禮恩派 (LEG) 2009 Q3 法說會逐字稿

Greetings and welcome to the Leggett & Platt third-quarter 2009 earnings. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Dave DeSonier, Vice President of Strategy and Investor Relations for Leggett & Platt. Thank you, Mr. DeSonier; you may begin.

Good morning and thank you for joining us. With me today are the following -- Dave Haffner, our CEO and President; Karl Glassman, our Chief Operating Officer; Matt Flanigan, our CFO; and Susan McCoy, our Director of Investor Relations.

The agenda for the call is as follows. Dave Haffner will start with a summary of the major statements we made in yesterday's press release. Karl Glassman will provide operating highlights. Dave will then address our outlook for the remainder of the year. And finally, the group will answer any questions you have.

This conference is being recorded for Leggett & Platt and is copyrighted material. This call may not be transcribed, recorded, or broadcast without our express permission. A replay is available from the IR portion of Leggett's website.

Yesterday we posted to the Investor Relations portion of the website a set of PowerPoint slides that contain summary financial information. Those slides are intended to supplement the information we discuss on this call.

I need to remind you that remarks today concerning future expectations, events, objectives, strategies, trends, or results constitute forward-looking statements. Actual results or events may differ materially due to a number of risks and uncertainties; and the Company undertakes no obligation to update or revise these statements. For a summary of these risk factors and additional information, please refer to yesterday's press release and the section in our 10-K entitled Forward-looking Statements.

I'll now turn the call over to Dave Haffner.

Good morning and thank you for participating in our call. We're pleased with the third-quarter results we reported yesterday in what continues to be a very challenging operating environment. Sales from continuing operations decreased 28% versus the third quarter of 2008, reflecting weak global markets, steel-related price deflation, and our decision to exit some specific customer programs with unacceptable margins.

Despite this significant sales decline, third-quarter earnings per share from continuing operations increased by $0.05 to $0.34 per share, versus $0.29 in the third quarter of 2008. This improvement reflects several factors, including ongoing benefits from the past year's cost-reduction initiatives; pricing discipline; a net LIFO benefit; and the absence of last year's unusual tax items.

The Company's primary financial objective is to consistently achieve total shareholder return within the top one-third of the S&P 500. From January 1 of 2008 through October 21 of 2009, we posted TSR of 23%, which ranks in the top 3% of the S&P 500.

Last year we made significant progress on the first phase of our strategic plan. We have completed six of the seven targeted divestitures and received proceeds in excess of our expectations. We have returned more cash to investors through a combination of higher dividends and share repurchases. And we have implemented a rigorous strategic planning process to help guide future investment decisions.

Our primary focus this year has been on margin improvement, which we believe represents a substantial opportunity for creating shareholder value over the next few years. We continued to show margin progress in the third quarter despite weak markets. Third-quarter gross margin, excluding the net LIFO benefit, was 21.8%. For the full year, we expect gross margins to approximate 20%, a level we have not achieved since 2001.

Third-quarter EBIT margin, excluding the net LIFO benefit, was 10.4%. Since fourth-quarter margins are seasonally lower than third quarter, we expect EBIT margins for the last half of 2009 to be roughly 8.5% to 9% after adjusting for that LIFO impact.

Throughout this year, we discussed the quarterly mismatch in the recognition of LIFO benefits versus the FIFO impact associated with the consumption of higher steel costs that we had in inventory or on order at the beginning of 2009. In the first and second quarters, we consumed the majority of the higher-cost steel, but recognized only half of the offsetting LIFO benefit. Therefore, first-half reported earnings were unusually low.

In contrast, second-half reported earnings will be unusually high. In the third quarter, we consumed the remainder of the higher-cost steel inventory, which was approximately $5 million, and recognized a LIFO benefit of $16 million. This resulted in a net $11 million benefit to third-quarter earnings.

In the fourth quarter, we expect to recognize an additional $17 million LIFO benefit, with no offsetting FIFO impact. We continue to discuss this issue because it is critical in understanding the quarterly pattern and variability in this year's operating margins. However, full-year margins require no special consideration for these items. For the full year, we expect the LIFO and the FIFO impacts to roughly offset.

The margin improvements we are reporting reflect substantial operational progress through a combination of aggressive cost containment efforts, headcount reductions, facility consolidations, and dispositions that we've made over the past several quarters in an environment where our sales for the year are expected to be down approximately 25%. We should exit 2009 with an EBIT margin run rate of the 8.5% and 9% that I mentioned before, and for 2010 expect EBIT margins to exceed 9% even if sales were to remain flat.

With market recovery, we believe that $2.00 of EPS is achievable by 2012. We base this expectation on the following assumptions. An EBIT margin of 8.5% to 9% as we exit 2009; an economic recovery-driven increase in annual sales to approximately $3.6 billion by 2012; a contribution margin of 25% to 35% from those incremental sales; and stock repurchases.

During the quarter, we generated $142 million of cash from operations, reflecting improved earnings and our focus on working capital optimization. Year-to-date we've generated $430 million of operating cash, which readily exceeds our initial full-year target of $300 million.

Reflecting confidence in our strategic progress, margin improvement, strong cash generation, and some stability that we believe has developed in our markets, in August we increased our quarterly dividend by a penny to $0.26 per share. At yesterday's closing price of $19.41, the current dividend yield is 5.4%.

We also used $80 million to repurchase 4.4 million shares of our stock during the third quarter at an average price per share of $18.40.

Our financial profile remains very strong. Even with the increase in share repurchases, we ended the quarter with net debt to net capital of 23.7%, down slightly from the end of the second quarter and well below the low end of our long-term targeted range of the 30% to 40%. We have no significant maturities of fixed-term debt until 2013, and our cash balance remained steady at $222 million.

Operating cash flow in past years has consistently exceeded the amount required to fund both dividends and capital expenditures. For the full year this year, we now expect to generate more than $500 million of operating cash for more than double the $250 million needed to fund annual dividends and capital expenditures combined.

With those comments, I'll turn the call over to Karl Glassman, who will provide some operating highlights.

Thank you, Dave. Good morning. I'd like to quickly discuss a few major topics. You will find segment highlights in yesterday's press release and in the slide presentation on our website that Dave DeSonier mentioned earlier.

Market demand remains weak. In the majority of our Residential markets, demand stabilized earlier this year. We experienced a seasonal increase in the third quarter, as typically occurs, albeit from very depressed levels.

We believe that units in the US bedding industry were down approximately 15% in the third quarter, and units in the US furniture industry were likely down 15% to 20%. The 24% sales decline we reported in our Residential segment for the third quarter reflects lower unit volumes and steel-related price deflation. Unit volumes in our Bedding and Furniture businesses decreased to a lesser extent than the market during the third quarter due to market share gains.

We have yet to see clear signs that our Residential markets are improving appreciably and are continuing to forecast soft demand for the balance of the year. Fourth-quarter comparisons in terms of unit volumes become much easier; but last year's price increases were not fully implemented until late third quarter, so the current quarter will be our most difficult comparison from the standpoint of pricing.

The office furniture industry remains very weak. Industry data indicates this market is off roughly 35%. We are watching with caution, but the rate of descent has slowed in recent months, and we're hopeful the industry may be approaching bottom. This business generally trails our other markets into a downturn and typically stabilizes and recovers somewhat later as well.

Our Store Fixtures business has experienced relatively solid demand this year, which in part reflects the fact that we are well placed with our value-oriented retailers. Third quarter is a seasonal high for this business, and fourth quarter is typically the seasonal low.

In Automotive, global production rates have been improved since midyear and are expected to remain well above those in the first half of 2009, when the industry was under-producing sales in an effort to reduce vehicle inventories.

The actions we've taken to reduce overhead cost and eliminate poorly performing operations are offsetting much of the impact from lower sales. Cost containment and working capital management remain top priorities. As Dave mentioned, evidence of this focus is reflected in our improving gross margins and strong cash flow.

In addition, segment EBIT margins increased versus third quarter of 2008 in three of the four segments, a significant accomplishment in this demand environment.

Margins improved 300 basis points in the Commercial segment, reflecting the past year's efforts to narrow the scope and improve operations within our Store Fixtures unit. Residential margins improved sequentially, but declined versus relatively strong performance a year ago.

Margins in each of the segments continue to benefit from the past year's cost-improvement initiatives. In the third quarter we had realized much, but not all, of the positive impact from these actions.

Although we don't know when our markets will recover, at some point demand will strengthen. Consumers still use and will ultimately need to replace the end products that our components go into, whether it's a set of bedding, an upholstered chair, or a vehicle. Leggett is extremely well positioned from both a cost and market share standpoint to benefit when that occurs.

With those comments, I'll turn the call back over to Dave.

Thank you, Karl. As we announced in yesterday's press release, sales from continuing operations for the full year are projected to be approximately $3 billion or about 25% lower than in 2008. Full-year earnings from continuing operations are now expected to be between $0.65 and $0.75 per share.

The increase in our estimate primarily reflects improved margin expectations. As a reminder, full-year guidance includes $0.08 of unusual expenses that were incurred earlier this year and explained in the July earnings release.

And with those final comments, I'll turn the call back over to Dave DeSonier.

That concludes our prepared remarks. We appreciate your attention and we will be glad to try to answer your questions. In order to allow everyone an opportunity to participate, we request that you ask your single best question and then voluntarily yield to the next participant. If you have additional questions, please reenter the queue and we will answer all the questions that you have. Diego, we are ready to begin the Q&A.

(Operator Instructions) Budd Bugatch, Raymond James.

I guess my question goes -- I've got a couple of them, but I will ask this one. I think in your remarks, Karl, you said that you have gotten some but not all of the restructuring savings showing up in the third quarter. What's left to get? Can you quantify that for us? And how should we think about that for the fourth quarter and then for 2010?

Budd, we continue to work on our cost structure. And we certainly have not received the full benefit of all of those activities. Some of those activities continued in the third quarter. Matter of fact, restructuring cost, while we don't call it out anymore, was between $0.01 and $0.02, split primarily between Residential and Commercial.

Those activities continue, but at a much lesser rate than they have historically. So as the year next year rolls out, we'll start to anniversary some of those benefits. We are continuing to be frugal, appropriately so in our spending. We have not seen the full benefit yet.

Did you quantify that for us? Or can you give us kind of an incremental benefit? What would you see? And does that factor above the 25% contribution margin target?

I did not quantify it and can't, Budd. I do think it certainly is a contributor to the incremental margin. You can speculate, is it 25% to 35%? I personally think it's 30% or north of that, but we'll see.

Okay. Thank you all. David, I will cede and come back in the queue.

Keith Hughes, SunTrust Robinson Humphrey.

Thank you. You talked -- it was either in the slides or in the release -- about the revenue. There has been losses here that you voluntarily exited. How much of that would be in the Residential division and how much in the Commercial division?

Keith, most of that is in Commercial, somewhere in the 120 to 125 range. There is a little bit in a couple of the other segments as well. Residential would be most of the remaining 50, but not all of the remaining 50 of that.

Okay. Then in the slide 12 on Residential, you talk about US Spring dollars down 20, innerspring units down 12, and boxspring units down 4. There is a lot of spread between those numbers. Can you just give some color of what you think's going on?

Yes, there's two things, Keith. In my comments you will remember that we said that 3Q '09 we were at our selling price peak, really. That really is fourth quarter, but we were moving into it. Passing through significant inflation last year.

There has been a little deflation that started to hit us in the -- certainly voluntary, but it was based on cost reductions, primarily steel based, that started in the first quarter of this year. So some of it is selling price on a specific SKU, but a good bit of it is mix. As our customers mix down in this tough economic environment, that we are seeing a less rich mix from a sales standpoint, therefore affecting our dollars at a different rate than our pieces.

And the boxsprings are doing so much better than innerspring units, is that market share gains?

Yes, it is. You may remember that we effectively de-verticalized -- or changed specifications is a better way to put it -- with Sealy. So the main contributor to that is third quarter we had -- for the first quarter this year had full benefit of that, where Sealy has moved to a more efficient manufactured product that has a much higher content of our product. It's a fully assembled product that we sell them as opposed to their historic partial assembly of components.

When do you anniversary that?

It started -- we started to see some of the benefit in early -- well, at the end of the first quarter of this year; ramped up in the second; fully in place in the third.

Okay. Thank you.

You're welcome.

John Baugh, Stifel Nicolaus.

Good morning. Two things. One, could you address the scrap rod spread? Where it was this quarter; where it was year-ago quarter, and guess as to where you think it might go going forward?

And then some help on how we think about revenues next year compared to the year 2009 as it relates to steel deflation. And how -- just if we sold the exact same number of units, how pricing would affect the revenue. Thank you.

You're welcome, John. What's happened with spread is it's dropped significantly as scrap costs have dropped; certainly so have selling prices. But that spread is quite a bit narrower now than it was a year ago now.

What happened was scrap, when you look on a go-forward basis, scrap jumped pretty significantly in September. And then in October that we expect our average to retreat back to the August level. So we would expect the spread going forward to be maybe slightly richer than it would have been in the third quarter.

And then, John, relative to -- it's an excellent question looking into the future, effectively what sort of part inflation or deflation may play on the top line. We don't know, is the answer.

However, -- and this is Dave -- my sense is that as business does pick up, demand will pick up. We will see some upward bias in some of those raw materials, and therefore will pass that inflation, if it so happens, through. At this point, we don't see it as a significant inflation potential, but we just don't know.

Mark Rupe, Longbow Research.

Hey, guys. Great quarter. Question is, when you guys come out of this kind of downturn, how are you guys positioned with some of your markets? I know that with the antidumping on the bedding side I would think you would have more share coming out this time versus maybe the last time. Just any color on that would be great.

Well, Mark, this is Dave Haffner. I'll comment first and encourage anybody else to comment. We certainly don't want to sound overly optimistic or braggadocious, but we like very much the position we're in, in all of our markets. As you know, we either lead or are very close to the top of the pack of all the suppliers in the various markets that we participate in.

We also have some significant advantages, Mark, in some of the cost profiles that we enjoy because of our vertical backward integration, if you will.

So we are in a wonderful position when things turn around. But again, we are just guardedly optimistic about when that significant turnaround is going to happen. Anybody else like to add something?

I would agree. I think we enhanced our market position through this downturn in really every market that we participate in, other than Store Fixtures. In that market we voluntarily gave up some market share for improved profitability and a narrower focus on steel versus wood.

So Mark, we reiterate what Dave said. We like our position. A little bit of volume right now through this lower cost structure would feel really good.

Yes, I guess the other thing I would add to it, Mark, is that I know you and the rest of the people that know us well understand and recognize the tough decisions we've made through consolidations and cost containment. So the margins which we're enjoying now at these low revenue levels, when that incremental volume does come back, we should enjoy margins that we haven't seen in a very long time.

Then the last thing I would mention is that it should not require much in the way of capital expenditure to add productive capacity. We were at about $4.1 billion with the consolidated group of manufacturing sites that we currently have. So in theory we could bring back that billion dollars worth of revenue assuming an approximate stable product mix without having to make additional manufacturing capacity investments.

Perfect. Very helpful. Thank you.

Mike Smith, Kansas City Capital.

Well, good morning. I think maybe you just answered my question. But I guess what I was really going to ask was -- if you are right on the economy and it recovers in 2011/2012, how much of what you furloughed in terms of people and facilities would you have to bring back? And how much margin expansion could we expect in those two years?

Yes, Mike. This is Dave again. I hate to be repetitive, but we really haven't attempted to project revenues in excess of that $4 billion in 2012. If it happens, it would be wonderful. And we stand ready of course to add productive capacity wherever we need to.

But at this point, we're trying to stay relatively conservative and just looking at our earnings leverage or power, based upon about a 20% increase in top line from $3 billion to $3.6 billion over that period of time. Some folks are of the opinion that we're being too conservative, and I hope that is correct.

But we should be able to service somewhere between $4 billion and $4.5 billion worth of demand with the current mix that we have. And the margins, the incremental margins -- I'm on Karl's side; I think they have a 3 handle, at least somewhere 30% or north.

Thank you.

Justin Maurer, Lord Abbett.

Just to follow up on the sales kind of sequentially. I suspect most of us on the outside looking in are maybe marginally disappointed that there wasn't a little bit better lift. You guys alluded to it a little bit on the Resi side.

What might be helpful is how much of it was deflation as you alluded to, units a little bit better than the industry, and then kind of a component of that, how much exit business you walked away from.

Yes, Justin, real quick on the deflation side, third quarter versus third quarter a year ago, that's primarily in Industrial and Residential. Where Industrial sales were down 41%, more than half of that was price.

Okay.

So the unit decline if you will in that segment was kind of mid to high teen level, which probably ought to make sense, I guess, given the fact that we've talked about Bedding and Furniture and Automotive all being down in the 15% to 20% range, and those are the main markets that that business will supply.

Residential is the other place where we had price deflation in the quarter. And volume there, where we reported minus 23%, minus 24%, volume there is down again kind of mid teens level. So the rest of that is price.

And how does that compare to second quarter as opposed to year-over-year? I'm just trying to understand how much kind of sequential lift given --?

Yes, that's a good question. We had a lot more price deflation in the third quarter year-over-year than we did in the second quarter year-over-year. That's because last year, if you'll remember, we were ramping up price significantly in the second quarter and the third quarter.

So actually second quarter -- and I'm pulling from memory here -- in Residential we were still positive year-over-year on the pricing side. In Industrial we started to give back, so it was still somewhat negative, but not to the tune that we've experienced here in the third quarter.

Okay. So you guys do feel like you are getting reasonable volume improvement kind of off the cyclical lows of the spring.

Fourth quarter if my math is right shows about a 19% decline again, top line. And you mentioned that the price -- that's your hardest price compare, I think I heard you say. Just because that's when the increases were fully instituted.

That's right.

So again, is that kind of 50-50 if we think about it? Is volume closer to down maybe 10, with the balance being price or is that too much?

Do you guys have a feel for that, Karl?

Our fourth-quarter guidance is in the 15% range, negative. I think that it depends on mix, it depends on the business; but there will be more deflation certainly as a percentage of total in the fourth quarter than the third, because we were at that pricing peak.

In our Residential businesses, it's possible in my mind that we would be positive on units. So, you know, this is just one bullet point, but through the first 14 shipping days of October we're about 10% positive on innerspring units. I don't have the dollar number; we would be negative from a dollar standpoint because of that deflationary aspect.

I would expect to start to mirror that in many of our markets. We are up against such easy comps. And you will see that deflationary impact in 1Q 2010 also, and then that would be about the end of it.

Okay. Okay, fair enough. Great, guys. Thanks a lot.

Brian DiRubbio, Yield Capital Appreciation Partners.

Good morning, everyone. If you look at the sales growth that you are projecting between now and 2012, the 20% essentially applies a 6.25% annual growth rate. And I know things never go linear, but most people would argue that's probably grown above nominal GDP growth for the next couple years here in the US.

Give some comfort given all these cyclical challenges that we are facing that you're actually going to be able to hit that $3.6 billion number in light, quite frankly, of the fact that you've missed some of your targets over the last few years.

Well, Brian, this is Dave. Your CAGR calculation must have the same algorithm as our calculators. You are correct.

We are down significantly in these various industries that we serve, significantly from what we would call a normal demand position. Historically too, whenever there has been a recession there has been a more robust demand in the early aftermath of the recession than normal.

So it's anybody's guess. We believe it's realistic, if not conservative. We won't know until 2012 if we are correct. But we think this is reasonable and realistic.

Relative to the fact that we've missed some previous estimates, duly noted. Duly noted.

Brian, I would add that we -- if you look at negative GDP rate over the last few quarters and then compare it to us, down that 28%, it's a sign that we're in consumer discretionary sectors. That bounceback -- the products that we sell are wearing out every minute of every day. They are replenishment, they are need-type products.

We have typically seen a bounceback as the consumer starts to get a little bit more confident and they start to understand the discomfort of their current sleep set or bed or whatever that set of circumstances is.

So we expect and have historically outperformed GDP out of each one of these cycles. Understanding the consumer credit availability and all of those macro concerns that we all have, but it's a signal of the sector that we play in.

Brian, this is Matt. I would just add that as we began this year our estimate -- which clearly turned out to be wrong -- for revenue in 2009 was to be about $3.5 billion, $3.6 billion. So as we flash forward to 2012, getting back to something about like we thought would occur this year also doesn't seem to be too far-reaching.

Okay. Thank you.

(Operator Instructions) Budd Bugatch, Raymond James.

Yes, I have a few more follow-up questions. Karl, you mentioned that -- I think it was Bedding units that went positive in October, up about 10%. Would you care to give us a guess on Furniture units as well and how long that may persist?

I don't have those contemporary data on Furniture units. But Furniture units, I would say, are slightly positive, Budd. And I apologize; we don't have the real-time data in Furniture that we have in Bedding.

A Furniture unit as you well know is much more difficult to calculate than a Bedding unit, just because of the diversity of the product line; but it is positive.

And the persistence of positive, will it be this quarter, do you think? So you think bedspring units turn positive? And is that an industry -- do you think the industry is going to turn positive this quarter, too?

Boy. Budd, anymore I'm afraid to even speculate on what I think. The industry is dealing with the same weak comps that we are. Again, speculation that I would expect that the industry would be slightly positive in pieces. But boy, it's a person's guess.

It's I think probable in my mind that we will be positive on units. We are in a better market position today than we were a year ago today.

Okay. Susan, if I heard you right you said about $100 million, and $35 million in Residential was price-related reduction in volume, and $65 million or thereabouts in Industrial. What was the walkaway business in the quarter for Commercial?

Budd, I didn't -- we don't quantify that by the quarter. I apologize for that, but the $175 million for the year is what we shared externally.

And of that $175 million, about $125 million was Commercial.

That's right, for the year.

And when you think of the third quarter being the commercial peak, Susan is right; we haven't calculated it, but that is a way to look at it.

Okay. My last question I guess goes -- I know you are all involved with detailed strategic reviews. I actually saw the first Residential application of eCoupled at the market just concluded. Can you maybe David, give us a feel of where you are on the strat plan reviews and any conclusions that you can share?

Yes, thanks for asking, Budd. In fact, right after this conference call, we are going into a deep dive for one of our business units, and will be their second strategic review.

That whole process of strategic analysis is getting well entrenched within all of the business units. I compliment Karl and the segment heads for embracing it the way they have.

We're also this upcoming year now going to integrate the early part of the strategic plan into the actual budget. So we're making that somewhat heroic and necessary change there.

Very pleased, in two words, relative to the strategic plan or plans.

And regarding eCoupled, we continue to be very encouraged with that technology. The consortium, the members of the consortium continue to grow. And all of the major players in handheld wireless telephones and cameras and things like that are participants. We expect to start to commercialize the sale of the primary coils sometime between now and the end of the year.

Okay. Thank you very much.

John Baugh, Stifel Nicolaus.

Yes, two follow-ups quickly. One, Simmons was in forbearance forever, so doubt it caught you by surprise that they are filing. I'm just curious how you are handling that and what, if any, impact there is financially?

And then secondly, a comment on share repurchases. They jumped dramatically from the pace the first half of the year. If you could just talk generally. I think you have $120 million left on the cash that you had originally embarked to use to buy stock back. Your thoughts about using all of that and some rough time frame? Thank you.

John, as related to Simmons, as you know, when Simmons made their announcement of a few weeks ago that they plan to file bankruptcy and emerge with a new parent, they very publicly stated that their intention through that filing was to pay all of their suppliers. So we feel good about that. Do not believe that there will be any financial impact to us at all, so it kind of remains business as usual.

They are current on every one of their payables, at least to us and I believe to all others. So we feel very good about that relationship.

John, on share repurchase, we continue to see it as a pretty compelling investment opportunity. We still have latitude to purchase 4 million shares in this quarter that we're in with regard to the 10 million share authorization that the Board gives us each year.

Assuming that we do that, we would spend about -- you pick the number -- but a little over $80 million to do so. We think that is probably a pretty good investment.

Great. Thank you.

Justin Maurer, Lord Abbett.

Sorry to belabor the call, guys. The LIFO/FIFO flow, was that about what you guys expected? I know you talked about the $70 million or $75 million that was going to be ratably over the four quarters. But in terms of the FIFO impact, has that moderated faster than you guys expected? Or is that -- as you flow through the third quarter and fourth quarter, is that kind of what you thought?

Justin, it's about what we thought. We thought there would be a little bit more to crawl into the third quarter; and it did at about $5 million. There won't be any in the fourth quarter. And for the full year our estimate is about $70 million; and that's, frankly, about what we've been thinking for several months now.

Okay. Then just lastly on the follow-up on the deflation question, you guys seemingly won't get credit for these goals until top line is kind of moving along with the bottom line. Do you think we are still going to see negative compares on the top line through the first quarter? And then the second quarter hopefully, all things being equal, that is when we turn the corner? Or is there a possibility that it could happen sooner?

No, probably, Justin, first quarter next year because of price would be negative. And hopefully we would be in a position to start to show some positive comps on the top line.

Okay. Fair enough. Thank you.

Thank you. Mr. DeSonier, there are no further questions at this time. I would like to turn the floor back over to you for closing comments. Thank you.

We will just say thank you. We appreciate your participation and we will talk to you again next quarter.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you all for your participation.