Neogen Corp (NEOG) 2006 Q4 法說會逐字稿

Good day, everyone, and welcome to the Neogen Corporation fourth-quarter and year-end fiscal year 2006 results conference call. Today's call is being recorded. For opening remarks and introductions, I would like to turn the call over to Mr. James L. Herbert, Chief Executive Officer. Please go ahead, sir.

Good morning and welcome to our regular quarterly conference call for investors and analysts. Today, as it's been announced, we will be reporting Neogen's fourth quarter that ended on May 31 and simultaneously of course our year-end results.

I will remind you that some of the statements that are made here today could be termed as forward-looking statements. These forward-looking statements of course are subject to certain risk and uncertainties. Actual results may differ from those that we discuss today. The risks that are associated with our business are covered in part in the Company's Form 10-K as filed with the Securities and Exchange Commission.

In addition to those of you who are joining us today by live conference, I also welcome those who may be joining by way of the simulcast on the World Wide Web. These comments along with some exhibits will be available on the Web for approximately 90 days. Following comments this morning, we will entertain questions from participants who joined on this live conference. And I'm joined today by Lon Bohannon and Rick Current.

Earlier today, Neogen issued a press release detailing the final results of the Company's 2006 fiscal year and the fourth quarter which ended on May 31. Once again, we set a quarterly and annual record for the Company in terms of both revenues and income. Neogen's net income for the year increased by 34% to approximately $7.9 million as compared to $5.9 million a year ago. This translates to $0.92 a share for the 2006 year as compared to $0.70 per share last year. Net income for the fourth quarter was nearly $2 million as compared to approximately $1.4 million last year or up 35%. On an earnings per share basis, the fourth quarter this year yielded $0.22 per share as compared with $0.17 last year.

Revenues for the year were up 15% to approximately $72.4 million as compared to 62.8 million last year. The fourth-quarter revenues show an even better compression with revenues of approximately 19.8 million, and that's up 24% from revenues in last year's fourth quarter.

As I said earlier, the completion of this fourth quarter also marks a continuation of our winning streak of both profitability and revenue growth. This was the 53rd consecutive profitable quarter from operations for the Company. Or stated another way, it's now been over 13 years since Neogen had an unprofitable quarter. The quarter also marks the 57th quarter in the last 62 in which Neogen has shown revenue increases on a year-over-year comparison. We began building this revenue record 15.5 years ago.

We believe that fiscal year '06 did show good financial performance. But further, we had development in all of our development areas as well as our growth strategy that will carry us forward in the years ahead. As an example, we were able to increase gross margins from 48.8% to 51.1%. Productivity improvements as well as better utilization of our facilities drove our operating income to over $12 million or a 37% improvement as compared to last year.

Our research and development groups were successful in bringing several new products to market during the year and making some very significant improvements in some of our existing products. We were also able to boost our international presence during the year as international sales grew to 29% of total Company revenues for fiscal year '06. This compares with 27% and 25% in the prior two fiscal years. Our balance sheet was strong at year-end and even stronger today. Shareholder equity increased almost 18% as compared to a year ago.

During the year, we made some strategic acquisitions that will be important to the Company's future growth. At the end of December, we announced that we had completed the acquisition of the dairy antibiotic test business from Brussels-based UCB and announced our intention to relocate that manufacturing operation from Barcelona, Spain to Lansing, Michigan. I'm pleased to announce that as of two weeks ago that entire business has now been relocated.

It's estimated that the worldwide market for testing for antibiotic residues in milk approaches $60 million. The revenues from our new business in this last full year of operation was approximately 8.5 million. We continue to think that we will be successful in obtaining US Food and Drug Administration approval. In the early part of next calendar year, they will open a sizable market opportunity for us with this product line in the US.

In late February, Neogen acquired Centrus International from the Eastman Chemical Company. The Soleris product that came with this acquisition gives Neogen an entry into the general microbial testing market with a truly unique product advantage that we've not enjoyed before. Though the company had revenues of less than $3 million, we believe that we have good growth opportunities with this product going forward.

During the year, the Company also acquired a 55,000 square foot building from the Lansing School Board. This property is located about a mile from the existing Lansing campus. Remodeling began this month to allow for the consolidation of the Centrus business, increased staffing in R&D and for other general purposes. However, a significant portion of their property will remain available for some future expansion.

In early June, the Company sold 650,000 shares of common stock in a registered offering. In conjunction with that offering, Lon Bohannon and I sold 150,000 shares through the exercise of non-qualified stock options. The stock was sold at a net of $20 per share to 14 shareholders. Net proceeds to the Company from the sale resulting from the exercise of the options was approximately $13.9 million. Now, I should emphasize that the sale by Lon and myself does not impact the total number of shares that either of us continues to own in the Company since we've both owned the same number of shares as prior to the offering. Our sale allowed us to handle the tax consequences of that option exercise and prevented there being a future overhang in the market.

Funds from this stock transaction were used to retire the Company's bank debt. There was a debt down of approximately $10 million. Therefore, the long-term debt that shows on the year-end balance sheet is now gone. Other portions of the proceeds were used to complete secondary payments on the UCB transaction and the acquisition of some additional equipment. As of the end of June, the Company had approximately $4 million in cash and securities, no debt and full access to our $17.5 million bank line.

In May, we lost a member of the Board of Directors and a good personal friend with the death of Ted Doan. Ted served as a member of this Board for almost 24 years and his encouragement was important, especially in those early formative years. We'll always appreciate the legacy that he left us.

In mid-June, Jack Parnell stepped down as Chairman of the Company's Board of Directors, where he has played an important role for the Company since 2001. But now, Jack will continue to be a member of the Board. I was elected as Chairman of the Board of Directors and Chief Executive Officer, and Lon Bohannon was elected as President and Chief Operating Officer. It was very appropriate at Neogen's stage of growth that we adjust some areas of responsibility to get the right people in the right places to continue our drive for future growth.

Lon is clearly the right person to drive that future growth, and the Company is extraordinarily fortunate to have someone of Lon's knowledge of our business, his impeccable business judgment, his demonstrated leadership ability and his unquestionable personal and corporate ethics. Though I don't expect that we'll see any major changes in the Company's direction, I'm sure Lon will bring some new ideas and new energy and vigor to the entire organization. Lon and I have worked side-by-side since he joined the Company 22 years ago as Controller and then moved to Chief Financial Officer and then to Chief Operating Officer. He has demonstrated an extraordinary commitment and a conviction and a personal involvement with the Company's customers, its employees and its shareholders. His election will help ensure the Company's growth as we near the $100 million revenue mark and plan our strategies for growth beyond that.

Now, let me abate any rumors that might be out there. First of all, I haven't been diagnosed with any dread disease. And no, I'm not planning to run for mayor or go to Texas to herd cows. I intend to stay around and help Lon as long as he and I believe that I am effective. I plan to spend some time in key areas that are going to be important to our growth as we begin to focus on the $200 million revenue mark. I intend to work on further development of the Company's five-year plan to work on new strategic acquisitions and to be involved in helping to strengthen some of our R&D activities. I'll also be helping Lon to focus on the international expansion, since a significant part of our growth opportunity lies outside the US.

Now, let me turn the conference call over to Neogen's new President, Lon Bohannon.

I guess I would start out by saying it is highly unlikely that I'm nearly as good as what you just made me sound in that introduction, but I'm certainly appreciative of those kind words. I am very excited about the future of Neogen, and I want to comment further on that in a few minutes. But first, I want to take a few moments to review the performance of our two operating divisions in more detail.

Let me begin by covering some fourth quarter and fiscal year highlights for our animal safety group. The animal safety division experienced a very solid year. They had organic sales growth of more than 8%. You saw the numbers for the fourth quarter, where growth did slow to around 6%. However, that fourth-quarter drop-off was the result of timing of orders for one of our large promotional rodenticide programs, timing of some international shipments for our BotVax B vaccine and some unusual inventory stocking orders for injectable vitamin products in last year's fourth quarter which made for a difficult quarterly comparison this year. However, this group achieved double-digit sales growth for most of the year, and all signs point to return to double-digit organic sales growth in fiscal year 2007.

There were several key product lines for animal safety that experienced significant growth during fiscal year 2006 that are worth mentioning. Veterinary instruments has achieved stellar growth for a number of years and continued that strong performance in '06 with sales growth of 15%. Our animal safety diagnostic team had a terrific fourth quarter and year. Sales for forensic drug tests, our proprietary K-Blue Substrate and diagnostic research kits -- each growing between 11%, 23% for the quarter and the year.

Sales of our care line of products focused on the companion animal market were up more than 40% for the quarter and 16% for the year on the strength of some new product introductions and market share gains. Rodenticides sold to some large OEM accounts also had a strong year with sales growing 27%. And by the way, just in general for our animal safety group, the OEM customers represent a significant future opportunity.

Looking at our food safety division, sales there were 46% higher than last year in the fourth quarter and they were up 24% for the year. Like the animal safety group, organic sales or same-store sales growth for the food safety team for the year was also 8%. That was led by a 12% increase in sales at our Neogen Europe operations and an 11% increase in sales of our Acumedia dehydrated culture media products.

Even though acquisitions contributed significant sales growth for the quarter and the year, I'm also pleased to report that our Lansing-based food safety diagnostic group generated organic sales growth of 12% in the fourth quarter, following a 13% organic sales growth in our third quarter. You will recall that just over one year ago, this group struggled to show any same-store sales growth. So the results for the last two quarters represent a significant turnaround. Additionally, I think this momentum is expected to carry over and help food safety report overall double-digit same-store sales growth in fiscal year 2007.

Now, a number of product lines contributed to the strong food safety sales growth, including sales of diagnostics for naturally occurring toxins that were up 19% for the year. This growth was led by particularly strong growth in sales of test kits to detect aflatoxin. I think most of you probably remember that aflatoxin is a residue from mold growth. It's very common in hot dry weather. It's a problem in several commodity crops, including corn and a known carcinogen and is regulated by USDA.

Sales of food allergen test kits had another exceptional year, growth of almost 40%. This was helped by new labeling regulations that went into effect on January 1 and the introduction of several new products during fiscal year 2006. Also, sales of our AccuPoint ATP General Sanitation Test continued to gain momentum as we moved through the year and contributed growth of over 14% for the third and fourth quarters.

Now, as stated earlier and as Jim talked about, the acquisitions did contribute to the strong overall growth. I think probably more important for our shareholders, these acquisitions were accretive to operating profit from the very first month they were consolidated into Neogen's financial statements. Both of the acquisitions that Jim talk about give Neogen access to important new markets, and there are significant future opportunities that have been identified for the dairy antibiotics testing business and the Soleris rapid test system for microbial contamination.

At this point, I was going to say with all that great news, why is Neogen's stock price so depressed? I think you all know that the stock went through some tough times in the last 30 days or so. I can't give you any concrete reasons why the market has been looking at our stock and beating it up a little bit. I think that just in general, the market doesn't like uncertainty. There's a lot of things going on out there that we could talk about. And perhaps there was some uncertainty related to Neogen with the change in organization and some of the questions related to our recent offering of stock. But what I do know -- and that is all speculation -- and I do know that the market responds very quickly and very positively to good performance like the quarter we just reported. And I think that's where management needs to focus its efforts and where we will be focusing our efforts in the quarters and the year ahead.

Now, one positive note pertaining to Investor Relations is our recent announcement that Neogen has been included in the new NASDAQ global select market that has the highest initial listing standards of any exchange in the world. We are pleased to be in this exclusive club with 1,200 companies that are recognized for their outstanding financial and liquidity standards. Now, let me get back to my earlier statement pertaining to my perspective on the future of Neogen.

Jim has been very gracious and kind in his remarks and compliments regarding my appointment to the office of President. No one could come into Neogen to adequately fill Jim Herbert's shoes. But I can assure you that I am committed to do everything in my power to maintain the exceptional growth performance Neogen has achieved over the last 15 plus years. I'm optimistic that Neogen can continue this performance for a number of reasons.

First, I'm particularly happy that Jim will continue to be actively involved in Neogen's business and available to provide the kind of wisdom, advice and counsel that I need as I take on bigger role as President. Also, I believe Neogen is very fortunate to have developed a strong management team to work with me as we drive toward annual sales of $100 million. I think two individuals in particular will be instrumental in helping achieve this important milestone. Terry Morrical has been promoted to Vice President of Animal Safety with overall sales and bottom-line responsibility for that division. Ed Bradley has been promoted to Vice President of Food Safety and will take on similar responsibilities for the food safety group. These two individuals bring a total of more than 25 years combined experience to their respective teams. They know our markets, they know our customers and our products, and they have demonstrated a level of dedication leadership that gives me confidence we can continue our streaks of sales growth and profitability.

I'm further encouraged by the knowledge that other key growth drivers for Neogen remain in place. Never in our history as a company has more attention been given to food and animal safety by consumers, regulators and therefore our customers. Our markets are sizable and growing and as Jim said especially in international markets, where many countries are moving forward with new interest in regulations focused on food and animal safety. Finally, we believe that opportunities to make strategic and non-dilutive acquisitions will continue to be available to add to our expected strong organic growth.

So with these growth drivers in place and a talented and trained workforce on board, Neogen is poised to continue its history of strong top and bottom-line growth. So I believe the prospects for our Company and the fiscal year we just started and beyond are exceptional. And I look forward to sharing Neogen's future success with our employees and stockholders.

So that concludes our prepared comments. At this time, I will turn the call back over to the operator for any questions you may have for Jim Herbert; Rick Current, Neogen's Chief Financial Officer; or myself.

(Operator Instructions). Laura Engel, Stonegate Securities.

Congratulations to everyone on their new I guess management positions. Jim, you are always welcome back in Texas to I think herd cows as you say if you so choose. I wanted to see if you all could expand a little bit on the increase in international sales and what the sources of those increases were maybe by country or by product, just overall view of that and what it will look like going forward. Is that going to continue to increase as a percentage of your overall sales?

I think leading that was our move of a couple of years ago when we made the acquisition of a company in Scotland, established it as our distribution point for all of the EU with our Neogen Europe, Ltd. operations located in Ayr, Scotland. That was helpful to us. It continues to be helpful to us. It was particularly helpful to us in the acquisition of the UCB business in that we had to produce about four months' worth of inventory in Barcelona, Spain --

Before you could open it?

Yes, before we could shut down Barcelona and move it to Michigan. It so happened that a big part of that business was in Europe, so we actually transferred the inventory from Europe to Scotland and handled our distribution out of there. A significant portion of that UCB business, that dairy antibiotics business, is international. That clearly had an impact on the growth of the percent of international sales versus domestic sales.

We had an increase in our sales in the UK, in Germany and France -- probably accounted for a big part of that in the fourth quarter. I think sales there were about $5 million into those three important European countries. We're beginning to get a little bit of stuff into Eastern Europe. I'm surprised when I see Russia (multiple speakers) --

Yes, anymore in China or South America? I know we had some press releases about some things going on in those areas at one point.

South America continues to be strong. China -- Lon is the Chinese expert. I'll let Lon comment on China. But the currencies have sort of leveled out -- the risk of currencies in South -- in Latin America. We think that's going to give us more growth opportunities as we look into the next year. So I think China has a story unto itself, but I think the rest of the world opportunities bode well for us.

As it relates to China, I will just say that we actually did exceed our budgets in fiscal year '06 for China. They were relatively modest. The product lines that are contributing primarily to the growth there are tests for Salmonella particularly, which is good to see in that specific pathogen and microorganism test line. And then, dehydrated culture media is the other big opportunity. Interestingly, we will be going over there in September and we've got customer set-ups -- seminars set up for Acumedia dehydrated culture media products and for mycotoxins, which is an area of interest that's growing over there. I think that's one of the things that we see just in general on the international side of the business -- is that there is a growing interest for a number of the products that we have, including things like general sanitation and allergens in addition to some of the core products that we've been selling for some time.

All that will be continue to -- you will continue to handle that area as well out of Scotland, or will you look -- is there a need to set up something closer to I guess farther east?

We actually operate -- the Asia-Pacific region is operated out of here and out of Shanghai. And I don't think we'll see probably any changes in that.

Congrats on the quarter and the year as well.

Amy Stevens, Susquehanna.

Congratulations as well on a strong quarter. I just wanted to ask a couple of quick questions. The first is related to your gross margin improvement in '06. To what extent do you expect to be able to continue those in the coming year? Obviously, it's pretty significant -- a couple 100 basis point improvement. Is that a sustainable kind of increase? Are we at steady-state right now or should that creep up?

And then secondly, with regard to your mention of non-dilutive acquisitions, what particular areas are -- do you see as potential areas you might expand your presence in? Any color on that would be very helpful.

As it relates to your question on the gross margins, of course, I made a quote in the press release that I was very pleased to see that 200 basis point increase. It was substantial. Neogen does have a culture of looking at ways to reduce its cost, contain its cost. We're constantly looking at ways to improve productivity. And as our sales increase and grow and we can make better utilization of the facilities that we already have in place, I would like to think that we could not just maintain that but that it could improve a little bit moving forward.

I don't know that we can achieve the kind of increases that we had this year. Of course, one of those things that causes us to pause when making any kind of predictions like that is the current situation with the price of oil that ultimately filters down and affects a number of commodity products and raw materials that we utilize. Of course, it obviously also affects fuel costs for freight for materials coming in and going out. So that's something that we can -- is a challenge for us along with just about everybody else that's out there in this environment. We're continuing to look at ways to be as efficient as possible with that. But we're going to continue to focus on ways to improve that gross margin going forward.

As to accretive acquisitions, we always continue to have two or three on the radar screen that we are looking at. We continue to have sweet things, some opportunities. As we look out over the next year are some things that could be synergistic to the Company. We're not near and far enough along at this point to be discussing anything and certainly not anywhere near any kind of sort of letters of intent.

But as the industry continues to consolidate, we continue to believe that we have a role as a consolidator. And that was one of the reasons that we wanted to get our balance sheet back to cleaned up and open up our full lines of credit that makes it lots easier when you're looking for acquisitions if all you need to do is pick up the phone and call your banker to find the money rather than going to the marketplace to try to find additional money. So we're encouraged about what could be available to us before the end of this current year.

[Joe Potman], Wachovia Securities.

Congratulations, guys. That was fabulous. Are all of the costs related to the acquisitions now reflected in the P&L?

The answer is yes I think if you are talking about the direct cost of the acquisitions. We will still have some additional costs of getting the production up to speed, but I think by and large those are behind us also.

Congratulations. That was terrific.

We will continue as has been our past history, it takes us about a year to get these new operations fully integrated and begin to realize the economies of scale and so on. And as Rick said, we are well along with that progress with UCB. We've been with Centrus. Of course, it's not near as big and we don't have to move it near as far, but that one we'll spend some more time on. We're absolutely out of space in the Lansing campus, and that was one of the reasons that the new acquisition of the building is going to be helpful and we're starting to remodel that. That will allow us to consolidate some stuff from Ann Arbor. And also, we were out of space for our microbial R&D group. That will give them some more space to do some important research that we're talking about, so we'll have some cost associated with the new building too.

Anytime we move things from Ann Arbor, that is a good thing.

That's football parochialism for those of you who don't understand that comment.

(Operator Instructions). Jeremy Steele, Lansing State Journal.

I wanted to follow up on the move of the Centrus operation here to Lansing. Is that about -- I guess how many employees are you expecting to move with that and to locate into that school? And when do you expect that can happen?

That's not a large group initially. I can't remember exactly how many people we've got that will be moving into the new building. We're slated to do that -- Halloween is the end of October is the date that we -- the goal that we've given ourselves. The Centrus group wasn't really all that large. We will be bringing on some extra people with -- as a result of that as well as some extra people in R&D. I guess if you check back with us later today, we can give you what the number is on our additional total employment. But that building I think we will start off with probably somewhere in the neighborhood of 20 people in that building, but there are a whole lot more than that but that's (technical difficulty).

John Moorehead, Catalyst Associates.

Congratulations, Lon. Can you, Jim, break down a little bit of the revenue base organic for the year in the fourth quarter versus the two acquisitions?

Yes, I can do that for you. Because we -- I looked at that and wanted to include that as part of the comments. It was kind of interesting that organic growth was like 8% for the quarter. It was also 8% for the year and it was 8% for both food safety and for animal safety, so it was just kind of a number that kept rolling out there. So that's the way it broke out.

Of course obviously as you went from quarter-to-quarter throughout the year, that changed. But once again, that gets into some of the benefits of being a company that doesn't rely on a single product or a single customer or something to be able to grow the business. I will tell you that while at very solid growth, we think we can do better. Our challenge -- and we've challenged our sales teams that we need to be looking at strong double-digit same-store sales growth. And we believe that those kinds of opportunities are present out there on both sides of the business. We think that we can develop the kind of sales plans of action that will help us realize those opportunities and gain market share where we need to. So, we're going to be focused on that as we move into 2007.

That's my only question. Congratulations, guys.

Quinn Ruddick, Roth Capital Partners.

I was just hoping you could give us some color as far as what we should be looking for for stock option expense in '07.

This is Rick Current. That cost will be about $0.08 -- best I can estimate right now. It should be about $0.02 a quarter, and that's what we've been running historically and it looks like what we'll run in '07.

Tom Davis.

First, let me say on behalf of all the small investors out here that I want to give a big thanks to Jim and to all of you for the cultural of integrity that this Company has. Everybody in management in this Company and your various Investor Relations people over the years, you have always been very straightforward with all of us about answering questions and giving us the real straight scoop on what's going on.

My question relates to the Beta Star product. And if I understand correctly, it's already marketed in some European markets. Is that correct?

It's pretty much marketed around the world with the exception of North America. A little bit of sales -- total dairy antibiotic sales -- it actually depends on product. We have two products there -- Beta Star and Penzyme. The Penzyme product, about 400,000 in the US and Canada. And the Beta Star and Penzyme tests -- the rest of that roughly 8.5 million is somewhere else in the world. So it's marketed almost everywhere else. Beta Star is marketed almost everywhere else except the US.

The big difference in the US is that the test is too sensitive for US standards, meaning that the rest of the world is interested generally in whether there is any antibiotics in milk regardless of what the level is. US levels however are established to say that antibiotics can't be above a given level, so therefore the testing procedure here (indiscernible) is close to that given level as possible.

So, in some ways I guess to make it simple, we've had to dumb down the test with aversion for the US. We won't have -- we'll market two different versions that will be used in the US that will hit closer to US standards. Most of that research has been going on actually in our labs since July as we've worked to do that. The research looks pretty good now as we're going into beta site tests, which is what gave me some confidence to say that I thought we ought to be able to get some kind of an FDA approval or get an FDA approval as we look towards the early part of next calendar year. Of course, predicting how long some of those things may take to get through the halls of government is sometimes unknown. But we believe that it's a pretty good shot that we should be there in the early part of calendar year '07.

You have been if I read all of this correctly but correct me if I'm wrong -- but you've been very successful in maintaining the customer base for these products in Europe, even though you have moved production operations to the United States?

I don't think we -- to my knowledge, we've not lost a single customer. It was a seamless transition. We moved -- we started building inventory. We started moving it to Scotland. We filled orders out of Barcelona until I think about the 14th of February. And then overnight, the orders started going into Scotland. Orders were billed out of Scotland, and we never missed a leak anywhere.

So Tony Maltese and I were over last month to spend some time with the Christian Hansen people, time with some of the customers in Denmark. And I think we're going to hold that business together just like we had it, just like they had it and good opportunities for growth. We're seeing good opportunities for growth now in some countries in which we had no sales. In addition to the US, we think we will pick up some business, Mexico being one of those examples.

Congratulations again, and we will hope for another call just like this next year.

[Peter Coil].

Congratulations to all -- to Lon going to President, to Jim going to Chairman and CEO and to Terry and to Ed Bradley. Congratulations for a great quarter and a great year. I had a question concerning the five-year plan; it was very briefly mentioned I think by Jim. Do you care to embellish a little bit on what's in that plan for getting to 200 million in revenue, or is it premature to ask that question?

No. It's a little premature. The last chapter is written that's got 200 million in it, but there is a few chapters in the front that's still to be completed. Lon thinks we'll get there pretty quick.

You know what we've had this target of 100 million for several years now, and you know it's definitely within our sights. It will from an organic sales growth standpoint -- hard to see how we will be able to achieve that in 2007. But certainly in 2008, that $100 million number is right there for us to realize. We kind of looked at that and said you know, we've got to start thinking about something beyond. So we said, why not just take a look at 200 million. And you know as you gain momentum and you get more products out there, you'd like to think that you start to get the kind of growth that can add on. We're kind of taking a look and saying, after $100 million what is it that we need to do? What kind of plans do we need to put in place to get to 200 million in sales within five years after we reach 100 million? So, we kind of established that as a target and a goal. Now as Jim said, we've got to fill in all the details and that's what we'll be doing as we start to look out.

Keep up the good work.

(Operator Instructions). Mr. Herbert, there appear to be no further questions at this time. I'd like to turn the call back over to you for any closing comments.

First of all, thank you all for taking the time to join the conference call this morning. I don't want to miss the open house -- reminding you of the open house. The Company's annual open house for investors, friends and community leaders is scheduled for Thursday afternoon, starting at 4:00. Hopefully, all of you have received information on that. If you hadn't, make sure and just e-mail Terry Maynard. Terry will make sure that information gets to you. But it's at the Company's corporate headquarters in Michigan and Lansing, beginning at 4:00 on Thursday afternoon. Plenty of good food, plenty of opportunity to visit with the Board of Directors and all the officers and many of the people that make the Company what it is today.

So thank you again for joining us and for the trust that you continue to exhibit. We will look forward to giving you the next great report -- only got about another 35 days left I think before we're going to finish that first quarter. So we look forward to talking to you again. Thank you and good day.

This does conclude today's conference call. We appreciate your participation. You may disconnect at this time.