Insight Enterprises Inc (NSIT) 2012 Q4 法說會逐字稿

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  • Operator

  • Good day, ladies and gentlemen, and thank you for standing by.

  • And welcome to the Insight Enterprises, Inc.

  • fourth-quarter fiscal year 2012 earnings conference call.

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

  • Later, we will conduct a question-and-answer session, and instructions will follow at that time.

  • (Operator Instructions)

  • As a reminder, today's conference may be recorded.

  • Now, it is my pleasure to turn the floor over to Glynis Bryan, Chief Financial Officer.

  • Ma'am, please go ahead.

  • - CFO

  • Thank you.

  • Welcome, everyone, and thank you for joining the Insight Enterprises conference call.

  • Today we will be discussing the Company's operating results for the quarter and the year ended December 31, 2012.

  • I am Glynis Bryan, Chief Financial Officer of Insight, and joining me is Ken Lamneck, President and Chief Executive Officer.

  • If you do not have a copy of the earnings release that was posted this afternoon and filed with the Securities and Exchange Commission on Form 8-K, you will find it on our website at insight.com, under our Investor Relations section.

  • Today's call, including the question-and-answer period, is being webcast live and can be accessed by the Investor Relations page of our website at insight.com.

  • An edited copy of the conference call will be available approximately two hours after the completion of call, and will remain on our website for a limited time.

  • This conference call and the associated webcast contain time-sensitive information that is accurate only as of today, February 14, 2013.

  • This call is the property of Insight Enterprises.

  • Any redistribution, retransmission, or rebroadcast of this call in any form without the express written consent of Insight Enterprises is strictly prohibited.

  • In today's conference call, certain non-GAAP financial measures will be referenced as we discuss the fourth-quarter and full-year 2012 financial results.

  • You will find a reconciliation of these non-GAAP measures to actual GAAP results posted on our website on the Investor Relations page.

  • Finally, let me remind you about forward-looking statements that will be made on today's call.

  • All forward-looking statements that are made in this conference call are subject to risks and uncertainties that could cause our actual results to differ materially.

  • These risks are discussed in today's press release and in greater detail in our Annual Report on Form 10-K for the year ended December 31, 2011.

  • With that, I will now turn the call over to Ken to give you an overview of our full-year 2012 operating results.

  • Ken?

  • - President & CEO

  • Hello, everyone.

  • Thank you for joining us today to discuss our fourth-quarter and full-year 2012 operating results.

  • Overall, 2012 was a productive year for our Business.

  • Market conditions were softer, as macroeconomic concerns globally led to lower capital spending for IT products, while we executed well in the environment, improving the overall profitability of our sales, investing strategically in sales and services resources, successfully integrating two acquisitions and essentially completing significant IT systems integration projects in Europe and North America.

  • We believe these actions will position us well as we head into 2013.

  • For the full year 2012, our consolidated net sales were flat year to year, as growth in the public sector mid-market were offset by lower spending by larger enterprise clients.

  • Gross margin increased 16 basis points to 13.6%, with gross profit dollars increasing 1.5%.

  • SG&A increased 2% as we invested in our sales force globally.

  • As a result, earnings from operations increased 1.3% and EFO margin was consistent year to year at 2.9%, excluding severance expenses in both years.

  • Within these full-year results, our North America business performed well overall in 2012.

  • Software sales increased 7% due to strong execution, new client wins, and stable demand for business productivity software across the large big market and public sector client groups.

  • Our Public Sector business in particular saw strong growth in 2012 and in this category, getting market share in federal and local markets with new client wins.

  • Hardware sales decreased 4% in 2012.

  • Sales of hardware in the mid-market increased year to year, but we experienced decline in purchases by our large enterprise clients, as we believe they rationalized investment dollars and the timing of projects.

  • Services sales declined 13% in 2012, while gross profit dollars increased year over year.

  • In 2012, we further refined the focus of our services category, selling or discontinuing certain non-core service offerings while at the same time expanding our portfolio through the development of our cloud solution center and through the acquisition of [Insync].

  • As a result, we now have a more relevant set of service capabilities to bring to our clients.

  • Gross margins in North America expanded 21 basis points year to year in 2012 to 13.2%, due partly to the benefit of our profitability initiatives and improved margin on our services sales.

  • Our North America team controlled SG&A very well in a slowing demand environment, which drove earnings from operations growth of 8% year to year.

  • In addition to the solid bottom-line performance in North America, we substantially completed our IT systems integration initiative in 2012.

  • In the second quarter, we the integrated the services business to our SAP platform, implemented new project management in ticketing systems, and upgraded the base software of our ERP system.

  • In the fourth quarter, we integrated the remaining public sector business to the system, and we began to integrate our software business, which will continue through the second quarter of 2013.

  • And just a few weeks ago, our Canadian business went live on the system.

  • This project has been delivered in line with our expectations.

  • In EMEA, net sales increased 10% year to year in constant currency.

  • Hardware sales grew 25% in constant currency, reflecting the acquisition of Inmac in February and low single-digit growth organically, which we believe was better than the market.

  • Software sales increased 2% in constant currency due to higher sales of business productivity software products.

  • And services sales increased 22% in constant currency, showing strong growth in an emerging piece in the EMEA business.

  • Gross margin in EMEA declined 24 basis points to 13.9%, due primarily to the effect of previously announced partner program changes in the software category.

  • And SG&A increased year to year, due to the acquisition of Inmac and strategic investments in sales headcount to support our hardware expansion plans in the region.

  • This resulted in a steep decline in earnings from operations year to year in EMEA, and overall results lower than our expectations.

  • Our Asia/Pacific business had another great year.

  • Reported net sales declined 2% in 2012, due to higher mix of public sector sales reported net of related costs in our financial statements, but saw gross margins expand to 178 basis points to 17.6%.

  • We invested in sales and services teammates in the region, and realized greater than 20% growth in earnings from operations for the full year.

  • Moving on to our 2013 plans.

  • Across the markets where we do business, industry analysts expect low single-digit growth in hardware sales in 2013, and mid-single-digit growth in software and services sales.

  • Our plans for 2013 are focused on driving growth in excess of the market across our operating segments.

  • In North America, we have invested in our Insight sales force over the past two years and are seeing good progress in that business overall.

  • As we move forward, we will continue to invest modestly in the Insight sales force, primarily to promote growth strategy and the health care vertical.

  • We will also invest in our field sales force; as mentioned on our last call, we recently launched a multi-city strategy throughout the US, where we will invest in additional sales service and technical engineering resources in key cities and in alignment with our core partners.

  • These teams will be focused on mid-market and large enterprise clients in the local markets, bringing deeper technical expertise around certain technologies to our clients.

  • In EMEA, we plan to invest modestly in our sales teams, and the focus has been improving the productivity of existing sales resources, which we believe will result in incremental sales growth in 2013.

  • We will also continue our efforts to drive higher sales around software asset management and data center solutions.

  • We are also planning to continue expanding our hardware and specialty capabilities in key markets.

  • And finally, we will improve the SG&A scale of this business, as we realize the synergies of operating on a single IT system throughout the region.

  • Our 2013 plans in Asia/Pacific, where we are currently focused on software, include continued penetration of mid- and public sector clients and development of more specialized software services capabilities.

  • We will also integrate our Asia/Pacific business onto our SAP platform in mid-2013, which will provide a platform for selling hardware in the region, which we hope to launch in Australia in 2014.

  • While the market conditions have been muted over the past several quarters, we believe our execution in 2012 and our operating plans for 2013 will position our Business for long-term growth and increased earnings potential to drive shareholder value.

  • I will now hand the call back over to Glynis, who will discuss the fourth-quarter 2012 operating results.

  • - CFO

  • Thanks, Ken.

  • Consolidated net sales in the fourth quarter decreased 1% year to year, to $1.35 billion.

  • And on a constant currency basis, sales decreased by a similar amount.

  • Gross profit was $180.4 million, up 1% year over year, and gross margin was 13.4%, an increase of 24 basis points from the fourth quarter of 2011, reflecting an increase in product gross margins and a high mix of fees from software enterprise agreements.

  • Selling and administrative expenses increased 4% year to year in the fourth quarter, and as a percentage of sales decreased to 10.5% from 10% a year ago.

  • We continue to drive initiatives to reduce our fixed operating costs so that we can invest strategically in sales and services positions.

  • In Q4, we recorded severance and restructuring expenses of $1.9 million in support of these initiatives.

  • And as a result, earnings from operations decreased 13% to $36.6 million, or 2.7% of net sales, compared to $42.2 million, or 3.1% of net sales, in the same quarter of 2011.

  • Excluding severance expense in both periods, earnings from operations margin was 2.9%, down from 3.2% last year.

  • Our tax rate in the fourth quarter of 2012 was 40.3%, higher than our normalized range, due to the mix of income earned in foreign jurisdictions, which generally have a lower statutory tax rate, and valuation allowances we recorded in certain countries in EMEA.

  • This is notably higher than the 16.8% tax rate in the prior-year quarter that reflects significant benefit from the reorganization of certain of our foreign subsidiaries.

  • All of this resulted in net earnings of $20.8 million and diluted earning per share of $0.46 in the fourth quarter.

  • Excluding severance expense, diluted earnings per share was $0.49.

  • Within these results, net sales in North America were $908 million in the fourth quarter, down 2% year to year.

  • Sales in our software category increased 8% year to year, due to higher spending by new and existing clients, primarily for business productivity products.

  • Hardware sales decreased 5% and services sales decreased 21%, reflecting lower volume primarily in the large enterprise client group.

  • Gross profit in North America decreased 2% year over year to $118 million, and gross margin decreased 12 basis points to 12.9%.

  • Increases in margin due to higher product gross margin and increased fees from enterprise agreements were more than offset by the effective lower services sales.

  • Selling and administrative expenses for North America in the fourth quarter were flat year to year at $89.5 million, and as a result of -- as a percentage of sales increased 13 basis points to 9.9%.

  • We also recorded $535,000 in severance and restructuring expenses in this segment in the fourth quarter, compared to $464,000 in the same period last year.

  • Earnings from operations in North America were $27.5 million or 3% of net sales in the fourth quarter of 2012, down from 3.3% of net sales in the fourth quarter of 2011.

  • Moving on to EMEA, our EMEA operating segment reported net sales of $378 million, up 2% in US dollar.

  • In constant currency, net sales increased 3%.

  • Also in constant currency, sales of hardware grew 21%, due to the effect of our recent acquisition of Inmac.

  • Software sales decreased 6% year to year, due to lower volume across the region, and sales of services increased 38%, both of these in constant currency.

  • Gross profit in EMEA increased 4% in US dollars and constant currency terms, with gross margin increasing 21 basis points to 13.4%.

  • This increase was driven primarily by improved margins in the software category, despite lower software sales in the quarter.

  • Selling and administrative expenses in EMEA in the fourth quarter were up 13% in US dollars, and in constant currency these expenses were up 14%.

  • This increase year over year was primarily driven by higher salaries and benefits from investments and headcount, and the addition of Inmac to our portfolio in February of 2012.

  • We took an action in the second half of 2012 to reduce our cost structure in EMEA, and we will continue to review this in light of expected market and business performance in 2013.

  • In the fourth quarter, we recorded severance expense of $1.3 million in the segment, up from $163,000 recorded in the same period last year.

  • Earnings from operations in EMEA were $4 million in this fourth quarter, down from $8.5 million recorded last year.

  • In APAC, our Asia/Pacific operating segment recorded net sales of $60 million, down 12% year to year in US dollars and down 15% in constant currency terms.

  • Gross profit was $12 million and gross margin was 20%, up from 14% last year, due to higher partner funding and a higher mix of netted software sales.

  • Selling and administrative expenses in APAC increased 11% in US dollars and 8% in constant currency, due to investments in sales and services headcount.

  • Our Asia/Pacific segment reported earnings from operations of $5.1 million, which was up 62% year to year.

  • Moving on to our cash flow performance -- for the year ended December 31, 2012, our operations generated $67 million of cash, compared to $116 million in 2011.

  • This decrease was primarily due to an increase in purchases from partners financed under our inventory financing facility.

  • The cash flow for these partner transactions are reported in the financing section of our statement of cash flows, but the related client account receivables are included in operating cash flow.

  • In addition, our cash conversion cycle was 24 days in the fourth quarter, up two days year to year, due primarily to higher accounts receivables in North America.

  • Also, our accounts receivable and accounts payable balances increased notably year over year, due to a single significant transaction with a public sector client late in the fourth quarter.

  • In 2013, we expect cash flow from operations to be within our historical range of $80 million to $110 million.

  • We also invested $30 million in capital expenditures in 2012, compared to $27 million in 2011, primarily related to our IT systems integration initiatives in North America and EMEA.

  • And we spent $3.8 million on the acquisition of Inmac in EMEA in the first quarter.

  • All of this led to a cash balance of $152 million at the end of 2012, of which $127 million was resident in our foreign subsidiaries and $80 million of debt outstanding under our debt facilities.

  • This compares to $128 million of cash and $116 million of debt outstanding at the end of 2011.

  • One last item before I turn the call over to Ken.

  • As announced today, our Board of Directors has approved a plan to repurchase up to $50 million of our common stock.

  • These share repurchases will be made on the open market through block trades or through 10-b51 plans.

  • We intend to execute the buyback in the first half of 2013, subject to general business conditions and working capital requirements.

  • I will now turn the call back to Ken for his closing comments.

  • - President & CEO

  • Thank you, Glynis.

  • For the full year of 2013, we expect the global IT market to grow in the low single-digit range, with trends improving throughout the year.

  • We expect our Business to grow slightly faster than the market, as we continue to invest in our sales force and expand our capabilities into key markets.

  • For the full year of 2013, we expect diluted earnings per share to be between $2.22 and $2.32.

  • This outlook includes the adverse effect on gross profit of previously announced partner program changes in our software category, which is estimated to be between $8 million and $12 million; an effective tax rate of 36% to 38%; the completion of a share repurchase program up to $50 million in the first half of the year; and capital expenditures of $18 million to $22 million.

  • This outlook excludes severance and new structuring expenses.

  • Thank you again for joining us this today.

  • I want to thank our teammates, clients, and partners for their dedication to Insight in 2012.

  • We look forward to a successful year together in 2013.

  • That concludes my comments.

  • We will now open the line up for your questions.

  • Operator

  • (Operator Instructions)

  • Matt Sheerin, Stifel Nicolaus.

  • - Analyst

  • First question, regarding your guidance for the year -- Ken, given all the puts and takes including the buyback, it looks like you are going to shake out around 3% or so operating margin.

  • And I know that the goal or the target for the Company is to get to 3.5% by 2014.

  • Certainly expected you to be closer to 3.2%, 3.3% in 2013 on your way to that target.

  • What are the puts and takes that keep that margin down?

  • Is it the volume?

  • Is it the mix of business?

  • Is it the fact that it's going to take awhile for the services business to come back because of some of the strategy changes there?

  • - President & CEO

  • Yes.

  • I think -- thank you for the question, Matt.

  • Certainly, some of it is volume-related.

  • We did well in the software category.

  • The hardware category did hold us back a little bit, as you could see from our result that we pointed to.

  • So, that had some impact.

  • I think the services piece -- again, we really righted the ship as far as growing the gross profit dollars.

  • And now we are very focused on growing the top line in the services category.

  • So, those are two important elements there.

  • - CFO

  • Matt, and I would also -- (multiple speakers)

  • - Analyst

  • Go ahead.

  • - CFO

  • What I would also add to that, Matt, is that we have some savings that are coming through from the systems initiative.

  • But as we stated in our third-quarter call, we are specifically reinvesting in the sales and services product, business going forward, such that we will, in the longer term, drive higher revenue growth.

  • And that is actually putting a moderator on our EFO margin in 2013.

  • And you are correct, I would say that flat EFO margin is where this guidance would come up for 2013.

  • - Analyst

  • Okay.

  • Are you still comfortable with that target, Ken, for next year, for 2014?

  • - President & CEO

  • Yes, when we look at the trajectory, Matt, as you know, we did talk about 3.5% at the end of 2014.

  • We think with the trajectory on, probably a safer assessment of that would be to push it to 2015.

  • Obviously, we will work diligently to pull that in.

  • But realistically, based on this trajectory, that would be a pretty significant gain year over year to get to the 3.5% by a year from now.

  • - Analyst

  • Okay.

  • And then, on Q4 that just ended and your commentary about demand still being fairly weak, particularly on the enterprise side, it looked like some of your competitors and other distributors have seen at least some snapback toward the end of the quarter.

  • Looks like deals were getting done.

  • Why didn't you see -- I guess you saw some of that.

  • But it sounds like you did see some pushouts as well.

  • Why do you think that is a difference there?

  • - President & CEO

  • We certainly -- on the software side, we did see that growth in the quarter.

  • On the hardware side is where we saw the miss there.

  • And when you look at large enterprise clients that we do business with, as we check those very, very closely, indication is that it wasn't really a share loss for us.

  • It's just their level of participation in that growth rates, and some of these, again, are pretty significantly large clients, we didn't see that same growth.

  • But we track them pretty closely, and I am sure there is always a few accounts that move sideways between all of us as competitors.

  • But in general, as you look at that, that was not certainly the case overall for us.

  • Those larger clients that we service who didn't participate nearly as greatly on the hardware side of the business.

  • Although we did see it, as you can tell, on the software side where we do the gain share in the quarter on software, but not so much -- not in the hardware side.

  • - Analyst

  • Okay.

  • And then, lastly, on your commentary on 2013 regarding the adverse effect on gross margin due to the software program, your partner program, that incremental $8 million to $12 million.

  • I was under the assumption that you saw a lot of that play out in 2013.

  • Are there additional -- or 2012, sorry.

  • Are there additional changes to those programs that will drive gross margin in the software business lower?

  • - President & CEO

  • Yes.

  • It's actually, Matt, as you might recall, it was over a three-year window that this large partner had announced those changes.

  • It's '12, '13, and '14.

  • And just the way they fall for us, '13 actually is the more significant year of the impact compared to '12 and -- 2012 and 2014.

  • But again, that is all built into the guidance, and obviously we are working diligently to make sure -- and have been for quite sometime to remediate that in 2012.

  • We did a successful job in remediating that difference, and now that is what we are up against in this year.

  • But again, that is all in our guidance.

  • - Analyst

  • Okay.

  • That is quite helpful.

  • Thanks a lot.

  • Operator

  • (Operator Instructions)

  • Brian Alexander, Raymond James.

  • - Analyst

  • Just a few clarifications.

  • Glynis, I think when Matt asked the question about operating margins for 2013, he assumed something closer to 3%, which was the number that I came up with.

  • But I think in your answer, you suggested that it would be more flat versus 2012.

  • I know we are only talking about 10 basis points, but I was just trying to get a sense for whether we should be thinking something closer to 2.9% or should we be thinking something closer to 3%.

  • - CFO

  • You should be thinking something closer to 3%.

  • - Analyst

  • Okay.

  • So, it should be up year over year.

  • - CFO

  • Yes.

  • - Analyst

  • Okay.

  • And then, in terms of the hardware business and the large enterprise customers that aren't spending, are those concentrated in any certain verticals?

  • Or can you give us a sense for what your customer concentration is in the large enterprise segment?

  • Is it dominated by just a few customers?

  • Because I guess I agree with Matt's point that we have seen hardware revenue decline, I think, for the last five quarters, and the overall market is kind of flat to up.

  • And I am trying to get a sense for whether there might be some market share loss here, and if so, is that confined to certain product categories?

  • Is there another answer that might explain it with respect to sales coverage or go to market?

  • Or is this really just less spending by a few customers?

  • - President & CEO

  • Yes, the key vertical for us and of course very significant [for the industry] is the financial vertical.

  • And that vertical certainly has been challenged, and we have a significant volume of business in that specific vertical.

  • And for us, we certainly saw that to decline.

  • So, that one vertical.

  • And again, we have seen the trending here, as you know, for the last couple of quarters, which is why we started a program with our specific city plan, which really helps address and augment the field coverage.

  • Because the inside investments that we have made, we have actually seen nice growth, and we think certainly above-market growth from the inside piece.

  • But the field piece is such a large part of the business that we need to do further investments there.

  • And that is where both the city [planned] structure around certain key cities, 14 cities specifically right now in the US market that we will be building more structure around field sales, as well as technical resources and service delivery folks into those specific markets, to really get to that -- again, not the highest end of the enterprise clients, but certainly those large clients that we need to service with a more direct field focus than just inside.

  • - Analyst

  • When you talk about the 2013 outlook for revenue growth for the industry to be up low single digits, Insight to grow slightly faster, I assume you are hoping to grow 4%, 5% overall.

  • What are you assuming within that with respect to the large enterprise segment and the investments that you have been making and the large concentration and the financial vertical?

  • Are you assuming that that picks back up?

  • Or are you assuming that that stays weak and the other segments offset it?

  • - President & CEO

  • I think we certainly believe that there will be growth in that segment, as it's been a little bit challenged over this year as well as even into last year.

  • So, I think that does start to pick back up.

  • We don't think it ends up being at the 4% to 5% range, but we certainly do see growth there.

  • And again, that is where we expect and anticipate to see growth from the investments we are making in these other accounts, as well.

  • - Analyst

  • Okay.

  • And then, just -- (multiple speakers)

  • - CFO

  • But Brian, if I could just also add on to Ken's comment.

  • The other thing consistent with what many of our peers have said, we also anticipate that the growth is going to be more muted in the first half of the year and strengthen in the second half of the year.

  • - Analyst

  • Okay.

  • And Glynis, on the gross margins in North America, you said that they were down year over year, and I think you talked about the services mix hurting you.

  • But with the customer mix helping you, I guess large customers being down I would think would help gross margin.

  • Software being up I think would help gross margins.

  • And then, I thought within services you guys were remixing toward more profitable services.

  • And so, I was just a little bit confused by the commentary around gross margins.

  • So, maybe some more detail on what drove that.

  • - CFO

  • I think in general, our hardware underperformance at the top line is reflected in the ultimate margins that flow through.

  • We also, on a margin percent, have an impact from the program changes that impacts margins more significantly.

  • And we also have an impact as it relates to, specifically in Q4, our services contribution was not as strong as it has been in prior quarters.

  • In prior quarters, we have seen deterioration in our services revenue but strengthening in our services margin.

  • We saw strengthening in our services margin in Q4, but not to the same extent that we had seen in prior quarters.

  • Hence, we didn't get the uplift from the margin perspective in Q4 that we would have anticipated.

  • - Analyst

  • Okay.

  • And then, over in Europe, if I am doing the math correctly on your hardware business, I know you said it was up 21% in local currency, but I think if you back out the acquisition, it was down maybe double digits.

  • So, maybe --

  • - CFO

  • On an organic basis in Europe in hardware, excluding the acquisition, our revenues would have been down 8% organically in hardware.

  • - Analyst

  • 8%.

  • Okay.

  • When you look at that and you look at software down 6%, clearly Europe is not a strong economy or a strong IT spending environment over there.

  • How much of the -- how do you think you are doing versus the competition?

  • And how comfortable are you with just the overall [org] structure and go to market in Europe?

  • - President & CEO

  • I would say that as we get the data and it's -- as you know, Brian, it's not as clean data sets as you get here in North America, from a share point of view.

  • But the indications that we can read through from some of the different reports and certainly from our partners is we are probably flat to down from a share point of view in Q4 in our European business, is our best estimate.

  • And we think, certainly, as we commented that there is opportunity for us to take advantage of a lot the investments in productivity that is needed there to get the SG&A more in line as well.

  • - Analyst

  • Okay.

  • And then, finally, as you guys -- I guess you are halfway through Q1.

  • Has the customer behavior changed at all in the early part of the year, relative to how it's been for the last one or two quarters, and relative to what you would normally see this time of year?

  • Which I understand it's not a vibrant time of year.

  • But I am trying to get a sense for whether you have seen any change in tone or demand patterns, or is it basically just seasonal?

  • - CFO

  • I think we haven't really seen any change in the demand patterns.

  • The underperformance in hardware that we saw in 2012, we see that continuing into 2013, the first quarter, at any rate, in terms of the visibility that we have.

  • And consistent with the guidance range that we gave, we expect our year-over-year comparisons to improve in the back half more so than in the first half.

  • So, we would expect EFO to be flat to slightly down in Q1.

  • - Analyst

  • Okay.

  • I guess I will sneak one more in.

  • On the buyback, is that something you would expect to execute ratably over the year?

  • Or is it more opportunistic, based on where the stock price is?

  • How are you planning on executing that?

  • - CFO

  • We are planning on doing it ratably, within an effective start date probably in March as we get a 10b5-1 plan in place.

  • So, we would anticipate that it would be completed, depending on the volume of our trading activity in the stock, sometime in late second and maybe early third quarter, just based on the volume of activity in the stock going forward.

  • And for planning purposes, you can anticipate it's going to be between $0.08 to $0.10, but more significant in the second half of the year than the first half of the year, given the timing of when it starts and how the weighting of the shares works throughout the year.

  • - Analyst

  • Got it.

  • Okay.

  • All right.

  • Thanks so much.

  • Operator

  • Thank you.

  • (Operator Instructions)

  • Presenters, I am showing no additional questioners in the phone queue.

  • I would like to turn the program back over to Ken Lamneck for any additional or closing remarks.

  • - President & CEO

  • Thank you very much, and we would like to thank everybody for their participation.

  • Operator

  • Thank you, sir.

  • Again, ladies and gentlemen, this does conclude today's conference.

  • Thank you for your participation, and have a wonderful day.

  • You may now all disconnect.