McGrath RentCorp (MGRC) 2005 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the McGrath RentCorp Q1 2005 earnings conference call. At this time, all participants are in listen-only mode. Following today's presentation instructions will be given for the question and answer session. (Operator instructions). As a reminder, this conference is being recorded today, Thursday, May 5, 2005. I would now like to turn the conference over to Jeffrey Busher (ph) of SPG Investor Relations. Please go ahead sir.

Thank you, operator. Good afternoon, I am the Investor Relations Advisor to McGrath RentCorp will be acting as moderator of the conference call today. On the call from McGrath RentCorp are Dennis Kakures, President and CEO, and Tom Sauer, Vice President and CFO. Please note that this call is being recorded and will be available for replay for up to 48 hours by dialing 1-800-405-2236 for Domestic callers and 1-303-590-3000 for international callers. The pass code for the call replay is 11028069. This call is also being broadcast live over the Internet and will be available for replay. We encourage you to visit the investor relations section of the Company's website at mgrc.com. Our press release was sent out today at approximately 4:05 Eastern Time or 1:05 Pacific Time. If you did not receive a copy but would like one, it is available online in the investor relations section of the website or you may call 1-206-652-9704 and one will be sent to you.

Before getting started, let me remind everyone that the matters that we will be discussing today that are not truly historical are forward-looking statements within the meaning of Section 21E of the Securities and Exchange Act of 1934, including statements regarding McGrath RentCorp's expectations, beliefs, intentions, or strategies regarding the future. All forward-looking statements are based upon information currently available to McGrath RentCorp. The McGrath RentCorp assumes no obligation to update such forward-looking statements. Forward-looking statements involve risks and uncertainties, which could cause actual results to differ materially from those projected. These and other risks related to McGrath RentCorp's business are set forth in the documents filed by McGrath RentCorp with the Securities and Exchange Commission, including the Company's most recent Form 10-K and Form 10-Q. I would now like to turn the call over to Tom Sauer.

Thank you, Jeff. In addition to the press release issued today, the company also filed with the SEC the earnings release on Form 8-K and its current quarterly report on Form 10-Q. All share and per share information discussed today reflect the previously announced two-for-one stock split, which took effect on March 25, 2005.

For the quarter, total revenues increased from 22.9 million in Q1 '04, to 52.9 million in Q1 '05, and net income increased from 5.7 million or $0.23 per diluted share in Q1 '04, to 7.2 million, or $0.29 per diluted share in Q1 '05. Most of the company's improved quarter-over-quarter revenues and net income were driven by the continued demand for modular classrooms, and the impact of the 2004 acquisition of TRS.

Additionally, during Q1 '05, the effective income tax rate was reduced to 38%, from 39.9% in Q1 '04, which reflects our current estimate at the higher proportion of business that we believe will occur outside of California in 2005 relative to 2004. For Mobile Modular, total revenues increased 3.6 million, or 16%, to 26.7 million in Q1 '05 primarily from higher rents, and rental related service revenues associated, with the educational market.

Pretax income increased 10%, from 8.4 million in Q1 '04, to 9.3 million in Q1 '05, and represented 79% of the Company's pretax income for the quarter. Gross profit on rents increased 15%, in Q1 '05 to 12.4 million, as compared to Q1 '04, with gross margins improving slightly to 65%. The increase in gross profit was primarily related to having more equipment on rent, over $30 million of additional equipment deployed over the last 12 months primarily serving our educational markets and resulted in rental revenues increasing 13% to 19 million, as compared to Q1 '04. Monthly yield, calculated by dividing the average cost of equipment by rental revenues, was consistent for both quarters at approximately 2% per month and has been fairly consistent over the last several years. Cost of rents in the quarter increased 3% over Q1 '04, with depreciation representing 11% of rents, and other direct costs representing 24% of rents.

Average modular utilization improved from 84.3% in Q1 '04 to 85.7% in Q1 '05, with quarter end utilization of 85.3%. Gross profit on rental related services decreased 9% to 1.6 million in Q1 '05, as a result of gross margin declining from 42% in Q1 '04, to 33% in Q1 '05, and was partially offset in the quarter by higher revenues. The gross margin percentage decline was primarily due to lower margins on service revenues, on leases still within their original lease term recognized during Q1 '05 as compared to Q1 '04. Gross profit on sales increased 0.4 million over Q1 '04 to 1 million in Q1 '05, on sales volume of 2.6 million, with a gross margin of 37%.

Sales revenues and gross profit are less predictable in the modular business, and will tend to fluctuate each reporting period depending on customer requirements, equipment availability, and funding.

Now for TRS-RenTelco, quarter-over-quarter revenue and pretax income increases were driven by the effect of the TRS acquisition in June 2004. Total revenues increased 18.5 million to 23.9 million in Q1 '05, from 5.5 million in Q1 '04. Pretax income increased from 1.1 million in Q1 '04, to 1.9 million in Q1 '05, and represented 17% of the Company's pretax income for the quarter.

Gross profit on rents increased 3.4 million to 4.8 million in Q1 '05, from 1.4 million in Q1 '04 due to higher rent, which increased from 3.2 million in Q1 '04 to 16.9 million in Q1 '05 on much higher equipment levels resulting from the TRS acquisition. However, gross margin on rents declined to 28% in Q1 '05, as compared to 43% in Q1 '04, primarily due to depreciation expense representing a higher percentage of rental revenues in Q1 '05 at 56% compared to 39% in Q1 '04.

Average electronics utilization for Q1 '05 and at quarter end was 61.6%. Gross profit on sales increased 0.7 million over Q1 '04, to 1.5 million in Q1 '05 on sales volume of 6.1 million with a gross margin of 25%.

Sales of electronics equipment are an essential part of the electronics rental inventory management. However, as with the modular business, sales revenues and gross profit are less predictable and tend to fluctuate each reporting period.

The company continues to generate strong cash flows to operate the business and return value to our shareholders. For Q1 '05, operating cash flows increased 11 million to 18.8 million, as compared to 7.8 million for Q1 '04 due to the increase in operating income before depreciation related to the TRS acquired assets and operations. Q1 '05 operating cash flows combined with 6.8 million in proceeds from sale of rental equipment, 4.8 million in bank borrowings, and 1 million in stock option proceeds, were used to purchase rental equipment of 27.9 million, and pay shareholder dividends of 2.7 million.

For Q1 '05, EBITDA increased 11.8 million, to 25.6 million in Q1, '05 from 13.8 million in Q1 '04, with consolidated EBITDA margin percentage improving from 46% in Q1 '04, to 48% in Q1 '05. The company declared a dividend of $0.14 per share in Q1 '05, a 27% increase over Q1 '04. On an annualized basis, this dividend represents a 2.5% yield based on the May 4, 2005 close price of $22.65 per share.

With respect to earnings guidance for 2005, at this time based on Q1 '05 results, and our outlook for the remainder of 2005, we are reconfirming our 2005 full-year earnings per share guidance to be in a range of $1.45 to $1.55 per diluted share. At this point, I would like to turn the call over to Dennis.

Thank you Tom. Let's jump right to our first quarter results beginning with our modular rental business. In our press release, I spoke to this being our highest first quarter pre-tax income level ever for our modular division, with gross profit in rents increasing 15% over first quarter 2004 to 12.3 million. The increase in profitability was driven primarily by our quarter-over-quarter increase in rental revenues of approximately 13% to 19 million.

We benefited nicely from the recurring rental stream from new classroom orders going on rent in the latter half of 2004 from both the California and Florida markets. In California, we continue to benefit mainly from the need to modernize schools and the bond measure funding available to do so. In Florida, we are providing classrooms to support strong student growth, implementation of class size reduction, and the phasing out of older model code portable classrooms.

We continue to focus on improving our gross margins on rents by minimizing our direct labor and material costs when preparing equipment for rent and by using existing equipment. Currently, for every percentage point that average utilization improves as a result of renting our existing equipment, pretax income can increase by approximately 6 to $800,000 over the next 12 months depending upon product, rental rate, and term.

Our California modular classroom business provides a significant amount of the pretax income for our modular division and we are looking forward to an increasing contribution from our Florida operations in the years ahead. As most of you already know, we entered the Florida market with an educational rental model in early 2004. We accomplished a great amount in our first full year of operations. We exceeded our internal financial modeling in the number of buildings placed on rent and rental revenues, filled key Sales and Operations roles, and established the central strategic manufacturing relationships and supply lines.

In 2005, we will move to purchase land in order to establish an inventory center in 2006. We will also continue to work hard at differentiating ourselves from our competitors in terms of our product offerings, and our logistical and execution capabilities.

It should be of great interest to everyone that in 2004 we introduced a hybrid modular classroom product in Florida. By fire rating the side walls, the new product allows for significantly more efficient land utilization by school districts, by allowing them to place buildings directly next to one another versus having to create a 20 feet separation between classrooms. This is a very important benefit for many school districts in saving valuable land resources for other uses. Additionally, due to its low profile design, the new product eliminates the need for a separate ramp and stair system to be installed, thus saving school districts these costs and logistical efforts.

The aesthetics of the new product are also a big improvement over today's standard product. The hybrid product has received great interest from a number of school districts throughout Florida. I wanted to take just a moment to acknowledge both Joe Hanna, our Senior VP of operations, and Richard Brown, our modular division Head and Vice-President for their efforts in producing the strong results for our modular rental division, and more specifically the great work that is getting accomplished in the Florida market. Nice going, gentleman.

Now let's take a closer look at TRS-RenTelco, our test equipment rental division. Sequentially, as compared to fourth quarter 2004, TRS-RenTelco's pre-tax profit in the first quarter declined by 2 million or 50% to 1.9 million. Declines in rental revenues and gross margin on sales offset by a reduction in operating expenses led to the lower profit level. I am speaking to sequential quarterly results due to the fact that they carry the most meaning to investors at this time as compared to RenTelco's stand-alone results in first quarter 2004.

Let's start with the decline of rental revenues. Rental revenues declined by approximately 1.6 million, or 9%, to 16.9 million for the quarter. Although we experienced a favorable uptick in business levels in early January, new booking activity began flowing towards the end of the month and continued below our level of expectations until the middle of March. In our discussions with our OEM partners and in monitoring our competitors' results, it appears that the slowdown was industry-wide. Due to the fact that the great majority of the rental revenue shortfall we experienced would have come from equipment already owned and depreciating, a significant amount of the top line number shortfall would have hit the pretax line.

We also experienced a decline of 0.9 million or 38% in gross profit on sales to 1.5 million as compared to the fourth quarter of 2004. The reduction in gross profit on sales resulted from lower sales revenue volume and to a lesser degree lower sales margin from the slower business activity levels I mentioned earlier. For TRS-RenTelco, a key metric we utilize to measure the health of the business is depreciation as a percentage of rent. We are focusing greatly on achieving our target product utilization levels in order to drive this percentage lower. Ideally, this is accomplished by creating higher rental business levels and the utilization of existing equipment. When rental business activity does not reach our targeted levels, we turn to selling equipment to both end users, and to an extensive broker network. Our goal is to cut out as much unnecessary quarterly depreciation expense as possible and still maintain appropriate equipment mix and quantity levels to keep growing rental revenues. In the first quarter, although our actual depreciation expense declined slightly from the fourth quarter of 2004, our depreciation expense as a percentage of rent increased to 56% from 51%. This was a direct result of lower rental revenue levels. We are targeting depreciation expense as a percentage of rents to fall into the 48 to 50% range for all of 2005, with further improvement in 2006.

Just as with our Modular Rental business, improving utilization is a key to improving our profitability of the business. For TRS-RenTelco, every percentage point that average utilization improves as a result of renting our existing equipment, pretax income can increase in the neighborhood of 7 to $900,000 over the next 12 months depending on the type of product and rental rate achieved considering that most of the rental costs which are in the form of depreciation are already included in the current income statement. In reality, achieving higher utilization in the electronics business is a combination of both renting more of what you have and proactively selling what you do not need to serve customer demand.

We experienced a decrease of .4 million or 5% in operating expenses to 7.2 million as compared to fourth quarter 2004. The reduction in operating expenses was mainly related to lower personnel costs, primarily driven by lower bonus levels paid in the first quarter, and to a lesser degree a full quarter’s impact of lower salary expense related to the reduction in force that occurred during the fourth quarter of 2004. These Operating expense savings were offset to some degree by an increase in equipment repair and calibration cost. Let me share with everyone some additional information regarding Q2 business activity. We experienced a favorable increase in new rental bookings for April as we begain seeing more projects coming on line from our first quarter quota activity as well as from new opportunities.

Utilization for TRS-RenTelco at the end of April was at just over 63%. We also had a strong month in both sales revenue and gross profit on sales. Looking forward, we are hopeful that business activity levels for our test equipment business will continue to improve as we have seen early in the second quarter. I want to let everyone know that we continue to work hard at refining and executing on our business development strategies with a high focus on the deployment of the most effective marketing mediums to reach each of our target customer bases.

Our goal is to create an increasing level of rental opportunities for TRS-RenTelco by smartly utilizing our outside and inside Sales and Marketing Teams, the Internet, and electronic communications. If we are successful in this effort as well as in our focus on lowering depreciation expense by targeting unutilized equipment for sale, we believe we will see increasing profitability for TRS-RenTelco in 2005. With respect to our full-year year guidance range of $1.45 to $1.55 per share, although the results of our test equipment business are below our first quarter plan, our modular business is performing better than expected. With the steps that we're taking to increase the profitability of the test equipment business coupled with the continuing strong performance of our modular business we are able to reconfirm our full year EPS range. Finally, I wanted to make everyone aware that Tom and I will be presenting at the Sidoti investor forum in Boston on Tuesday, June 7. We will also be traveling during that same trip to do one-on-one investor meetings in Boston, New York, and Baltimore. Now, Tom Sauer and I are pleased to address any of your questions.

(Operator instructions) Our first question comes from Cliff Walsh with Sidoti & Company. Please go ahead with your question.

Hi Tom. Hi Dennis.

Hi Cliff. How are you?

Good, good. Can you quantify maybe a little bit how strong April was at the TRS? I am just trying to get a sense on how strong the rebound was.

I can't give any specific numbers, but I will say is that there was a marked improvement in booking activity both related to new opportunities as well as items we had quoted during the first quarter, projects that were coming on line. So April was certainly different from what we experienced in the first quarter.

Okay, I am assuming that you said the business had slowed through the middle of March, I am assuming that the second half of March was similar to this April?

The momentum changed about the middle of March and actually slowly started ramping up and then got much stronger in April.

Any sense as to how better the margins are in April than they were in the first quarter?

All I can do is speak to the fact that if we are seeing-- if we are booking more rental activity, just from a standpoint of – if that is coming from existing equipment in inventory, which a great majority is, it is just going to help significantly over time if that continues. April we have to remember here, is just one of three months for the quarter so.

Okay you said it was about 63%, a little over 63%, utilization in April?

That is how we finished the month, at just over 63%.

Okay. In terms -- switching gears here a little bit to classroom business in Florida, given that you are using new classrooms that you said you are having built and the higher lumber and steel costs that you are probably seeing, are you happy with the yields you are getting in that business at this point?

Yes, we are.

Are they similar to California? Can you comment on that?

With respect to new price -- if you're going to compare it to new products in California, it's in the same neighborhood. If you're going to compare it to legacy product in California is not quite as good because we have such a large fleet of lower-cost products in California.

Okay. Can you give us a better -- you've had about a year or so in Florida, can you give us a better idea as to what your expectations are? Maybe just a timeframe when you will be able to quantify what kind of business you are doing down there?

I don't anticipate that we will change from our approach of segment reporting and that means that for modelers (ph) we would give a division look at the business. And that is strictly, Cliff, because of competitive reasons. The less we can share about our successes and what we're doing specifically and the way our numbers are down there, we think it is the better way to maximize the opportunity for investors.

Understood. It just makes our job a little bit more difficult, but I fully understand.

I apologize for that, but I think it is in the best interest of everybody.

I understand. Can you just talk a little bit more about the gross margin decline in the modular business? I was not sure I caught everything that Tom had to say.

The growth could you clarify that? Are you talking about the gross margin improvement on rent, or the gross margin decline in rental related services?

I am sorry the decline in rental related services.

Right. The decline, as you may recall the way a significant portion of that line item works is the one time charges for delivery installation, return delivering and dismantle that are associated with the lease are amortized over the term of the lease, the revenues and associated costs. And over the original term of the lease, so what you're seeing in Q1 '05 relative to Q1 '04 are the -- those one times that are associated with leases still within term and the margin related to those. And so what we are seeing is what is left in the portfolio to amortize out are at lower gross margin percentages.

Okay. Final question, can you comment a little bit on any what kind of commercial activity you are seeing in your markets?

With respect to the modular business?

Yes.

Our commercial activity has been fairly consistent over the last couple of quarters, so it's been fairly healthy. So nothing very different in the last couple of quarters.

Okay. Great thank you very much, guys.

Ladies and gentlemen, if there are any additional questions (Operator Instructions). One moment please for our next question. Our next question comes from John Givens (ph) with Oden Partners. Please go ahead.

Hi Dennis. Hi Tom. I'm just kind of curious, Dennis, I thought you said you might be looking to make a land purchase in '05 to hold inventory in '06 in Florida. Do you think you can do the same thing you did out there where you are now? (inaudible)

John is speaking to the large land purchases that we made in California in early years and the evaluation tied to that. With respect to Florida, I mean the good news about having to make a land purchase in 2005 is that the business has grown much faster than we had anticipated, and we need to be in position sooner rather than later, to manage turn of equipment. And so from a cost standpoint, I would expect our operations in Florida, because it's a strictly educational model, but the way we set up the inventory center will be a lower-cost operation in California, because we're not having to serve all the different modernization characteristics of commercial product.

So no real -- not as much assembly and renovation and stuff.

That is absolutely correct.

Is there any sort of center of gravity to where these ought to be? You guys are good at moving things right where you need them, is there a particular demand area in Florida that is different than other parts of the state?

More than likely, we will locate somewhere towards the center of the state probably into the greater, very greater Orlando area for the most part. That is where we will at least start looking.

Some of that cheap land around Disney World you mean?

We will be a little further out than that. Thanks John.

Thank you. Good luck.

Our next question comes from Greg Wilbur with Bay Area Micro Capital Fund. Please go ahead with your question.

Dennis, when are you going to issue the annual report?

It is out already at this time. It was mailed about a week ago.

Because I checked with a number of shareholders, some large, some small and myself none of us have gotten it.

I apologize if you have not received them todate. We will look into it right after the call here. And I don't have an answer for that right now, but we will get one. And Greg I am more than happy to call you directly.

Okay. Because I am certainly concerned about the time for the proxy turnaround for your Annual Meeting.

I would appreciate that concern and like I'd said. Let me-- we will look into it right after the call today.

Okay, thank you.

Our next question comes from Scott Vogel (ph) with Davidson Kempner (ph). Please go ahead with your question.

On the TRS side, how have equipment prices been trending on your purchase and sale of equipment?

Are you talking specifically to the sale of equipment?

Yes. I guess the inventory that you said you would sell, how has that pricing been trending for the past (multiple speakers) 2 months or so?

As you might imagine, based upon the technology that we are selling, it really varies across the board. For the most part, we have done fairly well. If you look at margins on used equipment sales they are in a very favorable range.

But how was pricing trend (indiscernible)?

Pricing trend I would say has been very consistent over the last few quarters in terms of the stability of used equipment sales.

And where do you see it going forward?

I would not expect it to deteriorate from here. I actually feel fairly good about what we've seen over the last three quarters and would expect that to continue.

And on the utilization side, you said you were at 63%?

Just over 63% at the end of April.

How high do you think you can get that?

Ideally, we would like to run the business in a range consistently north of 65. This business can run, we believe, in the 68 to 72% range when it is really cranking.

Okay. Great. Thanks very much.

(Operator instructions) Our next question comes from Arthur Winston with Pilot Advisors.

Hi, I did not understand why the amount of depreciation varies with the utilization of equipment, which I think you said before. And simultaneously, it seemed like your testing equipment depreciation was huge annualized compared to the depreciated amount of the equipment. It seems like you're depreciating over 2.5 years or 2 years or something?

Let me clarify what you are asking here.

I had two questions. What did you say about how the variance of the depreciation varies with the amount of utilization? That is the first question.

The utilization as -- the depreciation as a percentage of rents will decline as we become higher utilized. If that is what you are speaking --.

You said it varies with -- I understand that with the amount of rents as opposed to not with the amount -- I see what you mean. You mean, your revenue – you are dividing the depreciation by revenue is what you're saying?

Right so depreciation -- what happened between Q4 and Q1 was depreciation as a percentage of rents increased from 51% to 56% because we had the large drop off in rental revenues but we still had the same portfolio of assets.

No I misunderstood, I understand it perfectly. On the other hand, it seems like you're depreciating the stuff so quickly, am I right?

When we did the TRS acquisition back in June 2004, we looked at the equipment that was purchased, the remaining technology related to that equipment, and assigned not only a value, but a remaining useful life to that equipment. The remaining useful life that we assigned to the equipment was much shorter than if we would go out and buy brand new equipment. So yes, the equipment on average is being depreciated over a much shorter timeframe.

A year later, is the use of life that you assume fairly accurate or do you think you underestimated the useful life of it?

We were probably very conservative in our initial estimates and we will again continue to look at that -- the useful life relative to the technology of the equipment.

Okay. My last question is on – do you anticipate paying down debt for the rest of -- between now and the end of the year?

It will really depend on our capital expenditures that we have as we buy equipment to serve demand either in the electronics or the modular businesses.

So do you think, so what will happen, do you think? Your debt go up or down or stay the same?

Generally the cycle is in Q2, Q3 we are probably adding to debt levels, towards the end of Q3, Q4 we generally reduce, it's kind of the cyclical nature of the debt levels that the company experiences.

Thank you very much.

We do have another question from Cliff Walsh with Sidoti & Company.

Dennis you had mentioned that you thought the slowdown at TRS was industrywide. I don't believe you gave any reason why you thought that. Can you comment on that a little bit?

The reason I would have said that is because just in our conversations with our industry OEMs people that we buy products from to rent, the Agilents and the Tektronix’s of the world, their business levels have been down from our conversations. And when I've looked at competitors of our industry that report publicly, it appears that they have had a similar dynamic. I mean just overall, between OEM partners and competitors and as a whole, it's just been lower activity.

Do you think it was weather related at all or possibly just more of an economic slowdown?

Well for some of our business there is some seasonality to some of our communications products to where the first quarter is historically lower just because that type of work is not getting done that time of year. So there was some related to that, but for the most part, it was just an overall sluggish quarter. It started off pretty favorably in the first couple of weeks of January and then it just could really get no real momentum until towards the end of the quarter.

Okay, great thanks, guys.

Our next question comes from Charles Euriker (ph) with Euriker & Associates (ph). Please go ahead.

Hi good afternoon. I have a couple of questions on your capital expenditures in '05 and '04. First, in the modular section, your rental equipment acquisitions totaled out to be about 21.8 million versus only about 4.4 million in the same period of the prior year. Can you indicate why there was such a major step up? Or was last year possibly peculiarly low? But that's really a large figure in and of itself.

Some of it has to do with timing, if I'm understanding your question, Charles. Q1 of '04 we had about $4.3 million in rental equipment acquisitions for the year, it was much higher and it's really one of timing. Not only -- and how much equipment we had going into the year that was built Q4 of 2003. So to the degree that I have a lot of equipment going into the year end I am probably going to build and buy less product as we move and head into the school season.

Okay. What was your total CapEx for the modular group last year? I don't have that it front of me, unfortunately.

Hang on one second. The net adds to the balance sheet were about 35 million. The actual rental equipment acquisitions were 27.6 million.

Okay. Thank you. Then a question on the electronics side.

Charles, I am sorry. I misread that, that was 2003. 2004’s was 44.6 million.

Okay now on the electronics side, you have two things that seem to be at crosscurrents. Your rental equipment additions put it out to be almost $8 million and your sales and other, giving effect to what other might be, was 6.7. It appears that you bought a considerable amount of equipment at the same time perhaps for either reasons of commercial reasons or decisions to sell less attractive equipment you were quite active. I'm just wondering where the bulk of the 8 million went? Was that more towards the traditional TRS side of the business?

Charles it's really a combination of the two. We continued to buy assets because there is later technology that we need to purchase to serve customer needs, even if at the same time we're selling equipment that is either older technology or we are underutilized on. But it's fairly well balanced between the two products sectors.

Okay fine, thank you.

Thank you, sir. Gentlemen at this time, we have no questions. Do you have any closing remarks?

I want to thank everybody for joining us this afternoon and we will look forward to speaking with you again on our upcoming Q2 conference call. Thank you so much, and have a good day.

Ladies and gentlemen, this concludes the McGrath RentCorp Q1 2005 earnings conference call. If you would like to listen to a replay of today's conference, please dial 1-800-405-2236, or internationally at 303-590-3000. Once again if you would like to listen to a replay of today's conference, please dial 1-800-405-2236 or 303-590-3000. You will need to enter access number 11028069. You may now disconnect. Thank you for using AT&T teleconferencing.