Lindsay Corp (LNN) 2004 Q4 法說會逐字稿

Good morning, ladies and gentlemen, and welcome to the Lindsay Manufacturing Company's fourth-quarter 2004 conference call. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded today, Thursday, October 14, 2002. I would like to turn the conference over to Miss Diana Hettwer from Financial Relations Board. Please go ahead, ma'am.

Good morning. I'd like to thank everyone for joining us today.

Earlier in the day we sent a press release outlining the results for the fourth quarter, ended August 31, 2004. If anyone has not received the release, please call The Financial Relations Board at 312-266-7800 and ask for Han Wei (ph) who will send you another copy.

Joining us today from the management team of Lindsay Manufacturing we have Rick Parod, President and Chief Executive Officer; Dave Downing, Vice President and Chief Financial Officer; Bruce Karsk, Executive Vice President of Finance and Treasurer; and Tom Costanza, Corporate Controller. Management will provide an overview of the quarter, and then we will open the call up to your questions.

Before we begin 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 conjunction with this call, the Company has posted a slide presentation on its website, which can be viewed at www.lindsaymanufacturing.com.

At this point then I would like to turn the call over to Rick. Rick, you can go ahead.

Thank you. Good morning and thank you for joining us today.

First, I'd like to introduce and welcome Dave Downing who joined Lindsay as CFO at the end of August. Dave brings to Lindsay extensive financial management experience in multi-division businesses with global operations. We're pleased to have Dave join the Lindsay team. Welcome, Dave.

Thank you Rick.

Revenues for the fourth quarter rose 41 percent to 46.4 million from 33 million for the same prior year quarter. Net earnings were 345,000 or 3 cents per diluted share, compared with 1.9 million or 16 cents per diluted share in the prior year's fourth quarter. During the fourth quarter of fiscal 2004, the Company took a charge of 850,000 related to the insolvency and liquidation of the Kansas dealership as discussed in a release in early September. Net earnings were also reduced by 1.7 million pre-tax in year-end LIFO, physical inventory and other inventory related adjustments. Total fiscal 2004 revenues rose to 196.7 million, up 20 percent from 163.4 million a year ago. Net earnings for the year were 9.3 million or 78 cents per diluted share compared with 12.9 million or $1.08 per diluted share in fiscal 2003.

Throughout 2004, the Company was significantly and adversely affected by the rapid rise in steel costs. As a result of the steel cost increases, many process changes have been implemented throughout our organization. We've enhanced our pricing policy, strengthened our forecasting models, shortened manufacturing lead-times, and evaluated and modified many other processes and procedures. It has been challenging for dealers and growers to accept the rapid pace of the price increases this past year. Fortunately, we have now seen steel prices plateau. From another perspective, we've been fortunate to experience this unprecedented rise in steel costs during a period of strong irrigation equipment demand.

In the domestic irrigation market, revenues rose by 38 percent in the fourth quarter over the same quarter last year. Approximately one-third of the domestic revenue gain was due to increased volume, with the remainder of the increase attributable to price increases implemented throughout the year. For the full year of fiscal 2004, domestic irrigation revenues were up 18 percent over last year.

During 2004, severe drought conditions in the western states continued to drive strong demand for irrigation systems, as well as conversion from other forms of less efficient irrigation. Throughout the fourth quarter, corn, wheat and soybeans moved from year-over-year highs to year-over-year lows, driven by projection for exceptionally high yields and strong Indian (ph) inventories in the '04-'05 crop year. Overall the domestic irrigation market remained solid and our dealers are optimistic about the next selling season in spite of the continued softening in major agricultural commodity prices.

Our domestic order backlog is below the level at this time last year, which we believe is primarily attributable to the changes in our pricing policies. Last year during the fourth quarter, dealers placed orders for delivery in November and December of fiscal 2004, protecting orders from the traditional October 1 price increases. With changes made in our pricing policy, orders that are not shipped within 30 days of receipt are now subject to repricing based on current costs. While this new policy protects us from the potential adverse impact of cost changes such as we experienced with steel this past year, it is also likely to change our order flow from to fourth and first quarters, reducing the traditional backlog levels.

In the international market, including exports, we experienced an increase in revenue of 57 percent in the fourth quarter over the same period last year. Export shipments to Australia and New Zealand and Mexico were significantly above the same period last year, while exports to the Middle East were lower. Fourth quarter shipments from our operations in South America, South Africa and Europe were also significantly higher than the same period last year.

For the full year of fiscal 2004, total international revenues were up 33 percent from fiscal 2003 and represented 26 percent of total revenues. Exports were higher in all areas excluding Canada and the Middle East. The Canadian market remained sluggish through most of the year, affected by the past instances of BSE. However, we are now seeing signs of improvement. Full-year revenues from all of our international operations reflected double-digit revenue growth over the previous year.

Diversified manufacturing revenues were 4 million for the quarter and were up 16 percent from the same quarter of last year. We're continuing to find new, diversified manufacturing business and our order backlog was up significantly from this time last year. For the full year of fiscal 2004, diversified manufacturing revenues exceeded the prior year by 7 percent.

We believe that our efforts over the past few quarters to identify and solicit new potential business in conjunction with adding proprietary product lines in diversified manufacturing is now paying off. Diversified manufacturing revenues utilize and leverage the same physical resources as those used for irrigation equipment, so those revenues further improve our overall efficiency. Diversified manufacturing continues to contribute to operating income and we remain optimistic about new opportunities for growth and expansion.

Gross profit was 7.6 million compared to 8 million for the comparable quarter of last year even on the higher revenue base, due primarily to the 1.7 million year-end LIFO physical inventory and other inventory-related adjustments. Additionally, while we have made progress catching up our pricing to the increased steel costs, even excluding the year-end adjustments our margins were below last year's level. Steel costs per machine essentially doubled during the year, making it challenging to increase our prices at a comparable pace. To more rapidly pass through the effects of rising costs earlier this year we modified our pricing policy, reducing the price protection dealers achieved when placing orders. With this change, as well as others, we did see margins normalize towards the end of the quarter, as expected, while steel prices leveled.

The full-year gross margins were 20.1 percent versus 24.3 percent for the full prior year. All of our operations continue to implement margin improvement actions, and we've seen the benefits of scale and efficiency improvements in our new international operations, as expected. Unfortunately in 2004 those improvements were partially offset by higher material costs. While steel prices seem to have leveled off, we will continue to demonstrate pricing discipline and focus on product costs and process costs reductions, raising margins to the goal level of 23 to 27 percent.

Full operating expenses were 1.5 million higher in the fourth quarter, resulting from the 600,000 bad debt charge related to the insolvency of the Kansas dealership discussed in an earlier press release, and expenses associated with Sarbanes-Oxley compliance, insurance and Stettyn, our newly acquired business in South Africa. We have continued to focus on cost containment as we grow revenue. And even with the bad debt charge were able to leverage operating expenses in the quarter.

For the fiscal year of 2004, including the bad that charge, operating expenses were 14 percent of revenue compared with 14.3 percent of revenue in the prior year. Including the bad debt charge, operating expenses improved to 13.7 percent of revenue. And leveraging operating expenses where possible will continue to be an emphasis as we grow.

Lindsay's order backlog at August 31, 2004 was 16.5 million as compared to 21.9 million August 31, 2003. Reduction in the backlog is primarily attributable to changes in our pricing policy and the resulting order flow.

Our balance sheet remains in excellent shape. Cash and marketable securities at August 31, 2004 were 56.3 million compared with 62.8 million August 31, 2003. Accounts receivable were 11.4 million higher than at year-end 2003, driven by higher revenue levels. Inventories were lower by 200,000, due to higher shipments and initiatives to reduce US inventory levels.

We did not repurchase any Company stock during the fourth quarter or during fiscal 2004. We do have an outstanding existing repurchase authorization of 1.2 million shares.

In summary, 2004 represented extremely strong US demand for irrigation equipment, due in part to the continuing drought conditions in the western states, low interest rates, equip (ph) and favorable farm income. We're pleased with the unit growth that we were able to achieve in the domestic market in fiscal 2004.

In addition, we're very pleased with the progress of our international business units. Each of them achieved excellent growth and improved their market position. The markets for our international units and for exports remain strong. In addition, we continue to develop our market position in China and Eastern Europe.

While 2004 represented strong market demand, it also represented one of the most challenging years due to the unprecedented rise in fuel costs. We're particularly disappointed that following 2 years of improved gross margins our margins deteriorated early in the year. We believe that with the exception of a backlog established early in the year, we passed through price increases as rapidly as the market would accept them. In fact, there were times when we were concerned about the price elasticity of the market. We believe that the market has accepted the price increases reasonably well. And we've been able to hold our market share in the US, even though the price gap between us and some competitors grew from time to time.

In addition to the higher steel costs, operating expenses also ran higher-than-expected during the year with much of the increase resulting from expenses incurred in meeting the new SEC and Sarbanes-Oxley requirements. Even with those higher-than-planned expenses we were able to leverage operating expenses in 2004.

Margins are now normalizing and our dealers remain optimistic about 2005. Even though commodity prices have dropped off from last year's level due to expectations for exceptional harvest and yield and certain input costs are rising, demand for irrigation equipment remains strong. Drought conditions, which continue to affect the western states, and growers' need for efficient water-saving irrigation systems will continue to drive worldwide demand.

I would now like to open it up for questions.

(OPERATOR INSTRUCTIONS) Alexander Paris.

Barrington Research. Good morning. Just on the subject of steel prices, when was the last price increase that you -- pass through price increase that you did?

The last?

The most recent.

We had an increase again in October.

You did?

Yes we did.

So that's in reaction to the steel price increase over the third quarter?

Correct. Well, actually it's been reaction even to the most current anticipated steel price that we will pay for producing those units. So we're no longer really just reacting to what the increase was that took place; we're reacting to the increase that we see coming from the steel mills.

So despite the fact that they seem to be -- prices seem to be stabilizing so far in the new fiscal year, you're still planning on them being a little higher?

We've seen that steel prices now seem to have leveled off. And we don't really expect to see a continuation of what we were experiencing certainly throughout last year, and not even through the fourth quarter. What we are seeing at this point is a leveling off.

You have stated a number of times, and even today, that you so far have not seen a negative impact from the higher prices on the customers or worked dealers. But it seemed to imply in the press release that you were concerned about whether that was going to continue. Is that correct or not?

Yes, I think that's correct. I've been concerned about that throughout this year; whether or not we would hit that point. From a market acceptance standpoint we either get sticker shock for the grower or something else.

I would say that we haven't really seen that. We haven't seen a significant change there. What we have seen from time to time through this year, as we have at times lead with the pricing, is that competitive positions shift a little bit. And we've found that the gap with us and maybe one other competitor may grow from time to time.

But I think the growers in general have accepted the price increases pretty well. I would still be concerned, for example, if we found this price increases continue at the same pace, say, for another year. But that's not the case. We do see and believe it has leveled off.

This new pricing policy with your backlog, does that impact the dealer? In other words, if they take a dealer or they take -- the dealer takes an order and it has not shipped in 30 days, then you adjust that somehow by the current steel price? Is that what you do?

Correct. It is subject to repricing. I think in general it could depend on some situations. But yes, it is subject to repricing. And that means that our dealer knows that going in when he places that order. He either has a similar arrangement with his end customer or he knows that he may be absorbing that increase.

That's what I was just going to ask. So it's not the customer -- if the customer buys it at a certain price he keeps that price, and that adjustment would go against the dealer if he didn't plan for it.

Yes, if he didn't plan for it. But I would say in most cases that I've seen the dealers are putting that into their contracts with their customer or in discussions with their customer. So the customer understands that that pricing is not fixed; it's based on what's happening with steel at the time of shipment.

If you could somehow adjust that, the backlog would have been up if you looked at it, say, on a unit basis or exclusive of this pricing policy that you have now in effect?

I don't think I could project what it would have been. I do think that where in the past we through our programs had a number of orders, a significant backlog that could be built into the fourth quarter shift in the, let's say, November-December time frame of the next fiscal year, we would not see that now where we are -- because they would be concerned about the 30-day pricing window and having it in there and then subject to repricing. So we would not see them price their orders like that today.

What about on a unit basis? In terms of units, do you look at the backlog that way? Would it be the comparison look better?

No it would not. It would be the same thing. It really is the number of units that had been placed on order are less because of that 30-day window pricing policy.

Just a couple of housekeeping. The tax rate, is that going to change at all with the international sales doing so well?

The effective tax rate will move up slightly because of the relative tax rates for our international units compared with our domestic tax rate.

What are you accruing at for fiscal '05, just for our models?

I think we're at 32.5.

Just one other question. Do you have the actual dollar sales for international in the fourth quarter?

It's in the slide deck.

It is?

It is, but we can probably pull that.

I will find. That's okay. Thank you very much.

James Gentile, Sidoti & Co.

I want you to address the accounts receivable again in the quarter. This is your seasonally weak period. Looking over the past, my model goes back to 1996 and never did we see such a huge use of cash from accounts receivable. Also, if you take into account two-thirds of your 41 percent growth comprises price increases and not actually unit volume, could you just kind of isolate -- you addressed it slightly in your prepared remarks, but a higher revenue level maybe should account for perhaps 5 million, giving your historical receivable trends and the use of cash in the quarter. But approaching 12 million seems a bit high to me. Could you just address that?

Dave is going to address that for you.

The largest increase was in our international receivables, and it's related to revenue and the way the government financing programs work, especially in Brazil where we have longer DSOs internationally. And the remainder was domestic-driven by higher revenues in the quarter.

And then just looking at your -- how much was in Brazil in the quarter?

We don't really split out the receivables --

No, sales.

We don't split the revenues either for any of the units.

You didn't actually address the international revenue growth overall in your press release, unless I missed it, which you usually did in the past. Could you kind of give us an idea of how much that grew in the quarter?

Yes, in fact I covered it just a minute ago. But it's also in the slide deck.

I wasn't able to pull up the slides.

For international revenues were up 57 percent from last year for the quarter; had really double-digit growth in South America, Africa and Europe. Also we had the acquisition of Stettyn. And remember, Stettyn, in terms of framing that, our total projected annual revenues were in the 3 to 5 million level for Stettyn.

And then just one last question, looking at the liquidation of your insolvent distributor in Kansas. What happened there?

This is a dealer that we had a 25 percent ownership in. And we've had that ownership since 2001. We had seen an increasing receivable there. And the majority owner, who is the manager of the business, we had that person sort of relieved from his management responsibilities in the spring of '04. And simply as we got into the business, we could see that it was not going to cash flow, and we needed to take the bad debt expense on the business. We also had about 250,000 of limited recourse guarantees with a bank loan that that business has. And that's where the remaining 250 of expense went to. We have filed a lawsuit against the majority owner based on the personal guarantee that he had given us for the receivables, our receivables from him.

Certainly no correlation between your other dealers and your higher receivable levels in the quarter, right?

None at all, no. This was a situation in our view where it was simply a poor operating management at the dealership itself.

Thank you very much.

Paul Triano (ph).

It is Bill Church (ph) for Paul at (indiscernible). Just a couple of questions. One or two of them have been answered. But the G&A, is that where some of that expense write-off occurred?

Yes, 600,000 of that expense would be the bad debt expense in G&A, yes.

Okay. So G&A still would have been up more than that. I'm just wondering what number should we look at for G&A going forward for the next 12 months.

I think in terms of the numbers, there are a number of things that were in it, because it was also the Stettyn acquisition that came in to G&A, and there was also Sarbanes-Oxley and higher insurance costs that came in it. I think the way to look at it is we continue to have plans to leverage G&A expense. And I think the way to look at it in your models is from that perspective.

Okay. One other quick question. You just mentioned China. Could you expand on that all?

Yes. We started a project really about 1.5 years or so ago to really establish and strengthen our position in China. We've always for years that exports to China, but since then we've added some contract manufacturing in China. We're setting up a warehouse there. And we're strengthening our distribution network in China. So this is not a short-term, quick kind of return-type process probably. But we believe that we need to have that presence and establish our brand and our market position in China for the long-term. So we're going at it at a pretty prudent, gradual pace where we're getting established to be able to supply in China and have a dealer network in China. And right now we're making good progress there.

Is it registering on the needle? Is the registering on the overall revenue number?

I wouldn't call it registering on the needle yet.

When might we be able to look forward to that?

I think the bigger question than that one isn't so much what we achieved in terms of revenue short-term or long-term -- let's say short-term in revenue in China; it's how fast we can develop and how fast that market develops on its own. Right now that is not a significant market in China today. We project that it will be within the next couple of years. But that could be changing at any time. It's a real hard one to project. There's not a lot of units that are sold by any manufacturers in China today, but it will be potentially a very big market, meaning thousands of units.

Are you partnered with anyone yet?

We're partnered from a manufacturing standpoint, but only in that way.

Okay. Thank you.

Jennifer Leonard. Pardon me, Ms. Leonard? Mr. Gentile.

Just wondering if you can comment on the acquisition strategy and how that's coming along.

Not much has changed from the standpoint of the strategy is the same. We continue to look for accretive synergistic acquisitions. We have a pretty I think very solid acquisition process, including a couple of people dedicated to that process. And we have numerous candidates all the time on the list that we're working with as potential acquisitions. As we've talked about it, and I've talked about on this call and in the past, it's not a fast process. We're pretty selective. I think we're probably very selective compared to many companies. And our process is really quite comprehensive and stringent.

Stettyn I think was an excellent example of a synergistic acquisition that make sense and is built on a base we've got in South Africa. We continue to look for and find ones like that.

Cool. Thanks.

Dick Henderson.

Pershing. Good morning. Rick, a question. Why are your dealers so optimistic?

I think there's a couple of factors that keep their optimism up. And it isn't as much what's happening with commodity prices today, although that always has some impact because it has that impact in terms of how it affects farm income going forward. But drought conditions, weather conditions, low interest rates (technical difficulty) equip program that is still there and pretty solid, plus the continuing pressure on reducing water use and improving water use efficiency. So in areas, say the Texas Panhandle, where there's continually limited water available, farmers are really faced with having to find ways to get more with less, and our systems do that.

So our dealers are optimistic because the selling proposition is still a good one from the standpoint of a good return on investments for the farmers. And yes, from time to time other things like commodity prices and input costs will affect it as well. But what they see from an irrigation market standpoint is different than other kinds of agricultural equipment. There are different market drivers.

Since there's been such a rapid increase in the price of steel and steel is such a large component of the systems' cost, are you seeing your customers kind of sitting down and saying, "well, might as well go for the kind of improved models with incorporating (technical difficulty) and so forth?

I'm not sure that we're seeing that the steel (technical difficulty) in general is driving more of that. I think that the improvement (technical difficulty) that come from the higher technology part that will drive them to go in that direction. But I don't think the overall cost of the system does that.

I will say, though, in some of the international markets we participate in, we are seeing that farmers are going -- in spite of the high steel cost, farmers are going right for the higher technology right from the start. It's not a conversion, but the first machine they put in may be this high-technology system. And they are not afraid of spending the money to do it.

On the steel price increases, now these are price increases and not surcharges, right? I mean, the only thing that would evaporate would be this new sales agreements that you have where you take the price, depending upon the 30-day period, right?

Back earlier in a year we had combination of price increases and surcharge. And at different points in the year surcharges were converted to -- rolled into price. We did that again back, I think it was probably in September. And at this point I don't believe there is really a surcharge. There is not a surcharge on at all; it is all rolled into price.

What do you think would happen, Rick, if steel prices backed off?

I think that -- I know from our standpoint we believe that there is a need for irrigation equipment margins to have been strengthened anyway, which is, I think, what the rise in steel price could potentially leave us with. What I think will happen is, and what I'm hoping will happen, is that we will stick where we're at and that will not roll back. I think there will be some competitive pressure to do that. Our intention is to maintain as much pricing discipline and holding that as much as possible.

I sense that the resistance to the price increase is more acute in North America than internationally?

Yes, that's correct. Really we've had the price increases certainly on our export business as well. They have been more project-oriented and less sensitive to those increases that have taken place and a little easier to pass through and absorb. In the international market in our business units, typically they have not seen the same rate of steel cost increases that we experienced in the domestic market. They have seen some and they are able to pass those through, but they have not seen it -- they did not see it like we did in the domestic market.

Given the rapid increase in the price of oil, are you seeing those producing nations open up their wallets to your type of product? With their increased revenues they would be in a much better position.

We're not seeing really any change there at all. I think there's other factors affecting some of the oil-producing (multiple speakers)

But by the same token clearly their revenues have increased dramatically. Since you had so many price increases this year, if we were to stop the clock today what do you think the average price in fiscal '05 would be? How much would it be up versus 2004?

I can tell you where we're at relative to where we started at the beginning of 2004. I cannot tell you where we will be for 2005 (multiple speakers)

I realized that. I'm just saying if prices just remain.

What we have passed through is roughly about a 27 percent increase since the start of last year in price.

Right. And that was more kind of second quarter, third quarter, right?

It really continued also through the fourth quarter. But it was really second, third and fourth quarter.

One last question. On the diversified products, you're mentioning going out and looking for new business. Could you give some examples of what you have found?

I can say that I am pleased to see that for the last couple of quarters now our diversified business have been up. And we did finish the year above the previous year. The business that we're bringing in today is not the same kind of diversified business that we have had in the past in terms of more just agricultural equipment. But it's more diversified than that.

The other thing that we have found that's been really beneficial is we have also added some proprietary products in the diversified line. For example, we have added a track closer and a stalk chopper that goes through our distribution network. So it's produced by our diversified manufacturing group. So it's not irrigation equipment. We continue to look for and will and other products that will be proprietary products, because we think that's a good position for us to be in. Typically it will be higher margin. And we can build the lifecycle of that product, rather than producing or subcontract work for someone else. We think it's a good direction to go, and we're pretty encouraged with the opportunities we see to add additional products, but also more diversified contract manufacturing.

Thanks.

Alexander Paris.

Barrington Research. Just talking about commodity prices, early in the year the prices of your key commodities were up significantly over the year and year-over-year. And that's about the time that farmers were buying equipment and planting their new crops, which ended up in record crops for a number of commodities. And I guess the higher crops more than made up for the lower prices since then. But now when you're going into the new season, are those prices, have they gone from over a year ago to below a year ago?

At this point in time, yes, they are below the same time last year.

So then talking about the question about your enthusiasm among the dealers, as you go into the new season, are those prices going to be still high enough so that there's a good profit on the corn and so forth that farmers would still want to increase their planting and spend more for equipment? Or do you think you need some up-tick in prices before you get into your key season?

I think what that the dealers are seeing right now is that farmers are still feeling pretty good with where the prices are sitting today. But also with the harvest that they're bringing in and the income that they're going to bring in I think they're feeling that the farmers are in pretty good shape. I think from looking at it in the international markets as well, I think the current commodity prices are still attractive in South America and South Africa and other regions that we're participating in.

So I don't think we need a significant uptake or change. I do think that there is a point in terms of how far it can drop that has an impact. And I think there's probably -- the point going up is less important as the point coming down where it becomes very difficult for a farmer. But at this stage I think the dealers are pretty comfortable with where it sits in terms of commodity prices.

At current prices there's a reasonably good return to the farmers on a per bushel basis that it would not impede their planting and their equipment buying next year. Is that what you're saying?

Yes. And there's a point at which government subsidies also support the farmer and kick in. And the one that we're going to obviously be watching going into this first quarter is what potential impact energy costs or input cost have on the farmer as well.

Thanks again.

(OPERATOR INSTRUCTIONS) Dick Henderson.

Rick, on the tax front side, could you update us on the tax implications for the farmers and one of the tax benefits running out this year or has that been extended with this new tax legislation that was signed yesterday?

Based on what I've seen in the new tax legislation, the credit is still going to run out -- or not run out, but it has been extended now. That will be in terms of the -- you have the tax credit will be beneficial to the farmers and should be extended.

Thank you.

Thank you, gentlemen. There are no further questions at this time. Please continue.

For our business the global long-term drivers of water conservation and improving farm efficiency remain very positive. While we're disappointed with the short-term effect of cost increases for metals on our margins and our probability, our ongoing initiatives to differentiate our product offering, improve product cost and leveraged expenses will continue to enhance Lindsay Manufacturing's profitability.

In addition to the overall business enhancements that have taken place, we continue to have an ongoing structured acquisition process that will generate additional growth opportunities throughout the world. 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.

Thank you for your questions and participation in this call today.

Ladies and gentlemen, this concludes the Lindsay Manufacturing fourth-quarter 2004 conference call. If you would like to listen to a replay of today's conference call, please dial 1-800-405-2236 or 303-590-3000, followed by the pass code 11011016. Once again, if you would like to listen to a replay of today's conference call, please dial 1-800-405-2236 or 303-590-3000, followed by the pass code 11011016. Thank you and you may now disconnect.