NACCO Industries Inc (NC) 2012 Q1 法說會逐字稿

Good day ladies and gentlemen and welcome to the First Quarter 2012 NACCO Industries earnings conference call. My name is [Tahesha] and I'll be your operator for today. (Operator Instructions). I would now like to turn the conference over to your host for today Ms. Christina Kmetko. Please proceed.

Thank you. Good morning everyone and thank you for joining us today. Yesterday a press release was distributed outlining NACCO's results for the first quarter ended March 31, 2012. If you've not received the copy of the earnings release or would like a copy of the 10-Q, please call me at 440-449-9669 and I will be happy to get you the information. You may also obtain copies of these items on our website at nacco.com.

Our conference call today will be hosted by Al Rankin, Chairman, President and Chief Executive Officer of NACCO Industries. Also in attendance representing NACCO Industries is Ken Schilling, Vice President and Controller. Al will provide an overview of the quarter and then open up the call to your questions.

Before we begin, I would like to remind participants that this conference call may contain certain forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements made here today. Additional information regarding these risks and uncertainties are set forth in our earnings release and in our 10-Q. In addition, certain amounts discussed during this call are considered non-GAAP numbers. The non-GAAP reconciliations of these amounts are included in our 2012 first quarter earnings release which is available on our website.

I will now turn the call over to Al. Thank you.

Good morning to all of you. NACCO Industries had consolidated net income of $25.2 million or $3 a share on revenues of $803 million in the first quarter of 2012. That compares with last year's first quarter of $62.8 million or $7.48 a share. Revenues were $745 million. It's important to remember that in the first quarter of 2011, net income included $39 million after taxes for the settlement of the Applica litigation. If you exclude that amount, adjusted income in the first quarter was $23.8 million or $2.83 a share.

NACCO Materials Handling Group reported net income of $21.2 million on revenues of $629 million in the first quarter and that compares with net income of $22.3 million on revenues of $586 million a year ago. The revenues increased in the quarter as a result of an increase in sales of higher-priced trucks and an increase in sales in Western European markets, as well as an overall increase in unit volume, mainly in North America. An increase in fleet services revenue and the favorable effect of unit price increases implemented in 2011, and early 2012, primarily in the Americas and Europe, also contributed to the increase in revenues.

In the first quarter of 2012 worldwide new unit shipments increased to approximately 20,100 units from shipments of approximately 19,400 units in the first quarter of last year and declined from shipments of approximately 20,700 units in the fourth quarter of last year.

The worldwide backlog was about 22,300 units at the end of the quarter. That compared with 24,800 units a year ago and 24,700 units in December of 2011.

Our first quarter net income decreased modestly compared with the first quarter of 2011, primarily due to higher employee-related expenses partially offset by an improvement in gross profit. Improvement in gross profit was mainly due to a favorable shift in sales mix to higher margin products and markets and the favorable effect of price increases partially offset by material cost increases.

Now looking forward NACCO Materials Handling Group expects the global lift truck market growth to continue to moderate in the remainder of the year with volumes comparable to or up slightly from prior periods in the Americas, China and Asia-Pacific and declining modestly in Europe, particularly Western Europe. Nevertheless NMHG anticipates a slight increase in unit booking and shipment levels and parts volume in 2012 compared with 2011, primarily as a result of new product introductions and marketing programs.

NMHG's backlog is expected to be modestly lower in 2012 compared with 2011, although commodity costs stabilized and decreased slightly at the end of 2011 and early 2012. Those markets are highly volatile and commodity price increases, particularly for steel are still expected in 2012.

Prices increases implemented in the first quarter of 2012 are expected to offset a significant portion of these anticipated higher material costs over time. NMHG's new electric rider warehouse, internal combustion engine, and big truck product development programs are continuing to move forward. The new electric rider lift truck program brings a full line of newly designed products to market. The Company expects to launch the final two models in this electric truck program in the second quarter of this year.

In mid-2011, the Company introduced into certain Latin American markets a new range of UTILEV branded forklift trucks, which are basic forklift trucks that meet the needs of lower intensity users. This new internal combustion engine series of utility forklift trucks is expected to be introduced into global markets during 2012. All of these new products are expected to improve revenues and enhance operating margins as well as help meet specific customer needs.

In the context of these new product introductions, the Company will continue to focus on improving distribution effectiveness and capitalizing on its product capabilities to gain additional market share. Net income is expected to decline in 2012 compared with 2011 as a result of the absence of one-time items, including the elimination of certain postretirement benefits, which benefited 2011 results and an anticipated shift in sales mix to lower margin products and markets during the remainder of 2012 and higher marketing and employee-related costs. The majority of the decrease in net income is expected to occur in the second quarter of 2012, with results in the second half of the year expected to improve modestly compared with the second half of 2011.

In the second quarter of 2012, we expect to see some increase in -- significant increase in our SG&A expenses related to ramping up our strategic programs focused on both market share and product distribution improvement and also some lower -- less rich mix of product being sold with the result that our margins are expected to be lower as well in the second quarter. Overall, the results for the year are expected to be down in both the Americas and Europe, Middle East and Africa market segments. Cash flow before financing for the full year is expected to be higher than 2011 despite a significant increase in capital expenditures in 2012 compared with 2011.

Longer term, NACCO Materials Handling Group is focused on improving margins on new lift truck units especially in its internal combustion engine Business, through the introduction of its new products. In addition, NMHG is strategically focused on gaining market share through its new products, which meet a broad range of market applications, cost effectively and through enhancements to its independent dealer network.

Hamilton Beach reported net income of $1 million in the first quarter. Revenues were $104.9 million. That compares with $1 million of net income and $100.6 million of revenue a year ago. The revenue increase was due to an improvement primarily the result of an increase in sales of products with higher price mix.

Net income in the first quarter was comparable to last year's first quarter. However, despite an improvement in gross profit, operating profit declined compared to 2011 as a result of increased selling, general and administrative expenses, lower interest expense resulting from prepayments of Hamilton Beach's term loan in the third quarter of 2011 and the first quarter of 2012 that offset the reduction in operating profit.

As you look forward, the middle market portion of the US small appliance market in which Hamilton Beach participates is expected to continue to remain under pressure. Hamilton Beach's target consumer, the middle market mass consumer continues to struggle with financial concerns and high unemployment rates. As a result, sales volumes in this segment of the US consumer market are expected to remain challenged.

International and commercial markets are expected to be stronger than the US mass consumer market. Hamilton Beach continues to focus on strengthening its North American market position through product innovation, promotions and increased placements and branding programs together with appropriate levels of advertising for the Company's highly successful and innovative product lines such as the Scoop, a single-serve coffee maker and Hamilton Beach expects that the Scoop and the Durathon iron product line, both introduced in late 2011 to continue to gain market position over time as broader distribution is attained.

The Company is also continuing to introduce innovative products in several small appliance categories and in the second half of this year, Hamilton Beach expects to launch the Open Ease Automatic Jar Opener. This product as well as other new product introductions in the pipeline for 2012 are expected to affect revenues and operating profit profitably -- positively. As a result of its improving position in the US consumer and commercial and international markets, Hamilton Beach expects an increase in revenues in 2012 compared with last year.

Overall, Hamilton Beach expects 2012 net income to increase compared with 2011 as a result of anticipated increased revenue and the non recurrence in 2012 of one-time costs incurred in 2011 partially offset by an expected increase in operating expenses. Hamilton Beach expects the 2012 cash flow before financing activities will be comparable to 2011.

Kitchen Collection reported a net loss of $2.8 million, $45.3 million of sales and that compares with a net loss of $3.3 million and $40.9 million of sales. Kitchen Collection's first quarter revenues increased primarily as a result of sales at newly opened Kitchen Collection and Le Gourmet Chef stores and an increase in comparable store sales at both Kitchen Collection and Le Gourmet Chef store formats.

Comparable store sales improved due to an increase in sales transactions and customer visits and a higher average sales transaction value. The increase in revenue is partially offset by the effect of closing unprofitable Kitchen Collection and Gourmet Chef stores in the period after March 31, 2011. As of March 31, 2012, Kitchen Collection operated 270 stores compared with 239 at March 31 a year ago. Le Gourmet Chef operated 57 stores that compared to 60 stores a year ago. At year end 2011, 276 stores and 61 stores respectively were operating.

Kitchen Collection reported a lower net loss in the first quarter of 2012, primarily as a result of higher sales and improved gross margin at Kitchen Collection comparable stores and the favorable effect of the absence of $700,000 of costs incurred in the first quarter of 2011 related to combining Kitchen Collections [to] warehouse facilities into one facility. The improvement was partially offset by higher employee-related expenses in 2012.

Looking forward, the outlet mall retail market remains challenging as continued high unemployment rates and fuel prices along with other consumer financial concerns are expected to continue to affect consumer sentiment and limit spending levels for Kitchen Collections' target customer in 2012. However, the Company expects to have an increased number of Kitchen Collection stores in 2012 and anticipates revenue in 2012 will increase compared with 2011. Overall, Kitchen Collection expects an increase in full-year net income for 2012. However, further improvements over the favorable first quarter 2012 results is expected to be concentrated in the fourth quarter with weak comparisons in the second and third quarters.

Kitchen Collection expects the momentum achieved by the new stores in the fourth quarter of 2011 and the first quarter of 2012 to continue in the remainder of 2012 and expects improvements in full-year operating results at both store formats, as new stores opened in 2011 develop an established customer base and as additional new stores were opened in 2012.

In addition, Kitchen Collection anticipates improvements in operating results as the Company continues its ongoing program of closing under-performing stores. Enhanced sales and margins are also expected as a result of further improvements in store formats and layouts at both Kitchen Collection and Le Gourmet Chef. Those are expected to be completed by the end of the third quarter of 2012, and as a result of further refinements of promotional officers and merchandising mix in both store formats. The renegotiation of store leases and the combination of Kitchen Collection's two distribution centers, as well as the absence of a number of costs incurred in 2011 that are not expected to recur in 2012, are also expected to contribute to improved full year results. Cash flow before financing is expected to be comparable to last year.

North American Coal's net income for the first quarter was $9.2 million on revenues of $24.3 million. That compares with $7.1 million and revenues of $17.9 million.

Revenues and net income increased in the first quarter compared with the previous year, primarily due to an increase in deliveries at the consolidated mining operations mainly as a result of improvement at a -- improvements at a customer's power plant and an increase in royalties and other income received from third parties. The increase in net income was partially offset by higher operating expenses at the Mississippi Lignite Mining Company as increased production levels resulted in fewer costs being capitalized into inventory in 2012 compared with 2011.

North American Coal expects improved operating performance at its coal mining operations in 2012. Tons delivered are expected to be slightly higher this year provided customers achieve currently planned power plant operating levels. Limerock deliveries are expected to decrease modestly in 2012 as customer requirements are expected to be lower as a result of the continued weakness in the Southern Florida housing and construction markets. Royalty and other income is expected to be moderately higher than 2011.

The new unconsolidated mines, which are in the development stage and will not be in full production for several years, are expected to continue to generate modest income in 2012. North American Coal also has new project opportunities for which it expects to continue to incur additional expenses. In particular, the Company continues to move forward to obtain a permit for its Otter Creek reserve in North Dakota in preparation for the expected construction of a new mine. The permit is anticipated to be issued in mid-2012.

Overall North American Coal expects full year 2012 net income to increase compared with 2011 mainly as a result of expected improvement in tons delivered at the Mississippi Lignite Mining Company. However, higher selling, general and administrative expenses as a result of increased employee-related costs and development activities are expected to partially offset the improvements in net income.

Cash flow before financing is expected to be substantially higher than 2011, mainly as a result of the receipt in the first quarter of $20.2 million for a dragline sold in the first quarter of 2012 to Mississippi Power Company.

Now that completes our prepared remarks and I'd open it up for any questions at this point that you may have.

Thank you. (Operator Instructions). Schon Williams, BB&T Capital Markets.

Hi, good morning.

Good morning.

Congratulations on the quarter. Just wanted to walk through some of the pieces here. I was a bit concerned about the order patterns within Materials Handling. It looks like we're -- it looks like Q1 orders within materials handling were down about 15% on a year-over-year basis. It's the -- it's the second quarter in a row, you've had your book-to-bill ratio has been below 1. Can you just -- can you add some color, where did you see the weakness on a year-over-year basis, either geographically or within the product mix? I mean talk about maybe where you see that -- where you see the order patterns going from here? Should I expect this type of level to continue or do you see any strength in -- coming in the next couple of quarters?

Well, there are a number of facets to answer or to address in answering your question. First, we are at a backlog level that is fairly comfortable from our point of view in an abstract sense in terms of meeting customer needs. Having said that, volumes were or bookings were less than we had hoped for in Europe. And that's a very tricky area for us to calibrate right at the moment. As you know, European economies are unsettled and it's useful to note that our weakest position is in Germany, which is by far the strongest market in Europe.

So weakness in Spain and Portugal, where Spain and Italy really are more significant does lead our dealers to focus on using inventory that they haven't stocked rather than reordering and in effect hedge their bets while at the same time they're maintaining a better flow of retail orders. So, there is sometimes a disconnect in the short term between retail orders and bookings that our dealers are making and our factory shipments, which of course are the basis for determining our revenues. So, there are some issues in Europe that are compounded by the fact that large orders, given the environment, from larger accounts can be delayed because of uncertainty about markets and they're also lumpy.

So it's hard to project. Our current thinking is that our position in the market will improve as we work through those factors and the second, third and fourth quarters. And so in our observations we've incorporated the best judgments we can about future orders, it's always subject to change depending on the circumstances. If you move to the Americas as opposed to Europe, Middle East and Africa, North America volumes, and the high dollar value trucks have been very substantial and some of our promotions in the low value trucks come later on in the year and so the unit numbers can be not necessarily a real indication of the dollar volume flow.

And you can get a lot of spikes in the lower dollar value items depending on the timing of how we approach, working with our dealers on that, on that portion of the business. But I would call -- I would say that overall the situation in North America was really quite comfortable and looks as if it's going to be even stronger as we look forward. Latin America had a weak couple of months in January and February, better in March. We expect to see an improving trend there; we made a couple of dealer changes that unsettled conditions for buying trucks. We think we're now through that, one of those is closed and our program to put stronger more financially stable dealers in place is continuing to move forward appropriately.

So, we feel that Latin America is coming along. We have a bigger separate business in Brazil. The Brazilian market has been a complex one recently in terms of currency fluctuations, the availability of government financing and a very complex set of rules that we operate under there. It looks as though things are going to be better in the second, third and fourth quarters than they were in the first quarter. So there is no simple, easy answer to your questions, but generally speaking, our objectives are improved market position over the remaining portion of the year. And at this point, we have seen overall markets, as I indicated in my remarks, and weakening in Western Europe, but generally similar or strengthening a bit in other parts of the world. So, I think that's about the answer I would give you [on that].

Okay. And I wanted to follow up on the -- some of the commentary. You had indicated, it looks like I guess Q2 is going to be an especially weak period for material handling from a cost perspective. I just wanted to see if you could add any additional detail on -- and it sounds like the -- maybe the SG&A spend is going to go up in Q2. I just want to make sure I understood that correctly and then if it is SG&A spend, I mean what exactly is it -- I mean do you just have a number of marketing events occurring in Q2, is there -- is it surrounding the new product introduction? If you just add a little color there that would be helpful.

The -- a good bit of it is really related to our marketing activities. And we have a number of programs in place that are likely to generate more costs in the second quarter. Frankly, when we put our original forecast together for the year we expected more of those costs in the first quarter than actually occurred. So, the results in the first quarter were better than we had expected and we didn't carry some of those. They involve several different kinds of programs. A very important one is a program to work with our dealers to increase their coverage by having a central, very thoughtfully driven hiring program that places additional sales people with our dealers. It's working very well, but we've coupled that with some subsidization of those new sales people in the short run. We believe that the volume production capability of our dealer sales force was probably close to being maxed out at the volume levels we were operating at.

So in other words, our sales people were very busy with the business that they already have. And there was less time to go out and develop new business, because they were consumed with working with our existing customers. From our point of view, that's not, that's not the position we want to be in, we want to build our capabilities, so that we can take advantage of the new products, the electric truck line I outlined, the utility truck that I mentioned and the internal combustion area, the standard truck and the internal combustion engine all -- those two in addition to our really exceptionally well received and performing premium line.

So we need to have enhanced capability in the field and part of the subsidy program is related to providing some favorable adjustments as dealers get new volume. So, the assumptions that we're making in the second quarter are that some of those programs are coming home to in the form of expenses somewhat in advance of generating the benefits that we expect (inaudible). Really in total that's, that's a big portion of the change. There is also some margin erosion between the first and second quarters, as we see it now, we'll have to see, but we think that the mix will be a little less rich, but the main effect is that we do see some sort of miscellaneous revenues and the margins on those declining in comparison to the first quarter, which was pretty strong in those areas, but they can still move things around in a small way.

In addition, we had some pickups in our material price variances and that will not reoccur in the second quarter. So that's another piece of it. There is a bigger currency variation in the second quarter because we had more hedged a year ago in the first quarter. And so there is little more negative in currency in comparison to the two years. Those are the major factors that I would cite, and increasingly we work our way through those as we look forward into the third, and particularly the fourth quarter. The third quarter of course is always somewhat weak as a result of summer vacations and plant shutdowns and so on and so forth. So, I think that's the answer I would give you.

Okay, and then maybe one, just one more on material handling. I mean can you help me frame how you guys are thinking about in terms of the goals or the milestones for the UTILEV products? Either I don't know is it -- is 2012 just kind of a -- this is the kind of test [bed] year and you want to just kind of, you want to get some products out there and kind of see how it goes. Do you have, I mean do you have unit goals that we could talk about? I mean is this the product that, if we do 100 or 500 units you'll be happy? Or is this the product that you could be doing 5,000 or 10,000 units this year, can you just help me think about what are the goals that you have for that product in 2012?

Well, they're above the low-end numbers that you used, but I wouldn't get into the specifics, but I think I would be inclined to describe a couple of aspects of that program, which we think are very important. First of all, in general, it's going to be a lower margin truck in some sense because this is in large measure a sourced truck and so it's not flowing through our manufacturing plants, although it's under our supervision.

And so we don't have the capital tied up, we don't have the -- we don't get the leverage in the plants from selling these products, but they meet real customer needs and those are customers that we haven't been able to reach before and we will not only be able to serve them appropriately, but both the UTILEV, and the existence of UTILEV and the standard truck will allow us to more appropriately price our more expensive premium product. And therefore get margins without sort of having to compete at the lower end of the market, the middle to lower end of the market with the truck that is over designed and more costly than those customers need to meet their needs. So it's all part of a broad strategy to enhance our margin position and internal combustion engine trucks. Well, we still are meeting customer needs.

Then I guess, what I would say is the sense of your comment that 2012 is very much should be thought of as an initial entry year, not only in terms of the phasing of bringing it on and especially in countries where special engine emission requirements are needed, but also in terms of the sequence of things and getting the dealers established and identifying the customer base and so on. And certainly 2013 and 2014 will be more robust years from that vantage point. But it gives us a full arsenal of trucks to be able to sell that meet our customers' needs and it's worth noting that there are certain countries around the world where the percentage of applications that require either the standard for the utility truck is much higher than is the case in the United States. So it's particularly important in our overseas market that we're well positioned to be competitive with the kinds of trucks that others may offer in those markets.

Okay, thank you, that was helpful. Now, just turning to Hamilton Beach. I know that the -- I think the gross profit dollars within that unit were fairly similar to last year. But in terms of the gross margin in Q1, gross margins, I went back over time, it looks like I'd have to go back four or five years to a time when gross margins were that low within Hamilton Beach and I just wanted to see if -- I wanted to make sure I understood it, were there any kind of one-time effect that hurt you in that unit?

And then maybe if you could just talk about I -- maybe the pricing environment within Hamilton Beach and my concern would be that, my concern would be that the mass retailers continue to squeeze on that consumer product and that -- maybe -- my concern would be that this is just a beginning of further price erosion. Can you just help me understand where the pricing is, where gross margins can go within that Hamilton Beach unit and maybe why the numbers were so weak in Q1?

Well I think to the extent I can give you a perspective on it, gross margin percent may have been a little low compared to the previous year, but we have quarters from time to time that are at that level and -- I don't know that we think that gross margins are likely to be materially different in 2011 as compared to 2012, for the full year. We get orders for lower margin products and some of the lower margin products have high dollars associated with them, their lower price points and some of that can occur in the first quarter. Sometimes it occurs in the third quarter in preparation for the fourth quarter. But it's really mainly probably related to that sort of situation. I think that those are really the most important drivers.

So there is nothing (multiple speakers).

We do have some foreign currency in the first quarter which is not insignificant as an impact as well. And as we indicated that SG&A is up also. But as far as your question is concerned as to gross profit, we think that roughly speaking, the levels we're at are sustainable kinds of levels, and that's the basis in which we're thinking about future quarters.

Again so it sounds like, Q1 is possibly kind of lumpy, it's a lumpy business and maybe that's what we saw in the Q1 period. But there is nothing in your mind that is structurally getting worse about either on the distribution side or the manufacturing environment for Hamilton Beach, is that right?

Right.

Okay. All right. And then just kind of lastly, turning to coal, we've seen a lot of -- I've seen a lot of data out there, I mean it shows that the thermal coal inventories are getting exceptionally high. I understand that you got -- obviously you have a very captive customer base you're not really participating in, you are not really participating in the thermal market to any real degree, it's a [private] market for you guys. But I still think like some of the same factors may be -- that's disrupting that market would be affecting your business. I mean it's primarily the mild winter that we had was decreasing -- was causing some disruption in terms of lower power generation.

And then the other concern that's out there is just the exceptionally low gas prices, low natural gas prices causing utilities to do as much switching as possible. I wonder if you could just kind of address, whether you guys saw any of that effect in Q1, and whether you see that being an overhang as we move throughout 2012. Because it's -- from your commentary it sounds like other than maybe, assuming the operators continue to work the plan, it doesn't sound like loading natural gas or mild winter has really affected you guys.

Well, the first thing to note is that the comments we have in the outlook are all based on the latest indications from our customers as to their expectations for the coal that they will need to operate at the levels that they choose to operate their power plants at. So that's a regular process of communication and we get updated regularly. So it's not something that we are just speculating on. These are based on, these comments are based on what our customers are telling us. With regard to the first quarter, the weakness and the warm weather and lower demand did lead to a pull up of one of the scheduled maintenance periods so that it affected the end of the first quarter, a bit more than we had anticipated. And I think that was a comfortable moment for them to have more gas-fired production as well.

I guess, the first quarter obviously was a better quarter than a year ago. You may remember that from a point of view of year-to-year comparisons that there were some operating struggles at our Mississippi Lignite Mining Company, were at the power plant at the Mississippi Lignite Mining Company. And so they had more downtime than they or we wanted and that was in a substantial degree. So it's, it's worth keeping in mind in terms of the comparisons with this year that there were some power plant operating problems last year that appear to be significantly ameliorated.

And as far as both the first part of this year, that is the first quarter, the results as we indicated in our release were improved and we anticipate that those comparisons will be pretty good for the rest of the year as well. And that's always assuming that the customers continue to operate their power plants at the level that they currently forecast and both from a demand point of view and from the point of view of the underlying operating performance of the power plant itself and whether they are meeting the expectations in terms of the uptime that they had in their plant. So that's about as much detail as I could give you.

Okay, now that's helpful. And then lastly on coal, it seems like the Kemper County project is kind of back in the news with some concern. I guess there's some ambiguity I guess as to the legal status and whether the courts are going to kind of take another look at it. I mean in your minds is this -- are these major roadblocks to that project going forward or is this kind of the normal course of building a coal powered plant in the United States?

To the best that we can tell, it's just normal course our customer is moving forward. You saw that they purchased a dragline for $20.2 million right at the end of the first quarter. That's a fair amount of money to have changed hands. We need to -- we needed to have that transaction occur at the time that it did in order to stay on the schedule that everybody is planning for, that's the best evidence I can give you.

Okay. And was that -- that was just a purchase from one of your other mine sites?

We purchased that dragline some time ago and over the years when we see good opportunity to purchase a dragline we've been willing to invest our capital in them. Obviously, the economics of a first class updated used dragline are significantly better than the economics of a similar new dragline. So, it is one way that we can help our customers have in these new coal operations have lower costs and better dispatch cost from their power plants.

Right. I'm just wondering if you've got something else that's coming off line that freed up that dragline?

No no, it's a -- we bought it from -- my recollection is we bought it in Europe and we brought it over, it's been sitting at a port in New Orleans for some time in anticipation of just what's happened.

Okay. Okay, perfect. Well, I appreciate the update guys. And congratulations on the quarter.

Thanks a lot.

(Operator Instructions). And we have no more questions at this time.

Okay, well thank you everybody that's been listening in. We appreciate your participation. Christy.

Yes, we are -- again, thank you for joining us today and we do appreciate your interest. If you do have additional questions, you can reach me at 440-449-9669, thanks so much.

Ladies and gentlemen there will be a replay available after this call. It will [be in for] an hour. It will be available for eight days, your access code is 31263120, once again 31263120. The number you will dial to get to the replay will be 888-286-8010. Once again that number is 888-286-8010. Thank you for your participation, you may now disconnect. Have a great day.