Lindsay Corp (LNN) 2003 Q4 法說會逐字稿

Welcome to the Lindsay Manufacturing Company fourth-quarter results conference call. At this time all participants are in a listen-only mode. Following today's presentation instructions will be given for the question-and-answer session. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded today, Monday, October 13, 2003. I would now like to turn the conference over to Ms. Diane Hettwer with FRB Weber Shandwick. Please go ahead, ma'am.

Thank you. Good morning. I would like to thank everyone for joining us today. Earlier in the day we sent a press release outlining the results for the fourth-quarter and fiscal year 2003 ended August 31, 2003. If anyone has not received the release, please call financial relations board at 312-266-7800 and my assistant Karen Drova (ph) can send you another copy. Joining us today from the management team of Lindsay Manufacturing we have Rick Parod, President and Chief Executive Officer; Bruce Karsk, Executive Vice President of Finance and Chief Financial Officer; and Tom Costanza, Corporate Controller.

Management will provide an overview of the quarter and the year and then we will open the call to your questions. Before we began we would like to remind all participants that this conference call may contain certain forward-looking statements that are subject to the Safe Harbor disclaimer in today's press release. In addition to and in coordination with this call the company has posted financial data which can be viewed on it's Web site at www.LindsayManufacturing.com under the financial section. At this point I would like to turn the call over to Rick.

Thank you. Good morning and thank you for joining us today. We are pleased to report that in fiscal 2003 revenues increased 12 percent to $163.4 million, a record level for the Company. Net earnings increased 20 percent to 12.9 million or $1.08 per diluted share in fiscal 2003 compared with $10.7 million or 90 cents per diluted share in fiscal 2002. For the fourth quarter of fiscal 2003, revenues were $33 million compared with $32.5 million in the same prior year quarter. Net earnings rose to $1.9 million or 16 cents per diluted share from $915,000 or 8 cents per diluted share in the prior year's fourth-quarter.

Last week the Company filed amended 10-Q's for each of the three previous quarters of fiscal 2003 reflecting changes in accounting for two items. During our quarter ended November 30, 2002 we had recorded other nonoperating income of $1.7 million in order to account for the previously unrecorded cumulative cash surrender value of certain life insurance policies that had accumulated since 1994. After reviewing this accounting treatment we further revised previously reported quarterly results for fiscal 2003. To record the cumulative cash surrender value as a correction of error in prior periods, reducing previously reported first-quarter and year-to-date nonoperating income by $1.7 million. This reduction in other nonoperating income did not impact the financial condition or operating cash flows of Lindsay during fiscal 2003.

In addition, during fiscal 2003 the Company had not previously recorded certain components as inventory and when they were delivered to the company based on a belief that these components had been received on a consignment basis. After completing a year end review of the 2003 supply agreement for these components, it was determined that the Company had realistically assumed the risk of ownership for these components throughout fiscal 2003 and therefore should record them as a purchase of inventory at the time of their receipt. Accordingly the company has restated the previously reported quarterly balance sheet for fiscal 2003 to record the inventory and related accounts payable. There is no impact on previously reported operating cash flows because the determining factor for time of payment to the supplier is based on when the company consumes the components in its normal operations. This adjustment to the balance sheets did not impact the operating income, net earnings, financial condition or operating cash flows of the company during the fiscal 2003.

In the domestic irrigation market revenues rose in the fourth-quarter over the same period last year by 5 percent. Revenues remained strong in sections of the Midwest that were adversely affected by drought conditions last year. During the quarter we also experienced the strengthening in sales in the Pacific northwest Pateo (ph) region demonstrating some optimism following a significant drop-off in equipment revenues through most of fiscal 2003. The decline through most of the year in the Pacific Northwest followed very strong revenue for the region in fiscal 2002 from new projects and replacements partially fueled by strong potato prices at that time. Although potato prices are below the same period last year by more than 15 percent, we expect to continue to realize strong revenue growth in the region on a multi year basis through market share gains and new development.

For total fiscal 2003 domestic irrigation revenues were up 13 percent. Throughout the year equipment sales remained strong through current drought stricken parts of the Midwest and West, and areas affected last year. Overall domestic net cash farm income projected to be up 22 percent from the previous year, and the EQIP program aided farmers in irrigation equipment purchases by enhancing profitability and liquidity.

Additionally, cotton prices have risen by more than 35 percent over historical lows of last year aiding equipment sales in the Southeast. Low interest rates and accelerated depreciation schedules have also supported and will continue to support domestic irrigation equipment purchases. In the international markets we experienced a decrease in revenues of 8 percent in the fourth-quarter from the same period a year ago due to lower export sales. During the fourth quarter of fiscal 2002 export sales to the Middle East were very strong in comparison to the weak revenues from the region in the fourth quarter of fiscal 2003. Cumulative revenues from the new international operations in Europe, South America and Africa were higher during the fourth-quarter than in the same quarter last year.

For total fiscal 2003, international revenues were up 17 percent from fiscal 2002, even with a significant decline in exports of Middle East attributable to the war in Iraq. The new international operations more than made up the export revenue decline. In total for fiscal 2003, international revenues were 24 percent of total revenues, up from 22 percent of revenues in the previous year. While we view the international market as offering significant growth opportunities for the future, we do not expect a rapid change in the composition of revenues in total between the domestic and international market.

Throughout fiscal 2003 we saw a continuation of progress on improving the efficiency of all of the international operations by enhancing manufacturing processes and leveraging infrastructure costs through higher volumes. During fiscal 2004 we expect to continue that progress and later in the year to achieve margins near levels earned in the domestic and export market.

Diversified manufacturing revenues were up 8 percent in the fourth-quarter, reflecting the continuation of progress from changes made at the beginning of the fiscal year. With new leadership and the strengthened resources quota activity and diversified manufacturing remained strong. For the total year of fiscal 2003 diversified manufacturing revenues were 8 percent below the previous year even with the favorable progress made during the past two quarters. Expanding our diversified manufacturing revenues profitably remains an important part of our strategic plan and business model. We believe we can continue to enhance our overall profitability through even more efficient manufacturing capacity utilization.

We are continuing our aggressive efforts to seek additional suitable diversified manufacturing business. In the fourth-quarter gross margins rose to 24.2 percent from 17.5 percent aided by a year end LIFO inventory resort gain of $660,000; excluding the LIFO gain in the quarter gross margin was 22.2 percent. Gross margin for total fiscal 2003 was 24.3 percent as compared to 22.6 percent in the previous year. Fiscal 2003 was the second consecutive year reflecting gross margin improvement. The improvements are attributable to strategic initiatives to improve manufacturing processes and efficiency and to initiatives to differentiate our product offering and add higher margin new products. The effect of market price increases passed through revenues during the year estimated to be approximately 3 percent domestically.

Total operating expenses were 300,000 higher in the fourth quarter when compared to the fourth quarter of fiscal 2002 resulting from continued investments in selling and marketing activities in the domestic and international markets. For the full fiscal 2003 year operating expenses were higher than in fiscal 2002 by 3.6 million, reflecting full year expenditures of the company-owned retail operations, irrigation specialists, in the new international businesses including the current year startup in South Africa.

The Company also has invested in enhanced financial controls at all locations and expects further investment in particular to support the Sarbanes-Oxley initiatives. We expect to see some leverage of total SG&A expenses during fiscal 2004. Lindsay's order backlog at August 31, 2003 improved to 21.9 million compared with 18.9 million at August 31, 2002. Our balance sheet remains in excellent shape. Cash and marketable securities at August 31, 2003 were $62.8 million compared with $51.1 million at August 31, 2002. Operating cash flow for the year was $16.3 million compared with $11.6 million for fiscal 2002.

Inventories as of August 31, 2003 increased $4.4 million over the previous year, approximately $2 million of that increase is attributable to the addition of components of inventory previously purchased under a consignment agreement. The remainder of the increase is mostly attributable to increases in inventory balances at our international operations and support of planned sales growth. Inventories are currently higher than we like to have and all Lindsay operations will work diligently during fiscal 2004 to reduce inventory levels and improve turns.

Total accounts receivable as of August 31, 2003 are approximately $800,000 less than last year at this time. Looking ahead to fiscal 2004, we expect continued growth in company wide revenues and earnings for the year. We anticipate further expansion in our U.S. operation and on the international front we expect to continue to grow sales through our new operations and to resume strong export sales. At the same time we see the possibility of today's and future price increases in steel and natural gas as presenting challenges in fiscal 2004 selling season. We anticipate steel prices rising during the year, however, at this time we believe the increases will have less than a 3 percent impact on the cost of a machine and will be able to pass through the anticipated increase.

We continue to view the international markets as our biggest opportunity to improve sales margins for the next fiscal year. And our teams around the world understand and support the challenge. While our international operations are relatively new, we remain very pleased with our progress in gaining market share and improving operational efficiency. We will continue to seek high margin export business in other regions such as the Middle East, Mexico and Australia. In addition our diversified manufacturing business continues to show signs of improvement and potential growth opportunities for diversified have emerged but are relatively slow to be realized.

Overall we are pleased with the results for fiscal 2003. The level we achieved in revenue growth, gross margins, operating margins and return on equity were all within the goal ranges we established for Lindsay. In addition, 2003 was the second consecutive year with double-digit revenue and earnings growth. In total for fiscal 2004, we again anticipate double-digit growth and earnings on revenue growth of approximately 8 to 10 percent excluding acquisitions. I now would like to open it up for any questions. +++ q-and-a.

(OPERATOR INSTRUCTIONS) James Gentile.

James Gentile of Sidoti & Company. I have a couple of questions. Regarding your backlog of the $21.9 million obviously much stronger year-over-year up 15 percent. I was wondering if you can give us a little bit more insight into what caused the 3,3 million in change million dollar increase. Is is the dealer stock inventory incentives as we're going into seasonally weak period or other programs that you may have online?

Really about the only insight I can give you on that it is really in irrigation equipment.

Okay. How much in revenue was diversified manufacturing in the quarter?

Diversified for the quarter was 3.5 million.

And any word on the EQIP funding environment? Has that been improving half over half?

You know, it's been pretty good. The total EQIP money allocated to this year was I believe about 700 million. I think last I saw over 600 of it had been allocated out. So it certainly was beneficial, and I think next year's EQIP money wraps up a bit, it seems to me it is around one billion for the next year. But what we've seen is the EQIP as had a favorable impact. It still is somewhat challenging in terms of timing as far as when farmers will get their money for EQIP and how it effects order flow a bit, but overall it's definitely positive.

So the money has not been allocated, has been allocated but it is not in the farmers hand yet?

Money for the 2003 year is mostly in the farmer's hands now. I believe most of it has been allocated out.

Okay. As a percentage of the total 700 million then that has been granted to farmers, how much do you think is appropriate for your product?

That is a hard one for me to define. It is primarily conservation, water-conservation oriented. I think a good share of it is, but I think it depends on the specifically on the benefits of the program or what the farmer puts on the table in terms of the proposed benefits. But generally I think most of it is suitable for our kinds of equipment.

Okay. Just two more questions -- sorry to bombard you but your CAPEX budget for fiscal 2004?

The CAPEX budget for '04 would be a little greater than what we've spent in '03, something in the 3.5 to 4.5 million range.

You came in a little light from this year's budget; just wondering did any investment opportunities not pan out or --.

No, no not really. Some of the opportunities that we are looking at simply have taken a little longer to get implemented than we had planned.

Excellent. One last question. Looking at the -- I was looking back at my notes on your second quarter call and there was a lot of concentration or language about your parts business, the aftermarket, the higher margin characteristics of that business. How much is the aftermarket replacement parts contributed to FY '03 or fourth-quarter numbers?

Well there is really a couple different factors in there. There is the replacement part, and there is the aftermarket -- let's say parts part of it -- and we really do not split parts out for competitive reasons out of our total number. When we look at the aftermarket we really look at it in terms of what percentage of new machines going out are going into replacement. So I think we probably put that at about 20 to 30 percent range or going into replacement pivot.

Okay, and you opened a couple of new parts depots in Idaho and Texas. Have those met your targets?

Yes, they have.

Fantastic. Thank you very much, gentlemen. Excellent quarter.

(inaudible)

John Broadscan (ph) Citicorp Capital.

A couple questions, maybe Bruce, you might be the more appropriate one to answer this one. It's been dry up in Nebraska and Midwest for a couple years; when everything is said and done do you think the EQIP program hurt business opportunities? Because projects -- people might have waited for financing rather than go out and purchased some irrigation equipment?

We think in some specific cases that may indeed have happened. On the other hand at the same time, what it has done it has brought customers into the marketplace who otherwise would not have been in the marketplace. So the net of it, we certainly feel its positive for the business. But there are some cases where an individual was prepared to put a center pivot in on his particular field and he may have postponed that for a year because his project was not approved for this year, he is hoping it will be approved for next year and that he would get the grant from the government to pay for part of the installation cost of the equipment.

Secondly, and maybe I missed it during the earlier talk, but do you anticipate any mid East business this year?

For '04?

For '04, I'm sorry.

Yes, we do.

And coming from where in the mid East, and was there any business last year?

Yes, there was.

There was minimal?

It was not as -- I do not think I would call it minimal, but I would say it certainly was down from the previous year due to the war issue. We had business in the fourth quarter as well from the --.

Can you say where it's coming from?

Well, we continue to get business in Saudi Arabia and Egypt and other markets as well but primarily those.

Okay. How much was the mid East business off? Can you tell us that?

We don't really split out the specific markets for competitive reasons.

And lastly, if I am correct, in fiscal '02 and fiscal '03 there were no share repurchases. And your cash continues to build quite nicely. Any reason not to get back into maybe the share repurchase program if the stock would drop in the low 20s or maybe upper teens? Are you resistant to sort of re-engage in the share repurchase program?

No. We are not resistant or opposed to that at all. In fact, we really have stated we believe in a balanced investment approach, and we still believe in a balanced investment approach, we think there are times when that makes a lot of sense for us.

Thank you.

Alexander Paris.

Barrington Research. I think most of my questions have been answered. If I can just talk about overall climate for the farmers -- I was just reading the recent Fed report for the seventh district, it looks like the credit conditions are pretty good with lots of money available, farm land prices are still rising. But then I guess looking at prices, at one point the marginal farmer you had said in some cases with (indiscernible)some commodities, it was just not profitable for them to plant. At the current prices, even the marginal farmer, can he plant at a profit? And I guess you have to define what marginal is.

In my view at $2 and above corn it is profitable even for the marginal farmers; it depends a lot on the makeup of the condition of his equipment etc., but certainly at $2 corn and $5 or so soybeans it works fine for the farmers.

Okay, and I have just seen a lot of headlines, it looks like last time I saw was a record corn crop and I think I saw a bad soybean crop. Just how are the prices running for your key products of your customers year-over-year now? Are they still as far ahead as they were a quarter ago or the same?

It has changed a bit -- for example, corn is probably going to be in the $2 range now. A year ago it was probably about $2.40. So it is certainly down and that is because of the strength of the crop. And I think there is but at $2 it's still in pretty good shape. Soybeans on the other hand were probably in the 5.30 range last year and over $6, $6.50, $6.70 range now. So they are in pretty good shape. Cotton is significantly up. It is probably in the $60 range compared to $40 a year ago. So in general most of the commodities, the key commodities for us are pretty good and even corn at $2 is not a bad situation. But I think when you look at net cash farm income being up at least 22 percent this year over last, you look at farm land values being fairly strong. Overall input costs seem to be in pretty good control. Obviously what to watch for the farmers natural gas, but in general I think their attitude would be pretty positive.

So there's nothing really around that would be a negative as far as farmer psychology for doing capital spending?

It is hard to say nothing negative because there is always some negative perspective and some would say $2 corn compared to 2.40 is obviously not as positive. But then you look at the other side and say with the economic stimulus package, with accelerated depreciation there are some other benefits for the farmers. I think there are some really positive things right now in the market for equipment purchases.

And in the farm bill with all the concern about the budget getting out of hand, has there been any attempts to just kind of slow down the allocation, the funds under the farm program that was passed a while back?

There was some talk of it about nine months ago or so and I have not really heard or seen that much in terms of discussion of slowing down payments on the farm bill at this point.

So generally you would say it's a pretty decent climate for capital spending sentiment as far as the farmers concern, is that right?

Yes.

All right. Thanks very much.

Jack Granahan.

Jack Granahan, Granahan Investment Management? Rick, on the operating expense outlook, I am wondering if you could maybe quantify a little bit versus the 3.5, 3.6 million increase the year just ended, what kind of gain you are looking at operating expenses that would be consistent to get your 8 to 10 percent sales gain.

Good morning, Jack. You know I don't know that I can break out a number much more specific. I think what I said earlier is that we would be leveraging SG&A expense, and that is as far as I would go at this point is to say that we will leverage the SG&A during this next year.

Okay, all right. That would be in the international as well even --.

That is correct. Worldwide.

Second question, you mentioned possible acquisitions on the diversified side in order to gain some more efficient capacity utilization. Here again, I am wondering whether you might be able to quantify what a minimum sales you might be looking at as ideal for that division.

Well, we -- I believe I didn't mention acquisitions specifically to diversify, but acquisitions certainly in general. But I did comment that we were attempting to continue to grow that diversified business, and we have found a good profitable growth opportunities out there with new business that we can bring in. These are not acquisitions, but they are new projects. In some cases it is more industrial related, more industrial kind of equipment than it is the agricultural equipment that we've been involved in in the past on the diversified side. We have got quite a few good projects pending, and some good opportunities there but they are not acquisitions.

All right, thanks.

Carson Yost.

Luther King Capital Management. First I have a question about payables I might not have heard this. On better sales why are payables increasing disproportionately, quarter over quarter?

We have a number of -- a couple of extended payment programs that we have been used to a little less degree this year than last year, and we have simply done a good job with our current customers on the current portion of their payables or days receivables are down which would be an indication of a little quicker collection. So the combination of those two items.

In terms of what did you state was quarter-over-quarter, your international sales had performed over last year's quarter?

Quarter-over-quarter we take a look at the -- and this is in the slide Jack by the way on our site, but the international including export this year is 9.5. Last year it was 10.3, so it is actually a reduction of 8 percent. We take a look at the full year, however, we are at 38.4 million for the full year versus 32.7 which would be an increase of 17 percent.

And what was the impact of foreign currency on the quarter and the annual results?

I don't have the number right at my fingertips on that. I would have to get back to you. It would -- there is part of it on the current portion of it which would be for the full year, it would be somewhere in the 400 to 500,000 range.

Okay. And last question, can you give us an update on how you are currently investing that cash because it's noted obviously in short-term and long-term.

Sure. We do still go out from time to time and selectively pick up some 1, 2, 3-year maturity municipal bonds. However, the amount that we are holding simply in overnight investment in cash is greater right now than over a longer period of time than it has been. So it's kind of a combination. The current yields that we are giving on the 3-year or so would be in the 2 to 2.5 percent range. That would be tax-free.

Thank you. That's all I had.

(OPERATOR INSTRUCTIONS) Dick Henderson. (ph)

Persian LLC. (ph) A couple questions. First on the LIFO, where would we put that in irrigation or diversified or mixed? Could you give a little guidance there?

It's mostly steel price related and on with other commodities, I'd put the majority of it in irrigation. I actually would do a pro rata, I guess.

Second question, you mentioned the progress you are making with diversified products. How did they do in terms of the operating income? Obviously in the third quarter which is about breakeven? Are they kind of making progress or the fourth quarter was kind of nearer the third, and the benefits to the bottom line come in in '04, or what?

I'd say they were probably about at breakeven level in the quarter, and there is certainly upside opportunity with many of the projects that are pending right now, but the benefit really comes in this next year. Again they are helping a couple different ways; one is there is margin on the business we bring in and diversify it and it's also improves our utilization of capacity. So it helps in a couple different ways. So it certainly was beneficial in terms of capacity utilization. It will be more beneficial this next year with more projects.

That sounds good. A look at your guys outlook for '04 an 8 to 10 percent sales gain, which is terrific. And you've got the leverage not only within the irrigation international etc., new Mideast but with diversified products. Bruce, for you -- I was a little surprised I thought that as the general and administrative expense would have been a little bit higher because the cost increasing on medical and all the rest of this stuff. In looking at '04, any guidance in terms of potential increases?

Not guidance that we can offer at this time other than as Rick said earlier, we definitely realized we need to get a little more leverage off of the SG&A. We have part of the SG&A in '03, part of the increase we had there in addition was getting prepared for some of the Sarbanes-Oxley requirements. We have a bit more of expenditures there in '04 to make, but we did pick up a pretty good piece of that in '03. So our challenge, of course, is to start getting some leverage off the SG&A pieces that we have in place.

Could you guys put a little color on how you did specifically internationally versus South America and Europe with the drought conditions in Germany, France and so forth? How did you guys do there?

I really won't comment too much on the specific markets, again for competitive reasons, but I will give a little bit of color to it and say that we made really good progress with our businesses in South America and Europe. And Europe, I think some of the benefit that we will see or that will come from the drought conditions there, and there will be equipment sales that will come from it, will probably be in '04. What we often see is the equipment purchases resulting from a drought occur immediately after the season closes because those who had really suffered through drought conditions realized that they may need irrigation for the next year. So I think for '04 I would be optimistic about the potential given the drought conditions this past year.

You guys sounded pretty optimistic, realistic in the sense that steel prices kind of moving up with the tariffs and the rest of the stuff, and natural gas prices high and kind of staying high. That you have the pricing flexibility to push it along and be able to not get hurt in '04, that is correct, right?

Yes, we think from the steel standpoint in terms of what we see as potential increases or see as a potential increase there we believe we will be able to pass through and that the market will allow that to happen. The little bit tougher one for the farmer could be the natural gas increases. Because that is more farmer-related and may affect his purchase decisions. On the other side of that the kind of projections that we've seen with say that it could be like last winter and could still leave the farmer in a reasonably favorable condition, so right now we don't see any of that really having a big impact on the next year.

Not trying to get too cute, but in terms of the forecast again a good positive forecast and the backlog up, is it fair to say that the mix within the backlog is pretty good?

The mix of backlog or --.

In other words, the implied margins in your backlog.

The implied margin would be pretty typical as our normal margins would be, and the mix -- the increase in the backlog is generally irrigation equipment.

Last one in terms of your comments on the broad farmer and commodity prices and so forth, I guess one of the things you guys have done is to get more into specialized farming where the gourmets of the world are willing to pay a substantially more than some of what people would pay for soybeans. Could you kind of give some flavor on where that business stands now and kind of your plans?

I think I understand the question. I guess there's a couple different parts of our focus, and it has been on the farms who will use the specialty products that we've produced, and also those that will use the sort of moisture sensing and the technology that we offer. And in those farms in general are ones that will continue to invest in technology to improve efficiency and to reduce overall input costs. And in general I think we will continue to see good growth there. We also keep and have increased our focus on the large farms and the corporate farms, the key account sales and key account management which has also been successful for us. So we really will sell to all kinds, all sizes, all types of farms, but we have seen some particular interest, particular growth, and I think a little different margin opportunity in some of the higher end or the farmers that are more focused on the technology and the opportunities for reducing costs.

Thank you.

Stephen Lewis. (ph)

Lewis Capital Management. Can you give us the outlook for capital expenditures and depreciation for next year?

The capital expenditures again we believe will be higher in fiscal year '04 than fiscal '02. We peg them at 3.5 million to 4.5 million range. The depreciation -- let's see we -- had depreciation the past year of --.

3.5 million?

3.5 million, yes, and it will be, most likely I think in the 3.5, 3.7 million something in that range.

And the cash-flow statement for the year just finished, that includes cash uses in the course of purchasing distributors, right?

Yes, but we did not purchase any distributors in fiscal year 2003.

Okay, then for 2002 do you expect to purchase any more distributors in this next fiscal year?

Purchasing distributors is really not part of our strategic plan in the sense that we really don't want to get into specifically the distribution business. However, from time to time things come up that make that beneficial to us, and we will do that if for example, we are -- it is the market opportunity that we need to get into or it helps with the transition of the dealership or something of that nature. So I would not say that it is part of our strategic plan to do it, but we will continue to do that from time to time.

What do you figure your yield was on your long-term marketable securities for the whole year?

It would have been close to the 3 percent range, 2.5 to 3 percent if you take the weighted average yield.

Are you budgeting it for similar this next year?

We would be budgeting it in the 2.5 percent range.

Thank you.

At this time, there are no additional questions. Please continue.

Our strategic initiatives of international expansion productline expansion, parts programs and depots and the addition of integrated system components are all generating growth for Lindsay Manufacturing. Our ongoing initiatives to differentiate our product offerings and improve product costs and control expenses will also continue to contribute to improved selling margins profitability.

The global long-term drivers of our business remains very strong. Through the ups and downs of the agricultural cycle, the drive to improve farm productivity and water efficiency will continue globally given world population growth and scarce water resources. In addition to the overall business enhancements that have taken place, we continue to have an ongoing structured acquisition search process that will generate additional growth opportunities throughout the world. Our mission remains to be the worldwide leader in providing intelligent water and plant nutrient management systems. We have strong cash flow and financial flexibility to create shareholder value by pursuing a balance of accretive acquisitions, organic growth opportunities, share repurchase and dividend payments. We would like to thank you for your questions and participation in this call.

Thank you, sir. Ladies and gentlemen, this concludes today's Lindsay Manufacturing Company fourth-quarter results conference. If you would like to listen to a replay of today's conference please dial 800-405-2236 or 303-590-3000 followed by access number 555414. (OPERATOR INSTRUCTIONS) We thank you for participating. You may now disconnect.