Lennox International Inc (LII) 2007 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Lennox International second quarter 2007 earnings conference call.

(OPERATOR INSTRUCTIONS)

I would now like to turn the conference over to Karen Fugate, Vice President, Investor Relations.

Please go ahead.

Thank you.

Good morning, everyone, and thank you for joining us for this review of Lennox International's financial performance for the second quarter of 2007.

I'm here today with Todd Bluedorn, our CEO, and Sue Carter, our CFO.

Todd will review highlights for the quarter, and Sue will make -- will take you through the company's financial performance.

In the earnings release we issued this morning, we have included the necessary reconciliation, the financial metrics that will be discussed to generally accepted accounting principle measures.

You can find a direct link to the webcast of today's conference call on our corporate website at www.LennoxInternational.com.

We will archive the webcast on the site and make it available for replay.

I'd also like to remind everyone that in the course of the call, to give you a better understanding of our operations, we'll make certain forward-looking statements.

These forward-looking statements are subject to risks and uncertainties.

A list of these risks and uncertainties is included in our recent 10-K filing with the SEC.

It includes the impact of higher raw material prices, our ability to implement price increases for our products and services, the impact of unfavorable weather, and the possibility that a decline in new construction activity will depress demand for our products and services.

These risks and uncertainties could cause our actual results to differ materially from those we express to you today.

I will turn the call over to Todd.

Thanks, Karen.

Good morning, everyone.

As you can see from our announcements this morning, we've had a busy quarter, so I'll jump right in.

Our results for the quarter are solid, with adjusted earnings per share up 13% year over year.

Three of our four business segments had both strong top and bottom line growth, exceeding our expectations.

Through a continued focus on cost discipline, our residential business performed operationally well, despite adversely impacting -- being impacted by the weak housing market and cooler weather.

Total company revenue grew 3% to reach $1.042 billion.

Revenue growth was hindered by an 8% contraction in the residential business, but strong double-digit growth in commercial and refrigeration helped to offset the impact.

On the cost side, we are making some progress in realizing a downward trend.

SG&A, as a percentage of sales was down 100 basis points.

And though we have made some progress in our cost structure, we have lots of opportunity in front of us.

Now I'd like to spend a moment on outlook for the year.

If you recall, on the first quarter earnings call, we reaffirmed full year guidance under the assumptions that the upcoming cooling season would provide more normal replacement demand.

This, along with cost discipline, and solid results in all our other businesses, supported our guidance of fully diluted earnings per share in the range of $2.50 to $2.60, and revenue growth of 6% to 8%.

We expect continued good performance in the back half of the year from commercial, refrigeration, and service experts.

However, it's clear the softness in the residential market will last longer than we anticipated, and unseasonable weather has dampened growth in the US replacement market.

In light of this, it's appropriate to adjust our full year revenue and earnings per share guidance.

We now expect year over year revenue growth in the range of 2 to 4%, and GAAP diluted earnings per share in the range of $2.40 to $2.50.

This represents solid growth over last year of 10 to 15% adjusted, and 6 to 11% GAAP.

Before I hand it over to Sue, I'm going to review a couple of recently announced initiatives.

First, last Friday, we made an exciting announcement to build a low-cost manufacturing facility in Saltillo, Mexico, outside of Monterrey, under the name LII United Products.

The markets in which we compete demand the highest quality products and the most effective distribution at the lowest possible cost.

One of our top priorities will be to review all of our manufacturing and sourcing operations to identify cost reduction opportunities.

You will hear more from us in this area over the next several quarters.

Second, just this morning we announced our intent to repurchase $500 million of our shares, which represents 20% of our market capitalization.

We will execute on this plan by the end of third quarter '08.

We believe the share repurchase plan is a very effective way to improve our capital structure and still maintain the flexibility to pay quarterly dividends and pursue strategic opportunities to grow the business.

This authorization underscores the confidence the Board and I have in Lennox International and our future growth prospects.

To summarize the quarter, we ended with solid results -- adjusted earnings per share growth of 13%, driven by sound execution.

And even though the tough residential market drove us to lower our full year expectations, our other businesses are growing at a significant pace.

We announced our intent to build a low-cost facility in Saltillo, Mexico, leading to effective distribution at the lowest possible cost.

And finally, the $500 million stock repurchase plan is a good investment for the company and an effective way to improve the capital structure while maintaining flexibility for future growth opportunities.

Now I'd like to turn the call over to Sue.

Thank you, Todd.

Good morning, everyone.

Lennox International delivered solid top and bottom line results for the quarter, driven by strong performance in three of the four business segments and good cost control in all of the businesses, including corporate.

Our total company sales in the second quarter improved by 3%, or 1% adjusted for foreign exchange, to $1.042 billion.

Our adjusted net income of $62 million was up $4 million, or 7%, over last year.

Adjusted diluted earnings per share grew 13% over last year, to reach $0.87.

Excluded from adjusted net income for the second quarter are adjustments of $2 million net of tax, which includes $4 million from the elimination of an executive position, $1 million from the completion of the facility consolidation in South Carolina, and a $3 million favorable income tax benefit from a change in estimated gain from prior year.

Our GAAP net income for Q2 of this year was $60 million, or $0.85 per share, versus GAAP net income of $68 million, or $0.91 per share in 2006.

Cash generated from operations was $70 million, and the company invested $15 million in capital expenditures, for a strong free cash flow of $55 million.

During the quarter, we purchased 850,000 shares of stock using $29 million of cash.

The share repurchase plan announced today will replace the share repurchase plan approved by the Board in September of 2005.

Our intent is to repurchase $500 million of our stock through the open market by the end of third quarter of 2008.

And finally, we ended the quarter with total debt as of June 30th, 2007, of $178 million, resulting in a debt to capital ratio of 17%.

Now looking closer into our business segment results for the second quarter, our residential air conditioning business was impacted by difficult year over year comparisons, driven by a weak housing market and unseasonable weather.

As a result, revenue contracted by 8% to $498 million.

While our volume was down about 13%, we did achieve price improvement of approximately 6%, and [mix down] 1%.

Volume in the hearth products business declined disproportionately, due to its exposure in the residential new construction market.

Segment profit for the residential business was $60 million, a margin of 12%, versus $73 million, a margin of 13%, in the year ago quarter.

Price improvement offset higher commodity costs in the quarter and the organization remains focused on cost controls.

Sales in our commercial heating and cooling segment were strong for the second quarter in a row, growing 24% to $233 million, a record sales level for this segment.

This sales growth was driven by increased demand in international markets, a favorable products mix shift in North America, and the favorable impact of foreign currency.

Overall, sales volume increased 10%, price improved 6%, product mix contributed approximately 5%, and foreign exchange 3%.

Total segment profit in the commercial business increased 56%, to reach $30 million.

Year over year growth was fueled by increased demand in international markets, a favorable product mix shift in North America, and benefits realized from certain cost savings and strategic initiatives.

The commercial business in Europe had its best month ever in June.

For the quarter, sales in Europe grew 42%, and operating performance more than tripled year over year.

Our service experts business was able to prevail over the soft residential market and performed well on the top and bottom line.

Sales increased 4% to $184 million.

Segment profit was a strong $13 million, a 41% improvement, and profit margin was 7%, a 200 basis point improvement over last year.

In our refrigeration business, revenue grew 16% to $151 million, driven by strong sales growth in our international businesses.

The 16% sales increase consisted of 6% from volume growth, 4% in price, and a 6% benefit from foreign exchange.

Segment profit for the quarter was $16 million for a year over year growth of 14%.

We continue to invest in Asia for the long term growth.

At the same time, we continue to address cost initiatives throughout the segment.

Corporate expenses were slightly down for the quarter.

We continue to look for opportunities to reduce costs in this area.

Before I close, I'd like to make a few comments on our revised guidance for 2007.

As Todd mentioned earlier, the continued softness in the residential market prompted us to revise our full year guidance.

We now expect year over year revenue growth in the range of 2 to 4% versus our original assumption of 6 to 8%.

GAAP diluted earnings per share is expected to be in the range of $2.40 to $2.50 versus our original assumption of $2.50 to $2.60.

This guidance includes an assumed income tax rate of 35% and capital expenditures of approximately $80 million.

Included in the CapEx assumption is $17 million we intend to invest in the low-cost manufacturing facility in Mexico this year.

And finally, we've received official word from the SEC that our investigation has been terminated, and no enforcement action was recommended to the Commission.

That concludes our prepared remarks for today's call.

And at this point, we'd be pleased to address any questions that you may have.

(OPERATOR INSTRUCTIONS) And our first question comes from the line of Curt Woodworth with JPMorgan.

Please go ahead, sir.

Hi, Curt.

Hi, good morning.

Hi.

How are you?

Good.

The SG&A as a percentage of sales was very low this quarter.

And I know you commented that that's still an area where you see a lot of opportunity.

And I'm wondering, Todd, what -- do you have a target level on what you think SG&A as a percent of sales should be at the company?

A lot of your peers are running still well below where you are.

And maybe if you can identify some potential areas of opportunity.

Curt, I don't have a target to give today.

We're working very hard internally.

The target I know is that it's too high, and we're working to get it down, both on near-term actions and longer systemic and structural actions to lower our SG&A in the business.

When we give guidance later in the year for next year, for '08, I think at that point in time, we'll be in a position to give more specific guidance on SG&A targets.

Okay.

Great.

And on the commercial business, can you comment on your order rates, looking out into the back half of the year?

It seems like you're still pretty confident that that's going to be a sustainable pretty high-growth business for you.

And I'm wondering, did this quarter benefit at all from the Wal-Mart contract that you announced, I think it was last quarter?

Let me maybe answer that in sequential order.

We remain confident and bullish on the commercial business for the second half of the year for a couple of reasons.

One, the commercial market overall is up for all of us in this industry, and so we're taking advantage of some tailwind in the market.

I would also make the point that we think we're growing share in the segments that we play in our commercial business.

And the product that you announced with Wal-Mart, the brand name is Strategos, which is the highest efficiency rooftop product in the marketplace.

And Wal-Mart's our launch customer.

They're excited about that.

They'll be taking deliveries during the second half of the year.

And equally important, we're getting lots of interest for other national accounts.

We put a premium on having the lowest cost of ownership.

Okay.

Great.

And then in terms of the new plant in Mexico and potential for a facility rationalization in some of your other residential businesses in the US, can you give us a sense for -- you outlined some cost savings '09, and then going out to '10.

Do you -- will you get any benefits in '08, or should we think about most of the $13 million sort of accruing in '09?

If you can just kind of give us a sense for how the timeline could look on the savings there.

Yes.

I mean, the way I think about it, Curt, is in '07, it's going to be dilutive.

In '08, we're about break even.

And then '09 is when you start to see the accretion from the factory in the order of magnitude that we put in the press release.

And then in 2010, when we're fully ramped up, that's when you see the full amount start to kick in.

Okay.

So the $13 million would be a realized number in '09?

Not like a run rate exiting the year?

Correct.

Okay.

Great.

Thank you very much.

Our next question comes from the line of Jeff Hammond with KeyBanc.

Please go ahead.

Can you hear me?

Yes.

Hi, Jeff.

How are you?

Okay.

Doing great.

I just wanted to see if you could give us a little more granularity by segment on the revenue growth.

I mean, clearly, directionally, the commercial businesses seem to be outpacing even your original expectation, and the offset seems to be residential.

If you could just give us maybe some more directional guidance on the businesses, that'd be helpful.

Well, I think -- again, let me kind of repeat and start off, Jeff, with where we were for the second quarter, and then go from there.

So on -- from a volume perspective, res was down 13% on volume in the second quarter.

Commercial was up 10%.

Service experts up 3%.

And refrigeration was up 6% on volume.

So as we look through the rest of the year, we're obviously not expecting big revenue growth out of the service experts business, but we do expect the commercial business to continue to grow, and the refrigeration business to continue to grow, which is part of that guidance that we've got out there of the 2 to 4% revenue growth for the year.

Well can I presume that on a full year basis, the residential business is down in total?

Yes.

Yes.

Okay.

And then the very good margin performance, both in service experts and commercial heating and cooling, I just wanted to better understand the sustainability of that momentum.

And then specifically on commercial, I guess surprised by the mix benefit and the price.

Could you just explain the mix benefit a little bit better?

And I had thought the price increases were more back-end loaded.

The price increases we had talked about for the commercial business were that they would pick up in the second half of the year.

And we started to see some of that activity late in the second quarter as we went through that.

And then I'll jump -- maybe jump in on service experts.

Service experts had a strong quarter.

Margins were 7 points.

We think we're making incremental progress on that.

But I caveat that with second quarter is the busy quarter for service experts.

I wouldn't put 7% into my model.

What I would focus on is that we gained 200 basis points from last year, second quarter to second quarter.

And I think that shows a trend line that's consistent with the guidance that was given end of last year, which used to be a 6% to 7% loss business.

And then what's driving the mix change in commercial?

I would say that the mix change in commercial is coming from some of the higher efficiency units, and the -- just the pure mix of product that's coming in there.

And I think that's doing well for us.

And I would also add to that that the initiatives that we've talked about, Jeff, with you and with others, about the focus on the replacement market, and what we see as the trends that we -- the commercial business showed on the Analyst Day last year, of the replacement market showing growth for us, our share of the replacement market, continued in second quarter, and we're seeing a bounce from that mix.

Okay.

And then would you expect mix to get even better into the second half, as this new product line grabs hold?

I think we had a great second quarter.

I think we remain bullish for the balance of the year.

I'm not sure we see the kind of stop function improvement quarter over quarter that we saw in second quarter, but I would underline that the new product is a good product, and we want to sell as much of it as we can.

Okay.

And then moving over to the share repurchase, how should we think about maybe initial accretion for '07, '08, just given the moving pieces of how you -- the cost to fund it versus how it might impact the share count?

Okay.

Well, let me give it a shot with some caveats in there.

So, Jeff, as you look at and you model the kind of 2007 impact that's included in our guidance currently, you can get to sort of a $0.17 kind of accretion in the earnings per share for 2007.

So without having 2008 guidance out there, and all of those good things, what I would tell you is that I would expect the 2008 impact or accretion from the share repurchase to be greater than that.

So you're banking in $0.17 accretion from -- in '07 from the share repurchase?

Be careful of the existing word.

It's from the prior share repurchase.

So it's the cumulative share repurchase program.

Right.

Right.

So the incremental improvement into '08 would be a number bigger than that?

Yes.

I mean, that's about as close as we can get to that, without having specific '08 guidance out there, and all of the different parameters.

And I think that makes sense logically.

Okay.

And then Todd, as you look at the facility -- the announcement on the low-cost facility, was that kind of already in the works, or is that something that you've kind of facilitated early on?

It was already in the works is the honest answer, Jeff.

I think --

Okay.

-- when I came in, it was on the boards.

And I think we all agreed, as we talked about it, that we couldn't do this quick enough.

And we made it a high priority and put it to the front of anything else we had on our table, either strategically or operationally, and put a team around this thing.

And it's one of our most important initiatives.

And then just finally, can you just give us an update on the restructuring that you did last year on the South Carolina facility?

And are you getting the benefits you were hoping for there?

How did that play in?

How does that play in going forward?

Okay.

Well, we're nearing the end of any of the restructuring charges that were there for the South Carolina facility.

So I think we'll have a slight amount in Q3 yet.

But more importantly, as we wind up that activity, we had about $12 million of savings banked into 2007 for -- as a result of that initiative.

And we believe that we're on track to get that.

The -- when you break down the savings components, most of those savings components were from headcount reductions, kind of split evenly between salaried head count reductions and hourly head count reductions.

And all of those reductions took place early in the year, and are there.

So we think we're on track for the savings.

Okay.

How much would you have realized of the $12 million in the first half?

That I'm not sure of.

I think it continues to build over time, as all of the costs ramp down.

But I think we're done -- pretty much done with the cost side of that.

Okay.

Thanks, guys.

Thanks, Jeff.

Thanks, Jeff.

Our next question comes from the line of Keith Hughes with SunTrust.

Please go ahead.

Thank you.

I just wanted to get kind of your commentary on the residential business, on pricing in the sector.

Is there any price increases you're trying to put through, or do you see any push down in pricing in the space?

I think what we see in the marketplace, Keith, is what you'd expect in a down market, which is it continues to be a tough pricing environment.

And we have some competitors maybe who aren't as responsible as others on how they're competing in the marketplace.

You see, from the numbers we released, that the price increases that we passed on last year, which was, in the residential business, 6 to 10%, depending on the product, in August, and then another 1 to 3% in January, we've been able to pass some of that along to our customers.

That remains a focus of ours, even in tough markets, to try and optimize price.

All right.

Thank you.

Your next question comes from the line of Gary Lenhoff with Ironworks Capital.

Please go ahead.

Thank you.

With respect to the share repurchase, how much of that do you expect, when you're completed with it, will have been debt financed?

Well, that's kind of a difficult question, because the way that we expect to finance the share repurchase is through our cash flow and through our existing debt capacity.

So we're not actually providing specifics on that, but it's a balanced approach between the two.

And can you maybe give us a range?

Of the debt that would be put on for that?

Yes.

Well, let me give you the long term objective that we have out there, and we're still fairly in line with that.

We had put out a long term debt to capital ratio of about 40% last year, during our November Investor Day.

And I don't see that being any different as we look out into '08 and '09.

Okay.

That's helpful.

Thank you.

Our next question comes from the line of Michael Coleman with Sterne Agee.

Please go ahead, sir.

Hi.

Good morning.

Hi, Michael.

How are you?

Well.

I wanted to ask about your two-step business.

If you could maybe characterize the volume in your two-step business versus your one-step, no-step.

Yes.

As you know, we sell our Lennox higher end brand through our one-step distribution.

We tend to sell [inaudible] we sell our Allied brands, which are more value, competitive brands.

And what you find in this industry is on -- when it's hot, and the market's up, what you see is the lower end brands, the over-the-counter brands, have faster growth sales than what your premium dealers have.

And what you see on the downside of the market is just the reverse.

And so what we see is our Allied sales on a year over year basis are less -- are down more than what our Lennox sales are.

The good news for us is we have a lot more Lennox sales than we do Allied sales.

Right.

Okay.

And if you were to exclude the hearth volume impact, what would be the equipment volume on a year over year basis be?

Or was the hearth included in the down 13%?

The hearth was included in the down 13%.

Our hearth business is much more driven by the -- our residential new construction market than our other businesses.

So it's sort of order of magnitude.

I would think about hearth as being down with the residential new construction, which is, depending on what number you look at, 20 to 25%.

And then you get back into the amount of hearth as a piece of our total residential segment is not that large.

So I think you could sort of take the 13 number and plus or minus it by a point or two and get to the same place.

Okay.

And the -- you commented that you had felt that you were on track to capture the $12 million in cost savings.

The other piece -- you incurred about $6 million in 13 SEER inefficiencies in 2006.

How much of that do you think you've realized or benefited from on a year to date?

I think I'd answer it this way, is we're fully ramped up in '07 and any inefficiencies that we had due to the 13 SEER ramp up from last year are gone.

So you would have realized the full $6 million in the first half of the year?

No.

The actual -- the inefficiencies were actually in the back half of 2006.

So you're looking at year over year comparisons in the back half of this year.

Okay.

So you have yet to realize the -- that $6 million that -- so your comparisons get easier from that perspective?

The comparisons get easier, but I would also tell you -- because I think it -- I think it's a quarter over quarter type of activity, that the inefficiencies came from logistics and the warehousing activities and of all of that.

And we've actually seen those inefficiencies in the performance of that business come up in each sequential quarter.

So I think, while the year over year comparison is fair, I would also want to point out that the business is doing the right thing.

They're on top of it, and we're working to get all of those things behind us.

And in fact, I think they are behind us.

Okay.

And this quarter, and in the first quarter, you broke out the equity in earnings of unconsolidated affiliates.

And two questions.

One, I guess that's kind of a new format, as of first quarter.

But do you see as potential -- you've talked about acquisitions in the past.

Could the consolidation of these affiliates represent potential acquisitions?

And what potential size might that represent in terms of an acquisition, if they were?

I think the short answer -- and I'll let Sue disagree with me, as I look across the room -- we weren't trying to signal anything by the way we showed our financials differently.

I think it's just keeping up with the accounting recommendation on how we should show it.

So there's no underlying signal from that showing the numbers differently.

Yes.

Better information, but no indicators.

Okay.

But from the perspective of those joint ventures, I think you have one in Asia, one in Latin America.

Correct.

Do they represent potential acquisitions, if you were to consolidate those joint ventures, is that something that you might have an interest in?

I would never -- I don't want to speculate on those specific joint ventures.

We like our partners.

We like the venture.

We like our position as venturer.

And so, I wouldn't directly talk about that.

What I would say more broadly about M&A is we like the businesses we play in, and so when we think about potential acquisitions, we think about adding to the businesses we have, either through industry consolidation, geographical expansion, or those adjacencies that might make sense.

Okay.

If I could go back to the residential real quick.

Historically, the business and equipment side is 70/30.

Given you've seen an obvious downturn in the new side of the business, new residential construction, what do you think that mix is today?

Or what do you think that mix was in the quarter?

The mix is actually approximately the same, because while the RNC year over year degradation is more than the replacement degradation, just due to the size, it's still about 70/30.

That hasn't really moved.

Okay.

Great.

Thank you.

Thanks.

Thank you.

Our next question comes from the line of Marshall Levine with Knott Partners.

Please go ahead.

Yes.

I'd like to find out if you're making any assumptions about hedges on commodity inputs in your full year guidance.

Well, let me tell you what we do from an overall standpoint, Marshall.

We do have a commodity hedging program for our copper and aluminum products.

And so what we do is we have a banding strategy for hedging that lets us place hedges out 18 months.

And so the banding strategy kind of gives us a routine mechanism for doing that.

In the back half of the year, we have about 70% of our copper requirements hedged, and our aluminum and steel is done on fixed forward contracts.

Okay.

So you can't be specific about a contribution to guidance from these hedges?

No, because that continues to move throughout the life of the hedge.

Okay.

And in your volume increase in the commercial side of the business, are you gaining share on competitors, or is this an overall uplift in the entire market?

We think we're gaining share in the segments that we play.

So the short answer is we think we're gaining share.

Okay.

And given the growth rates here, are you seeing any change in the inventory levels of your distributors?

[I'll just get] --

I think we think that the inventory is pretty balanced within the system, but there's no real change.

And the other caveat , as you know, compared to our competitors, we own the vast majority of our

Right.

So when you think about different levels of the channel and the sell-through, you see our full inventory in our numbers, to a very large degree.

So short answer is our inventory's down end of quarter from where it was first quarter, so it's performing as we would expect, which is we're bleeding inventory off as we go through the season.

Okay.

Last question.

Has the transaction with AOC been completed now?

We have no further updates on that at this time.

Okay.

Thank you.

Thanks.

Our next question comes from the line of Jeff Hammond.

Please go ahead.

Hi, Jeff.

Todd, I guess just stepping back a little bit, you've been here a little bit -- another full quarter.

And I'm just wondering if you could maybe just give us a better sense of where, as you've visited the businesses and you look through the businesses, where you see the most glaring opportunities for maybe a fresh look, either from a cost standpoint, the way the business is structured or run, or where you want to make growth investments?

I'll answer in a general way, Jeff.

I think you can sort of pick up from the actions we've taken and the announcements we've made today a focus on our manufacturing footprint and cost structure is an important focus strategically for us as a company.

And so we're focused on that.

And as I've said in the announcement, I think we'll have more to say on that over the next few quarters.

I think you also pick up from the actions we've taken and the comments we've made today our SG&A structure, and being more competitive on our cost structure, on discretionary spend, is a focus, and we'll focus on that, and we'll have more to say on that.

What maybe you don't pick up from the announcement we say today, other than the comments on Strategos, is we have lots of opportunities on innovative products and systems to compete in this marketplace.

And we have very good technology here at Lennox, and a very good company-owned distribution network to sell the premium products.

One of the things -- one factoid that I would throw out is our -- one thing that we keep a close eye on is on our percentage of sales in residential that's 14 SEER and above.

And we saw a nice step up on that in second quarter over second quarter last year, and also sequentially first to second quarter.

So again, it demonstrates that when we have the right product, we have a distribution channel that can move the premium product.

And so I think we have a big opportunity there.

So I think those are sort of a couple of things that I would lay out at this point in time that -- where we have real opportunities.

Okay.

Great.

And then just a couple of housekeeping items.

How should we think about corporate expense for the full year this year?

Well, we had sort of previously talked about being flat to 2006, which was about $100 million.

As you'll notice, we're trending below that in the first two quarters.

And so I would expect that you could -- it would be in the $90 million range, the $90s.

So have a 9 in front of it instead of $100 million, as we look forward.

Okay.

And then can you give us components of cash flow from operations?

Namely, D&A and change in working capital?

Yes.

We're scrambling to get the paper to answer.

No.

Is there any other -- kind of other miscellaneous items within that?

Jeff, we're scrambling.

How about we get back to you offline?

Yes.

That's fine.

We can do that offline.

Yes.

The working capital is favorable on an overall basis, but if you want details offline, it's probably better, so that we get exactly the numbers you want and then --

Yes.

Absolutely.

Thanks, guys.

Thanks, Jeff.

And that concludes our Q&A period.

I'd like to turn the call back over to Mr.

Todd Bluedorn.

Thank you, operator.

Before we hang up, I'd like to wrap up by saying solid second quarter.

Earnings per share growth up 13% on an adjusted basis.

Cost reductions taking hold.

More importantly, more to go.

Secured a footprint in low-cost manufacturing.

And launched aggressive share repurchase plan, with plenty of room for strategic options.

Thanks, everyone, and I look forward to talking to you over the next few months.

Thank you very much.

Ladies and gentlemen, that does conclude our conference for today.