McCormick & Company Inc (MKC) 2011 Q1 法說會逐字稿

Greetings, and welcome to the McCormick first quarter 2011 conference call.

At this time all participants are in a listen only mode.

A brief question-and-answer session will follow the formal presentation.

(Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Joyce Brooks, Vice President Investor Relations for McCormick.

Thank you Ms.

Brooks, you may begin.

Good morning to everyone on today's call and to those joining us by webcast.

The purpose of our call is to provide an update on our business, review McCormick's first quarter financial results and share our latest 2011 outlook.

We have posted a set of slides to accompany today's call at our website ir.mccormick.com.

Joining us for the call are Alan Wilson, Chairman, President and CEO and Gordon Stetz, Executive Vice President and CFO.

Alan will begin with an update on the business environment and progress with our growth initiatives.

Gordon will follow with a review of our financial results and 2011 outlook.

After that we look forward to discussing your questions.

As a reminder, our presentation today contains projections and other forward-looking statements.

Actual results could differ materially from those projected.

The Company undertakes no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or other factors.

In addition, certain information that we will present today are non-GAAP measures.

This includes 2010 results that exclude items affecting comparability.

We present this non-GAAP information for comparative purposes alongside the most directly comparable GAAP measures.

Reconciliations of GAAP to non-GAAP measures can be found in the presentation slides for our call.

It is now my pleasure to turn the discussion over to Alan.

Thanks, Joyce.

Good morning everyone, and thanks for joining us.

Turmoil in Northern Africa and the Middle East, spikes in the price of food and fuel, and the devastating earthquake in Japan have added to consumer and business uncertainty in the first part of 2011.

In the face of this uncertainty, our first quarter results demonstrate that we are operating effectively in a challenging environment.

The biggest challenge we face heading into 2011 was the unprecedented increase in the cost of spices and herbs, along with higher costs for commodities such as wheat and soybean oil and increases in plastics and other packaging materials.

As we shared in our January call, we expect input cost inflation to be in a 7% to 8% range this year .

For our consumer business, we now largely have our 2011 pricing actions in place in each of our major markets.

It's too early to fully assess the 2011 and longer-term impacts of these higher prices and store take away.

Keep in mind that we took similar increases in both the brand and the private-label products that we supply.

A number of branded competitors have also taken pricing actions.

However, we have seen a lag in higher shelf prices for private label products in certain markets, including the US and the UK.

In the second quarter, we have solid marketing programs to support growing, as well as programs to reinforce the value of our products to consumers.

In our industrial business, we have maintained our pricing protocol with customers where we passed through higher costs on a periodic basis.

Our effective pass-through of higher costs, together with cost savings from our comprehensive continuous improvement program, CCI, are evident in the profit result from this part of our business.

In fact, gross profit margin across both businesses was up in the first quarter, as Gordon will discuss.

While higher pricing added to top line growth, we had some pressure on our sales volume in the first quarter.

As we discussed in our January call, an estimated $10 million shifted from the first quarter of 2011 into the fourth quarter of 2010 as certain US retail customers purchased product in advance of our price increase.

As illustrated on slides five and six, this shift lowered our first-quarter sales 1% for the total Company and 3% for the consumer business in the Americas.

Including the impact of this 3% headwind, sales for our consumer business in the Americas rose 3%.

Our pricing actions contributed to this growth along with unit increase in branded products that included our slow cooker seasoning mixes, Zatarain's items, Grill Mates, and warehouse club products.

These increases were offset in part by the shift in sales during the first quarter.

With this impact behind us, we expect the growth rate for our Americas consumer business to strengthen for the balance of 2011.

The other source of pressure this quarter was in Europe, Middle East and Africa region, EMEA.

In this region, our industrial business team has achieved a fourth consecutive quarter of mid-single digit or higher sales growth.

In recent years, we have strengthened our leadership team and invested in our product innovation capabilities.

These investments are paying off with increased sales in 2011 to both food manufacturers and the quick service restaurant channel.

However, our consumer business has been impacted by the economic and competitive conditions in EMEA with first-quarter sales in local currency down 3%.

As we reported throughout 2010, sales have been weak in our smaller markets.

This quarter, we also had flat sales in the UK and a slight decline in France.

In these markets, we are facing heightened competition at a time when consumers remain under economic pressure.

In response to this situation, we have three actions underway.

First, we are going to redirect a portion of our marketing funds towards promotional activity to deliver value to the consumer.

Second, accelerate the rollout of our 2011 new products.

We view product innovation as a key differentiator between the brand and private label.

Third, improve the in-store merchandising of our brands, including the rollout of our attractive new Vahine merchandising display in France and in the UK, secondary placement of the Schwartz products.

We remain committed to growing our business in Europe.

Consumer demand for spices and seasonings continues to grow with the latest 52-week store take away data showing an average unit increase of 3% across our markets in Europe.

With Schwartz, Ducros and Vahine, we have three leading brands that over time can bring the product innovation, merchandising ideas and marketing support to drive our sales and the entire category.

I began my remarks by stating we're operating effectively in a tough environment.

Behind this message are a few more points that deserve mention this morning.

First is our progress with CCI.

Under the leadership of our CCI champions throughout the business, employees are engaged in projects to reduce our material and production costs through supply chain initiatives as well is to lower our SG&A expenses.

I am confident that we will deliver our 2011 cost savings target of at least $40 million.

And second, I want to point to the role of emerging markets in our growth.

Those of you who were able to join presentation at CAGNY heard this discussed more fully.

Slide nine is a slide we showed to illustrate the five-year sales increase we achieved in our consolidated business alongside the increase in sales for our unconsolidated operations during in the same period.

Early in 2011, our activity in emerging markets is already a clear driver of results.

In Mexico, we grew sales of our consolidated industrial business 15% in local currency, which supplies products not only in Mexico, but for parts of Central and South America.

Across both consumer and industrial businesses, sales in China rose 7% in local currency.

Income from consolidated operations led by Mexico and our new joint venture in India rose 25% to $8 million, accounting for 10% of net income this quarter.

As I conclude my comments about operating in a challenging environment, I want to recognize our 7,500 employees around the world.

Individually, each of them plays an important role in our success.

Together, we are a powerful team.

One that's driven to deliver high-performance.

Underpinning all of these initiatives are longer-term financial performance and increased shareholder value is our passion for flavor and a proven growth strategy.

Invest in business to drive sales and profits, and fuel these investments with improved margins.

With that, I like to turn it over to Gordon to discuss our first quarter financial results in more detail and to provide our latest

Thanks Alan, and good morning everyone.

Our first-quarter results are a solid start to our 2011 fiscal year.

However, we recognize these results varied a bit from our guidance for the full year.

We grew sales 3% in local currency.

We expect this growth rate to accelerate in the upcoming quarters as we get beyond the impact of the sales shift and with pricing actions now in place.

First quarter gross profit margin and income from unconsolidated operations were both ahead of our full-year guidance, although we expect these to moderate as we head into the second quarter.

This performance added up to a 12% increase in earnings per share, a result that is above our expected growth rate for 2011.

I'll discuss our latest guidance more fully towards the end of my remarks.

I want to first discuss some details behind our first-quarter results.

Starting at the top line, pricing was the major driver behind our increase in total Company sales.

We reported an increase of 3% from pricing in the first quarter.

Alan went through the factors that hampered our increase in volume and product mix for the total business, but let's take a closer look at each of our two segments.

As indicated on slide 14, in the Americas region, we grew consumer business sales 3% as a result of higher pricing.

This is the part of our business that was affected by the sales shift from the first quarter of 2011 into the fourth quarter of 2010.

This shift lowered sales in the first quarter of 2011 by 3%.

This 3% decline was offset by a 3% increase in volume and product mix, driven largely by higher unit sales of slow cooker seasoning mixes, Zatarain's branded items and our Grill Mates line, as well as increased sales to warehouse clubs in both the US and Canada.

Consumer sales in EMEA declined 10% from the year ago quarter with a 3% decrease in local currency.

The impact of higher pricing was more than offset by lower volume and product mix.

We continue to face weakness in our smaller markets, largely as a result of a difficult economy and competitive conditions.

These markets account for about 20% of EMEA sales.

Following a stronger performance in 2010, we saw a downturn this quarter in the UK and France and as Alan described, are taking actions to drive sales of our leading brands in Europe

In the Asia-Pacific region, consumer business sales rose 11% and in local currency were up 5%.

This result was led by a 9% increase in China in local currency, with higher condiment sales driven by new products, greater market penetration and increased consumer demand.

Operating income for our consumer business was $87 million, a 9% increase from the first quarter of 2010.

We achieved this increase largely through CCI cost savings and a favorable mix of business.

During this period, brand marketing support was up $3 million, with stepped-up advertising behind our core products, including our antioxidant message and in support of our Zatarain's brand.

We also had a favorable comparison to the first quarter of 2010 when we recorded $2 million of product recall cost related to an ingredient from a third party supplier that affected us and a number of other food companies.

Let's take a look at the sales performance for our industrial business on slide 15.

Industrial sales in the Americas grew 7% and in local currency were up 6%, with increases in both volume and product mix and in pricing.

Increased demand for our spices and seasonings was led by food manufacturers in both the US and Canada.

This included the product innovation activity that you heard about from packaged food companies at this year's CAGNY conference.

Sales to the food service industry were comparable to the first quarter of 2010.

We grew sales of branded food service items with certain distributors and expect sales to quick service restaurants to accelerate next quarter with new product launches and distribution gains.

Our industrial business in EMEA posted another consecutive quarter of strong sales growth.

We grew first quarter sales 3% and in local currency, 4%.

Volume and product mix was the primary driver of the increase, with about one third of the increase coming from pricing.

Demand from quick service restaurants continues to be the key sales driver in this region.

In the Asia-Pacific region, industrial business sales rose 5%, but declined 1% in local currency.

In this region, quick service restaurants are the largest part of our business.

Heading into 2011, we are seeing these customers shifting emphasis to core items rather than limited time offers and other innovations.

Across all regions, operating income for our industrial business rose 12% to $24 million in the first quarter.

This increase was due to higher sales and CCI cost savings, which were offset in part by a $2 million increase in marketing and product development behind our US branded food service products.

Also, for this part of our business, we recorded $3 million of the product recall costs in the first quarter of 2010.

For the total business, operating income rose 10% .

In addition to higher sales, gross profit margin improvement was an important part of this increase, rising 130 basis points to 41.9%.

For the full year, we expect to offset higher material costs with a combination of pricing actions and CCI cost savings.

However, the net impact of these factors had a favorable impact on gross profit margin in the first quarter of this fiscal year.

In addition, about half of the 130 basis point increase was the result of our comparison to the first quarter of 2010 when gross profit margin included the unfavorable impact of the recall cost.

SG&A as a percent of sales rose 40 basis points, primarily due to a 12% increase in brand marketing support.

Turning to taxes, with favorable discreet tax items, our rate for the quarter was 30.3%, below our guidance for 2011, which remains at 31%.

Income from unconsolidated operations was an important contributor to profit for the quarter.

As Alan described, McCormick de Mexico had good performance and we had the added benefit of our eastern joint venture in India.

However, as those who listened to our January call know, we expect income from unconsolidated operations to be down slightly for the full year.

As we head into the second quarter, we continue to expect a greater headwind from higher cost for soybean oil and other key materials.

At the bottom line, as shown on slide 17, earnings per share was $0.57 compared to $0.51 in the first quarter of the prior year.

The majority of this $0.06 increase came from higher operating income with another $0.01 from the increase in income from unconsolidated operations.

Turning to the balance sheet and cash flow statement, our debt ratios remain close to our long-term targets.

During the quarter, we spent $50 million to repurchase 1.1 million shares at an average cost of $45.89.

At the end of February, $309 million remained on our current share repurchase authorization.

Our short-term borrowings in the first quarter of 2011 were up when compared to the first quarter of 2010 due to an increase in working capital.

While our accounts receivable collections improved, we had a significant increase in inventory.

As indicated in this morning's press release, the primary reasons for this increase were higher material costs, inventory positions and new products and new distribution.

As you would expect, the dollar value of our inventory has risen along with the increased cost of raw and packaging material.

Also, given the recent world events and potential supply issues, we have taken certain positions of spices and herbs to ensure a steady supply of high-quality products for our customers.

A third factor I want to point to is an increase in inventory to support the launch of new products and in support of new distribution.

For products like Zatarain's frozen items and our McCormick brand of mayonnaise imported into the US from our joint venture in Mexico.

In the face of these increases, we remain committed to lowering inventory.

One initiative currently underway is the implementation of new inventory management processes.

We are nearing completion of a transition and North America , and our next step will be to take these new processes to other parts of our business.

McCormick profit is keeping our focus on inventory and other components of working capital as it rewards our employees for improving our asset utilization and lowering our cash conversion cycle.

Let me wrap up with our latest financial outlook for 2011.

Our sales projection remains 5% to 7% in local currency.

Volume and product mix are expected to add 2% to 4% driven by product innovation, brand marketing and new distribution.

We expect our pricing actions to add 3% to sales.

And third, favorable currency rates are expected to add 1% based on today's exchange rates.

Turning to gross profit margin, our first quarter result was ahead of our guidance for the full year.

We continue to expect a slight decline in gross profit margin in 2011 based on our current projections of material cost increases, CCI savings and pricing actions.

Similarly, while income from unconsolidated operations is off to a strong start, we remain cautious about the impact of higher material costs in Mexico.

We reaffirm our estimate for a slight decline on this line of the income statement for 2011.

At the bottom line, our estimated EPS remains $2.80 to $2.85.

This compares to a 2010 earnings per share of $2.75 and adjusted earnings per share of $2.65, which excludes the reversal of a significant tax accrual.

Let me summarize our remarks by stating that we are pleased with our progress early in 2011 in an environment that remains challenging.

We are excited about our opportunities for growth and our ability to execute throughout the organization.

Our first quarter results have us off to a solid start toward another year of record results at McCormick.

Operator, let's

Thank you.

We'll now be conducting a question and answer session.

(Operator Instructions) Thank you.

Our first question this morning is from the line of Alexia Howard of Sanford Bernstein.

Please state your question.

Good morning, everyone.

Good morning Alexia.

Hi there.

Just want to take a little bit of a closer look at the Asia Pacific sales growth on the industrial side with it being down 1% this quarter.

I know you mentioned it was due to the quick service restaurants focusing more on core items.

Could you give us a little bit more commentary on exactly what that means, and is it likely to persist going forward?

Yes, what we see from time to time in Asia is our large customers there focus on new product innovation to bring people into the stores.

And when they do that, we tend to win because we win more than our fair share of those briefs and get those new products.

As they focus on core items like they did in the first quarter, we see more of a steady kind of normalized product mix, which is not quite as profitable as new products and certainly isn't -- doesn't have the growth profile of those limited time offers and new product innovation.

It tends to run in cycles.

If you asked our customers and our folks there, you would say it's probably going to be a year that's more focused on the core of than it is on product innovation.

But as we see, that usually impacts their store volume and when their store volume gets weaker, they tend to start promoting and innovating again.

And so we are not overly concerned about it.

We do think through the year that we will get back to product innovation and promotions there at that will continue to drive the business.

Great, and then as a quick follow up, there was a comment in the press release about improved profit growth in emerging markets, and I was wondering if you could tell us what's driving that inflection point in terms of, I presume higher margin.

Well, we certainly want to keep pointing to the fact that we have good exposure to the emerging market portfolio.

So, really is a sales driven event when we talk about improved profit growth.

So, it relates to the fact that now we have a joint venture presence in India, we talked about the other markets that you saw on the chart that we shared at CAGNY.

So, it's our confidence around the growth profile of those markets.

The only caveat I will point out which we did talk about in our remarks as the pressure in our markets in our joint venture in Mexico, which we expect to start to experience pressure from soybean oil costs as we head into the second quarter.

Great thank you very much, I'll pass on.

Thanks, Alexia.

Thank you.

Our next question is from the line of Chris Growe of Stifel Nicholas.

Please proceed with your question.

Hi, good morning.

Good morning Chris.

Hi, I just had a question for you first on the gross margin, perhaps for Gordon.

I'm trying to understand, in the first quarter you had a strong performance, and is there a phasing factor to the cost inflation that maybe didn't negatively affect the first quarter as heavily as you think it will happen in the rest of the year?

I'm just trying to get a better understanding for how it could be down the rest of the year or for the year.

And then related to that, are the CCI cost savings more heavily gross margin or cost of goods sold focused versus SG&A focus this year?

It is partially phasing.

We do you expect to experience as cost increases more severely as we progress through the year.

We also pointed out that in the prior year we had a favorable comparison, which included the recall cost last year about $5 million that we didn't experience this year.

And to your question regarding the percentage of CCI, it is heavily weighted towards costs of goods sold.

I'd say about 85% of the CCI savings would be in the cost of goods line, and that's part of the reason we are able to offset these costs and not have pricing offset more fully.

Sure.

And then in relation to the CCI cost savings, are those -- given you are now looking for perhaps more than $40 million for the year, do those evenly phase through the year, or are those more front half loaded such that you won't get as much benefit in the second half of the year?

They are generally more evenly phased.

We have a pipeline active throughout the year that we are constantly implementing.

So, they tend to be more evenly phased in terms of when we implement these projects.

I will say because our profits do skew more heavily into the fourth quarter, some of the savings may also end up being bigger in that quarter just by virtue of the volume being bigger that quarter.

Sure, that makes sense.

And my last question for you, just in relation to private label.

Last quarter you had, or you saw a weaker performance for private label in this quarter.

Maybe it's just due to the pricing, maybe that's the answer, but that it was a little stronger.

I was curious if you had any further commentary on that.

And then also how your private label business performed in the quarter.

Was in line with it, was it up a little bit, did it work against your mix?

Yes, what we saw in the quarter for private label, in the US market at least, is private label gained a little volume share, held pretty flat in terms of volume share.

And what we saw, both here as well as in the UK, a lag in the pass-through of the price increases specific to private label while the brand to go up and a lot of outlets.

So, we did see that bit of a gap.

Our sales of private label, because we passed on the same cents per pound increase as we did on the brand, will flow through.

We will certainly start to see that in the second and third quarters.

So, we are not overly concerned with the price gaps going forward, we are seeing a short term impact of that.

Our sales of private label were actually still down a little bit from last year.

Okay, that's very helpful, thank you.

Yes, thanks, Chris.

Thank you.

Our next question is coming from the line of Ken Goldman with JPMorgan Chase.

Please state your question.

Good morning.

Good morning, Ken.

I just wanted to focus on the European consumer business for a bit.

I appreciate that what's happening there is less about what you're doing than -- it's more about a tough environment.

But if feels like the challenges for many companies are growing there.

So, I guess what I am asking is, we have a tough economy, it makes things more difficult for a longer time than expected and the company, in this case you guys, responds by temporarily maybe lowering prices via promotion.

And that may very well be the right thing to do here, you're not doing that in a vacuum, you're marketing more too.

But when we end up in the other side, and let's say these economies finally improve, how likely is the consumer willing to be to take higher prices again?

I guess I'm asking, is there a risk of a structural shift here, especially with the austerity programs in place?

How difficult is it going to get to be to get back to that positive cycle of innovation and new products rather than maybe a less sustainable cycle of lower prices and competing on that level maybe more than you want?

Yes, I would say as we've gotten through this first quarter, what we've seen some pretty aggressive competitive activity, in the UK specifically, and we think it's important that we hold our own there and respond to that.

We are, as part of our -- as one of our tactics, accelerating our new product integration.

We had some planned for later in the year that we're pulling forward.

We think that is important and will help drive the brand.

In France, we are very encouraged by what we are seeing in both our spice and our dessert business and are less concerned there about the price promotion.

But you raise a good point.

We think over time the competitive impact will be lessened.

Our competition there tends to be larger, well-organized companies, and so they tend to be more rational.

It doesn't change the fact though that it is going to continue to be a tough environment for the foreseeable future, specifically with the retail trade there.

Thanks, and then one question on acquisitions.

This quarter your were asked about the, and you said it is a pretty active environment, more active than maybe it's been for the last couple of years.

Is that still the same, any change there?

I wouldn't say there's any change to that.

We see lots of opportunities.

Thanks very much.

Thank you.

Our next question today is from the line of Robert Moskow of Credit Suisse.

Please state your question.

Hi, good morning.

Good morning, Rob.

Just wanted to ask about the sales guidance because the way I'm modeling it out, your sales growth is about 2.5% first quarter, maybe it would've been 4.5%, excluding the $10 million shift.

But the model says that you have to do 6.5%, maybe even 7% for the rest of the year to hit your guidance.

And I understand you have some consumer programs in place, but is that -- what else has to take place for that kind of acceleration?

And is it going to be that much tougher because, as you say, the macro environment is not helping?

Yes, the things that we have in place, I think there is three things that we point to.

One is, the first quarter is depressed because of the buy in.

That's a factor that you pointed out.

The second is we have a later Easter this year, and so last year we would have seen a lot of Easter sales in the first quarter.

This year we will see it a little later.

And then the other impact of that is pricing realization.

Through the first quarter in a number of our markets, we are in the process of implementing pricing.

That's now largely in place, and we see that as also helpful for the rest of the year.

Specifically in our industrial business where you saw very little price impact in the first quarter.

The other thing is we've got a broad range of new products that we are launching, as well as new distribution that will be coming online as we go through the rest of the year, and we are very encouraged by what we see there, and that's why we gave the original guidance that we did.

And then in addition to that, we've got a number of merchandising initiatives in Europe, which we think we'll have an impact.

It doesn't change the fact that we are looking hard at consumer behavior and looking to continue to drive our share growth.

But we have a lot of things that we think will help us through the rest of the year.

Alan, if I can ask another question, industrial sales growth far exceeded consumer sales growth in the quarter.

And again, I think a lot of it has to do with the buy in.

But if your pricing is really going to be industrial driven, is there a mix shift issue here also?

When you model this out, do you have industrial growing faster than consumer for the rest of the year?

And if that's the driver of the growth, is there any impact on your margins?

Not necessarily, but industrial pricing is going to be higher than consumer pricing, but we are fully expecting with the new distribution gains as well as the new product activity and then the shift of the first quarter sales into later quarters, that consumer should hold its own.

We are not expecting a shift in our business mix.

Got it, okay thank you.

Thanks Rob.

Thank you.

Our next question is from the line of Ann Gurkin of Davenport & Company.

Please proceed with your question.

Good morning.

Good morning, Ann.

In the US, in relation to industrial customers, is there any change to the strategy or the pace of innovations?

No, we still feel pretty encouraged by what we see with the innovation pipeline in the US.

Okay, and then second, on your base business, are there any distribution gains we should know about?

Nothing specific that I can talk about at this point other than that we referred to at CAGNY.

But we certainly see some increases in the drug channel, as well as some dollar channel increases that we've started to take on now.

Great, thank you all very much.

Thanks, Ann.

Thank you.

Our next question is from Michael Block of Phoenix Partners, please proceed with your question.

Good morning, guys.

Ken Goldman asked much of what I wanted to ask about for European consumer, but one additional question.

What are your assumptions for the euro for Q2 and the rest of the year?

I was just very interested in that.

Thank you.

We generally don't predict euros, that's obviously a difficult thing to do.

But when we give our guidance, we base it on current exchange rates, and that's what we were forecasting.

As the 1% benefit from FX at current rates, we will get a 1% benefit for FX the remainder of the year.

Okay very helpful, thank you.

Thank you.

Our next question is from Alex Bisson with Northcoast Research.

Please state your question.

Good morning.

Hi Alex.

One or two quick questions for you.

You talked about a new inventory system.

I was wondering if you could give the highlights of what that entails and what the potential is from the new inventory system.

The system that we have is allowing us to use more technology to predict what our demand and our safety stock needs to be, as opposed to a lot of human intervention.

We certainly -- we are driving our sales and operations planning process with a lot of input from our sales and marketing teams, but we are using more data to try to predict that.

So, we are very encouraged by what we see there.

Got you.

And then I got on the call a minute or two late, so I apologize if I missed this.

But could you talk a little bit about how consumers reacted to the higher prices in the quarter on the consumer business?

I guess mainly in the US, but broadly as well.

It's pretty early to see the impact of price increase because it was rolling through throughout the quarter at -- in various markets and customers.

What we did see is that the brand prices were taken up pretty quickly as they started to hit, and the private label prices have lagged a bit.

And it's pretty tough to read the short-term data.

We would say that all channels in the quarter, we actually grew share little bit in dollars and held our own and units, private label grew share a little bit in units and stayed steady in dollars.

So, we just haven't seen that pricing impact fully implemented across the board yet.

Implemented at shelf.

Great, thank you very much.

Thanks Alex.

Thank you.

(Operator Instructions).

Thank you.

There are no further questions at this time.

I would like to turn the floor back over to Ms.

Brooks for closing comments.

Thank you for participating in today's discussion.

Through April 5 you may access a telephone replay of today's call by dialing 877-660-6853.

The account number for the replay is 309 and the ID is 367742.

You can also listen to a replay on our website later today.

If anyone has additional questions regarding today's information, please give me a call at 410-771-7244.

This concludes our call.