LSI Industries Inc (LYTS) 2005 Q3 法說會逐字稿

Welcome to your LSI Industries conference call. Today's moderator will be Mr. Bob Ready, the CEO and President of LSI Industries. Throughout the presentation, all participants will be muted. As a reminder, your conference call is being recorded. And now without further delay, I will turn your conference call over to Mr. Ready.

Thank you, Dawn. Good afternoon, everybody.

I would like to first start off by introducing the participants. Ron Stowell, our Chief Financial Officer; Scott Ready, the President of the Lighting Group; and David McCauley, President of the Graphics Group and our CIO, Steve Rucker (ph), who is in charge of our -- is our Chief Information Officer. And I am going to ask Steve to make a couple of comments on our first-time direction and our Webcasting presentation. Steve, if you would, please?

We are very excited today to bring you the investor conference call, not only by audio conference as we have in the past, but also by Webcast which you can find on our -- in our Internet Website which is www.LSI-industries.com. And the way to find it is to go to the Investor Relations section which is a button at the lower left of the main page and by using the Webcast you'll find supporting visuals that would be relevant to today's presentation.

If you don't happen to have convenient access to a computer right now, no worries. The conference today will be archived for a limited time and available for replay via that same resource on our main Website. So we invite you to have a look at that to see some of the visuals that go along with today's presentation.

Thank you, Steve. As a follow-up to last quarter, this is our attempt to do a much better job communicating with you folks in showing you what's going on with LSI and giving you a much better depth of the Company by having David and Scott talk to you a little bit more about the day-to-day programs. What's been going on.

To say the least, we are very pleased with the third quarter. It is an all time third quarter results on our revenue side and a lot of that has to do with some of our nice rollout programs that we've been involved with. I think, more importantly, it is some of the things that we are now beginning to see pay off with all the hard work that we've done in developing this 1 Plus 1 or Lighting Plus Graphics Equal Image.

The Graphics Group had an exceptionally strong quarter. And it really is kind of interesting that for all the years I've been doing this, the third quarter, the January, February, March months have been extremely tough. And it was kind of a surprise and -- somewhat that it was a strong as it was. But it just shows that as we diversify ourselves and we are getting more and more into indoor capabilities rather than just outdoor is that we can start to show a much more diverse quarterly result.

I'm not going to spend a lot of time talking about the quarter because it is what it is and the numbers tell the tale. But to say the least, we are extremely happy. I am going to turn it over to Ron and Ron is going to present the financial side; and then we will get into a much more detailed presentation from David and Scott. Ron?

Thank you, Bob, and good afternoon, everybody.

I will start off with our Safe Harbor statement. Our remarks today are related to our expectations with regard to a number of activities in which the Company is engaged. Reliance should not be placed upon such forward-looking statements because they involve risks and uncertainties which may cause our actual results to differ materially from those which we are going to talk about or we may imply. These risks and uncertainties are discussed in our Forms 10-K and 10-Q that we file with the SEC and in recent press releases.

An important element here is that, today, we will not have any material nonpublic information that will be discussed.

Go ahead, Steve.

As we wait for the next slide, I've got a number of slides coming up that will report the numbers in perhaps greater depth than what we had in the press release. This is here for you to understand today and, as Steve mentioned, for reference on our Website for some time.

First slide is net sales of the third quarter. Lighting segment was 40 million 235 and that was a 16% growth over the same period last year. Graphic segment -- 27,579 (ph). As Bob said just a very strong quarter. 63% growth. That brought us to 67.8 million and a 32% growth for the quarter.

The next one is simply a chart that I will just indicate that it has the first three quarters of each of fiscal 2003, '04 and '05 and just note not only an increasing year-over-year but a greater increase as the quarters have progressed.

The nine-month sales in the Lighting segment 131 million 913 -- a 17% growth. Graphics segments 78 -- 78 million 535. That's a 26% growth to bring us to 210.4 million. That's a 20% growth over the prior year.

The next slide would show up the petroleum and convenience store sales. It's our largest single market. We have a modest amount of growth in those in that market year-over-year. But certainly less than overall growth that we have achieved. It's up to 14.3 million. That's 21% of net sales in the third quarter, and 52.9 million or 25% in the nine-month period.

Operating income. We came in at 3.2 million for the third quarter. That's 4.7% of net sales. Obviously as you can see on the chart, the majority of that income has come from the Graphics segment with 2,700,000 or 9.8% of sales. In the Lighting segment, we had 514,000.

I think the last graph that I present looks very similar to the net sales graph. Increasing each year, quarter over quarter, and a larger amount of increase as the quarters progressed. The operating income for the nine-month period is 5,000,880 and the lighting segment 4.5% of net sales.

Graphic segment 10,000,338 -- that's 13% of net sales totaling then 16.2 million or 7.7% net sales.

The next slide presents our gross margins and I think a note here is the dramatic increase in dollars of gross margins that we have reported. We are up 30% in the third quarter to 15.4 million; and in the nine-month period, we are up 17 1/2% to 53.2 million. As a percentage of net sales it's essentially leveled off just a little bit, but the main thing here is the increase in absolute dollars of gross margin that we recorded.

In the third quarter, we had some charges that were taken. The first that I will talk about is some inventory adjustments -- which is normal for us -- and in this third quarter we took a little bit higher than normal charge totalling about it $800,000. And as you can see, the first two quarters combined were 688,000. So a little heavier than normal and the split was 470,000; the Lighting segment 330,000, in the Graphic segment.

The second item that we charged in the third quarter was a loss contingency reserve for an alleged patent infringement case; and we booked 590,000 on that.

Each of those, by the way, the charges were approximately $0.02 per share for each of those separate charges.

A favorable impact that came through in the third quarter related to our effective income tax rate which now for the nine-month period is 34.4%. We had estimated in the first two quarters, 37%. So as a result of conclusion of some audits and a more effective filing in our state and local area, we got to the 34.4. However produced a pretty low 24% rate in the third quarter.

Net income and earnings per share $2,000,422.12. This is in the press release but I just have to say, the income increased 163%. We don't often say that. I'm going to say it again. 163%. Year-to-date for the nine months $10,530,000.53 and that's a 40% increase over the prior year.

For those of you that are doing some modeling and tracking this, the number of shares that are used to calculate earnings per share on the diluted basis for the third quarter 20,109,000 for the nine month, that year-to-date period 20,043,000 and those are essentially unchanged from the same periods last year.

Another thing we really like to talk about is our strong balance sheet and our strong financial position. Some of these things, I think, were reported in the press release but just to make sure that everybody has the numbers that they really want and need, our cash at 331 was 1,000,599. That's higher than that's been in most quarters. Net receivables are $42 million. Net inventories of 44.4 million and, really, that's a reduction of $3.2 million so far this -- to date, in fiscal 2005.

Working capital. A strong and fairly consistent 64.5 million and then total assets, 168.1 million.

Just a couple of numbers on the liability and equity side of the balance sheet. Debt is the lowest that I've reported in many many years at $3 million; and on the flip side of that, our shareholders equity is 134,000,934. So very, very low debt to equity ratio. Very very strong balance sheet which is, as we've said in the past, is very important for our employees, our customers and you as shareholders and investors.

Capital expenditures. Coming in a little less than I might have anticipated in the past this year, but 676,000 for the third quarter and nine-month year-to-date 2,000,855. Both of those are down as you saw on the slide from the spending in the prior year. Depreciation and amortization is running ahead of and higher than our capital spending this year. It is 1,000,742 in the third quarter, 5,000, 262 for the nine-month period.

Finally, the last statistic that I will talk about would be our cash flow from operating activities. Again, a very nice thing to present here today. Third quarter, 10,000,742. It's up from 3 million last year and year-to-date would be 17 million, up from 10.3 million. So a very strong cash flow. With that I'll turn it back over to Bob.

Thanks Ron. Certainly from my perspective and, hopefully, yours there's some real good strong numbers that I feel are good indicators of how this Company has made the turn and things to come.

To give you a little better background on the whys and wherefores for third quarter, I'd like to turn this section -- the part of this meeting over to David and Scott. And I believe David McCauley, the President of our Graphic Solutions group is going to start off. David, it's all yours.

Thank you, Bob. Good afternoon, everyone.

I'm speaking, of course, from North Canton, Ohio, different from the other four individuals that are in Cincinnati today. This is the headquarters for our Graphics group.

I have to say I am as overjoyed as both are Ron and Bob are; and all the stars did line up this quarter and there's no reason that can't continue. I will touch base with you on the five reporting divisions for the Graphics group.

Images, which is the -- part of the Restaurant Menu board division in Erlanger (ph), Kentucky. They had a nice program that started basically in the third quarter. Roll out to a fast food chain visiting thousands of sites that they have and we are about midway through that program, adding some items to their menu board. And it's going just fine and we can expect it to go good next quarter, too.

Adapt division which has seven locations -- with one of them here in North Canton -- had some record numbers this quarter in both billings and profitability. And they are installing a lot and not -- they are installing all of the Restaurant Menu Board upgrades that we talked about. And they are doing a lot of convenience store upgrades. They had a nice quarter. Rhode Island, they are the outfit located near the drug chain that we are working with. That program, as you can see, has been going fine all year. We expect that program to continue strong in the fourth quarter and they are a darned good customer out there.

They also -- the Rhode Island group are very involved with the grocery market and they have received some nice orders. The grocery market seems to be putting up one heck of a fight (indiscernible) there as they are involved with the category killer coming after them in that grocery market.

David, you might want to mention a little bit -- since you were talking about Rhode Island -- some of our plans to expand their capabilities as we are now looking at -- in the final stages of review of a new facility. You might want to comment on that.

Yes and I was going to inject there that we are going to expand the capacity at that site. We are going to increase their size about four times. And that's good news for both North Canton and Texas facilities because we are manufacturing a good amount of product for the Rhode Island facility. When they can take over a lot of this manufacturing itself, it frees up the two largest facilities -- Texas and North Canton -- to have a lot better capacity and, therefore, (inaudible -- background noise) our sales.

You know, David, I think it is fair to say that this is a strong commitment that we are making to the future of our Graphics business and that the inroads that we have made -- with many of our customers and new customers we are developing -- is that the capacity of the Graphics group of LSI Industries is going to be improved dramatically which will give us much more opportunity with our locations to bring on additional volume.

You folks are on a roll. You've got a great image out there and there are a lot of folks looking at our abilities. And I think this speaks well of our strong feelings about the future of our Graphics business.

The Graphics market is very strong now. We need this capacity, also, to be able to take on the giants of the industry, not the competitors -- excuse me -- the giant retailers of the industry because these programs are massive. And you have to have the capacity to do that. We feel we are the largest in the industry in the Graphics, in the areas that we serve.

I mentioned the Texas facility. Their sales are very strong down there. They're our largest manufacturing facility, not much larger than North Canton but they currently are. One interesting point about the Texas operation. They have passed ISO and TSF certification. It's allowed us to leverage some of the equipments in some technology area, working with the automotive industry. And we expect that to bring strong orders in the second half of the calendar year here. That's new business. So we are excited about that.

North Canton, steady as ever. We like that we have the ability and the coordination now that we have the Graphic Solutions Plus group to work together, to shift the areas to the most economical production point. Also to serve on a national basis. It really cuts the cost.

We like the formula we have. We know it's right. It's just a matter of execution; and we have quarters like this hitting on all cylinders, these webcasts get very easy to do and we expect to be able to do them in the future. Maybe now, Scott, if you would update us on the Lighting end.

Thanks, David, I appreciate that. Good afternoon everybody.

We are about three-quarters into the coordination of our lighting business. As you recall we brought the graphics companies together a little longer than that ago. I think David is right. The formula that we have applied, the strategy that we have applied to leverage the strength that we can pull out of our organization when it's combined and coordinated is really proving its mettle.

Scott, you might go into that with a little detail. Or maybe, folks that weren't on our last quarter audio and you explain then -- take a minute and tell the folks what that really means. What did we do with the Graphics a year and a half ago and so forth. Just take a minute and explain that if you would.

Sure. Up to the point that prior to developing the concept of LSI Graphic Solutions Plus and LSI Lighting Solutions Plus, we essentially operated the companies on an individual market and management basis. That certainly allowed the individual management teams to guide their future but it did not offer the opportunity to really combine the power and the strength of each one of the operations into a more significant marketing direction. And, frankly, leverage entered in the cost control through the sales efforts with the markets that we were pursuing.

Little more than -- it's actually about 2 years ago now -- we started the direction with Graphic Solutions Plus. It was only about nine months or three quarters ago that we did that same action -- direction -- with LSI Lighting Solutions Plus. And by combining the operations in Kansas City, in Cincinnati, in Dallas, and in New York, we are beginning to leverage and really now serving to improve our ability to control our cost, improve service to the customer, and utilize the new systems that we have spent several years installing to coordinate the orders and organize our product development on in a much more effective manner.

Our multiple market strategy continues to serve us well. The third quarter results really illustrate the advantage that LSI Industries has in its ability to serve not only our niche markets, but also continue to penetrate national account business as well as the commercial industrial market. A good portion of our results and the increases we have seen in our net sales for the third quarter are a direct result -- of not only stand-alone national account programs on the Lighting side but also programs that coordinated the graphics installation in lighting components to serve some of our core markets. I will do like David and touch on each one of the operations briefly and kind of highlight what's been going on in those operations and its effect on not only the third quarter but the future.

Our work continues at our Lightron facility as we move through the plant to really reinvent that company. What began as a management change and cost reduction effort have now shifted in priority to improve inventory control and the use of our improved management reporting system and the expansion of our product offering. We've positioned the operation now to really support a much greater volume opportunity than we were able to support in previous quarters. Our focus now is on developing the marketing and the product directions to provide that kind of volume.

In Kansas City, our big opportunity now is the installation or the turn on of our systems. That will occur on Monday, the 2nd, coming up this next week. And with that, we will have our three major operations. New York, Kansas City and Cincinnati -- all on the same coordinated system. The opportunity to improve our communication internally and improve our efficiency and our ability to coordinate our service levels will be tremendously affected by that turn on.

You might comment about how you feel that affects our reps and what the advantages will be from our lack of those systems to where we will be effective in the next 60 days with Kansas City coming online. What do you think is going to happen in the field?

The strategy has always been to maintain the existing leverage, maintain the existing position that we have in our niche markets. In several of those markets, we have had the opportunity to have a major major role in those rep force, our contract sales force directions as they pursue the market. In the commercial industrial market it's a little bit different. As not one of the major players in that market to date -- due to our size -- we have not been able to offer the same level of single point of contact service that those competitors have traditionally offered. This is where we are going and this is where we will be able to offer, frankly, we believe a better level of service due to the size, our nimbleness, our quickness and the coordination, now, of all of our operations under a single system.

Jumping back to Dallas. Dallas will be online some time in the next several months. That will be the next operation that will finalize the entire Lighting Group package under the same system. Many of these efforts are directly related to our strategy to penetrate certain segments of the commercial industrial market. We might note that while we've had a 16% increase in sales, it is still a tough market out there and the pressures that we feel and operate on a daily basis -- especially in terms of cost, materials, energy and freight -- will continue to play a role.

However, having said that, we are very happy with the level of success that we've achieved this early in our strategy. And compared to some of our competitors releases we are very, very happy with our success.

David, you want to take a minute and jump now into some of the specific marketing initiatives?

Okay sure. What Scott and I thought we would do this afternoon is drill down and tell you more about our growth and opportunity strategy. So I'll start it out with the first of three points. Probably 5, 10 minutes at the most here.

What we want to do and what we did have done is capture and build a commanding chair in specialized niche markets. One of the target markets that we have relied on as a collective group here is the fast casual dining. There is a phenomenon going on in this industry that we are positioned perfectly for. If you take the fast food and the casual dining number of units in this country -- and it is somewhere close to 350,000 -- it wasn't too long ago that 200,000 was that number.

Is there a lot of growth in new build? No. Not necessarily. But what we have in our opinion is 350,000 tired old sites that have a phenomenon going on changes of menu. Of the ambience, the atmospherics of the whole look, and the whole feel. Getting away from the past unhealthy to the more casual healthy foods. Plays right into LSI's hands in terms of the graphics product we offer, the lighting products, the menu boards and of course our new technology -- active digital nerocasty (ph).

The second niche area that we've (indiscernible) been in for a long time but we are going to start seeing some movement we feel is the petroleum convenience store. The number that we throw out there is around 150 of these convenience store petroleum pumping sites, if you would.

150,000.

150,000 -- excuse me yes. 150,000 and, again, these stores as they may not be changing a whole lot outside are competing with this fast casual and they know if they were going to service fuel with food products, food offerings, drink offerings, coffee, the lattes, (indiscernible) the units have to look clean. They have to be bright, they have to be safe and, again, playing into LSI's hands. And they are in the stage where they do have to upgrade.

Bob, I'm going to move on here and put this second initiative up if you would take care that.

Before you move on, David, the petroleum industry, one of the things to note is that -- in conjunction with our overall strategy -- our interior lighting initiatives within the petroleum industry and, frankly, within some of the other niche markets have been truly well received. And they're serving to continue to strengthen and secure our position as the market leader in those niche markets. So as David said, our growth in opportunity strategies are number one focused on maintaining our position in those niche markets.

But clearly to grow in terms of our requirements beyond that, we need to concentrate on the broader commercial industrial market. In an effort to do that, we are continuing to focus on products, service levels, and program -- sales programs that will develop the segments of that commercial industrial marketplace that will serve us the best.

If we look at a product line that we developed last year about this time really started hitting the street last year about this time called the Lifestyles. It's a good example -- if you'd accelerate that, Steve. It's a good example how we're focusing on a portion of the commercial industrial market that is a high trendsetter. And as David said, identifying those areas where there will be movement, where there will be trends set, where there will be a lot of activity and focusing not only our sales programs and our products, but also our promotional directions. The slide you see in front of you now is a good example of a promotional effort that began in the January timeframe during the third quarter to promote our outdoor architectural products. We've added to it -- through the third quarter -- additional products, our low voltage line which is coming out of our Dallas operation, some additional wall mounted -- decorative wall mounted fixtures coming out of the Cincinnati operation to really complement what we've been able to break into in the architectural field.

The Lifestyles product, when combined and supported by these additional products, begins to then develop a very very strong recognition of LSI Industries in an important portion of that commercial industrial market.

David.

The last point -- and this point I almost feel like we should have it blinking on the screen -- is to capitalize on the core strategies of Lighting, Graphic, and Technologies. This is the key. This is what the Company has been laying the foundation for for years and it is sure is coming to fruition, quarter after quarter now. A good example of this will be the slide here that we are looking at.

Strong margins on these types of jobs where we have lighting and graphics. Technology. A collective effort. We are able to go in there, build a basket and be a one single source supply to the customer and it creates our largest profit areas.

One of the reasons that we are combining and leveraging these assets again, if you look here on the two pictures on the screen, on the left side is an advertisement that we run in the trade magazines selling and marketing our Lighting, Graphic, and Technology.

Right side is a mailer that the Graphics group put out in terms of the restaurant industry and the retailers. And what we do there, if we can excite them about graphic opportunities, then we -- Bob and we get the Lighting portion of the business connected together to give that complete total image solution. And we are getting a lot of feedback from this type of targeted and mass merchandise advertising.

Again, David, that's a strength -- if I can interject -- that's a strength that our typical lighting competitors simply don't have.

Right and then in terms of the graphics end of the business, there's no one offered lighting package. So we do have the image package that they don't.

The next slide, the last Graphic slide here that we get awfully excited about is, what happens when we try to take an area -- a commercial area -- with various business. We can't find a spot where we don't need -- don't have participation, whether it be the restaurant, the retailer, the parking that, outdoor lighting, the community lighting, the commercial building.

Scott, I know in many cases in this slide, and I don't know how well the customers can see it but there's many a case where the lighting goes beyond the building.

Lighting is playing, David -- as you know -- lighting is playing such an important part now in the decorative aspect. The atmospherics, if you will, of these facilities both indoor and outdoor as well as responding to new legislative initiatives that are driving tighter light control, as well as driving -- as an example, tighter specifications on emergency exits. Products that we introduced this quarter are addressed directly at that so that we can help our consumers help our customers comply with those regulations.

One thing we find in the graphics arena is, as we approach the customer on lighting, many times they do have the light levels they need but they don't have the energy levels they need. It's the cost of what their lighting that they had in those stores 20 years ago although it may work now, the cost does not work. Scott, you might want to address that one, too.

Absolutely. And as we continue to invest in our product development, there are tremendous opportunities in terms of energy savings. Either through the light sources that we are currently working with, with our light source suppliers -- from the HID side all the way through LED -- as well as through the performance of the products themselves. And we look forward to some exciting announcements in the future with new product development that will take advantage of our expertise in those areas.

Thank you. Now the final slide here, before we turn the microphone back over, says it all. There's opportunity everywhere. As Scott and I both said, we do have the formula, the customer understands it and it is showing up in our bottom line. We expect that to continue. With that said, Bob, I will turn this microphone back over to you unless you have something else, Scott.

No. Go ahead.

Thank you, both David and Scott. Hopefully today, folks, the opportunity that we are presenting to you by having the guys that live in the day to day field are giving you a little better feel for what this Company is doing for the future. For so many years, we have been tied to the petroleum industry. And in the years with the petroleum industry was very strong, we saw huge huge results. But the fact of the matter is, is that, today, your Company is a different company that it has been during its thirty-year -- almost thirty-year history.

For the last 2 to 3 years, we've been developing strategies that we feel will take us into long-term growth. Certainly, we've had disruptions in the economy and certainly our petroleum business is still a very very important dynamic part of our strategy. But we've taken a tremendous amount of -- put a tremendous amount of effort into changing the course of this Company while the main keel (ph), our petroleum niche market, is still a very important part of the stability of the company.

From my perspective as CEO of the business, I'm really excited about what we're doing. Certainly the fact of the matter, that the commercial industrial lighting part of our business is a tremendous challenge, understanding that there are four or five companies out there that probably own 70% or more of the overall lighting business. That doesn't scare me a bit. 1976, I started this Company with 4 people and not very much money.

I love a challenge and I think we've got a great challenge ahead of us, but what we've got now that we didn't have 30 years ago is, we've got one of the strongest balance sheets in the industry. We have got a formation of people that really understand the direction of this Company. We have a whole new product development program in place. We have a marketing strategy that really focuses on many more things than just lighting. It gives us a much more diverse opportunity to grow our business and become, and maintain a stability for our shareholders. We have got a great dividend policy and the balance sheet, where we are today, gives me more of an opportunity to look at acquisitions and certainly put the kind of money into the future that will continue on with the growth of the Company.

Are there pitfalls out there? You betcha. This economy is still bouncing around. And yet, we have really placed ourselves in a position that we can ride out whatever storm comes our way. Am I going to hit another quarter with 100 -- the kind of percentages? I hope so but I'm not sitting here as CEO and guaranteeing it. The most important thing to meet is the stability of what we've developed in the growth of the future of the Company.

Has Lightron been a disappointment? Absolutely. But you know, life is full of disappointments and certainly we have highlights. I look at Lightron now as taking a company that needed a tremendous amount of work and putting that company back to the level that it will start to develop a much stronger contribution to this Company as we start to build the volume opportunity. All of you that have followed this Company know that volume is a huge -- has a huge impact as far as our leverage on growth in this Company. This past quarter showed it. The results, I think, could have been better but we took the accruals that we felt were necessary in the future of this Company by looking at our inventories, coming the year end, and being sure that as we move into 2006 that this Company has got as much of its ability to grow -- and grow in a profitable level -- as it ever has been before.

My wish list has a couple of things. I will share those with you. I would love to see the oil industry start to show a much stronger direction toward re-imaging. I don't believe that that is going to come to the level that we enjoyed in the '90s; but I do believe that the oil companies are going to start looking in this direction because their image is becoming older, more tired, and they are having more competitive direction as David and Scott put out there during their presentation part.

The outdoor part of the business is not going to be with the indoor part. That is where we really can excel with our graphics and lighting and technology. So we have positioned ourselves to take advantage as some of these things improve. The different markets that we are now entering have tremendous opportunity for us. Patience is a virtue. We have been through two or three years of reseeding; and we have now found ourselves beginning to see some of the fruitful benefits of taking that direction. I think that things are going quite well. I will have -- I, certainly, in the mannerism of my control of my business is to keep these companies lean and mean and working toward the objective of the one world -- installation of the program of having our systems. It's the J.D. Edwards One World for those who remember that. For those who don't know, that's our commitment that we made. And what I see promising there is that we are coming down the slide and getting the major businesses all online, so that we can see more benefits in improving the margins.

The margins aren't going to necessarily come from higher pricing in the marketplace. Our margin improvement is going to come from becoming a more efficient manufacturer. And certainly from a marketing standpoint, bringing to the markets that we serve so well and new ones that we will approach. A unique product development, a unique product offering and then, through the strong balance sheet, we can develop an opportunity to building continued strength with acquisitions.

LSI is a great Company and I'm extremely pleased with the quarter and I'm looking forward to 2006 as we get through the fourth quarter and work toward the objective of continued growth through the opportunities that we are developing. The consolidation of our businesses were a must; and certainly it took a toll with it as we went through it.

Any change comes with a price. I think we paid that price. I think that those benefits now are going to be more obvious as long as the economy stays about where it is, we feel really strong about where we are going with this Company.

With that, I want to thank you for your time and look forward to talking to you next quarter and, as always, if anybody needs to have further communications, you can call either Ron or myself.

Dawn, we will conclude the third quarter program and I want to thank everybody for their time.