Hubbell Inc (HUBB) 2011 Q1 法說會逐字稿

Good day, everyone. Welcome to the Hubbell Incorporated first-quarter results conference call. As a reminder, today's call is being recorded. Now for opening remarks and introduction, I would like to turn the call over to Jim Farrell. Please go ahead, sir.

Good morning, everyone, and thank you for joining us. I'm here today with Tim Powers, our Chairman, President and Chief Executive Officer; Dave Nord, our Senior Vice President and Chief Financial Officer; and Bill Sperry, our Vice President of Corporate Strategy and Development.

Hubbell announced its first-quarter results for 2011 this morning. The press release and earnings slide materials have been posted to the Investors section of our website at www.hubbell.com. Please note that our comments this morning may include statements related to the expected future results of our Company and are, therefore, forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Therefore, please note the discussion of forward-looking statements in our press release and consider it incorporated by reference into this call.

In addition, comments made here may also include some non-GAAP financial measures. Those measures are reconciled to comparable GAAP measures and are included in the press release and the earnings slide materials.

Now let me turn the call over to Tim.

Thank you. Welcome, everyone, and thank you for joining us this morning. As is customary, I'm going to begin with an overview of the results we announced this morning, and then Dave will walk you through a more detailed discussion of our financial performance. I will conclude with my outlook for the remainder of 2011 and some closing remarks, and then we will open it up and take questions from you.

We will refer this morning to the presentation materials that are found on our website. I am starting on page three. But first let me begin by saying that we enjoyed the opportunity to host many of you at our first Investor Day early in March. We hope you found it helpful in understanding more about Hubbell and the breadth of our team. You will have noticed that we titled our Annual Report, Efficiency & Performance. We believe that that is what we are delivering to our customers and our investors, so that is the theme that runs through our commentary.

Now turning to the results, I am very pleased with our performance in the first quarter. We grew sales by 15%, improved our operating margins by 120 basis points, and increased our earnings per share by 28% compared with the first quarter last year. Our sales results in the first quarter reflect the general condition of our end markets.

In the non-residential construction market, we believe the put in place spending for the quarter was down, but was offset by the demand for energy-efficient retrofits and relighting, which allowed us to begin to grow our business here. Examples include strong growth in our relight business, which is helping owner operators save energy costs with new energy efficient lighting and controls, and wiring devices are benefiting from renovation spending. Utilities are increasing maintenance activities on their distribution networks and are spending more on transmission projects.

Our industrial markets have demonstrated strength across the board due to growth in output, capacity utilization and spending on capital equipment. We are seeing increasing sales in our high-voltage test equipment segment, as well as in our harsh and hazardous and OEM and maintenance and repair business. The residential market, however, continues to struggle, and we have had a difficult comparison through the first quarter of last year, which was inflated by governmental incentives in the form of a housing tax credit which pulled demand forward.

With sales up 15%, we have had even stronger order flow as we have built our backlog by nearly 8%. While the demand picture is very encouraging, we are battling against steep increases in commodity costs and inflation in areas like health care benefits. Of particular concern is the steep increases in the cost of copper, steel and oil. These trends pose a thread to our ability to maintain margin, and we must have price increases and productivity initiatives to provide counterbalance. The price increases have been implemented quite broadly, and while we anticipate market acceptance, we experienced a typical lag that creates quarter to quarter volatility. This dynamic makes the second quarter especially important for us as we will gain the full visibility on the progress of the pricing actions which will be fully realized in the second half of the year.

Furthermore, if commodity costs continued to rise, we would be prepared to take further pricing action later this year. To compliment pricing, we continue to focus on productivity initiatives. This is an important element of our management paradigm. We have had good traction on our productivity projects, and lean management methodology drives all that we do.

So far we have discussed market volumes, cost pressure and the need for pricing and productivity discipline. As construction markets start to show signs of coming off their lows, we must make the appropriate investments in our growth. Good examples include resources in LED lighting fixtures and controls, and also power has been adding engineering talent to support product development required by the growing demands of our grid buildout and the upgrade which is still in the early stages of expansion.

Given some of the recent macro shocks, it may be worth some commentary on Japan. With the unfortunate natural disaster in Japan, first and foremost, I am pleased to say Hubbell had no employees harmed there. To date we have seen no disruption in the supply chain, nor do we anticipate anything significant on the revenue side, but we will continue to monitor the situation closely.

So overall we welcome the growth we are experiencing across the broad base of our markets and are managing the challenging cost environment, and I'm pleased to be on track to deliver efficiency and performance.

With that, let me turn it over to Dave to give you more details on that performance. Dave?

Thanks, Tim. Good morning, everybody. I will echo some of Tim's comments that we are particularly pleased with the start of this year when we reflect back on where we were a year ago and the start of 2010. Let me give you a little bit more color on some of the numbers and try and get through it quickly so we can open up to some of your questions.

Starting on page four, the sales of $658.1 million, up 15%. As Tim mentioned, broad-based market improvement across all of our businesses, except for the residential business. Big leaders were power and industrial, and the segments, as we will talk about, electrical up 14% and power up 19%. Of that 15% overall growth, 13% of it is organic, the other 2% equally split between price and some currency benefit.

On the gross margin side, gross margin of 31.2%, up 40 basis points. Good conversion on our incremental sales as we would expect and as we have communicated in the past usually running in the 30% range, and that is pretty much what we are seeing overall, as well some of the productivity benefits that have helped to work to mitigate some of the costs headwinds on the noncommodity side, although on the commodity side, clearly that being a drag from our price not yet coming into play, and so battling that cost headwind in the first quarter. Not unusual as expected and our pricing increases that we have put in place, we expect to continue to begin to offset that as the year moves on.

Turning to page five on our selling and administrative expense, selling and administrative expense up $11.6 million or 11%, obviously less than the 15% volume growth, so we are getting some good leverage on the sales side. But certainly some offsetting headwinds from costs that we would expect salaries and benefits, some commissioned costs, some of the selling efforts, as well as some just timing that usually occurs -- expenses that occur in the first quarter that are more front-end loaded, particularly you might see around benefits that happens to be one of our lower volume. So the 18.5% of sales, a little bit higher than last year, and we expect that to continue to drift back down to the levels that we saw last year.

So all of that, 40 basis points of improvement on gross margin, 80 basis points improvement on selling and administrative, leading to our 27% increase in operating profit, 120 basis point improvement in operating profit.

Let me turn now to page six, net interest expense, pretty much comparable to last year. That is despite having $95 million more debt outstanding. So a 19% increase in debt outstanding resulting from our debt offering and issuance in the fourth quarter of last year. The tax rate down from last year's level. If you recall last year, we did not have the benefit of R&D tax credit until it was renewed in the fourth quarter. Now we are able to reflect that throughout the year. So that is where we are at the 31.5% rate in the first quarter and anticipated for the year.

So all of that leading to net income of $50.3 million, up 30%, and earnings per diluted share of $0.82, up 28%. That earnings per diluted share reflects higher shares outstanding, a higher average share count in the first quarter of this year, $61.2 million versus the first quarter of last year's $60.1 million. Within the quarter, you will note that we did repurchase shares in the quarter, 908,000 shares, just under $60 million share purchase in the quarter.

Let me now turn to the segments. First, the electrical segment on page eight, a very good performance in the electrical segment, sales up 14% to $56.8 million. Broad-based increases within that segment. Of the 14%, 11% is core volume, about 1 point of price and 2 points of currency. Getting down to the business level of the wiring business, we saw good double digit growth up 17%. The Electrical Products business up 20%. That has got the composite of very strong industrial, the harsh and hazardous business having high single digit, as well as the construction business showing some good improvement.

And even on the lighting side, overall our lighting business up 6%. That is despite some weakness still continuing in residential, but, as Tim mentioned on the commercial and industrial, some good performance there, certainly not from new construction, but more on the relight and retrofit. And I think to some extent lighting in particular and I think in our businesses overall, there is some piece of potential incremental volume that has come from pre-buys in advance of price increases, although based on our order rates as we are moving through the month of April. We don't think that that was significant, but that could have contributed some amount. It is difficult to identify precisely, but there is certainly some impact from that.

On the operating profit side, very good performance there, up 44%. 260 basis points in total, largely due to the higher sales and the conversion of incremental margins on those higher sales. Some offset coming from the increased commodity costs not yet being offset by the price increases as we go through the year.

On the Power Systems side, very good recovery in that market, very strong demand in the overall market. Distribution sales up 25%, transmission sales up 8%, all leading to a 19% -- now keep in mind that is coming off what was one of the lowest quarters in history in the first quarter of last year. So certainly an easier compare on the volume side.

On the profit side, a little bit more of a challenge there. Much not surprising at all. It is typically the situation that we see on the volume side getting the incremental margins that we would expect again in the 30% range, but being offset by the significant commodity costs. That is the segment that has the highest material content and, therefore, has the highest impact from the commodity costs. So all of the margin from the incremental sales really were being offset by that higher commodity cost until the price increases kick in.

And then some additional headwind that occurs from some of this spending that we have on some of our growth initiatives. Some of those are in the product development and brand development area, and some of them are just simply in the timing of expenditures that are in the first quarter, not necessarily annualized spending. An example would be a national sales meeting that would occur in the first quarter, and so it has some incremental cost there.

So we clearly expect continued improvement throughout the year in this segment from both the implementation and realization of the price increases, as well as ongoing productivity initiatives that will improve that.

Let me turn now to cash flow on page 10. Cash flow from operations in the quarter were $53.5 million. We used that to fund our capital expenditures of $22 million. Within there, as I mentioned at our investor meeting in March, we closed on the purchase of a facility that we used for our high-voltage business in Switzerland. That was $13 million, so the remaining capital was $9 million. But we expect the underlying recurring capital expenditures to recover to our more normalized $50 million to $60 million range for the year. But we are very pleased with the free cash flow of $31.5 million, up from last year's first quarter.

Again, as I mentioned in the investor meeting, in March the first quarter is always our weakest quarter. It tends to be even weaker than -- from a calendarization standpoint, than our operating profit. But we made a concerted effort to start to change those dynamics this year, working on our typical areas, accounts receivable and inventory, but also focusing on our accounts payable efforts in the dating of our Accounts Payable. And you see that on page 11 when we look at our trade working capital as a percent of sales, improving that to just over 18.3% for the quarter, and the continued area of focus as we drive to work the free cash flow at the level of net income for the year.

All that gives us a continued strength in our balance sheet position on page 12 and our capital structure. We finished the quarter with $497 million in cash, no additional borrowings from year-end, so giving us a very solid 29% debt to cap and a very conservative 3% net debt to cap.

Now we have talked in the past our use of our strong balance sheet and our cash flow. We use it for our investment in the business and capital expenditures. We certainly use it for returns to shareholders in the form of both share repurchase, as I mentioned, as well as note that we increased our dividend again back in February by $0.02 a quarter from $0.36 to 38% upon a nearly 6% increase. We have had a long history of continued increases in dividend, and we would like to be back on track to do that as we continue to improve our operations.

And the last piece and certainly not the least is on the acquisition side and keeping our powder dry for acquisitions. I think the market -- just a commentary -- the market there is starting to pick up. We see a lot more activity in the pipeline, which is good because it takes a lot of activity in the pipeline to work its way through the funnel. There is plenty of opportunities that we are working on.

The one thing that I would comment on is that it seems that the cycle time from start to finish is a little bit longer than we have seen in the past. And I don't know whether that is more deliberate sellers or more deliberate buyers or a combination of the two. But certainly a lot more activity, and I would expect to see some of the results of that later in the year.

I don't know, Bill, do you want to comment as well?

Yes, I think we are pleased with the dialog level there. The sources of private equity firms looking to realize on some investments, as well as corporates cleaning up their portfolios and divesting of some orphans, as well as entrepreneurs wanting to take their companies and move on to the next stage. So we are seeing good dialogue I would say to complement what Dave is saying. The actionability of all that activity looks high, and we are hoping to put some of that cash to work.

So all-in-all we are very pleased, as I say, about the start to the year. I'm very optimistic about where things are heading. And with that, I will give it back to Tim to give a little more specifics on our outlook.

Thanks, Dave. Let's turn to page 13 and our outlook for the remainder of 2011. Let me break down the end markets. Non-residential construction is our largest market, and based on the strength we see from the energy efficiency theme driving retrofit and relight projects, our outlook has improved to flat for the year. New construction spending is expected to be down, but each dollar of retrofit and relight spending has more Hubbell content in it.

Residential markets for us is comprised of single-family construction, multiple family construction and renovations. Our outlook has declined to down low single digit for the year as single-family construction has continued to declined.

The signs from our industrial markets are encouraging, and we expect growth in those markets. Our outlook has improved, and we now anticipate a 5% to 7% growth. In particular, the markets for our industrial product lines and harsh and hazardous products have improved. Our Power Segment is expected to realize mid-single-digit growth. Growth is anticipated in both distribution and transmission. Our view suggests that quarter-over-quarter comparisons will narrow as the year progresses.

Now let's turn to page 14 for some concluding comments before we take a few questions from you. Based on our experience year-to-date and forecast from independent market observers, our outlook has improved compared to what we provided you in January. We now expect our sales to grow 5% to 7%. We expect our price actions will take full effect by the third quarter, making the second quarter more favorable on the cost price front.

With productivity helping to offset noncommodity cost inflation, the results should be an increase in operating profit margins to 15% for the year. Our plan remains for free cash flow to meet or exceed net income,and our balance sheet continues to be in a very strong position to support growth investments. There is an increasing demand to adapt new technology to our core markets in areas like LED lighting fixtures, building controls, and new grid products for our utility customers. We continued to develop new products to meet these market demands.

Hubbell is well-positioned to grow as our markets recover, and our discipline is in place to generate profit and cash flow. We should be able to achieve record earnings per share despite the fact that our sales have not yet recovered from prior peaks. And the outlook is bright for us to deliver efficiency and performance for our customers and shareholders.

And with that, we would be happy to take some questions from you.

(Operator Instructions). Christopher Glynn, Oppenheimer.

A question on the acquisition pipeline. How would you describe your mix of competitive conversations versus some proprietary conversations you might have?

You know, it is both. We have somewhere trying to negotiate, others that have multiple conversations and people competing.

Okay. On the timing of price increases, would you expect some narrowing in the second quarter of your price cost shortfall?

Yes. Definitely, Chris. I think I'm not sure that at this point it is still uncertain whether we would get to parity, but certainly directionally it is going to be a narrowing in the second quarter and then start to turn in the third and fourth quarter.

Okay and just a little bit on the top line. The question is going to be half general and half specific, but some -- I know you have tough comps, but looking at some of the trends in the quarter, it looks like you are hedging some economic uncertainty in the topline outlook. So a comment on that, please. And the more specific question is, you had previously talked about tough comps for high-voltage tests, and the tone of your commentary around that seems to have improved.

Well, let's start first with the total level of cycles. I would say that certainly we are concerned about two things in the general economy. One is the extent to which all of our price improvements are effective in the marketplace, and that will become clear as the quarter proceeds.

If the current trend continues, we probably closer to the upper side of our guidance on revenue than the lower side of the guidance on revenues. So we are just a bit conservative here to the degree of uncertainty on price and what will happen on the back side of the price increases on orders. But we are generally more optimistic on market conditions for the year than we were in January. So that certainty for us or that picture is improving, and we are just being a little cautious on the cost price scenario.

And on high-voltage, we have had some good revenue on that side. We are still backfilling the backlog. So the conditions are improving somewhat there, but the percent of growth in that business as an industrial product should be lower than average for this year while our backlog refills. And we would expect, therefore, 2012 to be a better year.

Okay and if I could get one more in. The non-resi, I think the market commentary was for flat for the year. But with lighting up in the first quarter, is your specific nonresidential, was it up in the quarter?

Yes.

Rich Kwas, Wells Fargo Securities.

Within the 5% to 7% topline growth, what is the volume assumption there? Dave, if I recall last quarter, you were assuming 1% in volume in the 3% to 5% prior guidance, so what is the update there?

Yes, our 3% to 5% moving to 5% to 7%, that 2-point move is split a point of volume and a point of price.

Okay. Great. And then, on the contribution margin in electrical, 30-ish here this quarter, with price costs seemingly going to be improving here, should those contribution margins move up from here, or how should we think about that?

Well, I think if you look at contribution margins with price costs, I think that is true. I was looking at them as against our standard contribution. So yes, I mean the net contribution margin as price starts to kick in should improve.

Okay. That makes sense. And then on power margins, this is one of the lowest margins I have seen in a while I think even adjusting for seasonality. You talk to margins getting better as the year progresses. What is the cadence we should be thinking about that as the year moves on?

I would expect margins to begin to improve at a fairly rapid rate. I mean this is the group that got hit by far the most with steel. It is the largest component of material in their product lineup, so you would expect to see some pretty good bounce back as the year progresses.

Okay. Great. And then last question on lighting with margins, are you seeing more competition there on the project side, or are margins coming down in that business from a competitive standpoint? Are they holding their own? What is the color there right now?

Margins are slowly improving in C&I, and one of the healthy signs in the market for me is that I see a turn in the number of large orders we are winning from much more dominant from the public sector to moving back to, not I would call it not normal yet, but more projects on the private sector, which is a healthy sign and something that is needed because we know all the stimulus spending will be coming to an end. So that is a key for us that we have been paying attention to. So lots of competition on price, but slowly improving margins.

Thanks for the color.

Jeff Beach, Stifel Nicolaus.

With 13% organic volume in this first quarter and looking out at is it 2% to 3% volume for the year, are you looking for minimal actual volume increases as you go through the year to the year-end?

We think that the volume growth will be compressed as the year goes forward. If you look at our year last year, we had a very bleak first quarter. We had a considerably better second quarter and quite strong third and fourth. So we think that market conditions this year are better than we thought at the beginning of the year, but certainly that gap narrows as the year goes along.

And where, within all of your businesses, where are you going to be your toughest unit volume comparisons in the third and fourth quarters in 2010?

Certainly in high-voltage equipment, in residential lighting, and commercial products like rough in electrical like RACO, those kinds of areas. And, on the industrial side, we should maintain better compares maybe even harsh and hazardous, better compares as long as oil prices stay up where they are.

(Operator Instructions). Shawn Severson, ThinkEquity.

I was wondering can you quantify the impact of steel kind of through the power business? I mean year over year what are you looking at in terms of dollar impact? So maybe another way of asking is, what would the margins have been if steel had stayed flat year over year?

Well, I think the impact of our commodity costs are generally costing us about 2 points.

To the operating margin?

Yes.

Okay. And that was for Companywide or just for power?

Overall Companywide, a little more in power and a little less than electrical.

Okay. Great. And what is your threshold do you think on incremental increases in commodity prices before you would want to implement another price increase?

That is difficult to say because it is very discrete, you know, metal content. So, let's say, if there were continued price pressure on steel for instance, the pressure on our products would be on the utility side in the anchor business, in the hardware business, and on the commercial side, it would be in the metal box business where, for instance, steel represents probably 55% of the selling price. So if you have got a big jump in that, you need price to be able to maintain profit margins. So that is really where you would see it first.

Okay. Great. And in terms of the lighting business and going forward, especially on the retrofit, can you talk a little bit about the controls and the controls business specifically? One of the things that would seem to be an opportunity is to drive higher content in energy-efficient retrofits going forward. And just kind of where you are today in terms of providing that complete package of control sensors and so forth. And is there anything else that you want for that space in terms of your acquisition strategy? I mean what else do you think you need to have a complete solution or best solution there?

As far as controls go, we have a complete solution for commercial buildings and buildings like schools. We could use a product expansion in other areas that would be more specialty. That is a very difficult space to find people that are really performing well and good and knowledgeable and have the right technologies. So it is not obvious where you would find acquisition potential on the control side.

Maybe some small companies, but mostly it is self-developed right now, and these controls are going through rapid lifecycle iterations similar to LED lighting.

So we think we are doing well in that space. We think we have complete solutions. We just introduced a wireless retrofit solution for existing buildings, and we have some installations going into a couple of schools where you don't really have to string a lot of new wire, and you can do it wirelessly. So we expect some good potential from those kinds of product introductions. So it is step by step. There is no home run on the control side, but we like our position where we are.

So is it fair to say if we exclude some of the impact to the commodity prices that, as we come through this cycle, you should see a better margin profile, so to speak, in the lighting business. Because I'm assuming you are selling a little more value-added content in things like controls and such where versus historically recoveries in nonresidential construction, this time around you probably have a little better, higher margin and content throughout the recovery. Is that fair to say?

Well, I would say, first of all, just on the volume, if you would get back to mid-cycle on volume, you would have both the residential and nonresidential markets at historical declines. So I would say there should be very good margin improvement as you get back to mid-cycle on these things.

And although I, on the residential side, continue to be fooled by -- defined that the market will not improve, it has been years since that has happened. But slowly we will get back to the long-term trend lines in these things, and our margins should improve quite well from that.

In addition, every year we tried to improve our productivity, and we have taken some significant steps on the lighting side to try to make our cost footprint better positioned for that upturn to come.

And third the introduction of new lighting technology and our value-added in it should, as you point out, be helpful as this upturn arises. So we think lighting should do quite well as the business turns.

And just one last question on the power side. You know, it is tough to delineate what is technically Smart Grid or how you want to define that. But what is your strategy there maybe even on the M&A side as well? But there are certain things you really want to add to that from more on the Smart Grid side versus the traditional product or equipment side?

Sure. There is a lot changing on the grid, and there is a real demand for feedback from every part of the transmission and distribution system. And so the demand for us is to produce devices that we used to have that were passive devices without feedback loops.

Now we are being asked and required to produce devices that can provide real-time feedback as to their condition and the condition of the lines. And further, as the utilities are moving up to 800 kVA, there is a demand for products to reach higher ranges of electrical output than we have ever had before.

So the combination of those two are putting pressure on us to come up with new solutions, and further some of the materials that go into the products that we made for years are migrating to other things. So the fact that porcelain has been used in arresters and insulators and cutouts for years and years, and that is moving to other materials that are non-ceramic. So lots of changes going on there, lots of demand for better performance in products able to do more, and I think we are doing a good job of responding to those challenges.

Brent Thielman, D.A. Davidson.

Dave, I believe you provided some sense on the lighting side. Can you talk a little more broadly across the business where maybe you think you have seen some pull forward and orders ahead of the price increases you are implementing?

Really there is no particular area that we have seen anything substantial. I mean I point to the lighting only because the C&I being up year over year, while certainly a positive, was not necessarily consistent with the expectations that we would have had. So it forced us to really ask a question. Is that underlying market demand, or is that due to some pull-forward? And the assumption is there is some element of pull-forward, but, as I said, as we look at the order rates through April so far, it looks like there is some of that, but not anything really significant.

Okay. And then just on the pricing side, could you talk about maybe where you are most cautious in regards to your ability to see price increases accepted in the market?

I would say that we have a high expectation of realizing prices. The question is, are we going to get more than we typically get from a price increase? And we believe that is probably the case due to the magnitude of the increases in commodity costs.

So I mean we all understand that oil is -- or gasoline is a dollar a gallon higher than it was a year ago, that copper is 30% higher than it was a year ago, and that steel is up more than 20%. So these are -- based on the levels they were previously at, these are significant cost increases, and we need to realize more than average of it. We believe from early indications that that will be the case because all competitors are in the same boat here with the magnitude and steepness of the cost curve. So it is just that we have a lot of moving parts on the cost side and the price. So we are just holding a little caution here until we see the second quarter play through, but we are optimistic about the cost price scenario as the year goes forward.

(Operator Instructions). Christopher Glynn, Oppenheimer.

Tim, I just wanted to follow up on your comments on the Power Systems and the need for engineering with new materials and feedback capabilities. What are your thoughts around measuring share, market share risk versus opportunity on the time to market to meet this utility demand?

I think that in the space that we are in we are a leader in new product innovation. So I don't really think that you are looking -- we are expecting to see any downside risk to market share as a result of these. We are in many categories the preferred supplier, and so our conversations with public utilities to meet their needs are really in advance of any place they are going to act. So, from my point of view, this represents a positive future outcome as we bring these products to market.

So it is just the need to make the investment. When you change basic materials you are changing machinery, tooling, you need more engineers. So whenever a market is changing as both the utility market and the lighting market are, the need for R&D and the need for capital rises quicker than it does in a static or steady-state market. But we are excited about that because it gives us the opportunity to do more and participate on a broader basis.

Okay. And then just a quick one for Dave on the share repurchase. What was the timing in the quarter when we expect share count to come down a little and then the split between the As and the Bs?

There were no As; it was all B purchase, and most of the purchase in the quarter was February and March timeframe.

Okay. And they outpaced issuance?

No. Issuances were higher, so that's why we had a net drag in the quarter.

Gentlemen, at this time, there are no further questions in queue.

Okay. Well, thank you, everyone. This concludes today's call. Bill Sperry and I will be here all day in case anyone has any follow-up questions, and once again, thank you all for joining us this morning.

Again, thank you, ladies and gentlemen, for your participation. This will conclude today's conference call.