Park Ohio Holdings Corp (PKOH) 2011 Q1 法說會逐字稿

Good morning and welcome to the first quarter 2011 results conference call. At this time all participants are in a listen only mode. After the presentation, the Company will conduct a question-and-answer session. Today's conference is also being recorded. If you have any objections you may disconnect at this time.

Before the conference call begins, please remember that the Company will be discussing some issues that are historical and some issues that are forward-looking. When the Company speaks about future results or events, there are a variety of factors that may materially change their actual results from those predicted. A list of those relevant factors may be found in the earnings press release as well as in the Company's 2010 10-K filed with the SEC on March 9, 2011.

The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise. Additionally, the Company may discuss EBITDA. EBITDA is not a measure of performance under Generally Accepted Accounting Principles and is considered a non-GAAP financial measure as defined by the SEC.

The Company may present EBITDA because Management believes that EBITDA could be useful to investors as an indication of their ability to incur and service debt, and because EBITDA is a measure used under their credit facility to determine whether they may incur additional debt under such facility. For reconciliation from income before income taxes to EBITDA, please refer to the Company's current report on form 10-Q furnished to the SEC on May 9, 2011.

Now the meeting will be turned over to Mr. Edward F. Crawford, Chairman and Chief Executive Officer. Gentlemen, you may begin.

Good morning, ladies and gentlemen, to the first quarter report of financial performance of ParkOhio. At this time I would like to turn over the report to Matthew Crawford, President and CEO of the Company. Matthew?

Thank you very much. First, although it did not occur until after the completion of the first quarter, the most significant recent event of the Company was the placement during April of $250 million worth of 10-year, non-amortizing senior unsecured notes at a rate of 8.125%. The proceeds were used primarily to fund the tender or redemption of all the old $210 million notes with a coupon of 8.375%, the pay down of all term debt of the Company, and an increase in our cash position.

With the successful achievement of the financing, we feel that the structure and the cost of the Company's long-term debt is such that we can focus on the strategic goals of the Company which include significant growth opportunities in our key businesses.

Speaking of growth, ParkOhio grew 26% during the quarter to $242 million. Operating profit jumped 94% - $16.3 million, and EPS soared from $0.18 last year - $0.73 this year. Supply tech revenue continued to strongly rebound during the first quarter. The 30% growth was anchored by almost all end markets and included the benefit of the ACS acquisition.

While many of our customers saw increasing build rates, the increase in the heavy duty truck market was the most notable and welcome. Operating income increased 93% - $123 million. Margins increased to 7% and were benefited by the incremental revenue and the ongoing integration of ACS. We are beginning to feel the effect of volatile commodity prices and the weak dollar effect on imports and are planning and acting accordingly.

Aluminum products revenue saw a nice increase during the first quarter to just under $40 million. We benefited from incremental build rates with most customers, which were offset somewhat by contract expirations. As many will recall, this was a strategic decision to prepare for new business launching during the end of 2011 and early 2012.

Operating profit increased 71% due to better plant utilization in several typically weak operating facilities, and excellent cost containment at the plant level. I would also use this opportunity to remind investors that any increase in the price of aluminum is passed through at no-margin to the customer on a regular basis.

Turning to manufactured products, revenue grew 30% versus last year. The increase was spread nicely across most end markets. But, a notable boost from North American manufacturing. New order activity in our industrial equipment group remain moderately strong, with the equipment orders totaling more than $20 million during the quarter. We do expect to see some weakness from Japan, a typically strong market for us, as they recover from the recent crisis.

Manufacturing products saw 73% increase in operating profit to about $8.5 million, significantly improved margins at both the equipment business and our forging business, resulted from the incremental volume at what are some of our highest fixed cost facilities. We expect this trend to continue.

CapEx during the quarter was $1.5 million. Net debt decreased approximately $11 million during the quarter, slightly ahead of our internal plan.

In closing, we are pleased with the first quarter performance and remain cautiously optimistic regarding the remainder of the year. We are mindful of the cost of the changeover at our aluminum products division throughout the remainder of 2011 and will manage aggressively.

At this time we are reaffirming our earlier guidance of $900 million in sales, $1.85 - $2 in EPS for 2011. Our product cash flow forecast of approximately $30 million will be adversely impacted by the refinance cost, which totaled about $12 million. Thank you very much.

Thanks, Matt. Just a comment on the placement of the $250 million worth of bonds. We thought it was timely to be in the market. We were very pleased with the support at all levels, particularly the continuation of investors that were in the original bond offering in '97 and 2004.

So, we continue to build a base of relationships in that particular area and availability to financing and we hope that to continue, but we are pleased with being able to get out there and complete that transaction rather quickly; and also supported by our new bank agreement, which is a 5-year commitment, lead by basically the same group as before.

So, we are very comfortable with our continued relationships both on the bond side and availability to capital in Wall Street, as generally spoken. More important, our continued relationship with our bank group that has been there in the past and will be there in the future. That makes us comfortable as we move towards making the balance sheet more attractive every single day with our of earnings. Matt has really covered what has happened in the supply technology and manufactured products and that is very exciting and hopefully sustainable.

A couple comments on General Aluminum. We have talked continually about the transition from current long-term orders to new long-term orders. That has begun. We have announced some placements of some new orders, and we hope throughout the year to be able to continue to talk about revenues in the future.

The process has begun. We are off to a great start there. But clearly we want it understood that this is a transition year, and it is one that will flatten out a little bit. We hope to do better than we even expect, but the result of this will be putting the Company in a very strong position for the years '12, '13, '14, '15 and '16. Because all the contracts we are currently engaging in are long-term with outstanding new customers and some of our old historical customers.

So, that is going to be a great story. It is going to be a little flat, but it is off to what we expected, and we think we have it well under control. We hope obviously for the best in the auto industry. Based on that, it is a brief presentation, but we are anxious to answer any questions that you might have relative to the first quarter performance and a peek into the future as much as we can discuss. So, at this point, I would like to open up the lines to questions.

(Operator Instructions) Your first question comes from the line of Ajay Kejriwal with FBR Capital Markets.

Thank you, good morning, gentlemen. Very nice quarter, congratulations. I have questions on the quarter, but just wanted to touch on the guidance, if I could. So, you have done more than a third of your full year guidance in terms of earnings and 27%, 28% off the top line. You're keeping your full year guidance where it was. Is that just conservativeness? I know you talked about the transition going on in aluminum, but anything else going on there?

Well, no. We just feel that we are off to a great start, and we want to stay at that guidance, if we continue to move through the balance of the second quarter. As you know we raised guidance at least two or three times last year, but we are not ready to move on that. But we are optimistic.

We want to make sure that we really fully understand the impact of the aluminum business, and the inflow of the capital equipment orders. We have a very good visibility on supply technologies, but the other two are ones that we are being, optimistically, are very cautious about making sure that we can reach our stated goal first. And then given any more additional information on the positive side, we will put up the guidance.

Sounds like aluminum products is a big contributor. Maybe we can get a little more detail there. You talked about products in transition. Maybe give us a sense of what the expectations are on the top line. I would imagine what you did in the quarter were peak at least for this year, and then next year ramps up. But any sense of the trajectory from here on the top line?

Not really. We would have a guess. But what we have is, at the end of these platforms, let's put it this way, when you're phasing in on one platform, out of another platform, there is a tendency at the end of the platforms to either -- they either ramp down completely the first quarter. But sometime very soon here, the volume on the old platforms will move out of the facilities and there is that gap of, let's say, six months in which you retool or reposition yourself. You would wish it wouldn't be that way, but right now it is unique because of the auto crisis.

I've never been in a situation where you had this dramatic of a relay race. Normally you can hand the baton off in the race closer to the person. But really what you have here with all the disruptions in the auto business and what happened in '08 and '09, it's not the historical handoffs. There is a wired gap there.

We have to be very careful not to misunderstand -- at the end of these programs for example, they have a tendency to buy parts and service parts. So when does it stop becoming something that's used in a plant used for manufacturing and they really want to wrap it up and have spare parts for the future?

It is not a pure science; and more important, it is not business as usual. You have these companies, particularly Chrysler, for example, responding in a very, very robust way. So, they are anxious to get forward with the new platforms and we are anxious to be there, but you just can shut down making part A and the next day making part B.

So we are going to have to -- this has been carefully disclosed. We have talked about it when we're out there at the bonds. You've heard the story. Everybody's heard the story, For us to be able to gauge where we are sitting here today on the aluminum business is going to be very difficult to be accurate. We have our own concept.

We really expect declining revenues particularly in the second -- particularly in the third and fourth quarters. Maybe we will slip through the second quarter but it is there. We always like -- over here at Park-Ohio, when there's bad news, or there's something we're uncomfortable with, we talk about it and we face it. That's what we're doing. We're going to take all the steps necessary to reduce any damage to the year by a rough exchange here.

And that is helpful. But any sense you could give us on those contracts? What is the size in terms of annual revenues that are transitioning off? And maybe touch on the opportunities next year. You've talked about big contracts that you have signed, so that is obviously a big opportunity there. The contracts that are transitioning later this year, any sense of the size?

At a minimum, there's $50 million worth of work going away, and there is at least $50 million of the work coming in. So if you brought in $50 million, you would be where you were before. If you bring in $80 million, you're ahead.

So again, I'm optimistic about the future, and we don't expect -- or aren't anticipating replacing just dollar for dollar. This Company, as I indicated, should grow and should be very important to the earnings going forward. But just think of $50 million going away, and I wish it was the next day $80 million joined it, but there is a slag period here.

You're going to be, at some point, you're going to lose $50 million of revenue on a company that's $150 million -- that's a third of the revenue, 40% of the revenue, and you're going to replace it with them. You have got fixed cost. You've got the plants. You have got the size, and always, you're ramping up in that transition.

You have got all the expenses -- you have got the revenue and the earnings when it's there. When it goes away, you have got all the expenses and the overhead to ramp up for the future. But we will come out of this trough at a higher level of revenue. And, next time we finish -- next time we talk at the end of the second quarter, I think I can put a lot more color on what we've accomplished and the timelines. Right now -- but we will come back.

And that ramp up starts later this year in terms of the new business or is it early next year?

I think you have to really think in terms of the first quarter of 2012.

Got it. Good. And then, supply tech, big increase in revenues, both here and sequentially. Maybe if you can break down that in terms of organic versus acquisitions, that 30%, 31% year on year.

As we indicated, at the end of last year, the ACS, which was the acquired revenue, was about a $50 million run rate business. That has not significantly changed, so that's on the order of, what, 12.5 a quarter so that ought to get you there.

That is phenomenal organic. Yes, we had that baked into our model. I just wanted to make sure I was looking at the right organic number. So then the question becomes, is this organic sustainable? And before we get there, what growth, that organic, maybe talk about the demand trends, any new customer wins, what are you seeing there?

I think there have been some customer wins, but the material difference from 2010 is clearly the breadth and scope of the increased demand in most end markets. As I mentioned in my comments, Ajay, the truck is an important part of our business, and certainly they are seeing a very significant uptick, versus last year at this time.

Good. Any comments on the sustainability? What are you thinking for the rest of the year to the extent you have visibility from your customers? On the organic side, is it high double digits, 15% sustainability or does it tick down?

I'm not going to address quarter over quarter performance, but I will say, off the base of what we're seeing today, our expectation, as I mentioned in my comments is that we are going to continue to see reasonably steady performance out of that business. It is driven by billed rates, as you know, by daily billed rates at our customers, and by and large we are seeing pretty steady performance out of those customers. We'll see some volatility. Obviously there is some seasonality in some of the recreational sports and some of the consumer electronics, but no, there are no one-time hits in there, Ajay. It is a business, as you know, that's built on thousands of different transactions every day, and average daily sales is just stronger.

Good. Any new account adds in the quarter? Anything of note?

There have been some small ones, but nothing worth mentioning at this time.

Good. And then the incremental margin, very nice incrementals there. Is that just a reflection of the volume leverage? Or any change in margin on any accounts?

That is certainly a piece of it. I think that as we're integrating ACS, they are modestly really contributing at this time. They are not contributing in the way that we expect them to. I think we mentioned on our last call, we expect them to be at a positive contributing run rate to operating margins by mid-2011. We are not there yet.

Certainly they are beginning to contribute in a more positive way, number one. And I think really number two, the first quarter was probably our apex in terms of managing costs. Clearly, there is some potential inflation in the cycle, although I don't think it is significant at this point. Obviously, there is some cost adjustments that we had made here early in the year in terms of the labor costs and so forth.

So I think that we will continue to see, as revenue increases, positive margin expansion, but I think the first quarter of 2011 really represented a perfect opportunity to leverage decreased costs and positive growth.

Good. And then just in terms of seasonality for you -- and this has been a historical trend. The first quarter is seasonally the weakest and then it improves from here in supply tech, right, on the top line? Is that the expectation for this year?

Not necessarily. I think some of the seasonality rules have been a little bit thrown out the window. For example, consumer electronics was actually pretty weak in the fourth quarter; and we expected them to be stronger around the holiday season. So, I don't know that I see as much seasonality in this year as we've seen in the past.

Got it. Maybe remind us, what is the truck piece of supply tech, post-ACS? How big is that as a percent of total for supply tech?

Definitely about 10%, by about 10%, 15%.

Good.

I don't have that number in front of me, Ajay, but let's call it 15%.

Good. That 7% margin, I think that is the highest I've seen in the last couple of years, at least in my models, so we have talked about that --

Jeff just told me it's about 10% so I was wrong. I'm sorry, so say again.

On the supply tech 10% margin -- obviously your long-term goal has been to take up margins to high single digits, and 7% is a very nice number, maybe share your thoughts on sustainability? What's your -- have you taken up your goal long-term, and then expectations for this year?

There's no question we've taken up our goal. But I think that we have taken advantage of, as I mentioned earlier, the perfect opportunity on the costs and incremental margin side to move probably more quickly than we expected. So I think improvements from here will happen, Our bar is higher, but they will be more challenging. I think that -- I think we're going to get there, but I wouldn't expect to see incremental leaps at the rate of which we've seen in the last six months.

Any reasons why margins would be lower? Do you see any risks?

I think in general you've got a product mix issue here that's always important. We had a nice product mix for us in the first quarter as well. I'm not trying to suggest that I believe that margin should be lower in this business. They're not. I think ultimately we will push higher. I think the point, Ajay, that I'm trying to make is, a lot of nice things happened very quickly in the first quarter to make that 7% happen. I think there might be some volatility in it, but, no, I think our trend is to reach higher on a couple fronts, I think we will see that.

Obviously in particular, as ACS gets more integrated, that is a significant near-term opportunity. But there is product mix risk. There is some inflation risk. There is some currency risk. So there is -- I don't want to characterize this as the type of momentum that would carry us to a significantly higher number in the near term.

Good. You talked about inflation risk. So, what was pricing cost in the quarter in this business, and the cost for many of our industrials has been an issue, and companies have, to a varying degree, passed on through pricing. So talk about that, was that spread positive for you? What conversations are you having with customers on pricing?

I would say it has not been a material impact at this point. I think we expect the possibility, but the issue right now is really volatility as much as anything. We anticipate and are prepared for trying to make that a breakeven. I think we are prepared and probably ahead of the curve in this cycle, if you will. But it would be a stretch to say at this point that we expect, as we see more of that throughout the year, for it to be a positive contributor.

Good. Maybe moving on to manufactured products. You talked about Japan as a headwind. What is your exposure there?

That has been a nice business for us. It's been a significant contributor, particularly for industrial equipment products, most notably our steel and induction products. So I don't think it is going to be significant to the overall Company's forecast, but it certainly is something that will at the margin impact that business.

So it is not sizable in terms of total revenues?

In terms of total Park-Ohio revenues, no.

Got it. And then, you had held the book, as you mentioned, that $20 million number, is that just all on equipment?

As you know, we have got a lot of questions about backlog in the past, and that is a challenging number because sometimes orders, large orders, can get pushed back or cancelled or changed, so I think talking about new order activity is a better indicator of the strength of the current environment. New equipment orders during the quarter, for our industrial equipment group -- I am ignoring the after market side of the business -- were about $20 million, just over $20 million.

Typically this executes over six to 18 months, or how should we be thinking about this?

I would say six to nine. What's interesting, as I mentioned in the last call, was that as this business has strengthened -- and it is not back to were it was -- but it's definitely stronger, we have seen smaller average order sizes. So, that would lean more towards the four to six months turnaround than it would toward the six to nine which is more typical when the business is having $30 million type months which often include very significant orders, in terms of size and scale and actually time to execute.

Maybe just a qualitative question here. You have seen good order activity, a couple of very nice quarters. How do you feel about this business in the context of global capital spending? And we have seen that ramp up across many of our names. So with CapEx coming back, do you feel better about this business going forward than you were a couple months ago? Or is it still the same?

Absolutely. I think that we are -- as I mentioned on the last call, we are doing really well in terms of just repairing, replacing, and enhancing manufacturing base and the customers in the areas of the world that we service. The next leg up is going to be capacity building. As that happens more aggressively, we should start in too, then that will be our leg up to that next revenue level. We have seen a little bit of that anecdotally, but not significantly at this point.

Ajay, if you've got any additional questions, we would be glad to take them off-line. There are other people in the queue I would like to give them an opportunity to jump in here.

Yes, sure. That was very helpful, thank you very much.

(Operator Instructions) Your next question comes from the line of Michael Corelli with Barry Vogel & Associates.

Hi, good morning. Congratulations on a great quarter. I had to step off for a minute, so please forgive me if some of this was touched on. The guidance would imply average earnings of $0.40 a quarter over the next three quarters versus $0.73 in the first quarter. I know you talked about some of the transition in aluminum products, but it seems like extremely conservative guidance based on the recent trends in your other businesses and the first quarter earnings. Is there something that I'm missing here that would -- should lead earnings to come off of this base significantly going forward?

Again, it is conservative guidance. I agree with you there. We've thought about it and we feel that we will have a better view downstream at the end of the second quarter relative to performance. We have to handle and make sure that we have a full understanding of the impact of the aluminum transition, and more important, the continuation of, for example, the trucking market. So, we don't have our handle around everything, so it is a conservative position. We will address the guidance at the end of the second quarter.

Okay, thanks. As far as cash generation, which looks like it's going to be pretty solid this year, is there is a plan to pay down your revolver with excess cash or is it to pursue acquisitions? I know you have an issue with some cash, I believe, being overseas. Could you just give me a little more color on that?

For domestic cash, we will continue to pay down the revolver. For international cash, depending on the tax situation it's very possible that we'll retain that cash internationally and invest it overseas. I'd like to add just one other thing on the guidance that people need to build into their models would be when you see the new debt structure, you need to adjust for the size of the debt and the interest rates. There is going to be a little bit of -- (Inaudible) -- on interest versus the historical interest rate, because we did harvest $26 million in cash.

So keeping up on that topic, could you talk to us about what you think interest expense might look like in the second quarter? And what we should be using for our run rate after the second quarter?

So, the revolver balance, because we made an interest payment, is going to be somewhere in the high-80s, low-90s. We are going to be paying for a period of time 225 basis points plus LIBOR. We have a small amount of other debt that is immaterial, and included in there will be the amortization of the deferred financing costs, and that is going to be on an annualized run rate at about $1.5 million.

So you don't have a guidance as to what we should be looking at this quarter? When you talked about the cash overseas, that it could be invested overseas, would that be in existing operations, organically, or would that be potential acquisitions? Okay. That's all I have, thank you.

Your next question comes from the line of Private Investor John Baum.

Just a comment and then a few questions. First of all, in addition to the gentleman sitting in his room right now at your end, I think a high five goes out to all your operating managers for brilliant cash management, working capital management, and I especially like to see as a long-term shareholder that you are really setting the stones in place right now for some pretty exciting stuff coming up in 2012, 2013, and 2014. It was a real trough right there, but like you said, Eddie, you always come out of these stronger. Any comment on that?

We are able to take the time when the revenue compression hit, as we did once before and as you know, in 2002, towards '03, we are a better Company. I have indicated that we would be a better Company when the revenue -- when we have got the wind at our back and the wind is at our back. It is not a gushing wind, but it is a nice summer breeze. We are getting the results of all our preparation. And if the revenue continues to move upward, I think we'll do better. So we are not surprised over here. We put a lot of time and effort into it, but we are pleased that our first quarter shows a lot of hard work in some very difficult circumstances.

That was a tremendous job. A couple of housekeeping questions. I know you gave first quarter CapEx. Can you give full year CapEx guidance at this point?

Yes, right now we think we're going to be around eight.

Eight in full year D&A, is that somewhere around 16 or less?

Somewhere around 16.

Okay. I keep picking away at the net operating loss carry forward. Do you think you're going to have any federal cash taxes this year based upon existing guidance? Or with some of the other special carry forwards, do you think it's going to shelter federal cash taxes with that NOL carry forward of about $25 million? Where do you stand there?

We won't use that this year. We won't pay US tax, US federal tax in a lot of that.

Okay. Can we look at -- roughly, I think you had about a 15% accrual rate. Is that a fair estimate for cash taxes going forward this year?

That could be a little high on cash. Well, I take that back. One thing that is going to happen is we are going to have a gain in Ireland on the bonds. We will pay about $2.5 million in Ireland on the bond gain with the bond transaction plus four -- so our cash payment is going to be somewhere around $6.5 million.

All in US dollars, right?

That is US dollars.

Very good. Eddie, I know -- or maybe Matt -- what are some of the weaker segments in the silos right now? Are you seeing any pickup in railroad at all for Crankshaft for some of the new high speed rail lines coming down? Or is it too early to tell anything going on there?

John, it is too early to tell as it relates to the high speed rail lines, but we are doing better in that segment, and as I mentioned in my comments, the locomotive end market has been a benefit this year. Of course it couldn't have come off a more miserable base last year, so there was nowhere to go but up. But given the high operating leverage in those businesses, any revenue is a significant contributor.

Certainly. How about headcount this year? Where are you right now?

Total headcount, John?

Yes.

I think about 3200.

Are you planning on adding this year or not? Is that a good estimate for this year? Are you always looking to add or what?

We've probably added, since the bottom, we have added about 400 employees, so I'm including temps by the way as well, John. I'd say that we have been reasonably conservative. I don't expect a meaningful increase to that number at this time. I would say on this revenue base, we're about where we're going to be.

Excellent. What can you say, it was really a tremendous quarter, great working capital management. You refinanced the bonds; and again, as a long-term shareholder, we look for good things coming in the future. Thanks, guys.

(Operator Instructions) The next question come from the line of Larry Chlebina with Chlebina Capital

I have a question on your aluminum business one more time. You were doing well over $40 million in sales per quarter before the downturn, and then you bought Ravenna Aluminum. What is your current capacity that you could fill?

The five operating plants that currently are online have a realistic capacity of approximately somewhere between $300 million and $350 million.

Is there any status that you can talk about on slurry-on-demand?

Slurry-on-demand is operational, and we are negotiating with a customer, and we hope -- this is someone in the trucking business where this real has applications, and we expect to be testing that in a very serious or commercializing, let's use that term, in the next 18 months.

Okay. Finally, the Japanese transplants, are you engaged in most of those right now in terms of supplying parts?

We have always had -- done a lot of work with Nissan over the years. And quite frankly, we are measuring very carefully the impact of what happened in Japan. It would appear -- and this is not some of my thought process. It would appear that the Japanese transplants, for the lack of another word, have learned a lesson relative to it's along way from there, Japan to America, when it comes to auto parts.

I just sometimes wonder if they will go back and others wonder if they are going to go back and continue to try to make those parts offshore and bring them into our markets. If that is not the case -- or even if it is a slight change in direction, quite frankly, there's probably a shortfall in capacity in America. So we're at the capacity that it's going to be built, if in fact they decide to get closer to the production plants. Not only the Japanese transplants, but also the European manufacturers, German car manufacturers in particular. They're opening plants here and they want to continue to try to bring aluminum from around the world. And more important, critical safety parts.

We haven't even put that in our plan for the next couple years. But we have also -- we have already stated that we have a relationship with GF, who leads the world in electric steering, and we have our first platform coming on stream with them in 2012. And everyone is pretty optimistic about electric steering in the next three or four years. And we have a contract and are on stream with the leader in that particular area.

So one way or the another, I think we will hopefully need this embedded capacity that we bought when we bought, for example FSI in [Vena]. So we think we're where we'd like to be. We loved the fact that the domestic car manufacturer of having success, the possibilities of picking up work that historically has been done offshore. We are a lot closer to those manufacturers than other people around the world.

We have got to be guarded and optimistic that we've made the right decision. And if you look downstream, again, we are expecting a lot out of General Aluminum in the out years.

So on the margins though, you were able to hold the line on margins because of general lack of capacity elsewhere?

I don't want to characterize it as that. We see anyone, any really, solid manufacturing company that's supply parts to the auto industry in America that has survived the 2008 and '09 crisis should benefit from increased revenue. Forget about suppliers being there. There are a lot less manufacturers of auto parts, particularly in the aluminum business, today than there were five years ago. I doubt if that capacity -- anyone's anxious to bring that capacity back on stream, but I wouldn't characterize it as anything other than an opportunity.

Thank you.

There are no further questions. I would now like to turn the floor back to Management for any closing remarks.

Again I would like to take this opportunity to thank all the stakeholders in the Company and particularly the groups and the bonds and the banking and more important our employees that make this thing happen. We appreciate any continuing support and we look forward to a great year, and we will see you at the end of the second quarter. Thank you very much.

Thank you for participating in today's conference call. You may now disconnect.