Materion Corp (MTRN) 2009 Q2 法說會逐字稿

Greetings and welcome to the Brush Engineered Materials incorporated second quarter 2009 earnings conference call. At this time, all participants under a listen-only mode. A brief question and answer session will follow the presentation. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Mr. Mike Hasychak, Vice President, Treasurer, and Secretary for Brush Engineered Materials, Inc.. Thank you. Mr. Mike Hasychak, you may now begin.

Good morning this is Mike Hasychak. With me today is Dick Hipple, President, Chairman and CEO; John Grampa, Senior Vice President Finance and Chief Financial Officer; and Jim Marrotte, Vice President and Corporate Controller. Our format for today's conference call is as follows. John Grampa will comment on the second quarter 2009 results and the outlook and Dick Hipple will provide a market update and general comments. Thereafter, we will open up the teleconference call for questions.

A recorded playback of this call will be available until August 15, by dialing area code 877-660-6853, account number 286 and conference ID 327988. The call will also be archived on the Company's website, beminc.com. To access the replay, click on quarterly earnings conference call under the investors page. The broadcast requires Real Player software which is available as a free download from the icon as indicated.

Any forward-looking statements made in this announcement including those in the outlook section and during the question and answer portion are based on current expectations. The Company's actual future performance may materially differ from that contemplated by the forward-looking statements as a result of a variety of factors. Those factors are listed in the earnings press release issued this morning. Now I'll turn it over to John Grampa for comments.

Thank you, Mike. Good morning, everyone. Welcome to our second quarter of 2009 earnings teleconference. As Mike indicated, today's format isn't going to be the same as that of past calls. I'll review the quarter and then comment on the outlook. Then following my remarks, Dick Hipple will provide with you a market update and a review of other key company factors. Both Dick and I will also comment on the effect that the economic developments of the past several months have had on our business and the aggressive actions that we've taken to ensure that the Company remains healthy. We will also share our current view of the economic environment that led to the significantly improved second quarter performance and what, as a result, can be expected looking forward to the third quarter and the second half of the year. Then we'll open the call for your questions.

I'll focus on some of the key points identified in the press release covering both the quarter and outlook for the third quarter. We will not comment on the outlook for the fourth quarter or beyond which, while showing signs of additional improvement remains in this environment simply too uncertain to be specific about.

I'll first review the sales and earnings levels along with the key items affecting them as well as the comparisons to the preceding quarter including metal prices, certain market factors and other factors affecting the reported growth. Then I'll review our cash flow and the state of our balance sheet, which as you know is very strong and as expected improved significantly in the second quarter. Then I'll cover the status of the previously reported cost reduction initiatives, their scale and try to provide some added insight to how they affected the second quarter performance and what might be expected in this area in subsequent quarters. Following our comments this those areas, I'll review the outlooks.

Let's begin with sales and earnings. As you know this morning we recorded sales for the second quarter that although below the prior year's second quarter levels by approximately $73 million we're about $30 million or 30% better than first quarter sales. This was better than the guidance that we had provided primarily due to stronger order entry from our consumer oriented markets. Approximately $6 million of that $30 million second quarter improvement over the first quarter is due to a shipment of hydroxide. Hydroxide shipments generally occur in only one or two quarters in a year and are usually about half this level. We did expect that shipment, and we did include it in the guidance provided at the end of the first quarter. We would not expect this to repeat in the third and fourth quarters of this year. Thus our second quarter core business base to compare expected third quarter growth to is approximately $168 million of sales.

Metal price movement did not have a significant impact on the comparisons to the same quarter of the prior year. Metal price deflation or said differently, that portion of metal prices both precious and nonprecious price declines that we normally pass onto customers lowered sales by approximately 6 percentage points in the quarter compared to the prior year. Metal price increases raised sales in the second quarter by about 2 percentage points compared to the first quarter. Therefore, while reported sales were down 30% in the quarter compared to the prior year, the real volume decline excluding metal price movements was 24%, and the foreign exchange impact I should note was de minimus at a fraction of a percent. 16 points of the 24-point decline or volume drop, if you will, was in our specially engineered alloy segment. The advanced material segment was down only 3% much like the first quarter these volume declines were primarily driven by the macroeconomic conditions and mainly by conditions in the consumer-oriented markets that we serve.

The rapid decline in business levels obviously had a significant effect on our overall bottom line when comparing to the prior year. Comparing to the first quarter, about $32 million of the $39 million growth in the second quarter was in our advanced materials segment. $4 million was in the specially engineered alloy segment and $2 million in our engineered materials systems segment.

The reported net loss for the quarter was $0.04 a share, a significant improvement from the first quarter loss of $0.40 a share. The guidance provided was for a loss of no more than half the first quarter loss or a loss in the $0.18 to $0.20 a share range. Other than economic factors, there were no unusual factors that affected the reported results in the quarter either positively or negatively. The improvements in EPS were due to both the increased volume and the cost reductions. I'll comment further on the impact of the cost reductions later and Dick Hipple will provide additional information on markets in a moment.

Now let's turn to the balance sheet. It is attached to the press release. As you well know, our balance sheet is very strong. And in the quarter, it improved even further as debt declined by $14 million to the $38 million level and cash increased by $8 million to the $21 million level. That's a total of $22 million improvement in the quarter. The Company's debt net of cash to capital ratio was approximately 4% at the end of the quarter. At this time, we do expect the balance sheet to continue to improve through the remaining quarters of the year. The Company has a committed revolving line of credit totaling $240 million that matures in 2012. At the end of the quarter, there was approximately $3 million drawn on the revolver. We're pleased to have the strong balance sheet and the liquidity that we do have to support our operations as well as the flexibility that it provides to capitalize on important strategic initiatives as they present themselves in this economic environment.

Now let's review the cost reductions. As we reported in the past, during the fourth quarter of 2008 and subsequently during the first and second quarters of 2009, as the global economic downturn began to take hold, the Company responded quickly and decisively with a number of initiatives to reduce costs and to assure that the Company's balance sheet remains strong. The measures implemented included global head count reductions that reduced total employment by approximately 17% as well as a number of additional initiatives, including reducing the salaries of senior executives and senior managers, reducing the annual cash retainer of the Board of Directors, implementing a general pay freeze, suspending the 401K match, reducing discretionary spending and supplier costs and deferring lower priority initiatives. Efforts to reduce working capital and targeted capital spending deferrals were also implemented. These were all important factors in the second quarter earnings performance as well as balance sheet performance.

We reported previously that the annualized impact of the cost reductions was expected to be in the range of 45 million to $50 million. We also reported that about half of the reductions were in factory direct costs and half was in our overheads. We also reinforced that while the scale of these initiatives is sizable, the Company is taking care to not preclude opportunities for investment in the pipeline of new products that will help during the difficult macroeconomic environment of 2009 and provide solid growth opportunities for 2010 and beyond.

The cost reduction initiatives have had a favorable impact on results to date and are expected to continue to favorably affect comparisons in the coming quarters. As a result of the initiatives, overheads across the Company were down 20% in the second quarter compared to the prior year. You'll note from the financial statements that gross margins improved by 200 basis points in the second quarter compared to the first. The cost reductions were a factor. You'll also note in the quarter that expenses below the gross profit line were down 28% or over $9 million compared to the prior year. About half of that was due to lower incentive compensation accruals and currency. Compared to the first quarter, over $2 million or 8% is the size of the drop in overhead spending. Or expenses below the gross profit line. We expect the cost reductions to largely remain in effect through the third quarter and into the fourth quarter of the year.

I'll now turn to the outlook. We previously reported that while we did experience significant widespread weakness, and an environment with limited visibility across the majority of our markets throughout the first quarter, the level of overall business activity did begin to improve as that quarter ended and as the second quarter began. This improving trend continued throughout the second quarter and into the beginning of the third quarter. Overall, we are seeing improvement in order entry, driven primarily by the consumer electronics oriented markets. Certain other markets, especially the industrial markets have, however, not shown any significant signs of improvement and the medical and defense markets, which remain strong throughout the first half, have recently shown some signs of modest weakness or as in the case of the defense area some pushout of scheduled shipments.

While it cannot in this environment be said that anything's for certain, at this time, we do expect third quarter sales to improve by up to 15% from the base second quarter level of $168 million and thus be in the range of 180 million to $190 million in the quarter. Based on that, the Company expects to generate a small profit in the third quarter. It is important to continue to reiterate, though, that the outlook is subject to significant variability, especially given the current economic environment. Changes in demand levels, not metal price changes, metal supply conditions, new product qualification and ramp up rates, swings in customer inventory levels, changes in the financial health of key customers and other factors such as these can have a significant effect on our actual results. The outlook provided is based on our best estimate at this time and is subject to significant fluctuations due to these as well as other factors. I'll now turn the call over to Dick Hipple. And Hip will provide you with an end market update.

Thank you, John. I must say I was pleased with the sequential revenue and earnings improvement from the first quarter. As previously mentioned, the majority of this change came from the customer -- from the consumer electronics area across our business units. We had anticipated the second quarter to be stronger than the first. Driven by the extraordinary inventory adjustments taken by our customers in the first quarter. But obviously, the exact nature of the rebound was difficult to accurately predict. Looking forward in the same segment of our markets we would expect that the third quarter would see a modest additional sequential revenue increase. The overall visibility on a longer term basis is still very cloudy as it is difficult to gauge whether markets will ultimately grow or plateau at fundamentally lower levels as compared to last year until macro economic conditions improve at least returning to GDP global growth. We have still not seen the demand picture change in our heavy industrial markets such as commercial aerospace and oil and gas. Drilling activity has remained severely depressed. Until drilling activity rebounds, I would expect depressed conditions to remain.

A similar story has unfolded in the commercial aerospace market. That market will remain at lower levels until general flight travel miles begin to recover. Although it is not a major factor for Brush, I see a possible rebound coming in the automotive sector. In the first half of 2009 auto sales were down 30 to 35% while production has been down 50%. Inventories are getting closer to being in line, so increased demand should be coming. A similar circumstance drove the first and second quarter rebound in the consumer electronic sector. We have recently seen some pushbacks of orders in the defense sector. It appears to be a matter of delayed timing, not order cancellations.

I'd like to recognize that during this downturn our workforce has responded with flexibility and speed to help reduce costs very quickly, and there is no doubt in my mind that we will be a stronger organization as markets recover. Mult-faceted improvements are underway from improved operations, inventory control, IT systems, product development, pricing initiatives and overhead structure. I'd also like to make some comments regarding the quarter over quarter performance of our two largest segments. As you can see by the numbers, our specialty engineered alloy segment is still suffering from very low sales levels. This is particularly challenging due to the higher fixed cost structure of this business unit. We have reduced the workforce by over 25%, have implemented short work weeks and have taken many other cost reduction and revenue-enhancing measures.

During the last several years, the highest growth segment of this business has been the bulk products growing primarily into heavy industrial applications such as oil and gas and commercial aerospace as opposed to strip products which goes into electronic applications. We are now seeing some recovery on the strip products but are still suffering from very low levels in industrial product sales. We are pushing hard and our turning over all stones to drive this segment to improved performance as soon as possible. As this won't make a huge, positive impact on overall corporate performance. And in the meantime, the advanced material segment has seen strong revenue and earnings growth from first quarter to second quarter. In fact, second quarter sales were only 30% down year to year after adjustments for metal pricing which is a very good performance considering the market downturn. This division is performing very well and is expected to see ongoing progress in the third quarter. Thank you, and we'll open the floor to questions.

Thank you. (Operator Instructions) Our first question is coming from Chuck Murphy of Sidoti and Company.

Good morning, Chuck.

Any idea what the wireless inphotonics applications were as a percentage of advanced material sales in the quarter?

We don't have that with us, Chuck.

Okay.

The pie chart does get produced whenever we publish the update, so you'll see it in there. We do not have it in the room with us.

I was wondering, a lot of the LED companies had very positive results in the past couple weeks. I was just wondering if LED was in that kind of market for you is doing particularly well?

Again, the whole wireless sector and inphotonics is part of the big piece of the growth, so we are seeing the response. You're absolutely right when you look at companies like Cree, (inaudible) they're seeing very strong revenue increase. And we are participating in that because that's a key subsegment of William.

I guess the way I looked at it personally was that handset sales looked like they were a little bit better but not tremendously, certainly not 40% better like you guys saw your sequential sales. The LED sounds like it's a little bit more like that.

You have to realize this is kind of a funky situation and timing if you remember the data that I saw, Chuck, indicated the second quarter handset sales were down 15% year to year. Quite frankly, I was very encouraged by that because, you had the first quarter situation where you had sales to a lot of these customers down 40 to 50% while the consumer's only down 15. So remember when we talked about it last quarter it was difficult to figure out exactly where the consumer was. The inventory reduction was absolutely dramatic. Now what we're seeing, is we're seeing some recovery here getting back to exactly seeing the pull-through demand.

Okay. In terms of the 45 million to $50 million in cost savings you're expecting, I think maybe you said it before that you see it lasting maybe through the first quarter 2010. Is that correct?

I don't think we ever said the first quarter 2010. I think what we said was we would address each and every item that we took as we see the remaining quarters of this year unfold. So we can interpret that as costs starting to go back in the year -- beginning of 2010. I think we can probably say that. We would not see much go back in, in 2009.

All right. I think in the past, you said something to the effect of every $10 million in sales increase you see that you should see $0.10 to $0.14 for the bottom line. Am I remembering that correctly?

That's what we said. We said assuming the same metal prices and business mix.

Okay.

That existed in the first quarter.

Yes. So what, I guess, was it a matter of copper going up on you or was it--?

In the second quarter, if we adapt or adjust the flow-through for the metal price and some shift in business mix, and we did have some differences in customer-supplied metal, which as you know is also a factor. If we adjust the numbers for that, the flow-through was just under $0.12.

Okay. All right. I am guessing that similar logic applies to why maybe alloy didn't see tremendous leverage in the quarter?

Their sales really were fairly flat.

Yes.

What happened is alloy was up significant, that's correct. What happened in alloy was basically, if you take a look at other company's earnings reports that are more focused entirely in industrial applications, I'll just pick one up like a Carpenter Steel, if you look that one up. What you'll find is we're having some counterbalance going on here where these heavy industrial markets appeared to continue to decline in the second quarter as opposed to our strict products increasing in the second quarter with electronics. So we've had this drag down in this heavy industrial market sector particularly affecting alloy products.

Yes. Okay. And my last question may have said it before, but why was the other income line? It seemed kind of low to me. Weren't you supposed to start having some consignment-related expenses or something like that?

Consignment-related expenses are about the same. Actually down a little bit from last year because they pulled down the quantity of metal. The lower expense this year versus last year is the difference in exchange gains losses. We had some fairly sizable exchange losses on currency.

So mainly currency, so I guess could we look at that second quarter number as a decent run rate?

Yes. We have the majority of that number sitting there, that $1.5 million is a combination of amortization and intangible assets and a consignment fee.

Let me ask you this way. Like if the euro continues to go back up relative to the dollar, is that going to hurt you?

That depends on what kind of hedge contracts we have out there, what those rates are, the method of hedging.

Tough number to pin down.

It's always a tricky one.

That's not significant.

All right. Thank you, guys.

Thanks, Chuck.

Thank you. Our next question is coming from Anthony Sorrentino of Sorrentino Metals.

You had said in the release that sales to the medical market slightly declined in the second quarter as compared to the first quarter of 2009 but that they're anticipated to increase over the remainder of the year. What is your reasoning behind the expectation for improvement for the rest of the year?

Well, the -- it's really what I call -- we had two things affect us in the second quarter. One was a general market situation. Again, nowhere near the downturns we saw everywhere else. We saw modest pullback in medical and then in particular at our Techni-Met facility which is focused on the diabetes testing market, there was a, by our customer, I don't want to be getting into customer specifics, but there was a launch by one of our customers in a product that went a little lower -- took longer than expected because of some FDA slowness and approval. So all of a sudden, you bought a bunch out. It was going to get shipped out the door and then we had to hold up some of our orders. That affected the second quarter. That's going to flush through for us going second quarter. That will improve. That's the key item. We've also seen pullbacks in some of our X-ray business that goes into medical applications at electrocution business in growing products. We will be seeing some inventory adjustments going on there. We kind of think that's going to flush through. So we're not seeing that as we expect it to be a systemic decline there. It did affect the second quarter. More of a timing thing, and a particular customer situation that we have faced.

With regard to the ruthenium media targets, can you give us an update concerning the requalification of materials and how that's going with key customers?

Obviously slower than we like to see, but there's three major horses out there, and we expect to be in good position with one of them. Qualification shipping production orders this year. Certainly like to be in a stronger position, but that's where we are.

All right. Regarding the engineered material systems segment. You had said that growth in the second quarter as compared to the first quarter of 2009 is due to new product applications. Would you be specific as to what those new product applications are?

The key application growth at TMI has been in the district drive application which is the hard disc drives. We've had that new product introduced last year or so there, and if you've seen, the disc drive on business that would be like the Seagates and the Western Digitals. They were cut back severely in the first quarter. And again if you look at the same thing, the consumer's only down maybe 10 to 15%. There cuts backs were greater than 50% in the first quarter. So they're coming back on now, and coming back very strongly, as a matter of fact. So that new product that we have shipping in that market is coming up nicely.

Okay. Very good, thank you very much.

Our next question's coming from Rob Young of Wm Smith and Company.

Hey, everyone. Good morning.

Good morning.

Can you comment a little on any international acquisition opportunities?

Well, no, I really can't. But again, the general comment, we are certainly pursuing acquisitions at this point in time. We do have a balance sheet, and now's the time that should unfold some interesting acquisitions based on general market conditions and opportunities, but if they're not the right strategic fit, we're not going to be doing them. All I can say is at this point in time, we are actively pursuing acquisitions and investigating them.

Is there a particular geographic region that you're looking at?

No. The answer's no. From a strategic standpoint certainly Asia would be very interesting to us.

Can you quantify just the mix between the inventory depletion and possible core demand for the quarter and looking out into the remaining quarters of fiscal year, '09?

I think I commented, Rob, that the business base in the second quarter would be roughly $168 million.

Right.

And that we saw sequentially up to 15% growth in the third quarter. So the second quarter probably represents some growth over the first in real terms when you take out the effect of inventory corrections. It's hard to put our finger on exactly what piece of that would be growth versus inventory correction. Frankly, going from the second quarter to third quarter is growth.

Then you just mentioned on the last question some specifics about the data storage market. Has there been any depletion in that overall opportunity as a result of this lengthened time frame for getting requalified and going through the whole qualifications process?

Yes. I think that's -- it would be unrealistic not to say that. We are getting back into that market. It'll be a tougher slog for us as we move forward to get as large a market share as we had at one time. We're battling away with that. We've got some new products that we feel are superior. We'll see how we do over time.

Have you seeing any -- have you seen that level of competition increase dramatically?

I would say the answer to that is, no. I think we haven't really seen new competitive entrees there. It's the same group that we're competing with. I will say, though, that when you talk about the Williams division and the hard disc drive market, certainly, the media's not the only sector. We are in the hedge side of the business, and that's, we have a very substantial market share there. That's doing quite well. We're seeing the growth on that sector, although it's a smaller piece of the pie when you talk about the head business or the media business. But again, that we're seeing respond very, very nicely with these increases.

Okay. Then lastly on -- relative there solar, is there any opportunity to expand that piece of the business either organically or through acquisitions?

Absolutely.

Okay.

And I would say at this point the, I could possibly see -- well, I do see on the organic side. I know what we're working on, on product development so I'm quite excited about that. There certainly would be some possibilities depending on what acquisitions we may pursue, a piece of that business could be solar. So on both counts, the answer is yes.

Would you specifically be looking at the thin film as opposed to any type of silicone?

Right. That is correct. That's the place we play.

Okay. Great. Thank you very much.

You're welcome.

Thank you. Next question is coming from Mark Parr of KeyBanc Capital Markets.

Good morning.

Good morning, Mark.

Most of my questions have been answered. I did have one question, point of clarification. John, I was wondering if you could give us some feel for the cost reduction activity impact 3Q versus 2Q if you could wrap that all up and help us there, that would be really helpful.

Yes. We had commented at the end of the last quarter in prior teleconference that we believed by the middle of the second quarter that the -- we'd start to feel the full impact of the cost reduction initiatives both in direct variable costs, in factory overhead as well as in SG&A.

So that's like a 10 million, $11 million impact on the quarter. But the full effect of which was recognized for the second half of the quarter?

The full effect would have been pretty much in the second two-thirds of the quarter.

Okay. So whereas, you would have had -- you get $11 million of benefit in the third quarter, maybe would $8 million be a good estimate for the second quarter level?

Second quarter level out of the $11 million?

Yes.

We're probably closer to $9 million. Maybe a little bit more than that. We had some real benefit come flowing through the second quarter. I would say that for modeling forward, you aren't going to get a whole heck of a lot more than that level, that range.

Couple million bucks. Thanks for the help on that, and congratulations on the balance sheet recovery and the attention to cost and let's keep our fingers crossed that some of these other end markets start picking up soon as well.

Maybe we'll get rewarded by the marketplace the balance of the year and into next year that's certainly what we all hope for.

That stock's taking a nice upside today. That was a good result for you guys, clearly.

Thank you.

Thank you.

Thank you. Our next question's coming from [Shirard Patel] of Jefferies & Company.

Hi, guys, just a couple of quick housekeeping items really. What's a good tax rate that we should be looking at as we go forward here?

The tax rate when we're in a loss position or have numbers around zero, gets a little fuzzy just because doing the math, the impact of the fixed dollar credit items what it can do on the rate. I think our year-to-date rate's around 34%. Long term that's about where we play.

Okay.

In the mid-30s.

CapEx for the remainder of the year? I tink I might have missed it earlier.

Second quarter levels.

Second quarter levels were right around for the full year $16 million so correct?

If you would take the whole year you'd get a max of $16 million CapEx. It's probably going to be lower. Maybe around $13 million or so.

You have to be careful. Look at the cash flow of that $16 million, $10 million of that was money for the beryllium plant at our (inaudible) facility that's being funded by the government. So the net capital expenditures for the rest of our business was $6 million for six months.

Okay.

The whole year will be somewhere between 12 million $15 million.

Okay. That's all I had, guys. Thank you so much. Great quarter.

Welcome.

Thank you. (Operator Instructions) Our next question's coming from Avinash Kant of D.A. Davidson & Co.

Good morning, Dick and John.

Good morning.

I believe you mentioned at some point and I didn't get it right that, did you mention that given what you see in the markets out there, you would expect some sequential growth in Q4?

Didn't say that. What we said was we expected continuing progress.

Into Q4?

We did say into Q4 but sequential growth in Q4 we said was also a risk. We can't be certain in this environment.

Sure, of course. I was just trying to see what you said.

The real message, Avinash, is -- we actually said this, we had expected the second quarter to be stronger than the first quarter and the third quarter to be stronger than the first quarter. We said that last conference call based on just a macro economic sense of what's stress and logic based of what's going on. Once you go beyond that, it's difficult calling the the fourth quarter. It's hard to predict what's yielding out between demand versus inventory versus where is the market systemically lower than last year.. Where all of this is going to ferret out, nobody knows.

Right.

So I can say some of these, you can take some very high level macro data points and say okay, you've got handset sales down 15%. That reflects where the consumer is, okay? Is the consumer going to buy a little bit going forward? Maybe. All right. So that's how I look at this. Where is the market going to yogi out? Is it going to be strong as last year in total by the time the year ends? Probably not. The consumer's just fundamentally down. It's kind of trying to predict exactly where that's going to yogi out, it's a hard call. I think the best we can do is take it quarter quarter to quarter. We came up with some common sense logic that says second ought to be better than first and third ought to be better than second but once you go beyond that, it's open season.

Also, off the 45 million to $40 million annualized cost savings that you're talking about, could you kind of break it out, where is it coming from like how much from cost of goods, how much R&D, how much is unit? Do you have some idea?

Well, we did provide that insight in the last call as well as in my comments earlier. About half of the cost changes are in direct variable costs and the other half in overheads. For all practical purposes, the overheads are maybe half above the gross profit line and half below.

Okay. Okay, good. In terms of the government project they've been trying to install a new plant, where does the progress on that and when you see that starting to get online?

It's on schedule, and we expect to have construction completed in the second quarter next year, and we'll be going through start up, through that point through the end of next year. So I would certainly be expected to make some product in the third quarter and the fourth quarter, and getting more towards a real live volume production level by the end of the year early 2011. Everything's on schedule.

Thank you so much.

You're welcome.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for any closing comments.

Hi. This is Mike Hasychak. We'd like to thank all of you for participating on the call this morning. I'll be around for the remainder of the afternoon to answer any further questions. My direct dial number is area code 216-383-6823. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you all for your participation.