James Hardie Industries PLC (JHX) 2014 Q1 法說會逐字稿

Thank you for standing by and welcome to the Q1 2014 James Hardie results conference call.

(Operator Instructions)

I would now like to hand the conference over to your first speaker today, Mr Louis Gries.

Please go ahead.

Thank you.

Good morning from Dublin.

I appreciate everyone joining the call.

We'll walk through this how we usually do.

I'll take care of the business overview.

Russell will come back and take care of the financial presentation.

Then we'll come back for Q&A, investors and analysts first, and then any media questions at the end.

So if you flip through the slides to slide number 6, we'll start there.

Obviously the row we track is the net operating profit with the exclusions.

This quarter we did have a $4.6 million exclusion for Asia Pac Fibre Cement along with the other normals.

So the improvement on that line, 19%, good improvement.

We'll talk about how that was driven through both operating divisions.

We go to slide number 7 which starts the US results.

Pretty much had things moving in the right direction across the board in the US.

We had higher sales volume tracking about with the market opportunity there.

On a quarterly basis PDG was pretty insignificant, basically flat PDG was pretty insignificant, basically flat.

When you look back four quarters it's where we wanted to be, and when we look forward through the rest of the year it's where we wanted to be.

But this particular quarter if you calculate just for that, it's pretty flat.

Price was basically flat on last year, but positive trend we're seeing in the business currently and expected to continue.

We did have higher input costs.

It was super significant, about $2.5 million or so.

That would be kind of across the board for cement, energy, so pretty much everything a little bit.

The product mix, probably the positive trend in pricing is due to a positive trend also on the product mix.

So that's part of it.

We did have increased costs due to idle facilities and that's mainly our Fontana refurbishment costs, which are not capitalised, and then Somerville trials that we've done some preliminary works in Somerville anticipating that facility will start up.

It's not really production trials, it's production trials but not for commissioning, it's more to see what our product mix could be out of that facility.

It has been a siding plant and we're looking at producing Hardy [backer] at that plant.

So the work there has been around our valuation of that change.

We did have lower fixed costs basically due to utilisation.

We had higher employment and marketing, higher than last year at this time, but that's pretty flat at this point quarter-to-quarter but it was higher than last year.

Slide number 8 shows you results.

Generally the US numbers are slightly better than the numbers here, although Europe is small, Europe had an off quarter both from a volume and EBIT standpoint.

So it did impact it enough to where you can see it a little bit in the numbers.

But these are the numbers for both the US and Europe, up 10% in sales, obviously flat on price, you get 10% on volume as well.

18% on the EBIT line, which was a good result, pulls us to the lower third of our range, but we got a pretty positive trend month to month there.

So our EBIT margin that we've been struggling to deliver is starting to come in range for us.

We obviously indicate we do think it will be in range for a full year, not just the first couple of quarters.

Next slide, number 9, shows that graphically.

Last year same quarter we just touched a range and never really got back into it.

This year, like I said, we're at the bottom third of the range but we expect the trends in the business to continue and finish in the range for a full year.

Slide number 10 really shows what I already described.

Everyone knows the market's getting better so (inaudible) priced pretty flat so all three lines are actually lining up pretty close to the same slope, because our PDG result, even on a rolling average, is in the mid-single digits.

So we don't have the volume running significantly better than the market at this point.

It is running better than the market, but not significantly better than the market.

Slide number 8 (sic-see press release slide number 11) just gives you a price.

It's interesting to look at that graph.

We had a really good slope if you went back further years -- you had a really good slope running up to 2011, and then we had the reduction in pricing that we experienced over the last couple of years.

We're starting on a new slope off of that FY13 low is how I would anticipate the pricing going.

On a positive slope, obviously.

Slide number 12, Asia Pac had a very good quarter.

When you look at the Division over all, housing starts are up.

I guess Australia's [flat] is slightly up and New Zealand's and the Philippines are up reasonably good.

We did have higher sales volume as a result of that and just some positive [caps] against the market index.

We had lower fixed manufacturing costs for a variety of reasons, some production spending and also higher utilisations.

Obviously everyone's aware of the depreciation of the Australian dollar, so that impacted our earnings when we translate it to US dollars.

From the US dollar perspective, sales were up in the Division 7%.

Price was up a little bit and volume was actually up 8%.

In Australian dollars the revenue was up more, but again it didn't translate as well as last year.

EBIT and EBIT margin are up strongly, so a very good result down there.

We did acquire the land I think in May or possibly earlier than that.

We had indicated part of our plan to expand the Carole Park facility was to purchase the land, which we've done that.

We'll start it in the first half of calendar year '15, and [measure] where I believe the expansion of Carole Park doesn't affect the other plants as far as they'll still be operating plants.

We'll use the new capacity, obviously we won't need it all day one, so we'll use the new capacity to kind of rebalance the network and get whatever freight savings are available.

Slide 15; the US market is good and continues to improve.

Repair and remodel, especially for our type of repair and remodel, which is mainly driven by major projects (inaudible) definitely more positive than it has been over the last several years.

We're continuing to work on the capacity, so Fontana is starting in January and we have several capacity expansions right behind that, all in existing facilities, no greenfield plan at this time.

[Again] our expectations for EBIT margin so that's a repeat of that.

Asia Pac, you know again we had a very good quarter.

We actually expect to have a very good year in Asia Pac.

New Zealand's good market-wise, and the Philippines, it's good market-wise as well.

Both the Australian and New Zealand businesses are running very well.

The Philippines business, we've had a few bumps down there but still we expect a good year out of the Philippines.

At this point I'll hand you over to Russell.

Thank you Louis, and good morning everybody.

Turning to slide 17, I think it's probably apparent from our releases and also from what Louis said that we've had increased sales volumes and revenues dropping all the way through to EBIT and EBIT margin lines, increasing as you go down the P&L.

So that's the first time we've had that for a while, and showing the leverage starting to come through as we (inaudible).

We did have an unfavourable movement in the accounting provisions for the product liability issues in New Zealand.

That was an expensive $4.6 million for the quarter, but we have excluded that from the adjusted profit that we've reported.

We also had favourable asbestos adjustments due to the depreciation of the Australian dollars in the quarter.

That amounted to $94.5 million with an 11% depreciation of the currency between March and June.

One of the very pleasing aspects of the result was the improvement in net operating cash flow, 58% improvement due to improved earnings and also improved working capital as sales volumes increased.

So we're carrying less inventory and we're turning the inventory into accounts receivable and (inaudible) the cash quite efficiently during the quarter.

We've declared a dividend at the end of May, and in July we've paid a dividend of $163.6 million in total.

At the end of July we also bought back a very small parcel of shares which is the first activation of the share buyback that we announced in May.

Turning to slide 18, you can see here the line moving down to the reported profit of $142.2 million.

Sales were up 10%, gross profit was up 15%.

SG&A was a bit of a mixed story and in fact these numbers if anything portray the wrong picture.

It shows a 24% increase to $54.9 million, but I would just note a couple of things.

Firstly in FY13 Q1 we had a foreign exchange scheme of $5.5 million, and this year we've got a $4.6 million product liability expense reported through the $54.9 million.

So if you adjust for those impacts, the numbers are actually quite close together and to the extent that they're not the same is due to increased marketing and employment costs in the US business.

You can see the asbestos adjustment there of $94.5 million and reported EBIT up 90% to $156.9 million.

Obviously the big item there is the non-cash foreign exchange impact of the asbestos provision.

Turning to slide 19, perhaps a more informative slide in terms of the adjusted profits.

We reported $52 million for the quarter, which was up 19% on the $43.8 million of one year ago.

On slide 20, looking at the divisional result there, you can see very similar increases in both US and Europe, being 18%, and also Asia Pac up 19%.

So very satisfactory performance there.

The Asia Pac result was not impacted much at all by the foreign exchange movement.

The falloff in the Aussie dollar occurred at the end of June, but through the quarter the translation of the impact of foreign exchange was immaterial.

The Asia Pac business reported an EBIT margin of 22.4%.

As you can see also research and development was flat.

Corporate costs were higher this period than the prior corresponding period, mostly because of the foreign exchange gain that we reported a year ago in this quarter, but also because we've had a lower charge against the stock [comp] expense than in prior quarters because of the fall in the Australian dollar and also the fall in James Hardie share price in the past three months.

We did bear an expense but it wasn't the normal level as a consequence of that movement.

On slide 21 you can see there the movement in the foreign exchange rate, Aussie dollar/US dollar, over the two relevant quarters.

You can see the way in which the currency fell against the US dollar at the end of the first quarter in the month of June in particular, and that's what impacted the asbestos provision adjustment.

The fact that it was on average very similar during the course and relative to the prior corresponding period meant that there was very little impact on sales revenue or earnings from the Asia-Pac business.

On slide 22; looking at tax expense you can see the tax expense was up from $13.4 million to $14.6 million.

The effective tax rate was down on adjusted earnings from 23.5% to 21.9% and that was the result of recurring items in the tax line being a lower proportion of the total earnings and resulted in lower effective tax rate.

On slide 23, the cash flow statement.

You can see here that net operating cash flow was $78.2 million, approximately a $30 million increase on last year and of that $30 million increase about a third of it was due to earnings, through EBITDA and about two-thirds of it through improvements in working capital that I referred to earlier.

Capital expenditure came in at $26 million for the quarter compared with $15 million for the corresponding quarter of last year and we're anticipating that capital expenditure will be at higher levels during the balance of this year, probably in each quarter.

Turning to slide 24 on capital expenditure, you can see that most of it in this period somewhat unusually was actually in the Asia-Pac division and that's a consequence of the acquisition of the Carole Park lands and building prior to the expansion of capacity at that site, and that actually outweighed the spend in the US business and most of what was spent in the US was on the Fontana refurbishment.

Turning to slide 25, from distributions to shareholders as I indicated earlier we paid a $0.13 and a $0.24 special dividend based on FY13 earnings and that total dividend was $163.6 million distributed towards the end of July.

We've also activated the share buyback program in July and we purchased stock at AUD9.02 Australian, $8.20.

Turning to slide 26, on debt, you can see that our facilities position is very adequate.

We also had net cash at the end of June of $198 million.

Obviously that's been reduced by the $163 million dividend that we've paid but the business is generating strong cash flow as is apparent from the first quarter's result.

On slide 27, product liability, as Louis highlighted and I referred to earlier, we took another $4.6 million charge in this quarter which reflects adverse movements in provisions for existing claims during the quarter.

There was no material change in claims inflow but because of the way in which other liable parties are falling over in the New Zealand environment, particularly professional firms, those of us who remain as liquid entities, which is largely the councils and in the case of the cases against us, [also] Hardie, we're getting left to bear a larger proportion of the settlement on each claim.

So that's what that additional charge is about, and at the end of June we were left with a provision of AUD18 million as a consequence of taking that charge.

In relation to the Ministry of Education claim which we received in mid-April of this year, there's been no change relative to the full year position and at this stage we see no reason to be taking account of any liability.

On slide 28 we look at the asbestos fund, and these numbers are in millions of Australian dollars.

During the quarter the fund had fairly significant disbursement of claims paid.

There were a couple of large claims that were settled which impacted that, and the balance in the fund was reduced (inaudible) of AUD128 million at the end of March to AUD96 million at the end of June.

I'd also note something that is apparent from our financial statements that were also released this morning, that the -- there's been an increase in asbestos claims activity during the quarter.

We had 160 claims in the first quarter of this -- that financial year, compared with 130 last year and the actuarial assessment allowed 135.

[Coughs] Excuse me.

We are monitoring claims activity closely but at this stage it's not clear whether the increase that we saw in the first quarter is a result of a change in trend or just a result of random variability.

But I would not say that we've previously seen upticks in a month or a quarter or even in a year, only for the claim numbers to then settle back to a lower level.

So I think we're -- we'll hopefully get some clarity around that in the next few months, but it may take a little time.

Turning to slide 29, Summary, is I guess a very, very encouraging result.

We wouldn't say it's really strong but it's an encouraging result driven by higher volumes, some price improvement especially in the Asia-Pac business and also higher operating earnings in both of the major segments in which we operate, and a good margin.

CapEx is up and we expect we will continue to ramp through the year as we get more active in terms of the capacity expansions in both the US and the project at Carole Park.

Turning to slide 30, in terms of guidance, the guidance we noted from analysts was in a range of $165 million to $194 million and we at this stage are noting that it's still very early in the year, but our expectation is that our full year result will fall within that range of analysts' forecasts.

Clearly there will be susceptibility to movements in foreign exchange rates and for us to deliver a result in that range it may require exchange rates of the Aussie dollar, New Zealand dollar and the Philippines Peso to be at or near their prevailing rates through the balance of this year.

So at that point I think I shall close and hand over to Louis to chair the questions.

Okay, thanks Russell.

We'll go to questions, would you (inaudible) those please.

Thanks.

Thank you.

We will now being the question and answer session.

(Operator Instructions)

The first question today comes from the line of Mr Jason Steed from JPMorgan.

Your line is open, please go ahead.

Hi, good morning Louis, good morning Russell.

A couple of questions please, to start.

Just in terms of the product mix shift, which has obviously been a positive, could you just elaborate on that to a greater extent in terms of I think it's about half of your US and European sales that come from about five customers, is it really a shift among the big nationals that you're (inaudible) away from Cemplank perhaps into HardiPlank and ColorPlus that is driving that, or is it more in the R&R segment that you're seeing that products mix shift?

Yeah, I'd say the shift isn't large enough to really drill down on it like that.

Basically with the business we had experienced over the last couple of years, increasing percentage of Cemplank and what we call our Prevail product and slower growth in our trim and [Colorflex] product relevant to those.

So this quarter and I think probably, you know, the remainder of the year we expect that kind of to just do slightly and the kind of higher end products maybe outperform the base products to a small degree, but not any real big shift in what's going on but it turned positive on us after being negative for several quarters in a row.

I've got you.

So Louis, did you institute a price increase across products, because it sounds as though the products mix shift is not quite enough to arrest that decline in average price that we saw for most of last year?

Yeah.

No, the pricing at a better level than the previous quarter was somewhat due to mix, but we have been addressing price inefficiencies we had in the business, we've talked about those in the past, and that's not necessarily true price increases but the way large projects and builders were getting their discounts was changing a bit and it's just a more efficient way to do it.

Again, we used to do it in -- with a rebate structure.

A lot of that got on to invoice at some point during the downturn and now we've got it back to the rebate structure, which is more efficient from our position as far as how the business model runs.

In addition to that we've had some specific increases on a handful of products, four, and a handful of markets, so HLD is probably the product line that we had the most significant increase.

That's our trim product in the south.

And then there are just a little bit -- a few fix-ups here and there.

We have gone for a HardieBacker increase and it's now in the market.

Now, that wouldn't show up very much in the first quarter results but it will start to show up in the second quarter results.

Okay.

Great, thanks.

There's just one more if I may.

You talked at the full year results about a sort of 12% volume lift from FY13 to FY14, and I think that was obviously mostly considered to be a US fibre cement growth figure.

You're obviously a bit behind that now but your second quarter comments sound pretty positive, so should we expect to see sort of consistent period-on-period improvements through the remaining quarters of the year, or is that your expectation I guess?

Again, I'm not quite remembering the 12% but where we are at is we'll grow better than market.

We're targeting it at about 6% better than the market, so our PDG -- and this is exterior products I'm talking about -- I don't think -- you know, I think we're kind of expecting that, it's still a good target for the full year.

We didn't have it in the first quarter.

I think the second quarter -- if you remember last year's second quarter it was a drop-off quarter for us.

Right now we're looking at the second quarter, you know, whatever it is, five weeks in or so, looks pretty strong to us.

So you know, I think our [current] expectation on PDG in being slightly above the market is the same as it would [have been going into] the year.

Okay, great.

Thanks, Louis.

The next question comes from the line of Emily Behncke from Deutsche Bank.

Your line is open, please go ahead.

Thank you, good morning Louis and Russell.

Just a couple of questions, I'm just following from Jason's question around primary demand.

I guess when you look at the volume growth of 10% for the quarter and US housing starts, which is roughly I think 40% of your volume sort of growing at around 30% it's just hard to sort of -- to see how your -- to reconcile primary demand is even flat -- was even flat in Q1.

Are you able to give us a little bit more clarity on that?

Yeah.

Now, the -- I do agree with you, it's fairly hard to understand.

Now, our [addressable] housing starts we have up 19.6, so again we knock out certain starts, mainly high-rise construction, then we add Canada in, and Canada this year, after pulling up the number for several years, going back to a number of (inaudible).

But we see about 20% in our addressable housing starts.

On a [recurring] model I think this is probably where we're most out of line with some of the numbers that have been published, is we see our type of recurring model about -- just below 2% positive comp from a market perspective.

So we see our segment up about 2%, so it blends out.

It blends -- you know, if you blend the whole business it blends around 10%, like you say we're up 10% but we're up more exterior than interior so we do have a positive, slightly positive exterior PDG.

And the other thing we do, and I think you may as well, we look at the other materials at the same time.

So you have [BSI] numbers.

We see our competitors' numbers and we have estimates for our competitors' numbers that seem to be pretty reliable.

Outside an actual (inaudible) you get chipboard, hardboard numbers through results.

We don't see anyone going against that.

So yeah, and that's kind of where we're at.

We're still working off starts, we're still working off the same assumption on starts, 2500 for new construction and I think it's around 1000 for multi-family.

Obviously there's been a shift to multi-families so your average first start is down, but that's kind of where we're at.

We're not losing -- we can't see where we're losing against the market.

But like I said, this quarter in particular, you know, it's just kind of flat against the market the way we calculate it now.

I know if we use the other inputs you see published at times, and that's a problem outside of housing starts, you don't have official numbers, we'd come up with a different calculation.

But we're pretty satisfied, category share's good and like I said we can see vinyl's numbers and we understand what their struggles are and we see you know, chipboard, hardboard numbers through LP, so you know, we're pretty confident we know where we're at against the market.

Okay, and looking at Q2 you mentioned you're pretty happy, it looks pretty strong for primary demand growth and obviously the monthly EBIT margin improved throughout the Q1.

Does that mean the Q2 EBIT margin should actually be above Q1, which is a little bit strange when -- versus history, or how should we look at the Q2 margin, or maybe flat versus Q1?

Yeah.

I mean, it's a little bit early to call out, but you know, we're only five weeks in, but the audit file's good.

You know, like I said, there's a positive trend in pricing across (inaudible) lines are good.

So it wouldn't surprise me [there's] a little different than normal, but you know, normally we didn't deal with the kind of [lag] we have experienced with our pricing and the inefficiencies we're trying to address in the business on the pricing slide.

So it wouldn't surprise me that it was -- would be above the first quarter but you know, not significantly.

It's not going to pop out of our range or anything like that.

Okay, and what do you think you need to see to sort of be above the 20% margin for the full year?

Well yeah, I think we're seeing it, you know, when we gave you the guidance on the 20% plus margin for the full year we were only seven weeks into the year and now we're, you know four months and a week and basically if the market and the business translate it will be above the 20%.

Okay, that's great.

Thank you very much.

The next question comes from the line of Mr Matthew McNee from Goldman Sachs.

Your line is open, please go ahead.

Louis, just on the primary demand growth question.

Can you give us a sense for how much Siding grew versus Backer?

I mean you're 10% overall, did Backer grow or did Backer go backwards?

Backer grew about a third of the rate of Siding.

Okay, so we can -- so that implies probably 12%, 13%, 14% growth, something like that, out of Siding?

Anyway, we can figure out the numbers.

The other question just on pricing, going back to the pricing issue, I know you've sort of backed away a little bit from your bundling, you know, sort of house pack in the south with ColorPlus and your other products.

Is that part of the reason why we've seen price go up as well, because you're -- you know, implicitly you're not discounting some of those products as much?

No, those programs which are called Hardie House Pack would have been positive from a pricing standpoint, not necessarily positive from a contribution standpoint but positive from our average price standpoint.

Now, the pricing inefficiencies are just the kind of things, we've talked about them before, and it was how we were executing tactical pricing and it was just way less efficient than it should have been.

So there's certain projects involving business you want to give a different price to and it will -- there was too much leakage around that previously.

Yeah.

Okay, no worries, thanks.

The next question comes from the line of Mr Andrew Johnston from CLSA.

Your line is open, please go ahead.

Yeah, hi Louis and Russell.

Just going back to the question on margins again, if you have a look at the margin trend Q1 through to Q4 and where they normally sit and also the discussion around the -- at the full year result.

The view was it needed to be sort of -- 22%-23% in Q1 to be able to hit the 20%.

And also the sort of -- there was some thought that you actually needed to get some price increases coming through.

So by the sounds of things you know would I be right to interpret that you're reasonably optimistic that by year-end your prices will be a bit higher than where they are at the moment, you know compared to last year you know that it's better than plan?

Yes.

Okay and just I suppose trying to understand what's changed in the last few months around where you thought you needed to be in Q1, because you know what Q1 comes in at 21%?

And because your guidance says that you expect margins to be 20%-25%, so what's changed?

And then also, what would it have to be for you to get to the -- closer to the 25% margin for year?

Yeah, we're not aiming for 25%, and our forecasts don't show 25%.

So as we indicated you know over the last couple of years we've been trying to balance our investment and growth with the returns in the business and we've got the costs ahead of volume and at the same time our pricing didn't come where it thought it would in fiscal year '13 and that's why we fell pretty far short I think, a couple of points short on EBIT margin of where we thought we were going to be going into that year.

This year you know we had highlighted you know our problem in pricing last year, and we were addressing it but there was a pretty serious lag.

So you know the [get-go] was that pricing restructure requires a lot of work with your customers, so you know it just took a long time to get there.

But we have gotten there, so we've kind of addressed that price inefficiency piece which is good.

Now I just indicated we had a HardieBacker price increase that'll hit the numbers starting in second quarter.

It was a good increase -- it was 7% on HardieBacker and you guys know how much percent are HardieBacker so you know it's been a [held price] just you know whatever that is, 20% of 7%, so it's going to help the price about a 1.5% for the rest of the year.

And then just generally I guess that we had [HRV] go up and we had a few moves on the bottom of the cent point market and a few for the market.

So pricing will be trending better through the rest of the year, but we're not aiming at 25% because as we've had a lot of conversation going back to PDG it's kind of the wrong thing to talk about quarter-to-quarter, and this year will be a good example because like I said we're you know pretty close to flat first quarter, second quarter will be up a bit, but through our four quarters -- in other words second will show higher than it should because of the [conflicts] going against last year, but through our four quarters we're pretty comfortable with the 6%.

So I think -- you know I think we've starting indicating [this year] early in the year, confirmed in May and confirmed again now, we think we have it balanced right for where we are in the market recovery between PDG and financial return out of the US business.

So we're pretty comfortable.

Obviously we're still on a four-month (inaudible) but the trend lines are good on the market side and they're good in the business as well.

There was -- just on HardieBacker, on the numbers for FY13, HardieBacker didn't look like it grew at all, like there was zero volume growth --

That's pretty close to accurate.

Last year was very flat volume.

This year we are up a bit as [Matt] kind of guessed, you know we're up -- our growth rate on selling is three times that on the back of (inaudible) 4% or 5% -- 4.2% growth rate (inaudible).

Kevin then -- I assume everyone else must have put up their prices as well, if you're overall -- you know if you're confident getting a 7% price increase through and I shouldn't -- you don't plan to lose volume in backer?

No we don't plan to lose volume.

I don't believe -- I don't -- I'm not aware of the other backerboards going up.

There has been -- you know I think last year our fall off in volume you can't explain it through market share.

So you know obviously it should have up because new construction was up.

Now we would be more biased than the other backerboards toward renovation and new construction because we don't participate in a large degree in the (inaudible) that have backerboards at a relatively higher share in the (inaudible) than we would, and a lot of new construction goes through the (inaudible) channel.

Oh okay --

So even though backerboard -- you're right on your assumption that backerboard was (inaudible) slightly off last year, which it was, but now it's up a bit first quarter and I think it'll stay that way.

But now that we've actually seen some of the work done by the Australian analysts, where you guys are seeing the premium for HardieBacker in the retail stores, [loads and depots] becoming greater and greater against the fiberglass mesh boards, so that reflects our pricing and I think it reflects the margins our customers get on our board.

But ultimately what it reflects is the value the contractor puts on a fibrocement backerboard versus a fiberglass mesh backerboard.

So I'm not sure if the other backerboards went up or down.

We do track share on backer pretty much weekly, because we're in all the retail stores, so we would not anticipate losing share because we took a price increase, but it's not necessarily because the other backerboards have all gone up as well.

Now -- that's right, a nice position to be in.

And finally Louis on trim.

How are you seeing trim volumes?

Are you seeing much growth in volumes versus your exterior cladding?

We've had good trim growth in the south.

The north has been below our expectations, and in the west we don't participate with trim to the same degree as we do the rest of the country.

So I would say that we have more work to do in the north against both [cellular PVC] and hardboard or chipboard trim, and in the south we're on a good run with our [NTLV product], we expanded -- we made a product improvement on the product design and like I said we took a price increase around that change and growth has been very good since we made those two moves, so that's kind of the summary on trim.

Okay, thank very much.

It looks like things are picking up pretty well.

Yep.

Thank you.

There are no further questions at this time.

Mr. Gries please continue.

Now if that's it on questions, no media questions so we're set to go.

I appreciate everyone joining the call.

Thank you very much.

That does conclude our conference for today.

Thank you for your participation.

You may all now disconnect.