Lear Corp (LEA) 2014 Q1 法說會逐字稿

Good morning. My name is Shirley, and I will be your conference operator today. At this time, I would like to welcome everyone to the Lear Corporation first quarter 2014 earnings conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a question and answer session. (Operator Instructions).

Thank you Mr. Ed Lowenfeld you may begin your conference, sir.

Thank you, Shirley. Good morning, everyone, and thank you for joining us for our first quarter 2014 earnings call. Our earnings press release was filed this morning with the Securities and Exchange Commission, and materials for our earnings call are posted on our website, lear.com, through the Investor Relations link.

Today's presenters are Matt Simoncini president and CEO, and Jeff Vanneste Chief Financial Officer. Also participating on the call are several other members of Lear's leadership team.

Before we begin, I'd like to remind you that during the call, we will be make forward-looking statements that are subject to risks and uncertainties. Some of the factors that could impact our future results are described in the slide titled Investor Information at the beginning of the presentation materials, and also in our SEC filings.

In addition, we will be referring to certain non-GAAP financial measures. Additional information regarding these measures can be found in the slides labeled Non-GAAP Financial Information at the end of the presentation materials.

Slide three shows the agenda for today's review. First, Matt Simoncini will provide a company update. Next, Jeff Vanneste will cover our financial results and outlook, then Matt will return with some wrap-up comments. Following the formal presentation, we will be pleased to take your questions.

Now please turn to slide four and I'll hand it over to Matt.

Great. Thanks Ed.

We're off to a strong start to 2014, with another quarter of higher sales, core operating earnings, and earnings per share. Sales in the first quarter were $4.4 billion, up 10% from a year ago and double the global production increase of 5%.

Core operating earnings were up 21% to $243 million, and adjusted earnings per share were up 42%. We're on track to deliver our fifth consecutive year of higher sales and adjusted earnings per share.

Both our business segments reported higher sales and grew faster than the industry in the first quarter, in seating margins improved from the fourth quarter, and operating earnings increased from a year ago.

In our electrical business, we again achieved record sales and earnings. In addition to the strong operating performance, we took steps during the quarter to improve our capital structure by extending our debt maturities, and lowering our average cost of debt.

We also continued to return cash to shareholders. We increased our dividend for the third year in a row and we completed the accelerated share repurchase program which I'll discuss in more detail on the next slide. Based on our strong performance, we are increasing our 2014 outlook which Jeff will discuss in more detail later in the presentation.

Slide five summarizes the $800 million ASR program which we announced a year ago with an incremental $750 million share repurchase authorization.

The ASR program was completed on March 31. The total number of shares repurchased was 11.9 million. And the total cost of the program was $855 million. This is $55 million higher than originally estimated, reflecting a higher average stock price over the life of the program.

As a result of the incremental $55 million needed to complete the ASR program, Lear has $695 million of remaining repurchase authorization. The remaining authorization reflects approximately 10% of our current market capitalization.

Slide six summarizes a key element of a capital allocation strategy. The Board consistently reviews capital allocation, taking into account the [Company's] strategy, business performance, changing industry conditions, and available investment opportunities.

We intend to maintain a strong and flexible balance sheet with investment grade metrics. Our customers view a strong balance sheet as an important factor in sourcing decisions because they're depending upon their suppliers to support programs that can extend eight to ten years from the time of initial sourcing.

At our current level of business, we are targeting minimum liquidity of approximately $1.5 billion to meet working capital requirements to provide near-term investment flexibility, and to protect against short-term market disruptions.

In order to maintain investment grade metrics, we believe the appropriate amount of gross leverage is approximately 1.5 times EBITDA. This allows us to continue to invest in the business, take advantage of market opportunities, and protect against the cyclicality of the auto industry.

Based on our present level of earnings, increasing our gross levers to a turn and a half of EBITDA would provide approximately $800 million to $1 billion of additional capital.

We are growing faster than the industry. And we expect this trend to continue based on our backlog and competitive position.

To support this growth, capital expenditures have exceeded and will continue to exceed depreciation. Capital spending in recent years has been in the range of 2.5% to 3% of sales, or approximately 1.5 times depreciation. We expect capital expenditures to continue to be in this range.

We follow a disciplined approach to acquisitions, taking into account the strategic fit as well as the fair market valuation. We're pursuing acquisitions in both our product lines that will help strengthen, accelerate growth, and improve returns.

We're targeting acquisitions that will enhance our present product offerings, facilitate further diversification of our customer mix, increase our component capabilities, and further penetrate emerging markets. No transformational acquisitions are needed or planned.

The Guilford acquisition is a great example of the type of acquisition we are pursuing. Guilford strengthened our industry-leading cut and sew operations, provided access to new customers, and added design as well as manufacturing efficiencies that otherwise would not have been available.

This acquisition, completed at a fair market valuation, has provided incremental growth opportunities and enhanced the margin profile in seating.

We remain firmly committed to returning cash to shareholders through our share repurchase and dividend programs. With the recent completion of our ASR program, we have purchased 25% of the shares that were outstanding when we started our share repurchase program in early 2011. Our remaining $695 million share repurchase authorization continues until April 2016.

While we plan to purchase shares on a consistent basis, Lear will opportunistically accelerate the pace of repurchase, as the company has done in the past if market conditions warrant.

Our existing share of repurchase authorization, which represents approximately 10% of our outstanding shares, combined with our annual dividend roughly equals our expected total free cash flow for 2014 and 2015.

Now I'd like to turn it over to Jeff who will take you through our financial results and outlook.

Thanks, Matt.

Slide eight shows vehicle production in our key markets for the first quarter. In the quarter, 21.7 million vehicles were produced globally, up 5% from 2013.

Our major markets showed increases with China, Europe, and Africa, and North America up 11%, 7%, and 6% respectively. Market conditions were weaker in other key emerging markets with production declines in India, Russia, and Brazil.

Slide nine shows our financial results for the first quarter of 2014. As Matt mentioned, our sales, which were up 10%, continued to grow faster than the overall market. The increase in sales in the quarter primarily reflects the addition of new business and increased production on key Lear platforms.

In the first quarter, pretax income before equity income, interest, and other expense was $215 million, up $41 million from a year ago. Equity income was $12 million in the first quarter, up $4 million, primarily reflecting higher profitability at our joint ventures in China. Other expense was $29 million in the quarter, up $19 million, primarily reflecting $18 million in costs related to the early redemption of our 2018 bonds and 10% of our 2020 bonds.

Excluding the impact of one-time items, other expense was up $5 million for the first quarter, primarily reflecting losses associated with foreign currency fluctuations. Net income attributable to Lear was $122 million in the first quarter, up $14 million.

Slide ten shows the impact of non-operating items on our first quarter results. During the first quarter, we incurred $25 million of restructuring costs, primarily related to capacity reductions in Europe and various census-related actions. Excluding the impact of restructuring costs and other special items, we had core operating earnings of $243 million, up $42 million from 2013.

The increase in earnings primarily reflects favorable operating performance, the benefit of new business, and increased production on key platforms, partially offset by the impact of the changeover on key programs.

Adjusted for restructuring and other special items, net income attributable to Lear in the quarter was $152 million, and diluted earnings per share was $1.84, up 42%.

Slide 11 shows our first quarter adjusted margins for the total company, as well as for both of our business segments.

Total company adjusted margins were 5.6% in the first quarter, up 50 basis points from a year ago, primarily reflecting improved performance in our electrical business.

In seating, sales of $3.2 billion were up 11% from last year, with adjusted earnings up $13 million. Adjusted margins were 5.5%, down slightly from a year ago, but up from the 5.0 margin in the fourth quarter of 2013.

The increase in earnings from a year ago primarily reflects favorable operating performance, strong sales growth, and the benefit of operational restructuring actions, partially offset by the impact of key program changeovers. Our full-year margin outlook for seating remains in the 5.5 to 6% range.

In electrical, our positive momentum continued into the first quarter, with record sales and earnings. Adjusted margins were 12.3%, up 360 basis points from a year ago, reflecting operating efficiencies, the benefit of operational restructuring actions, and strong sales growth. We expect full-year margins in our electrical segment to be approximately 11%.

Slide 12 provides a summary of free cash flow. Free cash flow, was a use of $151 million in the first quarter primarily reflecting the timing of our March 29 fiscal quarter end, as well as increased working capital to support our sales growth.

The early fiscal quarter end negatively impacted free cash flow as there were significant customer payments received just after quarter end.

Slide 13 highlights the key assumptions in our 2014 outlook, which reflects the latest production assumptions in our major markets. Global production of 84.8 million units is relatively unchanged from our prior guidance.

Our 2014 financial outlook is based on an average euro assumption of $1.38 per euro, up 2% from our prior outlook.

Slide 14 summarizes our 2014 outlook. Based on our strong performance in the first quarter, we are increasing full-year guidance.

For 2014, Lear expects net sales in the range of $17.2 billion to $17.7 billion, up $300 million from our prior guidance, reflecting higher production on our key platforms and the impact of foreign exchange.

Core operating earnings are forecasted to be in the range of $935 million to $985 million, up $25 million from the prior outlook. Tax expense is estimated to be in the range of $260 million to $275 million, higher than our prior guidance, reflecting the higher earnings.

Our effective tax rate of 2014 is expected to be approximately 30%. However, given our tax attributes we expect the cash tax rate to be approximately 20%.

Adjusted income attributable to Lear is forecasted in the range of $580 million to $615 million. Free cash flow for 2014 is forecasted in the range of $375 million to $425 million, up $25 million from our prior outlook.

Now I'll turn it back to Matt for some closing comments.

Great. Nice job, Jeff. Thank you.

I thought we had a great quarter. We increased earnings, gained share, bulked product lines. We continue to invest in the business, return cash to shareholders, and produce strong shareholder returns.

So with that, we'd be pleased to open the call for questions.

(Operator Instructions). Our first question comes from the line of Rod Lache from Deutsche Bank. Your line is open.

Good morning, everybody. Can you hear me?

Hi, Rod. Yes. Great.

I may have missed this, sorry. I hopped on a little bit late. But can you comment on the -- your expectations for the seating margins, I guess for this year versus last year?

They, obviously, look really strong here this quarter. I believe your guidance implies flat margins for the year. And just kind of give us a few kind of thoughts on the year over year bridge. I know you guys have been talking about South America.

You've been hoping to get that to break-even but, obviously, the market conditions there are now weaker and you've been talking about getting that $1 billion North American structures business to exit this year at a profit. How does that stand right now?

Great. I think right now, Rod, it's been a tough slog as you know in seating, but we are making improvements. We expect the margins to continue to trend upward towards margin, towards that mid -- mid 5 -- mid to high 5% range, 5.5% to 6% range. That would imply a higher number than last year overall.

A lot of variables going in, first and foremost production. It looks like we're getting some stable production out of Europe, and that has helped us this year, South America you're right. It's increasingly difficult with the devaluation of the real, and rising labor rate cost which requires help with the customers as far as restructuring and commercial recovery.

And in the quarter, our performance in the quarter was actually worse year over year but in line with the fourth quarter performance in that segment.

We are getting better in the structured business. We are squeezing out manufacturing efficiencies, launching the product better. But again, you know, in certain cases it requires restructuring and working with the customer to get the proper recovery for the engineering changes in those products.

The good news is we posted this type of performance still with, I think, with upside in those businesses.

So overall, I would say the trend continues to be positive in that segment. We would expect the second quarter to be consistent with the first quarter. We did get the benefit in the quarter of the timing of search commercial recoveries that we were anticipating later in the year but we're confident that we'll continue to improve in that segment.

Okay. So the headwinds that are mitigating the margin upside for the full year are what, for this year and next?

Well, I would tell you first and foremost, Rod, the two underperforming segments, if you will, is the North American structured business and South America.

We had a meaningful loss, I would tell you, in South America and the recovery there, while there are certain operational efficiencies that we need to gain in those facilities, it's really minor in comparison to the kind of structural issues there, which are mainly driven by the devaluation of the real which is the main currency we're recovering.

Most of the materials that come in to be assembled there on these global programs are actually outside of the country, in many cases outside the continent. So you're trapped into a material buy in a currency that's stronger versus the currency you're recovering in.

We're working with our customers to address that both from a price standpoint, a localization standpoint, and certain cases a restructuring, meaning that there's probably certain product lines that makes sense for someone else to do there.

These things take some time, and unfortunately, it's not 100% in our control. The good news is even with the year over year erosion in that segment, in that region we have actually posted a fairly decent number this quarter.

Okay. Then lastly, another very strong quarter, 12% in electrical architecture. Can you just remind us what your thoughts are kind of intermediate-term margin potential for that business would be?

Well, we guided to about 11%. We think that's the level where we can continue to profitably grow and gain share and provide very nice returns to our investors. We benefited this quarter from a pretty strong mix and the timing of certain commercial recoveries.

But overall we're really optimistic on this segment. It is growing, we are gaining share and the segment itself, electrical distribution segment, within the industry is growing faster than other product lines, as we move to more contented vehicles and more complex power trains in order to achieve the efficiency gains that are mandated.

Okay. Great. Thank you.

You're welcome, Rod.

Our next question comes from the line of Itay Michaeli from Citi. Your line is open.

Great, thanks. Good morning and congratulations.

Thanks, Itay.

Just to expand more on the seat margins, Matt, hoping you can maybe talk about where you think you roughly might exit the year on and then just sort of a medium term thinking for seat margins. I know previously you talked about getting back north of 6%.

What's your latest thinking there given that there is some good news with Europe improving but also some of the challenges you talked about in South America?

I think we'll exit in the high fives from a margin standpoint. We believe that 6% to 6.5% in this business is probably the median term range where this segment should operate based on the current level of capital intensity and the current mix of component business.

Certain components and processes like just in time are not capital intensive, and require or mandate a lower margin in order to get the proper return on investment. And then other ones in certain cases light structures are more capital intensive and would require margin higher than the average of this segment overall.

But at the current mix of business we believe that --- you've seen 6%, 6.5% is the right run rate, and that also takes into consideration a realistic view on the type of improvements we can expect in South America.

Sure. Great. Then on the electrical side, I think if I look back historically, the Q1 margin for the segment tended to be lower than what you would end the year just over last few years.

Was anything different this year that you would be at 12% in Q1 but perhaps more like 11% for the full year in terms of timing?

Yes. It was a little bit -- it was a little bit aided by the timing of commercial settlements that we were kind of anticipating a little bit later in the year.

The business is benefiting from a lot of the actions that we have taken in the past related to restructuring, plant closures, and improving our footprint, and expanding our capabilities in places like China and Northern Africa and Eastern Europe. And you're seeing the benefit of that. We're confident this business can maintain a margin profile in the 11% range.

Perfect. And just a quick last one, just a little housekeeping. Any updated thoughts on the other expense for the year? I think, previously, you were talking maybe the mid-30s?

I don't know that we spoke to the mid-30s. But just other expense on a sequential run rate standpoint was fairly equivalent to the fourth quarter but higher on a year over year basis.

Generally, what's happening in that subsegment is higher compensation-related costs, primarily incentive compensation-related costs, coupled with the costs associated with supporting the growth that we've had in emerging markets.

Where we would see that segment on a full year basis is probably flat to potentially slightly up on a year over year basis for the same reasons.

Perfect. That's helpful. Thanks so much, guys.

Our next question comes from the line of Joe Spak from RBC Capital Markets. Your line is open.

Thanks so much, guys and congrats on another great quarter.

Thanks, Joe.

I don't know if this is related to what you were just talking about in other expense, but I think previously in sort of the corporate overhead, you talked about that being down about $10 million versus 2013 and then it was, obviously, up quite significantly in the first quarter.

So I guess is that still valid and, if so, what drives the balance of the year?

Yes. It's really driven by two factors and I think Jeff touched on them both. We are expanding rapidly in the emerging markets, and that requires us to expand our capabilities both from a administrative but also from an engineering and sales support process.

For instance, in the first quarter we greatly expanded our capabilities in China to support the Asian region with a brand-new center that increased our engineering capabilities in that region. That's one of the drivers. The other one is performance-based compensation, and with the results improving this is where we capture those costs.

Okay. So that corporate bench is more likely flattish or maybe even up for the year then?

I think we'll run, Jeff, around 60, $60 million a quarter or thereabouts?

On average, yes. It'll be up slightly the first quarter, but then will level down for the remainder of the year.

Okay. Then just on the EPMS, which, obviously, continues to surprise the upside, and it looks like you sort of keep on taking up the target, maybe 50 bps every time you report.

I mean what really is a true midterm target for that business at this point do you think?

Well, 11%. I -- look, we're cautiously optimistic. We think that the improvements in that business are sustainable, Joe. And right now what we would guide everybody to is the 11% type number because at that region I think we can continue to gain share, profitably grow, and have a nice return for our shareholders. And so from that standpoint where we would -- I'd have everybody choose about 11% at this point.

And then any -- specifically in the first quarter, there were strong incrementals. Was that something versus the comparable period or something in this period that drove it a little bit higher?

No. I think just in this -- certainly comparable as well to the first quarter of last year. But we did have -- as we looked at the full year, we had anticipated the timing of those things to be later in the year, and they kind of fell more so in the first quarter in both of the segments.

Okay. Thanks a lot.

Our next question comes from the line of Colin Langan from UBS. Your line is open.

Great. Thanks for taking my question. Any color on the outperformance in Europe? You're up I think about 17% where the market was up just 7%. I mean is that customer mix or new business or any estimate of how much of the outperformance was from those different factors?

Yes. Several different factors. One, we have a great mix of customers and product lines. We're everywhere from the entry level vehicles which have been challenged a little bit in the marketplace. But also well represented on the luxury brands and certain brands that lend themselves to export, 3 Series, C-Class, Jag, Land Rover, Audi, A4 and A6.

So we have a great kind of mix of business there. And the car lines that are going -- and we are penetrated in both product lines. So you're seeing a combination of two things. I think our mix speaks well. I think the -- while down from historical levels, we are seeing a recovery in production numbers in Europe year over year and our current lines are doing well and we're taking share from people.

So it's an equally split between share and mix, then?

Yes, I would say so.

And you mentioned earlier that you're targeting 1.5 times leverage. Can you remind us where your current leverage is today? And when you mentioned that there's another $800 million to $1 billion of liquidity coming, any time frame of that, and does that include the current authorization or repurchase?

On the leverage side we've got about $1.1 billion from debt right now. In terms of the additional liquidity capacity that we have, it's really dependent upon the deployment options we have for that additional capital.

I don't -- we don't envision borrowing for the sake of borrowing or borrowing upon the remaining share repurchase authorization. Between the free cash flow and existing liquidity, is more than ample enough to support the share repurchase.

And, sorry, what was your target of 1.5 times net debt to EBITDA is that the long term priority?

No. Gross debt -- what we said, Colin, was that we can maintain investment-grade credit metrics even with taking our gross leverage up to a turn and a half, which provides additional capital to make these investments in the business or create shareholder value through other means.

You know we still have a lot of firepower is what we're trying to say and we believe that even though our strategy is to maintain investment-grade metrics, we can do that and still have a fairly significant increase in leverage --.

For the right opportunity.

For the right opportunity.

Okay. Last question, any color -- you may have touched on this earlier. Sorry if you did. Any color on South America, obviously, that was a business you're trying to restructure. Does the weakness there slow that down, or is it a nonfactor? Does it help because of shrinking that money-losing business as a percent of the total business or _--(inaudible)?

It's a combination of things. It is a very difficult environment to do business driven by hyperinflation and labor rates and devaluation in the real, which is the main currency that we recover in.

So, yes, the environment is increasingly challenged. Operationally, I think we are making the type of improvements. There will be in certain cases, I believe, a restructuring of the business and possibly even handing back business that may make more sense for someone else to do because they might have the critical mass to do it. But we're confident that working with our customers that we will see improvements in that -- in that region.

Okay. Thank you very much.

And our next question comes from the line of Brian Johnson from Barclays. Your line is open.

Yes. Good morning. Great electrical results. So I just want to kind of drill down a couple things there. Would you -- we know the recoveries. We should back that out and kind of think about 11% margin business.

But if you kind of thing think of the margin improvement how would you split it between the sort of low cost foundation that you have laid in the segment versus just incremental growth in content and maybe more profitable content as you get more into the wire business?

Well, it's hard to make that breakdown, but I would tell you they're both equally important. We've spent over -- going back to when we started our restructuring program, around $0.5 billion investing in this business through restructuring costs and capital footprint actions to improve the cost structure of this business.

And I think we're seeing, in many cases, the benefit of that. The sales growth in certain cases actually came as a result of the fact that we were the most competitive cost structure in the industry for these product lines.

It does help when you have sales growth and backlog at the size that we do to absorb fixed costs. So I don't know, Brian, I would say roughly half and half.

And secondly, you've talked about seating we should look through the margins and think of the ROIC.

Just wondering how you think about that in electrical. It looks like CapEx as a percent of sales runs about 150 basis points higher, at least from last year. On the other hand, the margins are much higher. Does that mean that really electrical is going to be a key driver of cash flow going forward?

It will be a key driver of earnings and cash flow going forward as that business becomes very meaningful, and the margin profile is very nice. So it will be earnings contributions are meaningful, the cash flow contributions are meaningful. The return on investment is very nice in that segment. And, yes, I think it will be.

Okay. Thanks.

Our next question comes from the line of John Murphy from Bank of America. Your line is open.

Good morning, guys.

Hey, Murph.

Just one question on seating which might seem like it's come out of left field a little bit. But, Matt, do you see any potential for consolidation in the seating business that you could be involved in or maybe some other major players might execute?

Yes on both counts. But let me -- let me describe how I look at consolidation in that space.

I think from our standpoint, we would look for more niche-type tuck-in on a just in time. I think there's still a lot of opportunity to consolidate some of the key components -- key components that we use, surface materials, foam, in certain cases structures, although we're more focused on craftsmanship and comfort and differentiating the seat in that manner as opposed to the structure side of it.

I do think there's the opportunity to consolidate the just in time players in a meaningful way, but we won't participate in it. In many cases we will be precluded from doing it just because of our sheer size and market position from an antitrust standpoint.

So as the number two player from a market share standpoint, I don't -- I don't see us participating in that. But I do think there could be some tuck-ins on folks that are doing just in time on a regional basis currently. But I think the real opportunity, John, is going to be in the components.

Got it. Okay. And then second, just as we look at the EPMS business, I mean do you think you need to do acquisitions there to broaden out your product portfolio to support growth? Or do you think you have enough right now in your portfolio to really create blue sky growth for quite some time?

I would say that we don't need to, but I would like to. Anything that would facilitate the growth there would be great. I'd like to get better in the connectors business, specifically from a component standpoint and additional mass, and certain technical capabilities.

However, without it, we've been growing nicely. Our backlog would suggest that we are going to continue to grow nice and we're continuing to take share. And I don't see that stopping but, yes, it would be great to do an acquisition in this segment because I really believe this is the one area in the vehicle -- one of the areas in the vehicle where the content is just exploding between feature contact that requires power to the sophistication of internal combustion, power trains, that require more signals to improve the efficiencies.

We're just seeing an explosion of content in this segment and it's a great place to be, and we're participating nicely in it.

And when you evaluate those potential acquisitions, how do you think about the margin return and growth profile of what you need to get? I mean is it the kind of stuff that might have lower margins but higher returns or similar margins and higher returns, I'm just trying to understand how you think about the financial hurdle (inaudible).

It kind of depends. If it's connectors, I will tell you that it would have higher margins and normalized returns just because it's typically a higher-engineered and capital-type product, John.

So when we look at acquisitions, we look for strategic fit first and foremost. Then we look at the market valuation as a multiple of the earnings. Then we look at what we can bring combined, the synergies between the two of them both from a sales and cost standpoint.

And can we make the nice return on investment? Can we enhance our margin profile or return profile? And are we buying it at a multiple that makes sense to an automotive multiple or component multiple that we're buying into?

So we kind of balance a few different things. If it was more along the electrical distribution wiring, if you will, then I think the margins could be lower to get the same return because it's not as capital intensive.

Okay. And then just lastly, we have heard from a lot of other suppliers that the market is heating up for available assets and activity seems to be picking up quite a bit in the electrical space.

Would you agree with that and is there a lot of stuff that you're looking at more so than you have been in the recent history?

No. I mean we've had a lot of -- we've really worked hard to try to find the right opportunity in that segment and we have been even though we haven't made an acquisition in that space. We've been working very, very hard to reach out to firms.

We haven't really seen a pickup in the products that we do, electrical distribution junction boxes, connectors, wiring harnesses, we haven't seen it. There may be a pickup in some of the auxiliary or side-type components that are electronic in nature. We haven't seen it in our space.

Our business development team and our management team in that segment are out beating the bushes trying to find the right fit for us from a component standpoint. But to be honest with you, John, I haven't really seen it.

Great. Thank you very much.

You're welcome.

There are no further questions in queue at this time, sir.

Great. Well, the folks that remain on the call are probably Lear employees. I want to personally thank all of you for your hard work and effort, because without the long hours and dedication we wouldn't be posting the type of results that we are posting.

I want to remind everybody to attack waste in everything that we do and look to get better every single day. So thank you very much.

This concludes today's conference call. You may now disconnect.