Matthews International Corp (MATW) 2015 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the Matthews International fourth-quarter year-end financial results call.

(Operator Instructions)

As a reminder, this conference is being recorded. I'll now turn the call over to Chief Financial Officer, Steve Nicola. Please go ahead.

Thank you, Noah. Good morning. I'm Steve Nicola, Chief Financial Officer of Matthews. Also on the call this morning is Joe Bartolacci, our Company's President and CEO. Today's conference call has been scheduled for one hour, and will be available for replay later this morning. To access the replay, dial 1-320-365-3844 and enter the access code 373117. The replay will be available until 11:59 PM, December 1, 2015.

We have posted on our website, which is www.MATW.com the fourth quarter earnings release and financial information we will discuss this morning. On the top of our home page under the investor tab, click on investor news to access the earnings release for the quarterly financial data. Click on financial reports, to access the information under the section Matthews International quarterly reports. The documents are presented in a PDF file format.

Before beginning the discussion at the advice of legal counsel, I have been advised to read the following disclaimer as it pertains to forward-looking statements. Any forward-looking statements in connection with this discussion are being made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks and uncertainties that may cause the Company's actual results in future periods to be materially different from management's expectations. Although the Company believes the expectations reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove correct. Factors that could cause the Company's results to differ from those discussed today are set forth in the Company's annual report on Form 10-K and other periodic filings with the SEC.

In addition, please note that the balance sheet, income statement and cash flow information provided today are preliminary data, since our annual report on Form 10-K for the year ended September 30, 2015 is not due to be filed with the SEC until the end of this month.

To begin the conference, I'll review the financial results for the quarter. Joe will then provide general comments on our operations. Following that, we will open the discussion for questions.

For the quarter ended September 30, 2015, the Company reported earnings of $0.51 per share, compared to $0.15 per share a year ago. On a non-GAAP basis, the Company's adjusted earnings per share were $0.93 for the current quarter, compared to $0.82 a year ago. The net amount of these non-GAAP adjustments was $0.42 per share for the FY15 fourth quarter, and $0.67 for the same quarter a year ago.

As we anticipated, a significant portion of the 2015 non-GAAP adjustments included costs and other charges in connection with the integration of Schawk, Inc. or SGK. In addition, non-GAAP adjustments for the FY15 fourth quarter included costs including inventory step-up expense related to the acquisition of Aurora Caskets in August 2015. In our earnings release yesterday, we provided a reconciliation between GAAP and non-GAAP earnings per share.

In our year-to-date earnings for FY15, the additional non-GAAP adjustments included charges related to our ongoing cost reduction initiatives, the first quarter litigation settlement net of costs, the write-offs of certain trade names in the second fiscal quarter, a gain on the buyout of an installment payment obligation related a previous settlement of a SGK pension obligation, and the loss related to a theft of funds identified during the third fiscal quarter.

The consolidated sales for the FY15 fourth quarter were $368 million, compared to $350 million for the same quarter a year ago. The acquisitions of SGK and Aurora contributed to the Company's sales increase. Changes in foreign currency rates unfavorably impacted sales by $18 million, compared to a year ago.

Consolidated sales for the year ended September 30, 2015 were $1.4 billion, compared to $1.1 billion last year. Incremental sales related to the SGK acquisition approximated $340 million. In addition, the Company reported higher sales in the industrial and SGK Brand Solutions segments. Currency changes unfavorably impacted sales by $57 million on a year-to-date basis.

Consolidated operating profit on a GAAP basis for the quarter ended September 30, 2015 was $32.8 million, compared to $14.5 million a year ago. Recent acquisitions and the Company's cost reduction initiatives contributed to the quarter over quarter increase. In addition, acquisition-related costs were lower than a year ago.

Operating profit for the fiscal year ended September 30, 2015 was $105 million, compared to $81.5 million last year. Higher consolidated sales and the impact of recent acquisitions were the primary factors in the operating profit improvement, offset partially by the unfavorable effect of changes in currency exchange rates. In addition, intangible amortization was $18.8 million for the current year, compared to $7.3 million last year.

Consolidated adjusted EBITDA for the quarter ended September 30, 2015 was $62 million, compared to $55 million a year ago. For the year, consolidated adjusted EBITDA was $216 million, compared to $172 million last year, representing an increase of $44 million, or 26%. The quarter and fiscal year increases resulted primarily from higher adjusted operating profit and the impact of recent acquisitions.

Beginning this fiscal year, the Company realigned its operations in the three reporting segments, SGK Brand Solutions, memorialization and industrial. The SGK Brand Solutions segment is comprised of the graphics imaging business including SGK, and the merchandising solutions operations. The memorialization segment is comprised of the Company's cemetery products, funeral home products and cremation operations. The industrial segment is comprised of the Company's marketing and automation products and fulfillment systems.

Sales for the SGK Brand Solutions segment increased to $201 million for the current quarter, compared to $192 million for the same period a year ago, primarily resulting from incremental sales related to the acquisition of SGK, which closed in July last year. Changes in foreign currency exchange rates had an unfavorable impact of approximately $14 million on the segment's current quarter sales compared to a year ago. The segment sales for the fiscal year ended September 30, 2015 were $798 million, compared to $497 million last year. In addition to the impact of the SGK acquisition, European sales were higher for the year.

The SGK Brand Solutions segment reported operating profit of $16.3 million for the current quarter, compared to an operating loss of $6.7 million for the same quarter a year ago. Excluding charges related to the acquisition, integration and cost structure initiatives from both periods, the segment reported operating profit of $23.5 million, compared to $15.7 million last year. The year-over-year increase primarily relates to the SGK acquisition.

For the year, the segment's operating profit, excluding charges related to the acquisition, integration and cost structure initiatives, was $61.3 million compared to $33.9 million last year, primarily reflecting the acquisition and sales growth within the segment. Operating profit for this segment also reflected intangible amortization [expense of $10 million] for the current quarter, compared to approximately $3.3 million for the same quarter last year. Year-to-date, this intangible amortization was $15.9 million, compared to $4.3 million last year. The increases resulted from the incremental amortization in connection with the SGK acquisition.

The memorialization segment sales for the FY15 fourth quarter were $136 million, compared to $127 million for the same quarter a year ago. The increase for the current quarter primarily reflected the impact of the acquisition of Aurora. Changes in foreign currency rates had an unfavorable impact of $2.7 million on the segment sales. In addition, the fourth quarter last year included the benefit of a waste incineration project. Year-to-date sales for the memorialization segment were $508 million in FY15, which was relatively consistent with last year. The segment reported higher revenues from caskets and memorial products during the current year.

FY15 sales also reflected the impact of the acquisition of Aurora. In addition, sales of cremation equipment in North America increased in the current year. However, European equipment sales remained slow. Changes in foreign currency rates had an unfavorable impact of $9.7 million on the segment's year-to-date sales compared to last year. Additionally, FY14 sales included the benefit of a significant waste incineration project.

Operating profit for the memorialization segment for the FY15 fourth quarter was $12.7 million, compared to $15.9 million for the same quarter a year ago. The current quarter included costs including inventory step-up expense related to the Aurora acquisition. The fourth quarter of last year included the benefit of a waste incineration project.

Year-to-date operating profit for the memorialization segment at September 30, 2015 was $70 million, compared to $68 million last year. The increase primarily reflected higher sales of caskets and memorial products and the impact of the Aurora acquisition. The current year also included the benefit of a gain from a litigation settlement recorded in the Company's FY15 first quarter, offset partially by acquisition costs related for the purchase of Aurora.

The industrial segment reported sales of $31.7 million for the quarter ended September 30, 2015, compared to $30.8 million for the same quarter last year. The segment reported sales for the year of $120 million for FY15, compared to $101 million last year. The increases primarily resulted from higher sales of warehouse control systems, and the increased volume of marketing products and related [Incs].

Operating profits for the industrial segment was $3.7 million for the current quarter, compared to $5.3 million for the same period last year. The current quarter reflected a significant increase in new product development spending, and an unfavorable change in currency exchange rates. The segment's operating profit for the year ended September 30, 2015 was $13.1 million, compared to approximately $11 million a year ago. The operating profit improvement resulted primarily from the benefit of the segment's sales growth. Year to date, current year costs related to the segment's new product development project increased $3.3 million over last year.

A summary of sales and operating profit by segment including non-GAAP adjustments for the quarter and year-to-date periods are posted on our website for your reference. Our FY15 fourth quarter consolidated operating margin was 8.9% of sales, compared to 4.1% a year ago. On an adjusted basis, our operating margin was 12% for the current quarter, compared to 11.2% last year.

Our consolidated operating margin for the year ended September 30, 2015 was 7.4% of sales, which was relatively unchanged from a year ago. On an adjusted basis, our operating margin was 10% for the current period compared to 10.9% last year. The year-to-date operating margin decline primarily reflected the impact of the incremental intangible amortization expense from the SGK and Aurora acquisitions.

The Company's consolidated adjusted EBITDA was [16.7]% of sales for the FY15 fourth quarter and 15.1% of sales year-to-date. Gross margin for the quarter ended September 30, 2015 was 38.4% of sales, compared to 33.4% a year ago. Gross margin for the year ended September 30, 2015 was 37.1% of sales, compared to 35.5% a year ago. Gross margin a year ago was impacted by inventory step-up expense related to the SGK acquisition.

Selling and administrative expense for the current quarter was 29.5% of sales, compared to 29.2% for the same quarter last year. The increase primarily resulted from the impact of acquisition-related costs and incremental intangible amortization expense. Year-to-date selling and administrative expense for the current year was 29.8% of sales, compared to 28.1% last year.

Investment income for the FY15 fourth quarter was a loss of $856,000, compared to income of $383,000 a year ago -- $380,000 a year ago. Year-to-date investment income was $175,000 for FY15, compared to $2.1 million last year. The year-over-year declines primarily reflected lower investment performance on assets held in trust for certain of the Company's benefit plans.

Interest expense for the current quarter was $5.5 million, compared to $4.4 million for the same period last year. Interest expense for the year ended September 30, 2015 was $20.6 million, compared to $12.6 million a year ago. The increases resulted from additional borrowings in connection with the recent acquisitions.

Other income deductions net for the FY15 fourth quarter represented a deduction of $1.4 million, compared to $2.1 million a year ago. Other income deductions net for the year ended September 30, 2015 represented an addition to pretax income of $5.1 million, compared to a deduction of $4.9 million a year ago. The income for the current year resulted from a pretax gain on the buyout of an installment payment obligation in connection with the previous settlement of an SGK pension obligation. Other deductions also included the respective period portions of the theft loss.

Other income and deductions generally include among other items, banking-related fees and the impact of currency gains or losses on certain inter-company debt. Net income from noncontrolling interests for the current quarter resulted in a deduction from income of $28,000, compared to $360,000 a year ago. Year-to-date net income from noncontrolling interests for the current year resulted in additional income of $161,000, compared to a deduction of $647,000 last year. The year-over-year changes primarily reflect the minority interest portion of losses for our European cremation operation.

The Company's effective income tax rate for the year ended September 30, 2015 was 29.4% of pretax income. The effective rate was 34.5% for the fiscal year ended September 30, 2014. The effective rate for FY15 included the benefit of the utilization of certain tax attributes resulting from organizational restructuring during the FY15 first quarter, and favorable adjustments in the third quarter with the corporate income tax return filings, offset partially by the unfavorable treatment of certain acquisition-related and other costs. The effective rate last year also reflected the unfavorable tax treatment of certain acquisition-related costs.

At September 30, 2015, the Company's consolidated cash was $72 million, compared to $63 million at September 30, 2014. Accounts receivable at the end of the current fiscal year totaled $284 million, compared to $283 million at the end of FY14. Consolidated inventories at September 30, 2015 were $170 million, compared to $153 million at September 30, 2014. The increase primarily reflected the Aurora acquisition.

Long-term debt at the end of the current fiscal year including the current portion was $903 million, compared to $729 million at September 30, 2014. The increase resulted primarily from borrowings for the Aurora acquisition and the early [buyout] on the SGK pension obligation, partially offset by repayments on the Company's domestic revolving credit facility.

At September 30, 2015, $857 million of the outstanding debt balance represented borrowings under our domestic revolving credit facility, at an average interest rate of around 2.4%. The borrowing capacity of this facility is $900 million.

Additionally, as we previously disclosed, we received a claim from a customer, and funded a draw on a letter of credit earlier in the fiscal year, in an amount of approximately $13 million. The Company has assessed the customer's claim to be without merit, and as such pursuant to an action initiated by the Company, a court order has been issued requiring these funds to ultimately be deposited with the court until the matter is resolved.

The Company had approximately 32.9 million shares outstanding at September 30, 2015. During FY15, the Company repurchased approximately 305,000 shares under its share repurchase program, at a cost of approximately $15 million. At the end of the current quarter, approximately 661,000 shares remained under the current share repurchase authorization, which was recently increased by 2.5 million shares by the Board of Directors.

Depreciation and amortization expense for the quarter and fiscal year ended September 30, 2015 was $15.5 million and $62.6 million, respectively, compared to $14.8 million and $42.9 million, respectively, a year ago. The increases resulted primarily from the recent acquisitions and the related intangible amortization. Capital expenditures for the quarter and year ended September 30, 2015 were $13.6 million and $48.3 million, respectively, compared to $10.5 million and $29.2 million, respectively, a year ago. The increases primarily resulted from the SGK acquisition and integration, capital expenditures by our [gravure] operations in Europe, and purchases of casket delivery vehicles.

During the FY15 third quarter, we identified a theft of funds from the Company by an employee that occurred over a multi-year period through May 2015. The cumulative amount of the loss was determined to be approximately $14.8 million. The amount of loss in any prior period was not material to any prior period financial statements. However, because of the significance of the cumulative out-of-period adjustment for the FY15 third quarter, the prior period financial information was revised.

The matter was determined to constitute a material weakness in internal control as defined under Rule 12b-2 of the Securities Exchange Act of 1934 as amended. The Company took immediate action and implemented changes to the design of the controls. As a result, the material weakness has been remediated, and no longer existed at September 30, 2015.

Finally, the Board last week declared a dividend of $0.15 per share on the Company's common stock. This represents an increase of 15.4% in the Company's dividend rate, and reflects the Company's continued strong operating cash flow, and our confidence in the integration progress for our recent acquisitions. The dividend is payable December 7, 2015 to stockholders of record November 23, 2015. This concludes the financial review. Joe will now comment on our operations.

Good morning. Thank you, Steve. We are very pleased with the results for 2015. During the year, we had both great financial and key strategic accomplishments that we are proud of, and which should continue to benefit shareholders for years to come. These accomplishments cover all of our businesses, and individually have positioned us for continued growth.

Some of those accomplishments include, a successful year of integration of our SGK acquisition in which we achieved our synergy targets, the acquisition of Aurora Caskets which completes a 15-year migration to becoming the leader of the memorialization products industry, the success of our best-of-breed strategy in the warehouse automation division, the continued successful deployment of game-changing technology in our marketing products division, and a significant geographic expansion into developing countries in our SGK Brand Solutions segment. Some of these successes are reflected in the financial results that we have reported today, while others will benefit in the years to come. In the end, we are proud of our accomplishments, and the teams that helped us achieve them.

Despite significant headwinds, we met our financial target on a full-year basis while positioning ourselves for future growth. Some of these headwinds will continue into next year, but others should not. During the past year, we saw greater than expected foreign currency headwinds impact our year-over-year operating results by almost $5 million.

In addition, during the year, and because of success -- growing success in a significant research and development project that we have great hope for, we increased our capital expenditure for research and development by $4.7 million, which further reduced our actual operating results. The sum of these two items would have added $0.20 per share to our reported $3.03, which is a better reflection of the performance of our team.

The best way to describe this year is that our core businesses stepped up and performed well. We also continued to do a great job on the balance sheet. We focused on improving our receivables collection, managing inventory, and being proactive in reducing our pension liabilities.

These efforts, together with the success of our businesses, have allowed us to generate record cash flow from operations of almost $140 million, and a record EBITDA of $216 million. As you can tell by our announcement, we have used this cash flow wisely by further increasing our dividend by almost 16%, and by reducing our debt balance by almost $90 million on a comparative basis. It is important to note that we did all of this, despite the incremental costs of integrating our two acquisitions.

Regarding the individual businesses, this is a good story, too. The integration of SGK continued to go well, and we have our targets set for FY16. Similarly, the acquisition of Aurora is also on track with synergies and time lines being clarified as we speak. Aurora, which only added modestly to our 2015 results, should be a fantastic acquisition for us, adding upwards of $40 million of EBITDA when fully integrated, but with very little incremental capital expenditure needs.

As we have stated for the past several quarters, we continue to see strong demand in our industrials group, which is the result of multi-year multi-million dollar investments, which are now yielding great results. As discussed above, because of the success, we have and we will continue to intentionally increase our R&D spending in this business, as we work on yet another new product, which we believe it to be a winner. We intend to keep you informed of the amount of these expenditures throughout the year, but we will not adjust our earnings.

As we look forward to FY16 and beyond, we remain confident of our ability to achieve the financial targets that we have been communicating. We, however, remain somewhat cautious this year on the timing of some of those synergies, as we enter the most challenging, yet most rewarding phase of our integration of SGK. Starting in January, we will begin the roll out of a significant component of our ERP solution, which is the driver of a large portion of the remaining synergies. Similarly, with regard to Aurora, as we have communicated in the past, because of the potential for dissynergies during the early part of integration, we have remained cautious regarding the near-term impact of this acquisition.

Also, during 2016, we are also planning to make a permanent -- to make permanent, a portion of our bank revolver debt, which will increase our interest expense, but will add considerable stability to our capital structure. Finally, we expect to have another challenging year with respect to foreign currency translation, which will again temper our reported results. Given these challenges, we have set a cautious target for 2016 non-GAAP adjusted EPS of at least $3.25. Let us open up for questions right now.

Yes, at this time, we would like to open the call to questions. For those of you who will be asking questions, we request that you limit them to one question and a follow-up question, until all those who wish to participate have had an opportunity to do so. Noah?

(Operator Instructions)

Our first question is from Dan Moore with CJS Securities. Please go ahead.

Good morning. This is actually Robert Majek filling in for Dan.

Good morning, Robert.

What's your outlook for organic growth in Schawk's legacy business over the next four to six quarters? And given the market has generally been soft, do you see that turning at all? And lastly, what are your goals for increasing share beyond just market growth?

Well, from an organic growth in SGK, the challenges are the economies in which we operate. In the US, we see a very soft market. Part of that could be, because of impending regulation and implementation, and part of it could just be the economy. So we are cautious with respect to our growth, but we expect to begin to take some share. We've had some good successes on a couple of accounts, particularly in the UK where we landed some new business, and there's other opportunities we are looking at as we speak. So we think that over time our commitments to the growth in that division will be met.

Great. And can you update us on the trends in [memorializing] cremation, and perhaps talk about how attitudes are changing amongst funeral home directors and cemetery operators towards those products?

Well, the migration towards cremation continues to go. The fact of the matter is, although we're starting to see the growth in the total number of deaths in the United States beginning to turn. So as the total number of deaths continue to grow, we expect most, if not all of that growth to go to cremation.

The change is that, we're starting to finally see more effort on the part of our funeral homes and on our cemetarians, in terms of memorializing those deaths. So we don't think that's a quick change. But we have been communicating for a while, that we believe casketed, in-ground burial deaths will remain relatively flat in the near-term, as we -- as deaths grow and end up in cremation, the opportunity lies in memorializing those cremation deaths, and we think that will start to turn as well.

And next we go to Jamie Clement with Macquarie. Please go ahead.

Steve, Joe, good morning.

Hi, Jamie.

Good morning.

Joe, and I guess Steve, maybe both of you, I was a little confused in some of the prepared remarks about investments in the graphics business. Obviously, there's the ERP implementation, but I think you've also referred to some new product investing, that kind of thing. Are those part of the same project, or are those two separate things? Can you give me a little bit clarity there?

Sure. There's a couple of different investments going on. The first one is new product development in our automations group, where we said that we incurred somewhere near $4.7 million worth of [outputting] costs that we're not calling out. That is well beyond, what we would call normal R&D expense in that division. We think that new product development has some legs, and we'll continue to spend -- we'll continue to inform you, and our guidance going forward, anticipates a similar level of R&D expense in that division.

So, Joe, what exactly does that do for customers?

I mean, that -- we're not ready to talk about that just yet (multiple speakers)

Oh, okay (multiple speakers).

But we'll be in the process, and be happy to talk about it very, very clearly in about 18 months.

Got it.

But for right now -- but there are some other investments. So for example, on the SGK Brand Solutions side, we did launch two new facilities. We entered a partnership in Nigeria [to service] the tobacco industry, as well as opened a new facility outside of Moscow to service that, again, the tobacco industry in that part of the world. Those are areas of the world where tobacco is still very, very prominent, and [have given up] a relationship with some of the premier tobacco companies in the world, we think that's the right plan.

Now Joe, historically when you all talked about the graphics imaging business -- and this is before the SGK acquisition -- I think you all had over, over a long period of time had said a good long-term margin target for that business was about 15%. Now you're consolidating merchandising solutions with that business, plus you have Schawk, plus you have the SGK synergies, all that kind of stuff. Is 15% the right long-term margin? I mean long-term, I'm not talking about this year or even next year, but long-term target for that segment, or could it even be higher than that?

Well, Jamie, I'll take the first -- I'll answer the first piece of that. Part of the challenge near-term is going -- with operating margins, are going to be the intangible amortization expenses for the acquisition.

Sure.

But if you look at, if you look at that business on an EBITDA basis, pre-corporate charge adjusted EBITDA basis, we're actually currently operating in the mid-teens already.

Right. So I mean, just to -- not to put words in your mouth, but Steve, I think for the quarter, you were I think a shade below 12%. Plus you've got more synergies coming from SGK, and a North American market that isn't really growing. So I mean is -- I mean, versus where you all are running right now, even giving effect to intangible amortization, I mean, is there another 200, 300, 400 basis points theoretically in three to five years?

We think that's where it is, Jamie.

Okay.

In fact, it's probably $0.02 -- just 2% in the amortization, and another $0.01 or $0.02 out of corporate allocation as we go forward.

Okay. (multiple speakers)

[So we think ] mid to high teens.

Okay. And then, the last question, you touched on this briefly, Joe, pending federal regulations in packaging, can you give us update of where you see that process, and what your conversations with your customers look like? It sounds like that may be coming a little bit later, than maybe some of us would have thought 9 to 12 months ago?

Yes, I mean, as you know, we do not control the timing.

Sure.

Right now, we're, we're -- the conversations we're beginning to have with our clients around the United States are, that we expect to start to see some things toward the end of calendar 2016.

Okay.

And we're currently expecting completion to be sometime in 2018.

Okay.

About a two-year period.

Okay. And then, the last question is, I think Aurora had I think, a bigger brand nationwide than Milso did some years ago. How are you all planning on specifically working your merchandising display units at the funeral home level, with Aurora now part of the Matthews mix? Are those two brands going to be separate? Are you going to combine? How is that going to work?

Well, you're very astute there, Jamie, because what we've done -- we have -- for purposes of the market, we have kind of merged the two brands together, and we call ourselves Matthews Aurora funeral products -- it has -- Aurora had a fantastic brand name recognition. And over the course of the next 24 to 36 months, we'll be cautious in terms of our integration, making sure that we satisfy and retain our customers around the United States, and allowing them to get what they are looking for. So the migration to a single product line will be slow, and with the -- with the participation and acceptance of our customers while we do that.

Okay. Very good. Thank you all for your time, as always.

(Operator Instructions)

Our next question is from David Stratton with Great Lakes Review. Please go ahead.

Good morning.

Good morning.

Good morning, David.

(Multiple speakers) -- quantify the interest expense that you expect with the permanent portion of your revolving credit line?

Well, just to elaborate that on a little bit, what we've talked about in general, is taking our debt structure and moving it toward -- moving it in thirds, to where we keep a third in floating interest rates. We keep a third with fixed interest rates through ladder derivatives, like you see on our balance sheet and in our footnotes today, and then to move a third of our debt into a more permanent vehicle. And right now, we see those interest rates -- and at maybe a little higher this week as the market moves. But those interest rates in general for us, somewhere in the 5.5% to 6% range. So if you compare that to our current floating rate of 2.4%, for approximately a third of our debt, you can understand the potential impact.

Got you. Thank you. And then also, just out of curiosity, last time I believe you mentioned that you were seeking ways to recover some of the money stolen. And has there been any progress on that, either through insurance or recovering from the individual?

We, we expect to recover all of that money, or pretty much all of it over the course of the next 12 to 24 months, between insurance and from the individual themselves.

All right. Thank you.

Sure.

And there are no further questions.

All right. Thank you. Well, we want to thank everyone for participating in our call this morning, and we look forward to our first quarter FY16 earnings release and conference call in January. Have a great day.

Ladies and gentlemen, this conference will be available for replay after 11:00 AM today through midnight on Tuesday, December 1. You may access the AT&T executive replay system at any time, by dialing area code 320-365-3844, and entering the access code 373117. Those numbers again are 320-365-3844, access code 373117.

That does conclude our conference for today. Thank you for your participation and for using AT&T teleconference. You may now disconnect.