Mueller Water Products Inc (MWA) 2016 Q3 法說會逐字稿

Welcome, and thank you for standing by. At this time, all participants are in a listen-only mode until the question-and-answer session of today's conference begins. (Operator instructions). Today's conference is being recorded. If you have any objections, you may disconnect at this time. Now I would like to introduce Ms. Martie Zakas. You may begin.

Good morning everyone, welcome to Mueller Water Products 2016 third quarter conference call. We issued our press release reporting results of operations for the quarter ending June 30, 2016, yesterday afternoon. A copy of it is available on our website, muellerwaterproducts.com.

Discussing the third quarter's results this morning are Greg Hyland, our Chairman, President & CEO and Evan Hart, our CFO. This morning's call is being recorded and webcast live on the internet. We have also posted slides on our website, to help illustrate the quarter's results, as well as to address forward-looking statements and our non-GAAP disclosure requirements.

At this time, please refer to slide two. This slide identifies certain non-GAAP financial measures referenced in our press release on our slides and on this call and discloses the reasons why we believe these measures provide useful information to investors. Reconciliation between GAAP and non-GAAP financial measures are included in the supplemental information within our press release and on our website.

Slide three addresses forward-looking statements made on this call. This slide includes cautionary information identifying important factors that could cause actual results to differ materially from those included in forward-looking statements, as well as specific examples of forward-looking statements. Please review slide two and slide three in their entirety.

During this call all references to a specific year or quarter, unless specified otherwise, refer to our fiscal year. Our fiscal year ends on September 30th.

A replay of this morning's call will be available for thirty days after the call at 1-866-439-3740. The archived webcast and corresponding slides will be available for at least 90 days in the Investor Relations section of our website. In addition we will furnish a copy of our prepared remarks on Form 8-K later this morning. After the prepared remarks we will open the call for questions.

I'll now turn the call over to Greg.

Thanks, Martie, thanks for joining us today as we discuss our results for the 2016 third quarter. I'll begin with a brief overview, followed by Evan's more detailed financial report. I will then provide additional color on the quarter's results, and developments in our end market, as well as our outlook for the 2016 fourth quarter.

We were pleased with the third quarter's result. Adjusted operating income increased 18.2%, with all three business segments contributing to the improvement on a year-over-year basis. Mueller Company's domestic net sales of valves, hydrants and brass products increased 9% in the quarter, which helped drive this solid increase in adjusted operating income.

Mueller Company continued to benefit from growth in its key end markets of residential construction and municipal spending to repair and replace water infrastructure. And those third quarter net sales were down 4.3%, primarily due to lower shipment volumes into the oil and gas market, although we did have strong sales of our fire protection products.

Net sales in Mueller Technologies, increased 8.3% in the quarter year-over-year. Shipments of AMI products represented more than 50% of Mueller System's net sales in the quarter. As a result, Mueller Systems was slightly profitable this quarter, and Mueller Technologies operating performance improved by $2 million. Adjusted net income per share for the quarter was up 20% to $0.18 versus $0.15 a year ago.

For Mueller Water Products as a whole, we continue to expect demand for our products to increase year-over-year, driven by growth in both municipal spending and residential construction, and we believe we're on track to meet our overall expectations for Mueller Water Products for the full year.

With that, I'll turn the call over to Evan.

Thanks Greg, and good morning everyone. I'll first review our third quarter consolidated financial results and then discuss segment performance.

2016 third quarter net sales increased $9.1 million or 3% to $310.1 million compared with $301 million last year, we experienced solid growth in shipment volumes at both Mueller Company and Mueller Technologies which was partially offset by Anvil's lower shipment volumes into the oil and gas market.

Gross profit improved to $107.1 million for the 2016 third quarter from $96.2 million last year. Gross margin increased 250 basis points to 34.5% from 32% in 2015. Selling, general and administrative expenses were $55.9 million in the quarter, compared with $52.9 million last year. The increase was due primarily to personnel related expenses.

Adjusted operating income for the 2016 third quarter increased 18.2%, or $7.9 million to $51.2 million as compared with $43.3 million last year. Operating performance improved at Mueller Co., Mueller Technologies and Anvil.

Adjusted EBITDA for the 2016 third quarter increased to $64.3 million compared with $57.8 million last year, and for the trailing 12 months, adjusted EBITDA was $196.2 million. Interest expense net for the 2016 third quarter was $6 million, slightly down from $6.3 million, last year. For the 2016 third quarter, income tax expense of $8.2 million was 34.6% of income before income taxes. Adjusted net income per share improved to $0.18 for the 2016 third quarter, compared with $0.15 last year.

2016 third quarter adjusted results exclude a non-cash pension settlement charge, and other charges primarily associated with the demolition of a surplus facility.

In June 2016, the company's U.S. pension plan completed a pension benefit settlement program, lump sum distributions to fully settle existing obligations were offered to all vested participants who are no longer working for the Company and not yet receiving benefits. Approximately 75% of these participants accepted the offer.

As a result, the plan dispersed $58.5 million and the Company recorded a non-cash pension settlement charge of $16.6 million. These distributions are intended to reduce obligations associated with providing future pension benefits.

I'll now move on to segment performance beginning with Mueller Co. Net sales for the 2016 third quarter of $198.7 million, increased $10.9 million as compared with $187.8 million last year, primarily due to a 9% increase in domestic shipments of valves, hydrants and brass products.

We experienced strong improvement in adjusted operating income in the 2016 third quarter, largely due to higher shipment volumes, lower raw material costs and improved operating efficiencies. Adjusted operating income, improved 15.6% to $54.1 million as compared with $46.8 million last year. Adjusted operating margin improved 230 basis points to 27.2%, as compared with 24.9% last year. Adjusted EBITDA for the 2016 third quarter increased to $62.6 million compared with $56.5 million last year. And adjusted EBITDA margin increased 140 basis points to 31.5% from 30.1% last year.

Continuing with Anvil, net sales decreased 4.3% to $85.4 million for the 2016 third quarter from $89.2 million last year, as an increase in sales of fire protection products was more than offset by a $3.2 million decrease in sales into the oil and gas market.

Adjusted operating income for the 2016 third quarter improved to $7.4 million as compared with $7.2 million last year. This improvement reflects lower raw material costs and other cost savings despite lower sales in our oil and gas products, which have historically been our higher margin products.

And now concluding with Mueller Technologies. Net sales for the 2016 third quarter increased to $26 million as compared with $24 million last year. This 8.3% increase was primarily due to $9.3 million in higher year-over-year shipments of our AMI products, partially offset by an $8 million decrease in sales of AMR products to one customer. Additionally, AMI backlog and projects awarded was up about 10% at the end of the quarter year-over-year.

Adjusted operating loss for the 2016 third quarter, improved $2 million to $1.5 million as compared with $3.5 million last year, due to the increase in net sales, improved product mix, and lower selling, general, and administrative expenses.

Now turning to a discussion of our liquidity.

Free cash flow which is cash flows from operating activities less capital expenditures, was $59.4 million for the 2016 third quarter. A $10.6 million improvement compared with the 2015 third quarter. Free cash flow for the first 9 months, was $58.1 million higher year-over-year.

At June 30th, 2016 total debt was comprised of a $484 million senior secured term loan, due November 2021 and $2 million of other. The term loan accrues interest at a floating rate equal to LIBOR subject to a floor of 75 basis points, plus a margin of 325 basis points. Net debt leverage improved to 1.7 times at June 30th, 2016. Our excess availability under the ABL agreement was about $173 million. In July, 2016, we amended the ABL agreement and extended its maturity date to July 2021. Additionally, we were able to improve both financial and other terms including reduced interest rate margins and commitment fees.

I'll now turn the call back to Greg.

Thanks, Evan. I'll now comment further on our 2016 third quarter results and end markets and provide an overview of our expectation and outlook for the fourth quarter and full year, beginning with Mueller Co.

Overall Mueller Co.'s net sales were up nearly 6%, and as expected, we saw strong growth in domestic net sales, of valves, hydrants and brass products in the quarter, as our key end markets remained solid. Domestic orders for these products were up 13.9% year-over-year, which contributed to a higher domestic backlog entering the fourth quarter.

Mueller Co. is clearly demonstrating the benefits of higher volumes and its very strong operating leverage. Adjusted operating income for the 2016 third quarter improved 15.6%, adjusted operating margin improved 230 basis points, and adjusted EBITDA margin in the third quarter was 31.5%. On a trailing 12-month basis, the adjusted EBITDA margin was 27%, an increase of 140 basis points, compared to the prior trailing 12 months.

This is our 16th consecutive quarter, where Mueller Co. has delivered year-over-year higher adjusted margins and higher adjusted operating income on a quarterly basis, and the 31.5% adjusted EBITDA margin is the highest quarterly adjusted EBITDA margin that Mueller Co. has achieved since Mueller Water Products became a stand-alone publicly traded company in December 2006.

Turning to Anvil, end market demand for Anvil's products is mixed. As we expected, sales of our products that go directly into the oil and gas market, were down year-over-year. Demand from our Industrial markets, was flat to slightly down; however, sales of our fire production products, which generally account for over 20% of Anvil's overall net sales were up more than 13% year-over-year. As we have discussed in the past, Anvil sales into the oil and gas market have closely correlated with the US rig count. While the rig count is currently down 47% from last year as of July 29th, it has increased 15% since the end of May. While we believe it's too soon to conclude this market is stabilizing, this is the first positive indicator we have seen in some time.

Despite lower net sale, Anvil's adjusted operating income and margins improved due to lower raw material costs and other cost reductions.

Mueller Technologies third quarter net sales increased at both Mueller Systems and Ecologics. Mueller Systems had significantly higher sales of AMI products which more than offset a decline in AMR sales, primarily to one customer. At Ecologics, net sales increased 33% primarily in our fixed and mobile leak detection technology. As we have discussed on previous calls, Mueller Systems' strategy is gaining traction as we increase our penetration of the AMI segment of the market. In fact, AMI shipments grew $9.3 million in the third quarter year-over-year, and AMI backlog in awards at Mueller Systems was $45 million at the end of the quarter, up 10% from last year. Mueller Systems is continuing to benefit from its longer range radio capability, which we introduced into the market at the end of 2015.

Our LoRa communications technology has several competitive advantages, but most importantly, it lowers the cost of infrastructure investment and provides a path for Internet of Things for water utilities and municipalities.

Ecologics net sales increased as our fixed and mobile leak detection technologies continued to gain traction in the market. Year-to-date orders at Ecologics increased 45%, compared to the same period in 2015. Mueller Technologies operating performance improved $2 million compared to last year, and its operating loss was $1.5 million. The operating loss was at Ecologics as Mueller Systems was slightly profitable for the quarter.

Turning now, to our outlook for the 2016 fourth quarter beginning with Mueller Co. Municipal spending, and residential construction, our principal end markets, remain solid, which we expect should drive growth of about 10% in domestic shipments of valves, hydrants and brass products in the fourth quarter.

Last year, in the fourth quarter we had very strong shipments of our Pratt product line, as well as overall international shipments. We believe our Pratt and international shipments will be less in the fourth quarter this year. Consequently, we expect Mueller Co.'s overall net sales percentage growth in the fourth quarter to be in the low to mid single digits year-over-year. We expect Mueller Co. to continue its trend in improving year-over-year operating income and margins on a quarterly basis as we anticipate fourth quarter operating income to improve in excess of 10%.

Turning now to Anvil. Net sales for the fourth quarter are expected to be down year-over-year, driven again, primarily by a decline in shipments to the oil and gas markets. Sales for this market are now about 7% of Anvil's total net sales on a trailing 12-month basis, and we expect it will be down about $3 million to $4 million in the fourth quarter year-over-year. Although we expect fire protection net sales to increase in the quarter, we don't believe this increase will be enough to offset the decline in sales of our oil and gas products.

We expect Anvil's net sales percentage decline to be in the low to mid-single digits. Despite the decline in net sales, we expect margins to improve at Anvil and believe operating income will be essentially flat on a year-over-year basis.

Mueller Technologies continues to diversify its customer base and win AMI projects, and we believe in the fourth quarter, growth in our AMI shipments will again more than offset the decline in AMR meter sales compared to last year. We also expect the meaningful year-over-year improvement in Mueller Technologies operating performance to continue, due to higher shipment volumes at both Mueller Systems and Ecologics and a better mix with more AMI shipments. With this improvement, we expect Mueller Systems and Mueller Technologies as a whole, to be profitable in the fourth quarter.

Although our outlook for the fourth quarter for Mueller Technologies is down somewhat in both net sales and operating income from what we expected last quarter, it is largely due to the timing of projects at Mueller Systems.

We expect backlog and projects awarded of AMI products at Mueller Technologies to be around $54 million, entering 2017. Up about 25% year-over-year. For full year, 2016, we expect Mueller Technologies net sales to be down very slightly as Mueller Systems is expected to largely offset a $25 million decline in AMR shipments to one customer by growing its overall AMI business. 2016 AMI revenue is expected to grow between $20 million to $25 million compared to the prior year, despite essentially flat sales for the year, we expect operating results to improve $3 million to $4 million for the full year.

For Mueller Water Products, key variables for the full year include corporate expenses, which are expected to be $36 million to $37 million, depreciation on amortization, which is expected to be $54 million to $55 million and interest expense, which is expected to be about $24 million.

We expect our adjusted effective income tax rate to be 35% to 36%, and capital expenditures to be $38 million to $40 million. We expect 2016 free cash flow to be driven by improved operating results and an improvement in working capital. We expect free cash flow to exceed adjusted net income and to be significantly higher than in 2015.

Our overall earnings expectations for Mueller Water Products 2016 results remain unchanged. With the impact from project delays for Mueller Technologies offset by a stronger Mueller Co. performance, as we continue to be confident in the growth and demand we're seeing from both residential construction and municipal spending. We continue to feel positive about our outlook, our strengthening financial position and earnings prospect. With that, operator, I will open up this call for questions.

Thank you, we'll now begin the question-and-answer session. (Operator instructions).

Our first question comes from Seth Weber, RBC Capital Markets. Your line is now open.

Good morning.

Good morning.

First, I just wanted to clarify some of the numbers that I think I heard. Ecologics sales up 33% in the quarter, but orders were up 45% year-to-date. Was that correct?

Yes, that's correct.

And I guess my question there is, at these types of levels, is that a critical mass? Is that big enough for that business to start to turn profitable as well maybe in the early part of next year? Where do you see the threshold for the Ecologics business now turning the corner as well, I guess is my first question.

We're still not quite there. Ecologics, certainly, as we have talked in the past, we have added fixed costs to the business on the selling side, R&D. And we're not obviously quite at the volume level to be able to cover that fixed cost. We see very nice gross margins, and when we do get to that level, we will have very high conversion rates.

We think we're still probably, we could get there in 2017. It obviously depends on the continued adoption of our fixed leak detection. We have seen a nice growth in our fixed leak detection.

That is different than our field work. Our field work is profitable but it's lumpy; fixed leak detection is more predictable, a more steady flow of income. So we would think that we probably need to see another overall 20% growth in sales, revenues to get to that break-even point. We're not sure if we're going to get there, when we'll see that -- if, we see that in 2017 or not.

Perfect, that's very helpful, thank you. And then I guess as a follow-up question, you know, just conceptually, your net debt leverage was down 1.7%. It has come down materially over the years, and your free cash flow is going up, so can you just update us on your current thoughts on capital allocation. You have a small buy back in place, you did raise the dividend a little bit, earlier this year. But what's your thinking here, given the improvement in the capital structure and the free cash flow outlook?

Yes, Seth, good question. I know a number of you have been following us a while and know that several years ago our balance sheet was constrained. More specifically, our net debt leverage was approaching seven times, as you mentioned and Evan mentioned, at the quarter we just ended it is 1.7 times. And given the confidence in our outlook and our expected future free cash flow, we expect to have an even stronger balance sheet and have more flexibility.

And as you would expect, we're having a lot more detailed capital allocation discussions, with our board. As you pointed out, during the last 12 months, we have increased dividends twice, repurchased some shares as part of a $50 million share buyback that has been approved by the board. We have also evaluated acquisition strategies.

So I mean, at this point, I can assure you that we're very thoughtfully looking at all capital allocation options that we believe will best drive shareholder value. But I think it's -- when we talk about at least, capital allocations at this point, I think it's also important to note that we still remember the days when our net debt leverage approached seven times, so I think we're taking this all into account when we look at possibilities.

So we do think we have -- we're at the point now, where we can drive shareholder value with a very focused capital allocation plan, and I would say that where we are right now, you know, we're not ready to comment on exactly what that plan will be, but I think again, we have a lot more flexibility, we have a very positive outlook, and we think we have some real opportunities to drive shareholder value with the right capital allocation plan.

Okay, and as you think about M&A, is it primarily just on the technologies, smaller technology type tuck-in stuff, or would you be thinking something a little bit more transformational, either from a product perspective, or regionally?

You know, I think we certainly would consider and look at both. I think it depends on the opportunity. I think we would look at transformational acquisitions, but I think that we would be very hesitant about -- let me put it this way, we would certainly be very, very concerned, and watch what our net debt leverage would be, and that's what I meant by the previous comments.

It's still fresh in our minds where we were. So we would look at something transformational, but I don't think that we would stretch the balance sheet, too much beyond our comfort level. And I can never say what exactly it would be, because it always depends on the acquisition, and how quickly it would delever and so on. But I think that we have been pretty consistent just saying that we feel comfortable managing the business with net debt leverage at three times, but sort of look at that four times as a ceiling, but it certainly would depend on the acquisition.

Terrific. I appreciate the thoughts. Thanks, guys.

Our next question comes from Mike Wood, Macquarie.

This is [Jerome] for Mike, thanks for taking the questions. You said that you're on track with expectations, so I just want to ask if can you contrast the low double-digit growth for the base business in the second half with the 9% growth, in valves, hydrants and brass products this past quarter with the easy comps that you called out.

I'm sorry, would you repeat that again?

Just on the double-digit growth expectation for the second half, in the base business --- the 9% in valves, hydrants and brass products this quarter, despite easy comps, I just wanted to get a comment on what you're thinking for the fourth quarter.

Yeah, we are -- when we talk about double-digit growth, we're talking about our domestic valves, hydrants and brass products, and that's the largest percent of our Mueller Co. business, and as we said, we still expect double-digit growth. In fact, we expect that to grow -- valves, hydrants and brass products to grow 10% in the fourth quarter.

In fact, in July, our orders for these products were up between 10% and 11%. So I do think that we're on track to hit the outlook that we have been providing, I think throughout most of the year, and even one month, obviously, doesn't make a quarter, but the order rate that we saw in July, certainly supports the outlook that we provided. And again, I think further highlights the comments.

I think the comment that you just made about an easy comp, last year we certainly saw a falloff in our orders in the third quarter. They didn't meet our expectations because of the weather, the heavy rains, in a good portion of the country, and our distributors were sitting with a lot of inventory as we entered the fourth quarter.

This year, our distributor inventories look like they are in line from where they typically expect them, between 35 days, 40 days. As I said, we saw a nice growth in orders in July, and we still look at residential construction and municipal spending as being very solid. So I think as we sit here today, the outlook that we've provided, the last --we're pretty confident the outlook we have given the last several quarters, and reaffirm today that we'll be able to achieve.

Thanks, and then just on raw materials, if you could comment maybe on any benefit you saw in the quarter, and with steel prices going up if that turns into a headwind in the fourth quarter, if you need any additional price actions with that increase in steel prices.

Yes. Actually when we look at both in our Mueller business and our Anvil business, on a sequential basis, we saw higher scrap steel costs, but year-over-year, our scrap steel costs are still down. So on a year-over-year basis, going into the fourth quarter, we expect that will be a tailwind.

But however, since we did see an increase in the steel scrap prices, we did announce price increases on a number of our Anvil product line effective at the end of June. Those went anywhere from 4% to 8%, so we expect that we'll start seeing maybe some of the benefits of that price increase in the -- later in the fourth quarter.

Relative to Mueller Co., we did put a price increase in in February that we think more than offsets any impact that we may see on increased scrap steel prices, but again, I think it's important to point out, we did see an increase sequentially, but on a year-over-year basis, what we're paying for scrap and brass ingot is still down.

Great, thank you, guys.

Thank you.

Thank you, our next question comes from Walter Liptak with Seaport Global.

Hi, thanks, good morning, guys.

Good morning.

I wanted to ask about the Mueller Co. business, and that the order growth and backlog build a little bit more. Basically, so I think throughout the quarter, the orders were pretty strong, including in July. Why didn't it flow through to revenue? Why was there this build in backlog?

A couple things. Some of the orders that we saw coming in in the third quarter were actually for larger valves. Larger valves have a longer delivery lead time. And that's a positive for us, too, because generally, when we see projects that require larger valves, then pipelines that require smaller valves are not too far behind.

So one, given the mix, we did see a little more of a larger valve with longer lead time.

The second thing that actually -- that impacted us is that with most of our distributors, we do have a rebate program, and it's based on them purchasing a certain number of orders or volume with us throughout the year, and we have had several of our distributors achieve that level where they move to the next level with rebates, and that gets subtracted and again, that's good news, and that gets subtracted from our revenue line.

So I think that one, probably what impacted the most was seeing less in the third quarter and supports our fourth quarter forecast is we did see a higher mix of large diameter valves which again as I said, are a little longer lead time, and we are seeing that we are getting distributors that are getting to that level of rebate sooner this year than what we even expected. And that's coming a little bit off the top line.

Okay, that sounds great. And are you starting to see the smaller valves come through behind these larger valves or is that something that might be a little (multiple speakers)

Well, (multiple speakers) valves are strong throughout the year, but as I said, generally, when we see an uptick in larger valves, that's a good omen, or a good driver of what we would expect down the road to see an uptick in smaller valves, because again, once they put the larger diameter pipeline in, generally smaller diameter pipelines will run off that larger diameter. But I think that will be a couple months before we see those projects driving demand for smaller valves.

Great, thank you.

Thank you, our next question comes from Ryan Connors, Boenning & Scattergood Inc.

Thank you for taking my question, and I apologize if I'm running over some covered ground here. I've been hopping on a couple of different calls. But I wanted to explore maybe, Evan, the divergence between GAAP and adjusted numbers. In particular, you mentioned in the press release the charge for the idled foundries. I am just curious which facility that is, and it was a $5 million charge. What exactly was happening there?

Several years ago, we shut down an Anvil foundry and plant in Statesboro, Georgia, and moved production to our Columbia facility. Since that time, we've worked to take the appropriate steps to manage the site, and recently started demolition, decommissioning and recorded the related charges that you outlined.

We expect future expenses associated with this activity will be minimal, so effectively just in the quarter, we started the process to take down the buildings in south Georgia and recorded the associated charges, and we think that's effectively all the charges that we'll need to take.

And then, again, this has probably been talked about maybe ad nauseam, but just the scrap steel tailwind and the margins in Mueller Co., Greg, over the last several years, you've talked about -- you've maintained the peak margins we saw in Mueller Co. in the past peak were probably not be revisited, and yet even if we add in Mueller Tech and Mueller Co. together to form the synthetic legacy Mueller Co., it seems we're getting back up to that level.

Is it your view that that's still the case, that those are anomaly type margins, and we should moderate to the mean, or can we assume that we maybe do have a higher plateau level here?

Yeah, Ryan, great question. I think we're getting confident, when you look at it historically, and since Mueller Water Products has been a publicly traded company, that Mueller Co. did reach one year, for the 12-month period, EBITDA margins over 30%. Of course they were using 100% of their capacity then, and everything was flowing very smoothly.

We do think that if our volume picks up, that we will have the opportunity to I think continue. As you know, we've been pretty much saying that we were at the 25% -- we were confident in the 25% plus range on our -- on Mueller Co. The last 12 months, we were at 27% margin. I think if we continue to see capacity utilization increase, that we have an opportunity to expand upon those. But it won't be linear, it will be a step.

For instance, we're at a very nice position right now, where we're able to get everything out -- do all of our production, on one and a half, you know, one shift with some overtime, maybe two in some operations. As capacity utilization goes up, when you have to add another shift, sometimes you're not as efficient in the beginning as you are -- as capacity utilization continues to go up. So that will be I think an increase, it will be a step movement, but given if we see volume continuing to go up, sure, we may see scrap steel prices going up, it could impact us somewhat, but if we've demonstrated this business in the past, we're able to pass those along to the market.

So as we look at it today, that we believe that if we continue to see volume increasing, that we feel good that our margins can continue to increase.

Whether or not we'll ever get back on an annual basis, the 30% that we did have the one year, that remains to be seen, but we're very pleased with the efficiencies that we're generating at the manufacturing facility. Some of the capital investments we've made over the last several years to streamline operations, we're seeing the benefits. We're certainly seeing the benefit of lower scrap steel. but again, as we said, if we see raw material prices going up -- costs going up, we think we can cover those on the pricing side.

Just to clarify, when you say 30%, you're talking about you're normalizing for the current segment structure with Mueller Co. or you're talking about those are numbers when Mueller Tech -- or Mueller Systems used to be --

No, we're just talking the current structure of -- I'm just talking about Mueller Co., not Mueller Tech.

Mueller Co. as currently constituted. Okay, great, thanks for your time.

(Operator instructions). At this point, we don't have questions in queue.

Well then, thank you very much for joining us today on our call, thanks for your interest in the company, and I'm sure we'll see you all soon.

That concludes today's conference, thank you for participating. You may disconnect at this time.