Mativ Holdings Inc (MATV) 2015 Q2 法說會逐字稿

Welcome to the SWM second-quarter 2015 earnings conference call.

Hosting the call today from SWM is Frederic Villoutreix, Chairman and Chief Executive Officer.

He is joined by Bob Cardin, Corporate Controller and Interim Chief Financial Officer; and Mark Chekanow, Director of Investor Relations.

Today's call is being recorded and will be available for replay later this afternoon.

The dial-in number is 855-859-2056, and PIN number is 87430558.

At this time, all participants have been placed in a listen-only mode, and the floor will be open for your questions following the presentation.

(Operator Instructions) It is now my pleasure to turn the floor over to Mr. Chekanow.

Sir, you may begin.

Thank you, Sonja.

Good morning.

I am Mark Chekanow, Director of Investor Relations at SWM.

Thank you for joining us to discuss SWM's second-quarter 2015 earnings results.

On today's call, Frederic will share some high-level comments about our second-quarter performance and outlook, strategic priorities, and details on our operations.

And Bob will take you through a review of our financial results.

We will then take your questions.

Before we begin, I would like to remind you that the comments included in today's conference call include forward-looking statements.

Actual results may differ materially from the results suggested by these comments for a number of reasons, which are discussed in more detail in our Securities and Exchange Commission filings, including our quarterly report on Form 10-Q and our annual report on Form 10-K.

Certain financial measures discussed during this call exclude currency impacts, depreciation and amortization, capital spending, capitalized software expenditures, restructuring expenses, results of discontinued operations, non-cash amortization expenses, start-up costs of a new JV, purchase accounting adjustments, interest expense and income tax provisions, and are therefore non-GAAP financial measures.

Reconciliations of these measures to the closest GAAP measures are included in the appendix of this presentation and the earnings release.

This presentation and the earnings release are available on the investor relations section of our website, www.swm.com.

I will now turn the call over to Frederic.

Thank you, Mark, and good morning everyone.

Late yesterday we released our second-quarter 2015 earnings, and this morning we'll produce present our financial results and business updates.

I would like to begin the call by quickly reviewing our financial performance and providing some color on the key factors that influenced our results during the quarter and trends we expect to see through the remainder of 2015.

Second-quarter adjusted diluted EPS from continuing operations was $0.97, which included $0.09 nonrecurring benefit from selling water rights at one of our facilities.

This item was factored into the annual guidance we issued in early February.

The unfavorable net translation impact of currency movements was $0.11 during the second quarter and $0.19 year-to-date, which was more significant than we had expected at the outset of the year.

In fact, we had assumed an approximate $0.20 net translation impact for the full-year.

Importantly, for the second consecutive quarter, our top line was essentially flat versus a year-ago period, excluding currency impacts.

Our diversification activities have offset the decline in our tobacco operations so far this year.

We are encouraged but not fully satisfied with these results, as our ultimate goal is to create a business more heavily weighted towards nontobacco activities and then generate overall sales and profit growth despite smoking declines.

As you may recall, in the first quarter of this year our adjusted EPS annualized to approximately $3, and we noted several expected improvements future quarters of 2015 to help us progress to our annual guidance of $3.50.

Annualizing our year-to-date performance, normalizing for the water rights equates to $3.33 in adjusted EPS.

Several of the positive catalysts we expected to materialize have already begun to benefit our results, such as the ramp-ups of our Chinese Recon JV and newly-acquired air filtration assets; cost savings of restructuring activities in our tobacco businesses; and manufacturing improvement projects at DelStar.

At this point, we are tracking to our guidance with solid execution in our tobacco operations.

That said, we do have certain headwinds, particularly the ramp-up delay in our DelStar Poland facility, and challenges within a subset of filtration customers, as well as a weaker-than-expected euro.

Our healthy financial position remains a key attribute to support our strategy.

Year-to-date we have generated approximately $46 million of free cash flow and remain comfortably underleveraged at less than 1 time net debt to EBITDA.

We are diligently pursuing acquisitions that meet our financial and strategy criteria.

I will now provide updates on several of our key strategic priorities and developments, beginning with our announced addition of a new senior executive.

We are pleased that Don Meltzer has joined SWM in a newly-created management position, EVP of Advanced Materials, overseeing the filtration segment and the advanced fibers and materials business, or AFM.

Don was previously the CEO of Tensar, an Atlanta-based producer of plastic nets, specializing in several niche industrial segments such as erosion control and infrastructure structure.

Prior to Tensar he had leadership roles at companies such as AlliedSignal, United Technologies, Ingersoll-Dresser, Johns Manville, and American Pad & Paper.

As we have previously discussed, we created an internal organization called AFM to manage our nontobacco growth efforts and leverage SWM's paper assets.

We also have our filtration segments, comprised of DelStar and the recently acquired bolt-ons, which is based on resin-based rolled goods.

In addition, we continue to explore acquisitions that leverage the advanced materials businesses and are expanding market segment experience.

Advanced materials is a newly formed management structure for these existing and potential future nontobacco businesses, and we feel Don's experience is an excellent match for our needs.

We view this addition as a more appropriate organizational decision than onboarding a traditional COO to manage across the SWM organization.

We are now changing our three segments for financial reporting but believe an internal management strategy of two business leaders -- one for tobacco and another for advanced materials -- is appropriate given the different operating conditions, strategy, and skills required in managing those distinct businesses.

We welcome Don to the SWM team and look forward to the growth of advanced materials and, therein, his leadership.

Our Chinese Recon JV CTS delivered a very strong second quarter, with an EPS contribution of $0.07.

When combined with the first quarter, CTS has delivered $0.08 in EPS this year [as of the expected] annual contribution.

We generated sizable sales during the second quarter but have more modest expectations for Q3 due to the expected quarterly variability in our Recon start-up.

Regarding the December 2014 filtration segment bolt-on acquisitions, during the second quarter of 2015, we saw consistent results from our medical operations and solid profitability at our air filtration start-up facility.

We expect the acquisitions to deliver an aggregated adjusted EPS contribution in line with the $0.08 to $0.10 estimate we provided earlier this year.

Beyond 2015, we are making good progress on new air filtration product innovations -- including, for example, the launch of a new consumer product for a well-recognized household brand.

Another exciting long-term opportunity is the development of a high-end filtration product used in semiconductor chip manufacturing.

And we'll leverage the cleanroom production capabilities at the medical site we acquired in the UK.

Lastly, these two acquisitions have created additional M&A avenues to explore as our end markets, customer relationships, and technology core capabilities were each expanded as a result of these additions.

I will now discuss our operations and quality performance in more detail.

Tobacco paper volumes in the second quarter, including our paper JV in China, increased nearly 1% compared to the second quarter of 2014.

We consider this performance positive in the face of smoking attrition.

Within tobacco papers, our LIP volumes declined less than 1% in the second quarter.

As discussed last quarter, we expect to be negatively impacted throughout 2015 by a share rebalance in one LIP customer, although our results demonstrate trends across our other LIP customers.

While difficult to calculate precisely, we believe that during the second quarter we saw a small benefit on the adoption of LIP regulation in South Korea, which has just begun affecting global LIP consumption.

We also saw higher volumes in non-LIP cigarette-based paper as a result of share gains.

Our nontobacco paper volume decline of more than 20% is attributable to the intentional reduction of our printing and writing paper volumes.

This product line has typically been lower-margin filler volume and was deemphasized in the quarter due to strength in more attractive areas of our business.

We note, however, that the decline in the Brazilian real has improved our production economics in our Brazilian mill.

As a result, we may opportunistically pursue certain volumes in printing and writing for other historically lower-margin products should currency levels remain favorable.

Shifting now to our Recon segment, the 5% decline in volumes during the second-quarter 2015 was in line with our expectations, while year-to-date volumes are up almost 1%.

Consistent with the first-quarter 2015, we saw the negative effect of lower volumes in our high-margin wrapper and binder products.

However, when including CTS, SWM [other of our Recon footprint] delivered a 26% volume increase in the second-quarter 2015.

While Recon segment volumes are still expected to be relatively stable in 2015, preliminary discussions with our customers regarding 2016 RTL volume commitments, point to an approximate 10% volume decline from our planned volumes for this year.

As a reminder, this is primarily a European business and related to our Chinese Recon JV CTS.

There remains a relatively large supply of low-price tobacco leaf, which is contributing to cigarette brand reformulations, as RTL is being substituted for low-price tobacco leaf.

This negative impact of reformulations could carry into 2017.

We are exploring several cost reductions and other volume opportunities to offset this expected [other].

Longer-term, we believe that there opportunities for RTL in reduced-harm tobacco products, such as heat-not-burn, and are currently working with multiple customers to develop a reconstituted tobacco product that meets the technological needs of this emerging technology.

Moving to our filtration segment, as detailed in our earnings release, organic sales growth of DelStar was only 1% during the second-quarter 2015.

There are a number of factors at play -- some internal execution issues, and some external macro factors.

While our acquisitions performed in line with expectations and our reverse-osmosis water filtration end market performed well, the overall results lags recent performance.

We consider the most significant hindrance phase by our filtration segment to be escalating effect on certain customers of commodity price volatility, specifically in the oil and mining sectors.

DelStar sells filtration products for applications in the oil industry as well as metals and mining.

DelStar's industrial filtration products are used in oil exploration, extraction, and refining, as well as the heavy equipments used in the metals and mining industry.

Caterpillar excavators, for example, use DelStar products to filter fuel and other hydraulic fluids.

With oil and gold prices moving sharply lower, sector activity decreased, and our sales to affected customers were down significantly year-over-year.

We estimate the overall impact of this pressure to be several percentage points on sales growth.

We are currently pursuing additional lung-filtration volumes to offset the declines in the industrial filtration.

However, these are likely to come at somewhat lower selling prices and margins.

An additional factor affecting filtration segment sales is a weaker euro.

DelStar's existing European sales are denominated in euros, so they can't be produced in the US.

Absent these two factors, the filtration segment's organic sales growth would have been more in line with recent performance.

Regarding DelStar's Poland ramp-up delay, it is fair to say we are lagging behind plan.

The key factor has been last year qualification processes and originally expected with our European customers.

With these processes drawing to an end, we believe the site will generate a small profit in the second half of the year.

To date, we have been running the site with partial staffing and trial-level of production without meaningful sales and without generating the expected cost savings on freight and duty from shifting US production to Poland.

Despite these challenges, which became apparent during the second quarter, our filtration segment remains our most promising long-term growth avenue.

It has been the hub of tremendous activity regarding in M&A integrations -- one a complex carve-out and the other a startup facility, a new site for the base business, investments in personnel, and facility upgrades.

Along this line, we believe that the addition of Don, our new EVP of Advanced Materials, will offer additional senior-level support and leadership as we navigate the execution of new support strategy projects.

All told, we still expect the segment to deliver a year of strong growth and profitability.

I will now turn the call over to Bob Cardin, our Corporate Controller and Interim CFO.

Thank you, Frederic.

I will now review our financial performance during the second quarter, beginning with sales, which were largely as expected in our tobacco businesses and filtration segment bolt-ons, but below the assumptions in our guidance in the DelStar-based business.

Second-quarter net sales decreased 10.7% versus the year-ago period.

On a constant currency basis second-quarter net sales were essentially flat, as the euro remained significantly weaker than it was during the prior-year period level.

Excluding the fourth-quarter 2014 acquisitions, net sales would have been down 14.7% or down 4% on a constant currency basis.

The acquisitions contributed $8.1 million of net sales during the second quarter, and currency movements had a $21.8 million negative impact on net sales.

Second-quarter paper segment net sales, which includes nontobacco paper but excludes sales from our Chinese paper JV, were down 14.1% versus the prior-year period.

Currency had the largest impact on segment net sales, accounting for more than 80% of the decrease, with constant currency segment net sales estimated to be down 2.4%.

Lower volumes and planned LIP pricing concessions were largely offset by favorable mix.

These operational trends were generally as expected, and we suspect they will remain fairly consistent throughout the remainder of the year.

In the Recon segment, net sales declined by nearly 27%.

The euro decline accounted for more than half of the sales decline, with the remainder resulting from the 5% volume decline and also a negative mix.

The filtration segment generated 26.5% net sales growth in the second quarter.

Currency impact was approximately $300,000.

Excluding the December 2014 acquisition, the base business delivered 1% top-line growth for the reasons Frederic just reviewed.

Adjusted operating profit was down $4.3 million in the second quarter versus the year-ago quarter.

Note that in the table shown on this slide, the four bars on the left represent changes due to gross profit items; nonmanufacturing represents changes in G&A; and net currency is shown on the far right.

While we had previously shown the DelStar acquisition as a separate item, the late 2014 acquisitions are not material to SWM's overall results and have been consolidated into the table.

A notable trend in recent quarters is the reemergence of the positive impact of other cost of sales, which is primarily the result of improved capacity utilization coupled with ongoing cost reduction activities.

Net currency continued to present a headwind.

While the euro remained sharply lower versus last year, we did get some favorable offset from the decline in the Brazilian real as our Brazilian mill incurs manufacturing costs in local currency.

Paper segment adjusted operating profit during the second quarter was down approximately $1.3 million versus the same period in 2014, with adjusted operating profit margin of 18.9%, up 160 basis points versus the prior-year quarter.

The relatively strong LIP volumes this quarter, the positive mix effect of reducing certain lower-margin volumes, and improved asset utilization were the key drivers of the higher margin.

For the Recon segment, adjusted operating profit in the second quarter of 2015 was down $3.7 million, so adjusted operating margin in the second quarter was 33%.

This represents an increase of 90 basis points versus the year-ago period.

Currency movements accounted for the majority of the profit decline, with lower volume and unfavorable mix accounting for the remainder.

The filtration segment reported adjusted operating profit of $6.1 million in the quarter, up $1.4 million versus last year's second quarter.

As discussed, the Poland startup remained a drag on profits.

However, the expected improvements in our acquired air filtration startup came to fruition and contributed positively to the second quarter.

Of note, our operational excellence leaders have identified many areas for improvement regarding product quality and consistency across the DelStar manufacturing footprint.

We think these findings represent a promising opportunity to drive a few hundred basis points of operating margin over the next several years.

Given the long-term potential upside, we expect to deploy capital and resources to realize these gains and drive toward a filtration segment with mid- to high teens adjusted operating margins.

Unallocated corporate expenses increased by $0.7 million in the second quarter.

As discussed last quarter, we expect this trend to be consistent throughout 2015 due to changes in certain expense allocations, investments to support our AFM business, and higher legal costs as a result of our patent infringement litigation in Europe.

Our second-quarter 2015 adjusted diluted earnings per share from continuing operations was $0.97 and included approximately $0.11 of negative currency translation impacts, partially offset by a $0.09 benefit from the sale of water rights at one of our facilities.

This benefit was factored into our EPS guidance.

As a reminder, purchase price accounting adjustments for acquired intangible assets within the filtration segment, startup expenses on the CTS joint venture, and restructuring costs are excluded from our adjusted EPS.

For the second quarter of 2015, our tax rate was 23% versus 20.8% in the year-ago period.

But for the full year, we continue to expect a tax rate in the low 20% range.

Regarding cash flow and liquidity, there were no major events or capital investments during the second quarter of 2015.

Our net debt to EBITDA remains relatively low and provides ample balance sheet capacity to pursue appropriate acquisitions.

We have paid down debt this year, continue return capital to our shareholders through our dividend, and expect cash flow to remain healthy.

Year-to-date free cash flow was nearly $46 million.

As a result of our year-to-date capital spending of $9 million and the projects we expect to complete in the second half of the year, we are revising our estimated 2015 capital expenditures to approximately $25 million, down from the previously provided range of $30 million to $35 million.

I will now turn the call back to Frederic for his closing comments.

All told, as we evaluate our progress midyear, we are tracking toward 2015 adjusted EPS guidance of $3.50.

Our tobacco businesses are delivering solid results despite the impact of the weak euro; and while there are certain hurdles in filtration, we still intend to deliver a solid year of top- and bottom-line segment growth.

Assessing our strategic transformation, with nearly 30% of total net sales year-to-date outside of the tobacco industry, thus the nominal contribution before with DelStar acquisition, our revenue balancing is well underway.

The long-term fundamentals of our filtration, medical, and industrial end markets remain intact.

And we consider the addition of the EVP of Advanced Materials a critical step in the strategic management of our nontobacco growth businesses.

As we move forward into the second half of the year, we remain focused on executing our 2015 plan and assessing targets that complement our advanced materials end-market presence, core technologies, and customer relationships.

That concludes our remarks.

Sonja, please open the line for questions.

(Operator Instructions) Ann Gurkin, Davenport.

I just wanted to start with your comments about RTL volume and the outlook for 2016.

Does that decline reflect any change in market share or change in customer contracts?

Clearly the main driver is, as you know, the [other supply] market conditions within the tobacco leaf segment.

So as a consequence, there is a large amount of good quality leaf inventories that have yet to be consumed, which is driving prices down.

And as we over the years have experienced is that there is a pressure on the use and production rate of Recon tobacco if customers have the opportunity to use some of the good quality, low-price tobacco leaf that they have on hand already.

So they are going to the marketplace.

And I think that is the main driver, what we see.

We had a stable year, maybe slightly up this year versus last year.

However, in the preliminary discussions we have with customers, our indications are that they have this inventory group that they need to work out, or that they intend to opportunistically continue some of the reformulation in order to take advantage of this available low-price natural leaf tobacco.

I just wonder -- it seems to me like the leaf industry is becoming to correct, Frederic, and the oversupply is moving to tight supply in several markets, particularly as you look out into 2016 and 2017.

So I am kind of curious as to why -- you know, your thoughts are that there's so much oversupply of lower-cost leaf.

I think that is changing.

I think what I've heard last night and what likely our universe is going to communicate today is that future plantings are projected to be down.

Right.

So the supply is expected to -- excess supply, all this supply, expected to shrink over the next two years.

However, I think stakeholders in this industry -- the cycle is correcting much slower than it used to be in the past.

And so right now, I think Recon tobacco is -- may have a slight lag with the natural-leaf tobacco sector.

And the fact we may have a stronger year this year than -- you know, taking into account attrition rates -- again, nothing is firm right now.

We felt compelled to share in the outlook based on these preliminary discussions.

But we are still actively engaged with customers as we look at -- as they look at firming up their plans for next year.

Okay.

Okay, thank you.

And then you talked a little bit about the water gain.

Is that in your $3.50 outlook as well for the year?

Yes.

Quarter outlook -- that was for the full year, too?

(multiple speakers)

Yes, that's what we see in the outlook.

Okay, and then you touched a little bit on acquisitions.

But are you actively pursuing acquisitions?

Are there a number of opportunities you're close to looking at?

Or can you give us any other color on that?

Yes, I mean, I think we -- consistent with what we have said the last two calls, that means we are actively looking at building up the platform around DelStar.

And as we mentioned this morning, with the two bolt-ons, and the fact that they are trying to get some traction themselves, we have expanded the technologies and the market segments of interest.

And I think as we said, since February, we have a bias this year for maybe larger-size deals than the ones we executed late last year.

So we are making progress.

But we maintain also our strategic focus on how we build the advanced materials platform, and the best way to deliver on top- and bottom-line financial growth targets.

Okay, great.

And then I'm sorry -- I missed the beginning of the call.

Did you comment on your search for a CFO?

No, we did not comment, but it's progressing.

Obviously we are not there yet.

But we are making good progress.

And as I said in April, finding the right candidate, the right fit, is most important.

Great, thank you for your time.

Dan Jacome.

I saw you paid down a nice chunk of debt this quarter.

Just wondering if you could give us some thoughts on the cadence for your opportunity to call away some extra debt as we progress through the year and into 2016.

Thank you.

Yes, Dan, I think that we are taking a very balanced approach here in terms of looking at potential acquisitions, trying to keep as much flexibility as we can in terms of ability and dry powder to be able to finance those acquisitions.

So at this point, yes, we have paid down here to date about $34 million in debt.

And I would expect that as we move through the year, we will continue to pay down debt as the opportunity arises, recognizing that there are potential acquisition opportunities out there that we also need to take into consideration.

Okay, great.

And then on the China Recon JV, that $0.07 was that net, or was that all to SWM?

That is our share.

Yes.

Okay.

So do you feel comfortable with, like, a run rate -- you know, $0.25 to $0.30 as we move forward?

No, I think what we indicated -- it's a lengthy pattern.

If you go back, last-year fourth quarter we got $0.03 from CTS.

First-quarter this year $0.01, one penny.

And now $0.07.

And we also -- I think I mentioned earlier in my prepared comments that after a very strong quarter in terms of revenue out of CTS this past quarter, we expect a softer third quarter.

So we are on track with the target for 2015, which was $0.16.

Midyear we are halfway there.

But you cannot take the $0.07 and extrapolate for the balance of the year.

It would be too aggressive.

Okay, I understand.

Thanks a lot.

Good luck with the quarter.

(Operator Instructions) Jessica Douieb.

I am Jessica Douieb calling on behalf of Alex Ovshey from Goldman Sachs.

My first question is that you had begun some restructuring initiatives in 2014 and had expected to realize them in 2015.

Did you realize them in 2015?

So can you give us an update on that, and whether you expect operating margins for RTL to get back to the high 30s and close to 20 for the paper segment?

Thank you for the question.

As we mentioned, we are in the midst of implementing a fairly substantial restructuring within the Recon business segments.

And as we have said in the last quarter, midyear to now is when we start to get the full benefit.

So when we look at the second half of the year, we expect to see additional benefit in terms of cost improvement from the restructuring program.

However, I think when you look at the performance of the RTL segment and the profit margin, second quarter versus first quarter, it went down some.

And part of that was due to first quarter being very strong in volume.

So volume -- sales volume is probably the primary driver for the profit margin of these cycles during the early substantial fixed-cost nature of these paper assets.

So the view right now is: we are going to get in the second half full benefits of the restructuring.

We tentatively intend to maintain profitability that we attain in the second quarter.

But it's really based on what volumes are going to flow through the segments in the second half that will affect whether we can see a recovery of our profitability.

And one thing to keep in mind is we have some headwind in terms of mix.

As we stated last year, due to a change in regulation in Europe, the small cigar wrapper and binder revenue, which is highly profitable, is affected downward in volume.

Because in Europe there is no tax incentive anymore versus conventional cigarettes to buy small cigars.

So we are working against the mix headwind.

And I think we are making good progress in terms of cost control and in terms of seeing an improvement in the overall profit margin of the segment.

It's a question of how do we leverage the restructuring benefits, which we are seeing flowing now at the bottom line, with revenue -- volumes.

And maybe just one point to add, as well, is the currency factor is pretty important to the RTL segment as well.

So given the headwinds in the euro -- all of these factors, as Frederic mentioned, will impact the margin.

Got you.

Thank you.

Another question that I had is -- so if you were to break up the 10% volume return in RTL that you expect in 2016, some of it would be from smoking attrition, some of it would be from substitution to cheaper tobacco.

And how much of it would be the personal blend reformulations that you have talked about the past quarters?

Can you do something to maintain that -- maintain the volumes in the RTL segment from that chunk?

Certainly -- again, right now the 10% projected decline is an early estimate.

We are looking both on the commercial side and on the industrial side of how to mitigate that outlook, if you want.

We have -- I think very strategically -- we have a very important opportunity to develop new Recon products for the lower-risk smoking products, like heat-non-burn.

And that will take some time.

But if you look at the big players in the tobacco industry, they are investing heavily in heat-non-burn.

And we are partnering with them, as the Recon technology has unique properties that are very valuable to that product segment.

And then, obviously, we are looking at opportunities elsewhere around the world to push our RTL sales and gain market share at the expense of other alternatives.

But as Ann Gurkin rightfully asked the question -- we have to take into account that the market today is oversupplied as it relates to natural-leaf tobacco, and that has always been an alternative for customers to use at the expense of RTL.

Now, over the year, these cycles get a correction.

And as we have demonstrated over the last 20 years, RTL is still a very important tool for the cigarette companies.

And as nat leaf tobacco prices rise, this will give us a more favorable environment to grow volume and share.

Got you.

Last one from me: so in the near-term for the dual-edge, you think similar organic growth in the filtration segment that you saw in this quarter, given the challenges that you mentioned?

Yes, in the filtration we are growing through the bolt-on acquisitions -- they have their own growth.

Our core filtration business, there is one segment that is continuing to do very well.

And that is the water filtration.

The second-largest segment within filtration, the industrial filtration, is the one that is going under some pressure right now due to oil and mining sectors being depressed.

However, we are -- give us time.

If you want, we are selling into other industrial applications.

And the ramp-up of our foreign facility is going to allow us to gain share in Europe.

So over time to continue to see organic growth.

And I project that for this, by the end of the year we will have organic growth, a positive organic growth.

However, it would be more modest than what we were used to due to the oil and mining.

But we are now baseline with that and working hard to stretch the limits.

Got you, got you.

Thank you.

Thanks.

That's all for me.

(Operator Instructions) I am showing no further questions.

I would now like to turn the call back to SWM International management for any further remarks.

Thank you, Sonja, and thank you all for attending the call.

We certainly appreciate your interest in SWM.

Mark and I will be in our offices today.

If you have any further questions, please give us a call.

Have a nice day.

Ladies and gentlemen, thank you for participating in today's conference.

This concludes today's program.

You may all disconnect.

Everyone have a great day.