L B Foster Co (FSTR) 2011 Q3 法說會逐字稿

Good day ladies and gentlemen, and welcome to the third-quarter 2011 L.B. Foster Company earnings conference call. My name is Angela, and I will be your coordinator for today.

At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.

And now, I'll transfer the call over to your host, Mr. David Russo, CFO. Please proceed, sir.

Thank you, Angela. Good morning ladies and gentlemen. Thank you for joining us for L.B. Foster Company's earnings conference call to review the Company's third-quarter 2011 operating results. My name is David Russo, and I am the Chief Financial Officer of L.B. Foster. Hosting the call today is Mr. Stan Hasselbusch, L.B. Foster's President and CEO. This morning, Stan will provide an overview of the Company's third-quarter performance, give an update on critical business issues and discuss market conditions. Afterwards, I will review the earnings press release issued earlier this morning and then we will open up the session for questions.

Means to access this conference call via webcast were disclosed in our earnings release and were posted on the L.B. Foster Company website under the Investor Relations page. This webcast will be archived and available for seven days.

Today's call includes forward-looking statements and information within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements relate to future events and expectations and include known and unknown risks and uncertainties. Future actual results may differ greatly from these statements and expectations that are expressed today. All participants are encouraged to refer to L.B. Foster's annual report on Form 10-K for the year ended December 31, 2010, as well as to other documents filed with the Securities and Exchange Commission for additional information about L.B. Foster. Additionally, while forward-looking statements will be made today, L.B. Foster Company's policy prohibits us from providing specific earnings guidance.

With that, we will commence our discussion and I will turn it over to Stan Hasselbusch.

Good morning. Thank you David. Thanks to all of you for attending our third-quarter 2011 earnings call and webcast.

This morning, we announced consolidated sales for the third quarter of $162.7 million, 29% above the third quarter 2010. More importantly, we reported record earnings from operations in the quarter. Earnings for the quarter were $0.95 per diluted share, up 49% from the same quarter last year. Both sales and income increases were largely fueled by the Portec Rail Product acquisition, which was completed last December. For the second-quarter in a row, consolidated bookings were relatively flat. $128.7 million in the third-quarter compared to $124.8 million last year. Excluding Portec, Legacy Foster order entry was down 14% indicative of the continued uncertainty in our public infrastructure market. I continue to point the finger at our inept federal legislative body in failing to move forward on a meaningful comprehensive transportation bill.

Let me remind our stakeholders that number one, the current SAFETEA-LU bill expired September 30, 2009 and we're now on the eighth extension of that bill. That extension will expire March 31 of next year. The federal Gas Tax, which funds approximately two-thirds of the cost of this bill was passed in 1993 at a flat rate of 18.4 cents per gallon without an index for inflation.

Currently over 25% of our nation's bridges are either categorized as structurally deficient or functionally obsolete. And it has been conservatively estimated that each $1 billion in transportation spending provides over 28,500 jobs. With national unemployment over 9% for the past 29 months and the construction industry unemployment at times at least twice that amount, talk about a job program opportunity. We've got one right in our face. Our nation needs a robust, fully funded federal transportation bill to provide the money necessary to not only maintain our aging transportation infrastructure but to expand it to meet our critical needs in the future.

Enough for editorializing at the time. Let's take a look at the product performance. We had strong contributions from a number of areas, but three stick out. Our Distribution sector, Portec, and Tubular Products. In Distribution, revenues from new rail were over $38 million in the quarter, up nearly 75% from last year largely on the basis of a 60% increase in tonnage shipped. The increase in tonnage was largely a result of completion of the New England Central order shipping from Steel Dynamics.

Our Distribution business have also been a key beneficiary of an on-going internal process improvement focus, our Continuous Sustainable Improvement program. We began this program three years ago under the watchful eye of Steve Burgess, our Director of Continuous Improvement. The major focus is breaking down every facet of all of our process from the time inventory is purchased until the shipment invoice is collected. We call this cash-to-cash and it's conducted numerous kaizen and lean events in order to successfully implement this program.

As a result, we've noticed remarkable improvements in a number of areas. Two areas worth noting are in Distribution with new rail and piling. New rail has more than doubled its inventory turnover metric from 2.7 to 5.6 this year and reduced DSO by 36% from 47 days to 30 days at the end of September. On a year-over-year basis, piling has reduced product inventory from 51.4 million to 34.7 million or 32% at the end of the quarter in increased revenue for the year of 34%. This improvement is crucial in all products, particularly in our high-revenue lower-margin businesses such as new rail and piling where margin pressures remain in this competitive environment. We must continue to increase returns on our investment at all of our product levels.

Contributions from the Portec acquisition have been across the board. In addition to friction management where we have had strong performances in the States, Canada, and the UK, we've had a solid year in the shipping system in track component lines. Friction management has been one of the beneficiaries of increased spending by the North American Class I Railroads this year. Year-over-year spending has been estimated at up over 30% over last year.

We are now more than 10 months into the Portec merger and the integration is going very well. We're focusing our attention on 14 key issues which include implementation of best practices, product rationalization, organizational realignment in sales, engineering, and research and development. This focus will continue into next year.

One area that is not meeting our expectations is the Salient Systems division. As a result, we have stepped back, made management changes, and initiated improvements to the product lines to enhance future performance.

Though a small part of our portfolio, Tubular Products has had a solid year in both threaded and coated where combined revenues are up over 12% in the quarter. We are bullish in the energy market in the months ahead. Square footage coated at Birmingham this year will approach 20 million, up 20% from last year. Projections for 2012 increase another 10% to 12% increase. And the move to our new threaded products facility in Magnolia, Texas is on track to be completed and commissioned in December.

In construction products where revenues were flat, piling sales were $40.5 million, up marginally from last year. Fab products was up 50% based on our previously discussed strong backlog. And concrete products were down 36% in the quarter because of the completion of stimulus spending.

Finally, in CXT concrete ties, on the cracked tie issue, we continue to be involved in comprehensive testing with outside consultants regarding the UP Railroad's claim of defective workmanship of concrete ties emanating from our former Grand Island facility. Because of the detailed testing procedures of this process, we will not have final answers until early 2012, but I can comment that indications from initial testing do not imply defects in workmanship.

I would like to close by saying that despite our current weak economic environment, L.B. Foster keeps on progressing and is well positioned to continue to grow profitably in the future. This is a testament to the efforts of our workforce and the dedication they bring to the job every day.

I'll now turn it back over to Dave for financial review.

Thank you Stan.

As Stan mentioned, sales for the third quarter of 2011 were $162.7 million compared to $125.6 million in the prior year, a 29.6% increase. The sales increase was due to the inclusion of $26.5 million of sales contributed by Portec Rail Products, our December 2010 acquisition, as well as a $10.6 million or 8.5% increase in legacy L.B. Foster sales. The 8.5% increase in Foster sales was driven by a 19% increase in Rail Products sales and a 12.2% increase in Tubular Products sales slightly offset by a 1.2% decrease in Construction Product sales compared to last year's third-quarter.

After adjusting for the businesses that we divested in December of '10, Portec Rail Product sales were approximately $3.8 million or 16.5% higher than its 2010 third-quarter sales. Of course Portec rolls up in our Rail Product segment. And including Portec, our rail sales increased by 67.3% The remainder of the increase in rail sales was driven by increases in rail distribution and in transit products

Our update regarding the Union Pacific Railroad's product claim, as Stan mentioned, was described in our earnings release and is somewhat limited as our testing process, while we believe purposeful and thorough, has quite a way to go before we can evaluate and draw conclusions. Along with our expert consultants, we are proceeding expeditiously to understand the preliminary test results and then advance to the next logical test. We anticipate completing adequate tests on a representative sample of ties so as to be able to adequately respond to our customer while sharing our testing process and results.

As mentioned in our earnings press release, because we still have much testing to perform, we have not recorded any charges in the third-quarter for this claim as it is impossible to reasonably estimate the liability, if any, we might have. We can say, however, that preliminary test results have not indicated any obvious defects in workmanship or deviations from specifications. We anticipate completing the tests required to adequately respond to our customer's product claim sometime during the first-quarter of 2012.

As we mentioned during last quarter's call regarding ties, our Tucson facility remains close to maximum capacity. And in Spokane, we continue to produce concrete ties for transit authorities, Class I railroads, and contractors, and industrial customers. We continue to see robust inquiry and bidding activity, and we're close to capacity at that facility as well. Our Spokane facility reported very strong sales and profitably, not only in the third-quarter, but all year thus far.

Our Rail segment ended the quarter with bookings up 12% over last year, however, our backlog was higher by 13.9% with the Portec Rail backlog included. And it was 32.5% lower for the legacy Foster products.

The Construction Products third-quarter sales decline was due to a 36% reduction in concrete building sales, mostly offset by a 7% increase in piling product sales and a 50.4% increase in fabricated product sales.

Last October, we mentioned that we expected new pre-cast building orders from federal agencies customers to decline over the following several months. And in February, we announced that our year-end 2010 building division backlog was half of what it was at the end of 2009 and that we expected a significant decline in building sales in 2011. This anticipated decline was due to the conclusion of stimulus spending by the federal government, and we expect this negative trend will continue for the remainder of this year as we compare to a record year in 2010. Our nine-month 2011 order entry for this business has been approximately 37% lower than last year, and the backlog remains at approximately 50% of that of September 2010.

Our Fabricated Products division has a backlog that is 5% lower than last year, but it's still very strong, and we expect that division to perform well over the next 12 months.

Our piling division had a reasonable bookings quarter but a stronger sales quarter. As a result, its backlog is approximately 49% lower than last year, as this is one of our more competitive markets today.

The third-quarter Tubular Products sales increase was due to an improved sales performance in our threaded products business and to a lesser extent improvement in our coated products business. Our coated products division ended 2010 strong and reported a 40% sales increase over 2009. Business activity has been good and backlog is well above last year as of September.

As a percentage of this quarter's consolidated sales, Tubular accounted for 5%, construction was 38%, and rail was 57% of total sales. As mentioned in our earnings release, backlog stood at $153 million at the end of the third quarter, down 25.3% from September of 2010. Portec represented $16.2 million of that backlog.

Consolidated bookings for the third-quarter quarter increased by 3.2% as Stan had mentioned and Portec represented 21.7% of that activity. Gross profit margins were 18.9% in the third quarter, an increase of 290 basis points from last year's third quarter. The increase in margin was due principally to the inclusion of Portec Rail Products, partially offset by a $1.1 million unfavorable swing in LIFO expense.

Selling and administrative expense increased by $7.6 million, or 78%, to $17.4 million in the third quarter of 2011, due to the inclusion of Portec's estimated expense as well as certain legacy L.B. Foster costs including integration costs and costs incurred to perform the testing of the concrete ties. Selling and administrative represented 10.7% of sales for the third quarter as compared to 7.8% of sales in the third quarter of last year, the increase being principally the result of the inclusion of Portec as its selling and administrative costs as a percentage of sales has historically been higher.

Third-quarter operating income was $14.4 million compared to $10.2 million in last year's third quarter, a $4.2 million improvement which was due principally to the addition of Portec Rail Products' operating income. As disclosed in our earnings release, we provided a calculation of adjusted EBITDA which we believe is meaningful for a company which has made a significant acquisition as it compares the results of operations, excluding certain non-cash items, to provide another measure that reflects how a business is performing.

For the third quarter of 2011, adjusted EBITDA was $17.4 million compared to $12.2 million in the prior year, a 40% increase. As a percentage of sales, adjusted EBITDA was 10.7% of sales in the current quarter versus 9.9% in the prior-year quarter.

Interest expense was $170,000 in the third quarter of '11, 19.4% less than the same period last year due to reduced borrowings. Some other items that occurred during the quarter that relate to other income are as follows. We reported about $700,000 of currency exchange gains related principally to our Canadian operations. We also incurred a little more than $600,000 from a 2008 sale and lease back transaction related to sale of our Houston, Texas threaded products facility. The lease on this facility was recently amended and now has a much shorter duration. And we therefore had to accelerate the recognition of the previously deferred gain.

Third-quarter 2011 pretax income was $14.3 million compared to $10.1 million in last year's third quarter, an increase of 41%. The third-quarter 2011 effective income tax rate was 31.7% compared to 35.5% last year. The reduction in the rate was principally due to the impact of Portec Rail Products results and the relatively lower effective tax rate applicable to its foreign operations as well as the receipt of state tax refunds for the Foster Companies.

Net income was $9.7 million, or $0.95 per diluted share, compared to $6.5 million, or $0.63 per diluted share, last year.

Turning to the balance sheet, debt at the end of the third quarter was $2.8 million compared to $4.8 million at the end of 2010 and $16.4 million as of September 2010. The primary reason for the decline was the payoff of our term loan when the company refinanced its debt earlier this year. Capital expenditures were $1.5 million for the third quarter compared to a $1.4 million expenditure in the prior-year quarter. We anticipate capital expenditures will approximate $9 million in 2011. We also expect to generate cash flows from operating activities in excess of capital expenditures, scheduled debt service payments, share repurchases, and dividends.

During the third quarter, we purchased shares of the Company's common stock pursuant to the Board of Directors' share repurchase authorization that was announced in May of 2011. We purchased 230,612 shares at an average price of $21.39 per share for a total cost of $4.9 million. Since the authorization began in May of this year, we've purchased a little over 278,000 shares at an average price of $23.25 per share for a total cost of $6.5 million. Approximately $18.5 million remains on the outstanding authorization. We do not believe that this program conflicts with our stated acquisition strategy as we've said in the past. Instead, we believe that the combination of the share repurchase program, the quarterly dividend initiated this year, and the acquisition strategy will provide a balanced approach to providing value for our shareholders.

Cash at September 30, 2011 was $57.1 million, which was invested principally in AAA rated money market funds and other short-term instruments where preservation of principal and quick access to funds has been the priority.

Working capital, net of cash, decreased by $10.9 million compared to June of 2011.

Accounts Receivable decreased by $2.8 million compared to June while DSO was at 44 days. We believe that our Accounts Receivable portfolio remains in very good condition. Inventory decreased by $1.9 million during the third quarter of 2011, while Accounts Payable and deferred revenue declined by $0.6 million.

Looking forward, we believe that the wind-down of the federal stimulus spending, continuing budget deficits at the state level, and the lack of a renewed transportation bill, and a more inconsistent economy than we expected will keep our markets on the weaker side, as evidenced by a lower backlog, which will likely continue to exacerbate the competitive environment.

Portec was nicely accretive in the third quarter and we expect that, along with some of our other rail divisions, that that will continue for the remainder of the year and for the full year as well.

That concludes my comments on the third quarter. We will now open up the session for questions. Angela?

Thank you, sir. (Operator Instructions). We'll pause one moment. Gentlemen, your first question will come from the line of Liam Burke with Janney Capital Markets. Please proceed.

The backlog was down. Is that a function of entirely the construction side of the business? And does the shorter cycle nature of Portec affect the backlog as well?

No, the backlog is down. We are down in buildings. We're down in concrete ties. Last year, we had -- Grand Island, if you recall, there's no backlog out there. That's all been moved out. Piling backlog is down. That's the biggest area. It's down about 50%, as David said. But rail is relatively flat, but rail exclusive of Portec is down also. We had a very strong quarter, as we discussed, in new rail. But as it stands, in new rail's backlog, at this point, is probably down about 45% compared to where it was last year.

Is it right to assume now that the Portec product line is a little more shorter cycle and backlog will tend to be a little different in the future?

Somewhat, I think. That's fair, for the most part, Liam.

On the SAFETEA-LU side, this thing has been going on for several years. We knew the concrete huts -- concrete structures were going to be down due to the artificial bump you had last year. Aside from that, the business looks like it's in pretty good shape. You're managing through the headaches. You're getting through the stimulus dry up. Is that an accurate view of the business?

I think that we are -- that level of spending at the federal side for transportation is pretty much -- it's continued to stay at that level that it's been since it expired in '99. We had the bump in stimulus. We're going to probably end up close to $40 million in buildings, which is a good normal year. I think our piling group, new rail, under the circumstances, is doing very well. Fab products still benefits by a large strong backlog, but we probably see a backlog in that product, Liam, well into -- probably throughout most of next year. We've had a benefit of certain overlap taking it up to a preciser operation in Georgetown, Massachusetts to help with the capacity overload that we had at Bedford, where we primarily make our bridge decking. But under the circumstances, I think we're very pleased with our performance in the quarter.

There's the challenge on bookings and there's the challenge on our backlog. But with everything else said, we're very pleased with what we saw in the quarter.

Great. Thanks, Stan.

(Operator instructions) Gentlemen, your next question will come from the line of Robert Kosowsky with Sidoti. Please proceed.

Quick question on the piling backlog. It was down 49%. Is that more due to you guys holding the line on pricing and kind of forgoing chasing volume or kind of what does the over market decline look like right now? And is this getting worse, or is it kind of flatlined, or kind of -- any more commentary on that?

It's fairly flatlined. Last year, we had a strong backlog with the piling going down to the New Orleans area with the aftermath of Katrina, which really played a lot into that. But we're aggressively after everything we can get and trying to find ways to drive profit as we talked about looking at ways to maximize turnover and really do a better job with working capital. And it's really starting to pay off in that area, but it's a challenging market out there.

I think one of the areas that we see that is starting to unfold is in the port markets. And I know Don Foster and his group are very actively addressing some of the opportunities in that, but a couple years ago, if you recall, we supplied the sheet piling to actually widen and deepen the Panama Canal. And that's getting the bigger ships through there. Now, we have to get them into the harbors in the United States. And I think that that's one of the big construction products that we're looking at on the radar coming up over the next three to five years is really as they widen and deepen the ports in the eastern part of the country.

And just a numbers question, you said that revenue was down about 1% in the construction segment?

Yes, Rob. That's right.

Would you be expecting that negative comparison to get wider as you get kind of this weaker backlog coming as a reality?

It could drop off somewhat. We think that we will be pretty consistent, I think. Normalized -- buildings is very seasonal and normal drop-off is the next two quarters. And so, that'll drop off, but comparatively speaking, it'll be down because of some of the stimulus backlog was winding through there. That product should be pretty consistent. And piling because of the lack of backlog, we know it's going to probably have a lot of pressure on shipping in the fourth quarter.

The gross margins were very strong in the quarter. Can you just briefly talk about, was there any product mix that went to it? I know Portec obviously helped the product mix. Do you think this new level of margin is sustainable taking in mind seasonality?

I think so.

Yes. Portec was the majority of the reason for the increase, Rob, that we -- our distribution businesses both had upticks in their gross profit margins, rail and piling, and that helped certainly. Of course, new rail and actually piling both had strong quarters. So, even though they increased their margins, their margins are less than consolidated. So, that would've had a little bit of a negative to it. But they did well. It's really 90% Portec and the only other item was the Tubular margins were up nicely as well.

Finally, do you have any outlook on Class I CapEx for next year?

As we talked, there's been a big ramp up this year. And I think that we looked at -- through the third quarter, it was up 25% to 30%. The Class I's really started ramping it up in the fourth quarter last year. Even if we're at a flat level in the fourth quarter, we'll be up roughly 25%. That's huge. We don't really look for that going up next year, but we don't look for it dropping off. That level, it's really good for our business.

So you see kind of a flattish CapEx environment. Kind of historically good level?

Next year but keep in mind that this year's going to be probably -- and they've had three or four -- five -- I think four, they had a drop-off in '09 actually. But the last two years have been really nice pickups. And we expect it, if it keeps flat, we'll be very happy with that next year. This year's far and away a record in CapEx and --

Thank you guys very much and good luck in the fourth quarter.

Thank you very much.

Thanks, Rob.

(Operating instructions) Gentlemen, your next question will come from the line of Brent Thielman, with D.A. Davidson. Please proceed.

Dave, just a clarification question. I don't think you mentioned it but were there any other additional costs associated with the Grand Island closure that impacted the quarter?

Yes, we didn't want to sit here and make excuses. But yes, we incurred probably about an additional $700,000 related to Grand Island, Brent.

And any more you thinking next quarter?

Somebody asked that question the last time. We didn't think we'd incur any. And then, we did. Until we get out of there, we still have quite a few ties sitting in the yard. We have to get those moved. But we believe most of that's taken care of. We could have some. The big thing is to get our testing done and to figure out what we have with regard to the ties that're still there. But we think we're in pretty good shape right now.

We do have, as you're required to do, an asset retirement obligation for the basic teardown and removal of the structures that we put in place. So, I think we're in pretty good shape.

I guess just back on the bookings. You guys have been clear through the truckload type business being relatively slow, some of the smaller projects. But you have been able to find some larger opportunities out there, which have kind of given you some stability the past several months really. But Stan, kind of given your 9- to 12-month view, are you starting to see even those larger opportunities fade or pushed further out? Any color to that?

Like I said, we don't really have a big job. We've been very fortunate the last couple years to have a big job on our backlog, whether it was Katrina, or whether it was Panama. We had a huge shipment into Iraq. Seems I'm missing something here, but we've had that in the back. Well, we really don't have that. We think, as I mentioned a few minutes ago, that there's an opportunity in some of the ports that's starting to unfold. But there's not that big job that we've got in our backlog. And it's very noticeable.

And just on the Portec, obviously it's been integrated here for a little while. Any new synergies you're finding that you care to discuss?

We're seeing synergies across the board. As I said, we've worked hard on this integration. We're very pleased with what we've seen. We started off with 120 days and we got through that just familiarizing the companies. And we're really down to I think, as I said, there's 14 areas. And we're starting to see some synergies in operations. We're going to be seeing more synergies in sales. We're starting to see some of that.

We will continue this. This is an on-going process. But I'll tell you one thing that's really been good. I think that -- this is the biggest acquisition we've had. And we've worked through it, I think, fairly well. And we're ready to look at something else. If the right -- we've been kind of hesitant to jump on something unless it dropped in our lap. But we think that we've got some great opportunities. I know that we've been talking and we didn't really talk about what we've got going on in China. We've got some positive things going right now with that. We're looking at some work in Brazil. We're looking at some work -- I was over at the UK a couple weeks ago. And we're looking at opportunities to expand that business both in the UK and looking for opportunities as a stepping stone.

There's a couple small operations that we're looking at that would really get us into the mainland a little bit quicker than what we would. But we're looking at, with Portec, it really gives us an opportunity to look at things really differently in the rail business. And it'll start to come together. We get this under our belts, and I'll tell you what. We're out looking right now and if the right situation comes along, our balance sheet's in great shape. And we will jump at the opportunity to grab it if it makes sense.

And then, just lastly, on the coated business, you mentioned kind of anticipating that 10% to 12% increase in square footage coated for next year, if I heard that right.

You did.

Are you already booking projects out in the next year?

We are. We've got a solid fourth-quarter. The activity level that we're looking at next year -- I think that it'll be -- we're looking for it to be one of our better years. And we're going to end up this year much better than last year. Much better than what we thought. We're picking up some of the shale opportunities. Shipping some stuff up into the northeast with Marcellus, but we've also got some projects that we're participating in in the southwest. So, that business is good. And actually, threaded is good. So, Tubular across the board's pretty good.

And gentlemen, you have a follow up question from the line of Robert Kosowsky with Sidoti. Please proceed.

Yes, just two other questions. I think you've mentioned some issues at Salient. I was just wondering if you've got some more details behind that.

Not really. I think that we looked at, when we made the acquisition, we thought that that was an opportunity. And we still think it's an opportunity. And I know that Dave Sauder, who's our head of Business Development, has been overseeing the changes that we've made out there, and we knew that there was a lot of changes that had to happen. And we've been heavily involved in that. And David has been very much involved with that.

We've got a new General Manager out there looking at some of the products. We're starting to get some visibility on where we need to go and what we need to do. And we feel better about it than we did 6 months ago, Rob, but it's coming.

That's helpful. And then, I think you mentioned friction management was up more than the market this year. Is that right? And kind of what are some of the drivers behind that?

I don't know whether it's up more than the market. I think it's up more than what we thought it would be when we bought it. I think that we're seeing some opportunities across the board. And it goes not only into cap spending but in the maintenance. It was a little slow coming out of the box, I think, with some of the domestic lines, but it's starting to pick up. We had a good year with the product in the UK and in Canada. But we expect some continued good things with that going forward.

And then, this might be kind of awkward, but just an update on the CEO search, Stan. And then, just wondering how this kind of uncertainty might affect your ability to look for an acquisition.

I decided to stay around for another ten years so take that (laughter).

Just wondering how this plays in with acquisitions too, and kind of the acquisition strategy as well.

That's a good point. I think that we will continue to look. Two things. The search is continuing. We did have an 8-K that came out last week that I'm going to stay on at least until next year until that's completed and the transition is made by the search committee. But I think if we find the acquisitions that come along, the opportunities that come up with that, that play into what we're looking for from a strategic standpoint, we'll jump at it.

Rob, what I'd tell you is the way Stan has set this up, it's a strategy within our overall strategic plan. And we've got a process there in different segments of the business. Know where we want to go and that pretty much helps us do the targeting. And in that regard, it's a team approach. And that's the way Stan has set it up. We've got people that're doing that targeting at the segment level as well as the corporate level. It's proceeding.

Thank you. That's very helpful. And good luck guys.

Thank you.

(Operator instructions) Gentlemen, at this time, I show no further questions within the queue.

Well, thank you very much for your support and wish you folks all a very happy holiday season into the fourth quarter. Look forward to talking to you after the first of the year. Thanks.

Ladies and gentlemen, we thank you for your participation in today's conference. This does conclude the presentation. And you may now disconnect. Have a wonderful day.