Park Ohio Holdings Corp (PKOH) 2012 Q3 法說會逐字稿

Good morning, and welcome to the Park-Ohio third quarter 2012 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.

And I would now like to turn the conference over to Mr. Edward Crawford, Chairman and CEO. Please proceed, Mr. Crawford.

Welcome, ladies and gentlemen, to the third quarter 2012 Park-Ohio conference call. I would like to turn over the Safe Harbor statement to the CFO of the Company, Scott Emerick. Scott?

Thank you, Ed. Good morning, everyone, and thank you for joining us today. If you've not received a copy of our earnings press release, you can find it on the Investor Relations section of our corporate website at pkoh.com.

I want to remind everybody that certain statements we make on today's call, both during opening remarks and during the question-and-answer session, may be forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from those projected. A list of relevant risks and uncertainties may be found in the earnings press release as well as in the Company's 2011, 10-K filed with the SEC on March 15, 2012.

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. For a reconciliation of net income to EBITDA, please refer to the Company's recent earnings release.

This time, I'll turn the call back over to Ed.

Thanks, Scott. [And is] Matt Crawford, the COO and President of the Company to cover the results in the third quarter and year-to-date 2012. Matt?

Thank you very much. Good morning, everyone, thank you for joining us today. Our strong operating performance momentum continued into the third [quarter] during which we saw strong earnings performance in each of our business segments. Integration of our March acquisition of Fluid Routing Solutions, or FRS for short, continues to meet expectations.

Highlights of the third quarter financial performance included an 18% increase in revenues to $286.5 million and earnings of $0.88 per diluted share or roughly [3.5] times the $0.24 earned in 2011. EBITDA, as defined, totaled $27.8 million for the third quarter of 2012, which was a 36% increase over EBITDA of $20.4 million during the third quarter of 2011.

On a year-to-date basis, our reported earnings increased 129% to $1.99 per diluted share from $0.87 in 2011. The increase in net sales was primarily attributable to acquisitions and continued strong performance in the Engineered Products segment, partially offset by a decrease in net sales in the Supply Technology segment.

On a sequential basis, third quarter net sales decreased 7%. This sequential decrease was primarily attributable to less shipping days in the second quarter, as well as July shutdowns and program completions in the automobile and truck industries. The gross profit margin was 18.8% in the third quarter, which is 160 basis points better than the 17.2% in the third quarter of last year. This change is largely due to favorable changes in the sales mix at Supply Technologies and the inclusion of FRS.

SG&A expenses as a percent of sales were 10.9% compared to 10.8% in 2011. Although we continue to watch our spending very carefully, we are making investments to support our ongoing control [descent], particularly in the aluminum casting business and the Supply Technologies international expansion. Interest expense increased by $300,000 to $6.5 million during the third quarter of 2012 from $6.2 million in 2011. Although our 2012 debt carries a lower average borrowing rate, the average borrowings were higher in the third quarter of 2012, primarily due to the acquisition of our FRS.

Turning to taxes, income was taxed in an effective rate of 33.7% for the quarter, although we fully utilized our remaining NOLs in the third quarter of 2012. Accordingly, we estimate the cash taxes will be $6.8 million for the year with $2 million in the fourth quarter.

Now, looking at the segment results, as we mentioned during the second quarter call and as a result of the FRS acquisition, the Company realigned its segments in order to better align its business with the underlying markets and customers that the Company serves. The business segment results for the prior years have been reclassified to reflect these changes.

Looking at Supply Technologies, revenue decreased 5% compared with the third quarter of 2011 to $117 million. We continue to see revenue growth year-over-year in the truck and recreational markets as well as from new customer sales, but we saw one less shipping day in 2012 as compared to 2011 and softening customer demand, particularly in the appliance, industrial equipment and defense markets. Our international growth initiatives to support our current customers on a global basis continued successfully and we expect this initiative to help drive revenue growth in 2013. As we look towards the rest of the year, we expect demand to stay a little volatile, particularly due to North American holiday shutdowns.

Segment operating income declined (inaudible) to $7.6 million despite some unfavorable revenue trending due to economic softening. Segment operating margins grew 10 basis points to 6.5% compared to the prior year. We continue to focus on good product and customer mix, including the introduction of new items into our supply chain offering and we remain committed to strong expense management.

Next, the Engineered Products segment. Net sales increased 3% compared with the third quarter of 2011 to $85 million. The increase in net sales was driven by strong performance in the Forge division, highlighted by continued strong demand in the rail industry. The Industrial Equipment Group continued to show strong and consistent top-line performance, buoyed by the strong North American equipment and especially aftermarket performance through the third quarter. Although we expect revenue to stay stable through the end of the year, we're watching carefully the order book in both new equipment and aftermarket business lines as our customers evaluate uncertain market conditions.

Segment operating income grew 4% to $14.2 million. Segment operating income margin grew 30 basis points to 16.8%. Segment operating income was very comparable on a sequential basis and segment operating income margin increased 20 points compared to the second quarter. From an expense standpoint, we're carefully and cautiously observing our customers' order patterns as we proceed into the fourth quarter and look into 2013.

Now, let's move into a discussion about Assembly Components. Net sales increased 121% compared with the third quarter of 2011 to $84 million. The FRS acquisition is the primary contributor to the significant increase in net sales. Rubber products also showed consistent improvement and Aluminum continues to work hard to prepare for a successful launch of significant new business. Some of this business launched in the third, but not as much as we expected. While there will be significant ongoing program launches in the fourth quarter, we currently expect the most extensive financial ramp up of the new business to commence in the first quarter of 2013.

On a sequential basis, net sales for the segment declined by 8% compared to the second quarter of 2012. The sales decline is attributable to fewer production days in the third quarter due to July shutdowns at our automotive customers and the completion of a couple of programs during the third quarter.

Segment operating income grew to $6 million. Segment operating income margin grew to 7.1%. While the addition of FRS was a significant contributor to this increase, we're also pleased with the improvement at Rubber Products due to customer delays with program launch as we've not yet seen the profitability step-up in the Aluminum business that we're expecting from those launches. Specifically as it relates to FRS, we continue the thoughtful execution of our integration plan and believe we can expand their success through both Park-Ohio synergies and FRS strategic initiatives.

I'll take a moment to discuss operating cash flows. Operating cash flows are $42.5 million for the first nine months of 2012 which compares to $26.1 million for the first nine months of 2011. Improved earnings are the primary contributor to the increase in operating cash flows. We expect to improve cash flows in the fourth quarter by an approximate $10 million.

CapEx was $12 million for the third quarter. We anticipate our full-year capital spending to more closely approximate $21 million, with $2 million being spent in the fourth quarter.

Although we'll not be providing any guidance for 2013 today, I would like to update our net sales and earnings outlook for 2012. We currently forecast our consolidated net sales to be approximately 18% greater than the prior year. We are also updating our earnings per diluted share forecast to be in the range of $2.45 and $2.55 per diluted share. This updated earnings forecast includes the unusual $13 million pretax litigation settlement charge in the second quarter of 2012 of $0.69 per share.

In addition, we are forecasting EBITDA as defined to be approximately $94 million for the year ended December 13, 2012, (sic - see Press Release) which also includes a settlement charge as an expense deriving EBTIDA. Our modest reduction in guidance is based on a lack of clarity into end of year demand across most businesses and the later launch although increasing volumes in the alumina business.

Thank you. I'll turn it back over to Ed.

Matt, thanks very much. We were pleased with the progress year-over-year for the quarter and we're looking for the uncertainty in the marketplace, hopefully will clear. We are very positive about our position for 2013. We believe our three diversified business units will do very well. So we're looking forward to further progress for the Company across all divisions in 2013.

Now, I'd like to take this opportunity to open up the lines for questions and thank you. Berna, are you there to open up the lines?

(Operator Instructions) Ajay Kejriwal, FBR Capital Markets.

Hi. Good morning.

Hi, Jay. How are you today?

Good. How are you?

Very well, thank you.

Good. So maybe if we can get a little bit more color on Supply Tech; mentioned July shutdowns. So was this more than what you expect seasonally? Or I know you said one less shipping day. But what else can contribute to this lower sales than last year?

Hi, Ajay. It's Matt, how are you?

Good, thank you. How are you?

Good. Now, I think in my comments, I think I mentioned with some specificity some of the volatility by name in the marketplace during the third quarter. Yes, as I mentioned in the second quarter call, we saw a bifurcation. Some markets were up, some markets were down. We just seemed to see more action relative to increases and decreases in demand. So while the lack of an additional shipping day was significant in our business, since we're a daily supply business, there is no question that we did see some cooling and some specific segments and I mentioned those in my comments.

Ajay, this is Ed. I can't overstate I think the concern in the marketplace across so many customers in that particular unit to what is happening at this particular moment. I think there are a lot of people that are not -- in the third quarter are not building inventories; they're being very, very careful on shipments. So maybe we're getting -- we'll get some relief from this very quickly. But there are a lot of people with all different types of thoughts on what might happen in the fourth quarter and the first quarter. So the hesitation there, I don't think necessarily is reflective of the demand. It just hit certain pockets faster than others.

Okay. So it sounds like some of your customers are destocking on the inventory, and then when things kind of stabilizes in expectation that you see a bounce back quickly?

Ajay, I wish I knew what 2013 held. I do think people are aggressively managing their inventories, as we are here at Park-Ohio. So that shouldn't be a surprise to anybody. One of the segments I mentioned or industries I mentioned that we are seeing softness in or saw softness during the third quarter is in defense. It is -- your guess is as good as mine of where that's going, but clearly there's been what was a soft patch and we expect a soft patch through the end of the year.

Got it. And then, you mentioned international expansion, some investment there. Could you maybe elaborate on that a little bit, what are you looking at, which markets, where are you in terms of those initiatives? Any thoughts there would be helpful.

Sure. I think I mentioned in the last call, specifically talked about our expansion in Singapore. One of our initiatives that we began right about a year ago today was to focus aggressively on our customers, many of which are US multinationals, but many are European and Asian-based multinationals and making sure that we can supply them globally. For a long time, we've done a great job of taking significant European and Asian customers and helping them here in the US as they expanded. Our goal is to go the other direction as well.

So, Singapore has been a specific location, which we have been aggressive in terms of expanding both from a footprint and a management and sales perspective. Asia continues to be an area of focus, particularly China; and increasingly Europe is an opportunity for us as well, although not quite as mature as Singapore and China. So that project is relatively young, but given the closeness of the relationships with those key customers, we expect to have traction certainly next year.

Ajay, as I mentioned, we have, in the last six months, increased the amount of feet on the floor all over Europe and Asia with a new and fully developed international sales force. So this is clearly something where we're investing on behalf of all the companies, particularly supply chain and our customers around the world. We have acquired and have working and doing a great job initiatives in many different aspects outside North America.

Then, one more from me if I could before I pass it on. So in aluminum, you've mentioned something about delays with customers. I mean, is that program specific or is that something you're seeing with just the general auto industry kind of pushing back on new programs?

Well, it's not -- it should be characterized as the delay by our customers. As indicated, we have written well over $100 million in new business. The problem we have, and this is a strange problem for General Aluminum, the launches of so many programs at a critical time, we're trying to get -- we're launching major platforms. We have five plants, we're (inaudible) initiating major platforms in four of the five plants.

And when you start up a program like we are, when you start, you'd decide to double the business, okay, and your run rate goes from X to Y, literally, in one quarter; there is a jam, quite frankly, a logjam at the plants, getting these platforms up and running. And it's not the demand from the customers. Quite frankly, we're working very hard to bring this on stream, maintain the quality, so it's a good problem, but it's not the demand and it's not our people, it's the fact that we've really written so much new business.

Again, when you think in terms as we've discussed, doubling the size of this business in a very short time, I expect, as I've indicated this to be in the latter part of 2013 running at a rate twice the rate it ran two years ago or a year ago. So we have a lot to accomplish here and it's not the demand at all. Quite frankly, we're having a hard time keeping up with a couple of our customers. So it's not -- that's not the issue. The issue is a lot coming down the pipe and the pipe just went from two inches to six inches and it's hard to really do.

Ajay, I would only add one. I hope I was clear that we are seeing incremental volume in the third and more significantly in the fourth quarter, but definitely the second half of the year in a material way. We're just -- we don't expect it to impact the performance of the business until we get more stable.

Again, all the expense -- these are five-year contracts. They begin -- the plan was to begin in August or September of this year, okay. And I'll tell you -- but we have to be up and -- and these run rates -- boy, I'll tell you by St. Patrick's Day or thereafter. I mean, we are committed here and, not only are we casting as indicated. At the same time, we've gone into all the machining. So, we're not bringing up only the casting in the plants, we're bringing up casting and machining, the total concept of converting an ingot. This is a big job.

And I was at one of our plants yesterday. I just -- they just -- everyone down there has to understand that we went out to sell X, we sold Y. And now, we went into a different part of the business, but they'll handle it. We've got the people, it's stressful, but it's there. It's not the customers. It is not the customers. We've got plenty of business.

Got it. So that's very helpful. So it sounds like, first quarter of next year, you should be kind of where you want to be on the production side or is that fair?

It's not fair to say that. It's fair to say that by the middle of year, we'll have all these wrinkles, all these startups ironed out. It's going to be up and down for the first two quarters. Again, think of this as we already had as hardcore million dollar business. Now, if you try to -- $100 million business. If you try to double that, okay, it's going to take some time. But, it's five years. Once it's dialed in, it's dialed in. But these are start-up problems, these are expense problems. These are things that make it happen. Would I prefer to be only starting up $50 million in sales and have no problems or trying to start up $100 million and having a few problems? So I'll take the latter.

Yes, makes sense. Thank you very much.

Thank you. Matt Vittorioso, Barclays.

Hi guys. Oscar Bate in for Matt today. How are you doing?

Good, how are you doing today?

Well, thanks. Just --

Are you in New York?

We are, yes.

You're at work, so that's good.

That is good, yes. There is no power at home, so it's nice to be at work.

So, that's why you're at work.

Exactly, exactly.

All right, man, what do you have on your mind?

So, just a couple of quick ones here. Could you just update me on the timeline for your expansion from aluminum casting into machining as well? And then, I guess, specifically, how long we should see the elevated CapEx levels associated with that? Is that just through the fourth quarter or what's that timeline look like?

Let's go with the CapEx, yes. The increase in CapEx literally everything involved in the CapEx ramp-up again is all for the machining side of the business. We had five plants. We have all the casting equipment we needed to be a much bigger company. We decided that no longer did we want to just be a caster and supply our customers to another party. Now, we are all direct. We do the machining ourselves and the most amazing thing about this is, this is our ability to recapture the chips.

When we do the machining, we take the chips. So we bring the chips right back and put them in the furnace. This is very important. This is about quality, this is about reducing cost, but more important, when we get an ingot, we are the Company that specializes and is respected in the industry as we take the ingot and in one facility, we anodize it, we heat treat it, we cast it, we machine it and we sell it directly to the customer. This is like a whole new business. That CapEx -- don't think of that CapEx as being in the casting part of the business. Think of that CapEx as a brand-new business.

Right.

That all of that was outsourced before; now, it's all in-house, virtually all in-house.

I would add as well, during our forecast, as I am sure you noted, we estimated $12 million -- where we said $12 million for the third quarter and $2 million for the fourth. So I think that's indicative of directionally where we're going. $12 million was an extremely high number, probably the most we'd ever spend in a quarter. So that is highly unusual. Now, do I think $2 million is a typical run rate for the business? No. But I think $12 million was highly unusual and I think directionally, it gives you a sense of where we're going.

You guys still feel good about $2 million in the fourth?

Yes. We just gave that estimate.

Okay.

About four minutes ago, so, yes.

I'm sorry.

Nothing has changed.

Man, I think you got to really look at it as an investment in new business.

Absolutely. Thanks very much. And then, just one last quick one, could you just talk a little bit about the FRS integration and how that's coming along, your ability to take out costs and drive margins there?

Yes, sure, I'll comment on it. The opportunity, once again, on the synergies as it relates to the FRS acquisition was largely related to cross-selling and marketing opportunities. So, FRS is a very well-run business. It was when we bought it and it is now. So our expectation for success there is not about driving cost; it's about cross-marketing opportunities and we continue to expect that that is a 12-month to 18-month project. Their product lines are substantially dissimilar than ours, although we think we found a fertile ground to cross-sell. It's going to take some time. So -- but no, I don't want to leave anyone with the impression that this is about driving cost or increasing the performance through cost reduction at FRS, it's not.

Okay. That's helpful. Thanks, guys.

Thank you.

Thank you. Jay Harris, Axiom Capital.

Good morning, gentlemen.

Well, good morning. How are you today?

Very good. Thank you.

All right.

I have several questions. First is, I'm a little confused on the balance sheet on the -- you filed a 10-Q on -- for the June quarter showing a little over $79 million of net worth. We're now at about $94 million plus and yet the net income was $11 million. What am I missing?

Good, Jay. Scott Emerick will take this, Jay.

There's some other activity that goes through equity for some share activity that occurs with some restricted stock. It's not all that significant, but it does have an impact. There is also accumulated other comprehensive income for some foreign currency translation and some impact on pension and OPEB plans that occur as well.

Okay, thank you. Second question. When you took over Fluid Routing, they had some profile of customer contracts. Have they all rolled over? What percentage rolled over during the March quarter before you took possession, and where are we on rolling over the contracts with the full customer base?

Jay, it's simple. We were where in the acquisition process that the auto companies, the customers have [ejected] the previous owner's concept of raising prices when they first took the company over. That's why the company became available on the basis that they were shutting out, being shut out by the auto companies for their activities and the way they ran the business previous to our purchase.

So that was the reason it was for sale. It was considered in the price because they had missed two or three platforms, okay. They come in, we've realized what happened. So we did -- now, we. They missed writing some business that they would have had and had historically. That was missed. That was taken into consideration and the price we paid for the company. And since we've been involved, we have been continually bidding on the programs. I think we are back in good graces, but there is a valley that we anticipated in the purchase and that is taking place.

Well, Jay, it's Matt. How are you? Jay, hi. It's Matt. Let me just point out two quick things quickly. These are long-term agreements. These are long-term auto supply agreements. So I don't want to -- in your question -- embedded in your question was this idea that maybe things turned over very quickly, they don't. These are long-term agreements and when most all of the contracts that were in place when we purchased the business are still in place today. Some are not, some will complete periodically and I alluded to those in my comments. But we don't think it's materially a different business and since the acquisition, we have been awarded some new business as well. So, I think, we're -- there's the potential for a soft spot. But by and large, the business is healthy and being awarded new business.

Well, as you go through this process, I presume over the next couple, three years, what impact do you think this rollover process is likely to have on your gross margins?

Well, Jay, I don't -- once again, embedded in your question is the concept that maybe there is something unusual or strange about the volume or the margins of the business we own, I don't know if that's the case. So we -- it's business as usual there and we're competing for business aggressively and we have competition and it's -- I don't know that there is going to be a material difference the way you're asking the question.

Yes, I think Jay, you're applying that the -- something is going to happen to the margins [because] of the volume. Those programs you're talking about have been gone for some time.

Okay. All right. That's a good answer. Thank you. In your guidance, why are the margins in the fourth quarter going to be so much lower than they have been?

Well, let me first comment generally on guidance. We are -- as I indicated, also share some of the concerns that we hear from our customers and you hear from them as well. Many of them have had their own conference calls as of late. So, the lack of clarity and concern about some softness we share as well. So that's built into our forecast, but having said that, going to the root of your question, we have been performing particularly in some of our higher-margin businesses exceedingly well.

So we expect that as -- to the extent there is some softness in the fourth quarter or to the extent that there is a change in business mix that that could likely hit some of our more profitable business. At the same time, we are seeing an increase in revenue as we've indicated at our aluminum casting business which as has been indicated several times here, at least at the outset is going to be extremely low margin. So to the extent we replace some low-margin business with some high-margin business, that's also going to impact the margins.

Okay. Good answer. What percentage -- looking backwards in the -- let's say in the first half of the year, what percentage of your revenues was defense related?

It's Matt again, Jay. I want to think about that for a second, it is not one of our larger segments and it's not overly material. There is a piece of supply technology that is directly defense related. It is important, but not significant to the overall revenues of Supply Technologies. There is also a significant, an important part of our Forge business group that is related to defense as well. On a combined basis, it's definitely single digits and maybe mid-to-low single digits.

Okay. Thank you very much.

Hey, Jay, if you're making landing gears to the patchy helicopters and the F16s and somebody is saying they're going to cut the budget, [most of] their budgets into half, I think that slows down the flow until it's just straightened out.

Jay, that's a good question, because I don't want to leave that hanging as though we will be -- as though we're tied exclusively to government budget. Particularly in the Forge Group, a couple of things are happening which I will benefit us, although the overall trend would not be positive. Couple of things are going on there. One is we are principally in the Forge business an aftermarket supplier. So to the extent that airplanes in this case, military aircraft are not retooled and they depend on older designs which they are, that's a benefit to us actually.

Once again, the overall order book might decline, but at least we are keeping our market share. Also of note particularly in the airplane and aerospace business as well, military aerospace, the international markets are huge buyers of our aircraft, most notably and recently Saudi Arabia. So we're not tied -- I don't know if that's where you're going with that question, but I don't want -- I want to take it as an opportunity to say that there are opportunities outside of the Department of Defense.

Well, the reason I brought up defense was because you had mentioned that as a source of a possible weakening in demand and you were commenting to an earlier question.

Yes. Now, we're definitely seeing that. You can't -- we're not -- I'm not suggesting that we -- that that's not a point of weakness. I just wanted to remind people that particularly in the Forge business, we are positioned a little better than just a prime contractor for the Department of Defense on new designs.

Jay, this is way, way, way, way, way under 5% of the business, total business. It's small. It's not really something --

Just listening to your comments, it occurs to me that it's probably very difficult for you to give guidance in an environment that we find ourselves in today. And I guess if I were doing it, I'd be ultraconservative.

Jay, we thought about this long and hard. And our responsibility is present the facts as we see them, okay. So that's the facts as we see them. I mean, god, if everybody knew what's going to happen here, maybe we play it differently. But this is what we see and we don't like coming off guidance downward, but the net result is that's what we see. That's our responsibility and we'll go from there.

But the uncertainty here is pent-up across -- well, in all the businesses I'm involved in. I mean we're all waiting, so hopefully this will all clear up and we'll get the confidence back in America and what we can do and away we go, but -- so at this particular point, let's concentrate in finishing up with strong -- I mean you think of this quarter over all the other quarters and how well we've done and even this quarter against last year's quarter, forget about -- so we should be comparing last year's quarter with this year's quarter and we shouldn't be thinking about the consensus for the whole year. I mean it all gets muddled here. The net result is the Company is doing very well. It's very strong and we think we have responsibility to reflect the overall guidance. That's what we've done and with all the information we have and all the uncertainty to [adjust].

Well, thank you for your comments. Very helpful.

Thanks, Jay.

[John Baum, Park Ohio].

Hi, guys. How are you doing?

Hey, John. How are you doing?

You had a great quarter. Congratulations. And I understand there's some trepidation with making guidance in this environment with all the uncertainty out there. A couple of questions. Have you decided to raise your full-year depreciation and amortization maybe up to the $20 million range right now with the acquisition of FRS and new business?

We really haven't made any changes in our core forecast for depreciation and amortization since we rolled that acquisition in and incorporated in the guidance in the second quarter.

Well, if I see we are close to -- if I look at the D&A for the third quarter, can we be annualizing that right now or was that -- because that's nearly up to [$4.9 million], can that be annualized at that level or is that not a fair estimate?

It's pretty fair. There might be a few adjustments for truing up the depreciation and amortization for FRS, but for the most part, I think it's a pretty good indicator.

Okay. Very good. Maybe back to you, you know what, I'm going to call it manufactured products right now, not Engineered Products, but any particular reason that with our big shipments for the drop-off in quarterly sales from 2Q to 3Q or how does that -- what does that look for fourth quarter?

John, we have benefited from a margin standpoint from good mix, particularly as it relates to the equipment business in high aftermarket percentages. The new equipment part of that business has continued to be a little choppy but not bad. As I've mentioned on prior calls, the key market there that has continued to not recover is the steel business.

So our order book, our average new equipment ticket price, if you will, is down from what I would consider a normalized basis. So where are we benefiting? Process improvement, heat treat operations, auto suppliers, things like that. So I would expect that we will continue to see a little bit of choppiness as it relates to the order book and the revenue stream there. But it's largely stabilized, albeit stabilized at a level that from a new equipment perspective, we don't think is optimal, principally because of what's going on in the steel industry.

Okay, very good. Eddie -- I'm sorry. Go ahead.

No, no, John, that's enough [of me], sorry. John, anything else?

Yes, yes, [I'm sorry]. Thank you very much, guys. Great quarter, all right. Thank you. All right, bye-bye.

Thanks, John.

Thank you. And at this time, there are no further questions in queue.

Well, I want to thank all the stakeholders in the Company. We've just come out nine months, and uncertainty is something I think we've proven we can handle successfully. So we're not daunted by the little curves and the roll, little bumps. We're looking forward to 2013. We like our businesses. We think we had the right team. This is a matter of execution in all the opportunities we have. So we'll see you in the spring, hopefully reporting a strong finish and more important, a brighter future for the Company. Again, thank you for your support. Have a nice day.

Thank you for your participation in today's conference call. You may now disconnect your lines.