We expect this group to be profitable in the second quarter and then improve as the year progresses.

Moving on to our Environmental Products Group. Orders were up only slightly from last year. The market fundamentals are strong, but sweepers and sewer cleaners got off to a slow start, and we had some delayed refuse truck orders from one commercial hauler. These pockets of weakness offset strength in export orders, RAVO sweeper orders in Europe, and industrial vacuum trucks.

Revenue in the group was up 8%, and income was up in all units except Refuse compared to last year. Refuse losses were worse than last year, as expected, because our price increases are just phasing in to offset steel price increases, which began to hit us after Q1 last year. In addition, we are temporarily -- we temporarily experienced higher expenses as we finalized the phase-out of our plant in Oshkosh, Wisconsin. We ceased production of rear-loader truck bodies in Oshkosh at the end of March as planned, and we are completely out of the building as of now. Although worse than last year's Q1, Refuse income was better than planned, so I'm extremely pleased with our progress to get this business upright.

In April we received our first orders from Allied Waste since they announced that they would be implementing a new centralized purchasing process. It's too early to tell what our share of the business will ultimately be, as they continue to develop this program, but we're pleased that they recognize the outstanding characteristics of our products and we look forward to developing a strong relationship with them in the coming years. We are on track with our plan to reach break-even by the fourth quarter in Refuse.

I'll move on to our Safety Products Group. As you saw in our press release, everything is positive for this group. New business is up 10%, revenue is up 19%, and income is up 33%, with strength across the board. Our parking business performed especially well, including landing a new $2.3 million project at a major university, and some additional lots added to our Port Authority of New York and New Jersey project. The first parking lot in the Port Authority project is up and functional, so that is progressing well.

Another area of strength was our hazardous lighting business, which is enjoying the benefits of new investment going into mining and oil exploration. Markets continue to be strong in all these businesses, so we anticipate a strong second quarter from the Safety Products Group as well.

Moving on to our Tool Group. New business was off 2% from last year, with lead times of only days in this business, revenue was down a similar amount, while income was off 26%. Lower revenue contributed to some of the income drop, but this group has been hit with significant surcharge increases in tool steel over the past quarter. Increasing our costs by about $400,000. Substantial price increases in the alloying elements of molybdenum and nickel primarily are driving the surcharges.

The Group instituted another price increase in early April to offset these latest unforeseen surcharges, which have doubled since December. Because of the dramatic and sustaining increase in tool steel surcharges, we are implementing a process to pass along additional increases directly through a surcharge on outgoing shipments, rather than continuing to republish price lists every few months. We're rolling this out beginning this month for the first product line.

We are anticipating that the problems in the automotive and some other sectors in Tool will continue for the balance of the year, and have taken down our forecast for the Group as a result. However, the Group is working to accelerate new cost reduction and targeted marketing initiatives to restore margins.

Before I turn this over to Stephanie, I'd like to make a couple of more general comments. As I said in my remarks at the end of Q4, all of our business units are performing well, and continue to improve in their performance except for the two projects I've commented on extensively throughout 2004, namely Refuse and Fire. As I've indicated today, both of these businesses are now substantially more stable and predictable. We have very capable management teams in place, and we have initiatives that are producing results. Both of these businesses improved their gross margin since Q4 and will continue to make progress throughout the year.

Outside of the risk of industrial markets possibly weakening, although we don't see any of that outside of Tools so far, we really are down to two risks for our plan for 2005. Will we be able to gear up in Medicine Hat as planned? To this I believe the risk is low.

Will we get our throughput improvements grounded in Ocala? Here I'd have to say our risk is a little higher, but I feel very good about our progress in the past couple of months and I'm growing more confident day by day.

As of January 1st, we began measuring our performance against an EV scale, and it is gratifying to see how it is changing our people's focus and already that is starting to show up in our results. We have made -- seen a significant reduction in working capital in Q1 and we will see this continue to improve through the year.

Reducing invested capital is one lever we have to increase economic value. Increasing earnings is the more powerful one and we are focused on that for the balance of the year. As we progress through the transformation, we continually assess our organization's strengths and weaknesses, including the appropriate management to address the needs of our business. We're committed to making the necessary changes to ensure profitable future for Federal Signal Corporation.

Now I'd like to turn it over to Stephanie.

Thank you, Bob. As Bob mentioned, sales came in at $280 million for the first quarter, which is lower than the annual run rate of about $1.2 billion that we're forecasting. Given the seasonality of our businesses, this is typical for us in the first quarter. We expect sales to exceed $300 million in the rest of the quarters of 2005, with the highest sales level in the fourth quarter.

Orders exceeded sales by about 5% in the quarter causing our backlog to rise to $448 million at the end of the quarter, broken down as follows. EPG was at $101 million, up about 6% from year end. Fire Rescue was at $264 million, up about 5% from year end. Safety Products was at $75 million, down about 4% from the year end, which reflects some of the initial deliveries on the big airport projects. Their backlog, because of the -- those projects, is up about -- is at about twice the level it was at a year ago. And Tool was at $9 million. And that's up, percentage-wise, but not much, in terms of actual dollars.

Our gross margin averaged 23.4% in the quarter, down 60 basis points from last year's first quarter, but up significantly from the fourth quarter of last year. If you recall, our gross margin averaged 17.7% in the fourth quarter of last year, or if you exclude the one-time impact of the Dutch contract loss, 20.9%. We believe we are at an important inflection point after steadily declining gross profit margins last year. We expect our gross margin trend to continue to improve as the year progresses.

Our selling, general, and administrative expenses as a percent of sales rose to 21.5%, up from 21.3% this time last year. And up sequentially from 20.8% in the fourth quarter. We expect that figure to level out to below 20% in the second half of this year as sales trend up and we benefit from cost reductions and back-room consolidation initiatives that are underway.

Corporate expense, which is part of SG&A, totaled $4.9 million, up from $4.4 million last year. The year-to-year increase mainly reflects higher costs associated with audit fees, which for 2004 overran our earlier estimates. Although we've not yet received a fee quote, we see limited opportunity to reduce these costs appreciably this year. We expect full-year corporate expenses to be on the order of $21 million to $22 million for 2005, depending on the spending for legal costs associated with the hearing loss litigation and the level of incentive compensation earned.

A date has been set this summer for the initial trials on this litigation. We continue to believe that the cases have no merit and we plan to defend the Company aggressively, using defenses that were successful several years ago when similar suits were brought forward on behalf of certain firefighters in Philadelphia. While we are fighting this, we expect to incur defense costs on the order of $1 million per quarter.

Interest expense rose to $6.1 million this quarter, reflecting higher short-term rates. About two-thirds of our debt currently is exposed to floating interest rates. Given our low earnings rate, our effective tax rate was an unusually high negative number due to the disproportionate benefit of permanent differences, plus a one-time reduction in the statutory rate in Finland, which is where we make our Bronto aerial devices, and that benefited us one time approximately $300,000. For the year, we expect the tax rate overall to be in the range of 28 to 30% absent any one-time -- any other significant one-time items.

Now some comments on the balance sheet and our cash position. Our balance sheet is continuing to strengthen. Operating cash flow was strong at $20 million, reflecting reductions in working capital and payoffs of financing leases. We experienced our normal seasonal increase in inventories, but this was more than offset by a significant reduction in receivables, and some progress with increasing deposits from customers. Receivables net of customer deposits reached a recent low of 41 days at the end of March, and averaged 43 days for the quarter.

Inventory turns are averaging 4.6 year-to-date versus 4.4 a year ago, an improvement, but still not showing the kind of progress that we are expecting yet this year. We need to get that number over 5. At quarter end, the ratio of manufacturing debt to capitalization rose to 40% versus 37% at the end of last year. However, this statistic, this reported increase, understates our progress. It's distorted due to the high level of cash balances, $55 million, currently on hand.

Manufacturing debt net of cash declined to 34% in the quarter. We expect to continue to show significant cash balances for the second quarter, and perhaps for the third as we reassess our cash generation and borrowing mix, and also as we're considering foreign cash repatriation options during the year.

Regarding liquidity, at quarter end, in addition to having $55 million in cash, we had no debt drawn against our $75 million revolving credit facility. We have $17 million in maturities on our private placements during May, which will be funded with cash on hand. We have no further maturities this year. We are considering the best timing for our planned $5 million discretionary pension plan contribution.

Looking forward, as I said, we believe the first quarter represented an important inflection point for the Company's margins, and we expect sequential improvements as the year progresses. Although Fire Rescue posted a loss for the first quarter, the U.S. operating fundamentals have improved and will continue to improve as the year progresses. We expect this business to return to profitability in the second quarter and then improve markedly in the second half. EPG's sequential improvement will be tied to the turnaround of refuse, still expected to break even in the second half.

Safety Products expects to continue to post favorable comparisons as the year progresses, and should have average margins slightly above last year's 13.2%. We're watching Tool closely to be confident that the first quarter's weakness is not the beginning of an adverse trend. The business is amending its plan so that they can beat 2004 even in the event of a weaker sales environment.

This concludes my comments, and I will turn it back to Bob to moderate questions.

Thanks, Stephanie. Jean, I guess we're ready to go.

Thank you very much. [OPERATOR INSTRUCTIONS] You have a question from David Gold of Sidoti & Company.

Good afternoon.

Hi, David.

Bob, as you talk about Fire Rescue, perhaps you could give us a sense on a couple of things. One, the progress, I guess, we've made since the -- a little bit -- the fall-off in sales in the fourth quarter where it looks like life has gotten a little bit better. And two, at the bottom line, what the effect was -- or what the costs were of closing associated with the failed dealership so we can get a sense of what that margin would have looked like.

Okay. I'll talk about the progress in Fire since Q4, and I'll let Stephanie field the dealership question.

Perfect. Thanks.

As you know, throughout 2004 we were looking at a lot of things in this business, and deciding on those areas where we need to focus to improve and those areas that we just needed to change some of the practices that we had in place. And recognizing that there were some -- that a lot of these changes, it was the right time to do them as we were working hard to change the direction of the business.

One of those changes was the change -- looking at the way that we in previous years discounted more heavily in the fourth quarter. We decided that we didn't think that was the right thing to do, that we were probably pulling orders ahead into the year that we would get anyhow at a higher margin if we wouldn't discount so heavily. And, in fact, we believe we're seeing that happen, with North American orders up 37% in the first quarter, that's a good sign, and we believe that that was the right thing to do.

From an operations standpoint, as I said in the fourth quarter conference call, in some respects we just kind of dropped the ball late in the year because some of our employees perhaps -- I shouldn't put it that way. We just took our eye off the ball as far as constantly maintaining progress in improving the day-by-day-by-day-by-day focus on getting trucks started on time and trucks completed on time. So we got through that basically mostly in December and it leaked into January for a couple of weeks, but then we started gaining traction and we're making good progress. And I'm really happy with where we were in March and April and continuing to make progress. I don't know if that answers the question, David, but --.

No, that's fair.

We'll let Stephanie handle the dealer question.

Just in terms of the margin, our gross margin was up about 3 percentage points, and we lost about 1.5% of that, about $1 million on the dealership. Then we had some other increases in SG&A year-over-year, some of it associated with some of the staffing changes, relocation, some severance, that sort of thing, which is why, at the end of the day we showed no improvement. But we do expect the gross margin to continue to go up. We didn't get much price through yet in the first quarter, and also the SG&A to abate.

Okay. So it was 1 million on the dealership closing, then a little bit more in the SG&A?

Yes.

One more. Stephanie, just to clarify, your comment on the tax rate, I think you said 28 to 30. You said for the year. Did you mean for the next three quarters, or did you mean for the year, because obviously this quarter's tax rate pulls it down pretty significantly for the year.

I really meant for the year, given that our earnings were virtually zero in the first quarter, it's kind of the same answer. Yes, I did mean for the year, 28 to 30.

Got you. Okay. Thanks.

We'll take a question from Walt Liptak of KeyBanc Capital Markets.

Hello, Walt.

Looks like the question was withdrawn. One moment, please. We'll take a question from Jack Kelly, Goldman Sachs. Again, star 1.

Bob, you had mentioned two key challenges would be getting throughput at Ocala, and kind of a start-up at Medicine Hat. Could you give us, on Ocala, some metrics kind of where you are now with throughput on a per-truck basis? You also mentioned completion times. Maybe those two metrics, where we were in the first quarter and kind of where we need to get to in the third or fourth to kind of hit your targets, and then any other similar metrics you could offer with regard to Medicine Hat.

Well, I don't want to give you details, Jack, because we would prefer that our competitors are not aware of some of those things, but I'll put it this way. We have built into our plan progress from the beginning of the year to the end of the year. We're not that far away from where we need to be in the second quarter. And making steady progress. We need to continue making steady progress in the third quarter and then additional progress beyond that in the fourth quarter.

And we're making good progress, we're very close to where we need to be, and we still have some work to do, because we keep setting the bar higher and higher. But, it's not the -- it's not an order of magnitude of 30% or anything like that.

So if we -- rather than maybe putting absolute numbers around it, if we said production was X in the first quarter, by the fourth quarter it has to be X plus 10 or 15%?

Yes, that's probably fair, Jack, some where around there.

Okay. Then just moving over to industrial, you mentioned it was weak, and cited automotive. Can you talk about any difference between the U.S. and Europe, or wasn't there much of a difference?

Well, in Tools, in the U.S. we were about flat, and the weakness in the Group came from outside of the U.S. Europe, France was -- beat their plan slightly, but other than France, all of our operations in Europe were below last year, and Japan was lower than last year.

Now, some of this -- some of that is not all market. For instance, the first quarter of last year in Japan we were introducing a new product line, which gave us a little bit of a pop, so not all of that is due to market weakness. But just in general, much of this business is automotive outside of the U.S., automotive related, either directly or indirectly, and the European automotive conditions are not that much better than they are in the U.S. And in Japan, we think that for the rest of the year Japan will be okay.

Okay. And if you looked at the U.S., ex automotive, what kind of trend would you have seen? In other words, was automotive the reason the U.S. was flat, and if you look at other industrials you might be up?

Well, we break it down into, I don't know, 12 or so different sectors, and the data that we have are estimated, so it's not terribly accurate, but indicative, I suppose. And in those sectors, probably half of them were up and half of them were down. None of them were down really significantly, and on the other hand, none were up significantly.

As we look at that, other than -- I don't see anything that stands out of -- indicating that we should be concerned for the rest of the year other than just all of the anecdotal stuff that you see going on in regard to GM and Ford in particular. And some of the other industries, other than the industrial activity growth rate slowing down a little bit compared with previous quarters, we don't see anything declining at this point. We think that the decline for the most part in the first quarter was automotive and for the most part outside of the U.S.

All right. Thank you.

[OPERATOR INSTRUCTIONS] We'll take a question from Walt Liptak of KeyBanc Capital Markets.

Thanks. Good afternoon. I missed part of the call, so if these questions have been asked already, I apologize. But the backlog was up 17%. I wonder if we might get the detail of what the backlog would have been without price increases?

I know approximately what price was flowing in in the quarter, that was somewhere on the order of $6 million versus a year ago. But I don't -- I don't think I could -- I don't have the data to look at the other $400 million.

Okay. That's fine. The Leach business, your garbage truck business, have you discussed what the loss was during the quarter, the dollar amount?

No, and we haven't disclosed that before, either. But I did say that our operating income -- or operating loss, actually, was less than what we had in the plan. So from that standpoint, we were pleased.

Was part of that loss one-time in nature related to the restructuring?

Well, he's talking about the number without the restructuring. I would say there was about $0.5 million in the loss as a result of the move, that was not charged to restructuring, and that basically is some higher reserves for excess and obsolete material, some higher inventory reserves that did not flow through restructuring.

Okay. And the -- the Allied Waste orders that you've mentioned, is this the first time that Allied Waste has purchased from either the old Wittke or Leach?

No, some of the component companies that Allied Waste is made up of, have been Leach customers in the past. Now, beginning when they said they were going to institute this centralized purchasing process, I believe it was in the fourth quarter last year, all orders stopped at that point, and what we've seen so far is the continuation of some of those orders. What we don't -- there have been no announcements from Allied, and they have given us no indication that they've determined what their policy will be going forward.

We think that all they're doing is just allowing their subsidiaries to continue to buy trucks that they need, in the meantime, until they roll out what their purchasing strategy and sourcing strategy is going to be. So we don't read anything into this other than they're just kind of business as usual until they get their arms around their new policy.

That's fine. And the commentary that you made about municipal at the end is that one of the risks is that may slow down, and that at the FDIC show I was getting indications that municipal might be slowing in the U.S., but then your revenue in the Safety Products Group and the orders in fire trucks seemed to contradict that. And I wonder what you might have meant by that initial comment.

I'm pretty sure I said industrial. What I said about municipal, which was earlier in the call, Walt, was that the municipal sector is strong and we see that continuing to strengthen through the rest of the year. So the comment that I did make about some risk of weakening that was in regard to industrial, and again, we haven't seen anything so far outside of Tool. So we just recognize that with some of the data coming out in the last few weeks in particular, where the growth rate in the industrial sector is slowing somewhat --.

okay, I understand.

But we haven't seen anything so far in that regard.

Okay, I understand. And then I guess, lastly, the legal defense, is there more data that you can tell us about perhaps, any dates related to any trials or when their costs would ramp, I know you said $1 million per quarter, but can you provide some more detail on this?

The first trial date has been set, and it's for, I think, August of this year, late August. So I think the costs will be a little bit higher in the third and fourth quarter.

Okay. Thank you.

We're in discovery now and we're spending a fair bit of money as we speak.

Okay. Thanks, Stephanie and Bob.

[OPERATOR INSTRUCTIONS] And I see no questions at this time.

Okay. Thank you, everyone. We appreciate your continuing interest in Federal Signal. We look forward to a much better year in 2005 than we had in 2004, and from that respect, looking forward to our conference calls in the future, more so than in the past, perhaps. And thank you, Jean, for a very fine job of managing this conference. And, everyone, have a nice weekend.

Thank you, sir. And, ladies and gentlemen, thank you for joining us on the call. You may now disconnect your phone lines.