Stantec Inc (STN) 2004 Q3 法說會逐字稿

Thank you for holding for the Stantec Inc.

Q3 2004 conference call.

I'd like to introduce your chairperson, Mr. Tony Franceschini.

Thank you, Brenda, and good afternoon everyone and welcome to our 2004 third quarter conference call.

As always I am joined by Don Wilson, our Chief Financial Officer, and we will both be available to answer any questions you may have at the end of our discussion.

I would like to mention that this conference call is being broadcast live over the Internet and will be archived for future reference at Stantec.com under the investor relations section.

We would also like to ask any members of the media who are joining us today in a listen-only mode that I wish to quote anyone other than Don or me to please request permission to do so from the individual concerned.

This morning we released the results of Stantec's operations for the third quarter of 2004 and I am pleased to report strong performance for the Company.

Net income increased 17.1 percent at 8.5 million from 7.3 million and basic earnings per share were 15 percent higher at 46 cents versus 40 cents.

On a year-to-date basis net income increased 10 percent to 20.6 million and basic earnings per share increased 9.8 percent to $1.12.

Our performance for the quarter reflects improvement in our administrative and marketing expenses following the integration of new staff and systems from the firms we acquired in the first quarter of the year.

On a year-to-date basis our administrative and marketing expenses as a percentage of net revenue were 40.4 percent at the end of the third quarter of 2004 for the first three quarters of the year compared to 41.9 percent at the end of the second quarter.

We also continued to make progress in improving our level of billings and collections which had a positive impact on our cash position.

At quarter end our investment and costs in estimated earnings in excess of billings amounted to 34 days of revenue compared to 52 days at the beginning of 2004 and 32 days prior to the implementation of our new enterprise management system.

We are now focusing on reducing our level of investment in accounts receivable.

I am also pleased to announce that the Company appointed Miss Susan Hartman [sp] and Mr. Robert Masell [sp] to the Stantec Board of Directors effective today, November 4, 2004.

New project awards during the quarter once again illustrated our ability to respond to the needs of our marketplace.

In particular strong project demand continues in the environment market segment across the Company.

In the US southwest we secured an assignment to provide a comprehensive range of services for an environmental improvement program at Lake Tahoe Basin in Eldorado County, California.

This 3-year contract will require multi-team project delivery from our environment, transportation, urban land and buildings group.

In the US southeast we were awarded an assignment to develop a plan and design for restoring approximately 1 kilometers of the stream and .3 hectares of wetland in Columbus County, North Carolina for the North Carolina ecosystem enhancement program.

Our team will also provide construction oversight services and carry out the first year of monitoring for the stream and wetland restoration.

Other environmental type projects obtained during the quarter include the design and construction administration of a new municipal water system for Campbell, New York.

The detailed design and contract administration of an expansion of the air west water treatment plant in Ontario, the development of a master plan for wastewater treatment in Drum Heller [sp] Alberta and the design of an upgrade of the Grand Prairie wastewater treatment plant in Grand Prairie Alberta.

Our environmental management team also secured a contract to conduct a study of aquatic ecosystem monitoring throughout the province of Alberta for Alberta Environment.

Subsequent to the end of the third quarter we added Dunlap Architects [sp], a 100 -person architectural practice based in Toronto Ontario to our Company.

The completion of this acquisition not only expanded the depth and breadth of our architecture and interior design group company wide but also enhanced our presence in the greater Toronto area.

Clearly the third quarter of '04 was active and productive for our Company reflecting our commitment to the continuing to pursue our objective of orderly and profitable growth.

Now I would just like to make a few comments and observations about what we see the state of our market going forward.

As we have noted previously at the macro level the infrastructure and facilities industry tends to grow in parallel with overall growth in the general economy.

Over the next three years growth in the Canadian economy is forecast to be strong but slightly slower than growth in the US economy.

This general growth should lead to increased capital spending in the infrastructure and facilities industry for the next few years.

One of Stantec's key markets in both the US and Canada continues to be the residential housing market, which accounts for about 35 percent of our business.

Although on the macro level housing starts in North America now appear to be coming off all time highs, starts in all markets are expected to continue to out perform the averages of the past 10 years.

The environment sector in both the US and Canada also continues to be strong especially the area of wastewater treatment plant renovation and upgrades.

In the buildings area the best markets are in education and the health care sectors in both Canada and the US, both markets in which Stantec has an excellent representation.

In the industrial market we are starting to see increased capital spending in the biopharmaceutical sector as companies upgrade their equipment and facilities for manufacturing new compounds in biotechnology products coming out of clinical trials.

Stantec again is well positioned to respond to this trend.

In the transportation sector the overall market in the US continues to be affected by uncertainty about federal funding for a new transportation equity type act.

However, we believe that a recovery in state local receipts as incomes improve is likely to be a more significant factor in driving spending on transportation in the US in the next few years.

In Canada the recent allocation of 3 billion or so in funding for infrastructure projects in Alberta bodes well for Stantec's participation in this market.

Overall our assessment is that long-term outlook for professional services in infrastructure and facilities remains strong with demand being driven by several factors including general population growth, in some cases more stringent government type regulations and also the need to maintain, upgrade and replace the aging North American infrastructure.

There still continues to be a significant deficit with respect to the infrastructure improvement needs and the projects that have already been identified and funded to date.

With that I will conclude our brief comments for today and as always Don and I are now available to answer any questions that you may have and our conference call operator, Brenda, will explain the question procedure.

Thank you. [operator instructions] Ben Chernowsky [sp], Raymond James.

Good afternoon, guys.

Let me just ask first a quick housekeeping item with respect to Sear Brown [sp].

How much revenue contribution was from that acquisition do you think?

We have that here for you.

We expected that question based on the last quarter. 16.7 million Canadian in gross revenue was contributed by Sear Brown in the third quarter and we also like to add although you didn't ask the question at Sear Brown we incurred 6.1 million in G&A costs.

And it sounds like revenue per head was back up to average?

I mean I know in the last quarter you said that more people were spending time integrating instead of billing.

Has that reversed itself a bit?

Yes, that's reflected in our utilization, which has improved slightly in the third quarter.

Great, thanks.

Don, I'll ask you a question about the proposed sale-leaseback.

Can you give us some idea what that will do to SG&A versus your current interest payments and so forth?

Sure, Ben.

We've taken a look at this and the amount of depreciation that has been being charged on the building plus the financing costs are almost equal to the lease cost that we will be paying going forward.

As a matter of fact, the last time we calculated this there was an impact of less than 1 cent per share per year on EPS.

The one thing that you should know is we've indicated that our carrying value for the building on our books right now is between 25 and 26 million dollars and we expect net proceeds on this to be $32 million.

That means that there will be a gain on the sale of the building but the accounting rules are such that because we are leasing it back from the purchaser that that gain gets deferred and is brought into income over the life of the lease.

Right, okay, and what would you calculate your off balance sheet debt to total by the end of this year then?

Off balance sheet debt meaning --

Capitalized operating leases for all your facilities.

We've never made any attempt to figure out a value for capitalized operating leases.

What about your annual rent expense?

Have you got an idea what that is?

That's -- I don't have the figure handy, Ben, but if you take a look at our annual report from 2003 it is disclosed in the note there.

Right and this will add how much then?

You know I don't have that figure handy.

I will get that number and that's something that we will make available.

Great.

Thanks a lot.

Andrea McReynolds, Sprott Securities.

Hi, just a follow-up on Ben's question about the Sear Brown contribution.

Just looking at your financials and your notes overall the acquisitions that you've done added about 12.8 million in revenue or contributed about 12.8 million in revenue so it looks like for the second quarter in a row your other acquisitions are actually seeing negative growth.

Can you elaborate a bit on which acquisitions in particular may be problematic and sort of what you're doing to address that?

I'll address that.

This was sort of a combination of things but I guess the principal one is an acquisition that we did in the environmental area in the Toronto area just a little over a year ago.

I guess it would be about 18 months ago and basically I guess the best way to put it that this is one that didn't work out as well as we had expected and as of the end of September we had basically parted company with about 75 percent of the staff that we had.

They really weren't integrating well into the Company so we decided to keep the quarter that were good and we're moving forward on that basis so we've made all of the adjustments that we are going to make with respect to that particular one.

We had already integrated them into our other operation so it wasn't a matter of we weren't operating the entity on its own but the revenues that were coming from that group we had been gradually reducing the client base and some of the projects that we were working on.

That would be the major contribution but we also had again in looking at the last two years which is the point that we go back is that the southeast has not been growing and has had some modest decline although we see that turning around by the end of this years and it's actually already starting to show signs even in like October and November of starting to go in the opposite direction.

And the industrial area compared to two years ago some of the projects in the industrial marketplace in Alberta we did have some reductions in that area and we're starting to see that becoming a little bit more positive and there was a bit of a lull there in terms of new projects that were coming up but that marketplace is really heating up again and it's starting to look more positive so when you add those three factors together cumulatively they contributed to the 3.9 million decrease acquisition contribution.

Okay, that helps a lot.

And then just to clarify some of your comments earlier just about the various segments when you were talking about the environmental market were you focused more specifically wastewater treatment was that focused more on Canada or was that both in the US and Canada?

That's both in the US and Canada.

In Canada we actually have and even in the last few weeks even since producing our quarterly report that we've been successful in securing some additional projects and in the US we're in the process of going through proposals for about a half a dozen upgrades to wastewater treatment plants and if our success rate holds that we get about one in three of these, that bodes well for another few projects in Q4 in that area.

Okay and then just maybe if you could talk a little bit about what's going on with your acquisition strategy?

Overall this year and even late 2003 you've generally had a fairly full pipeline I think of a wide range of targets and notwithstanding Sear Brown being a fairly large sized acquisition this year overall your activity has been I'm going to say somewhat limited and I know timing is always difficult, then a big question mark.

But given that your pipeline has been bigger than it historically may have been can you talk about whether or not you've had to walk away from more than you normally do as pricing expectations are sort of out of whack or what's going on there and what the outlook is right now for your acquisitions?

Okay, well I think you've addressed a few points there.

One is clearly we have walked away from more acquisitions this year than certainly the last three years.

Two, we're fairly significant in size and we walked away in the end because of price and what clearly has been happening in 2004 is that some pricing expectations have increased.

There have been some new players in our marketplace, predominantly private equity that for some reason have decided that the sector is under priced or something and they're really looking at some fairly significant pricing pressures so we are being more careful in that if we're going to pay more than what we have traditionally paid for an acquisition that we want to make sure that there is enough strategic fit and upside and potential for -- I realize this is an overused word in terms of synergy but that, in fact, all those things are coming together if we're going to pay a higher price than what we have traditionally paid so that after we are through with the integration that we can still see some of the benefits of being part of the staff tech organization so clearly there has been all of those factors at play, some increased pricing.

I would say the pricing has increased upwards of 30 percent in a number of areas, 30 to 35 percent.

So if we're going to do things closer to that we are being more careful and cautious in terms of the assessment so although we have kind of almost as many firms and, in fact, even more than we've had in the pipeline that we're going to take a little bit more time and when we do something we want to be comfortable that we have a pretty good probability of meeting our targets and projections.

When you're paying a little less you can afford to err a little bit more so I would think that it's a combination of factors in terms of why we perhaps haven't done as many in numbers but I think in terms of volume, in terms of potential fee volume that we would add to the organization, we're still kind of on track with some of our traditional growth except we're likely to do fewer deals to get to those numbers because of some of the pricing changes that have occurred and we don't think that these pricing are necessarily here to stay long-term.

Whether it's one year or two years or six months that we don't know so if we have a good acquisition that we could follow up on and that we think there's good synergy then we will do it even at a higher price because we think that all the other factors are in place.

I hope that gives you a sense of where we're at.

Okay.

One last question then, you mentioned your admin and marketing expenses that they trended lower in Q3, is that -- or I guess two actually questions.

Is that an indication that we should them to trend lower?

I know you normally give a range but just pointing out that there sort of you had some extraneous integration issues.

Are you expecting them to stay more towards this Q3 level?

Well I think that's the trend.

I think in Q1 we were at 42.3.

In Q2 we were at 41.9.

In Q3 we were 40.4 and at the end of last year we were 39.5 so I think our objective is that to get somewhere between 40.4 and 39.5 where we were last year, is to get closer to the year-end number of where we were last year so that is a trending and it has been reflected in the improvements we've done with respect to our enterprise system and so forth.

Okay and then one last question, Don, on the tax rate are you expecting to average 35 percent for the year then?

At this point, Andrea, our expectation for the end of the year will be a 35 percent tax rate.

As you know what we do is we try to estimate the amount of income and the effective tax rate in the jurisdictions in which we operate and we've seen some pretty good reductions in tax rates this year in some jurisdictions and particularly in Alberta where we've had some pretty good operations this year and some pretty profitable results that has led to the pushdown of that rate but our best guess right now is that the tax rate would be 35 percent for the year.

Care to hazard a guess for '05?

Not a hope.

You know it really depends, Andrea, on what each political jurisdiction does with their tax rates and I would be loath to try to outguess provincial federal and state governments wherever we operate.

All right.

That's it for me.

Richard Stoneman [sp], Dundee Securities [sp].

Hi Tony, Don.

The first question, the Republican sweep in the US, will that have any impact on your business down there positive or negative?

Richard, it's Tony.

I think right now it's still a little bit early for us to tell but the one thing we can say, the one area of the US market that we are not involved in and that will likely continue in terms of spending is the infrastructure spending in Iraq.

A lot of our American based competitors are certainly benefiting a bit from the amount of infrastructure work that's being done in Iraq and we're not participating in that at all and clearly there have been some domestic funds diverted to Iraq so so far that's been occurring though in '04 as well and I think we've generally been able to react and adjust but the expectation is that that will continue and that unless we do some other federal type government work in the US we're not likely to benefit as a result of that and there may be some reductions because some of the funds that would normally go to domestic are likely to be involved there and that may have been the same whether there was a Republican or Democratic government so I'm not sure that having one or the other is going to be a huge difference to us.

The second question, Tony, the environmental unit that you're having some challenges with in Ontario, will that result in any adjustment to book value or will that be taken off the purchase price?

Richard, it's Don.

To the extent that we've had any assets that were restated there those were reflected in Q3 and there were some assets that we determined that there was less value on.

So that drag will not be there in Q4?

Correct.

Thank you very much.

Mike Hoen [sp], National Bank Financial.

I just wanted to ask you first of all if you could give us a little more detail on what you're seeing in the housing markets?

I know in the past you've had some prepared comments on what's going on in your various regions in housing so -- and it's obviously such an important segment for you so could you elaborate a little bit?

Okay well again just to refresh everyone's memory the key housing market are really Alberta.

Both Edmonton and Calgary are significant.

The Toronto market in Canada as well as to a lesser extent southwestern Ontario in the Waterloo region and to some extent London Ontario and then it's the five key offices in the southwest US of phoenix, Tucson, Las Vegas and Sacramento and then to a lesser extent Reno, Denver and Salt Lake City so those are the key markets and what's important is what's happening to the housing activities in those markets.

So to address them individually the Alberta market is still what I would say very strong.

The numbers are below where they were last year but they're still at a fairly high level compared to the last five-years average and the Alberta economy without a deficit and so forth will continue to do well so we expect the Alberta market to continue the way it is at the present time.

The Toronto market is already -- our results this year already reflect a reduction over last year in kind of the 5 to 8, 5 to 7, 5 to 8 percent range and if there's a continued reduction in Toronto it will likely be in that range, not much more than that 5 to 7 percent.

And then at least sort of in the markets that we are in.

In the US the Phoenix and Vegas markets are still what we would call strong but they are at lower levels than they have been sort of in the last year or so but they're still in our minds strong and so is Sacramento and the other markets are kind of what I would say flat in terms of there's certainly not any growth plan or projected and it likely would be a modest reduction as well.

So overall I think the markets that we are in are not as robust as they have been the last two years but they're also still relatively speaking quite strong so we are not expecting for 2005 that we would have a significant drop and by significant I would mean more than 10 percent reduction in the urban land activity.

If there is a reduction it will be between zero and 10 percent.

Just to touch back on acquisitions, are there any particular segments that you're focusing on more so than others or any geographies that you're focusing on more so than others?

Yeah, the- I guess in broad terms, we are focusing on sectors that would focus more on public sector clients and in the U.S., the one significant client that we don't have as much work as we would like is the federal government, or federal government agencies in the U.S.

So we are looking at companies that would provide more services in that area, be they in the transportation or DOE type work.

And in terms of geographic presence, our focus is on the East Coast, because you know, the success to Stantec in the past has been being able to be a sort of significant player in a well-defined area, and our-- given that we have a good catalyst, with the Northeast, or some of the Northeast covered, and some of the Southeast, our plans are to strengthen that market and to get a stronger and more visible presence in the East, so it's either to fill with the Mid-Atlantic area, between the Northeast and Southeast, as well as strengthening the Southeast and Northeast.

Those would be our highest priorities, so assuming, all things being equal and that the right type of transactions are there, and certainly a handful of the ones we're looking at are in that area, that would be our first preference, and also focus on the public sector client, to offset some reductions that we think are likely to happen in some of our private sector work, particularly urban land.

So even if it's a 0 to 10% reduction in the next year, to offset that with more public sector work.

Great.

Last question I have is just regarding your depreciation line, it looked like this quarter it was higher by about 900,000.

Now I know about half that can be explained your additional depreciation on the ERP systems, but I'm just wondering about the other half.

Well, the other thing that we began depreciation this year on was the Atrium tower of our Edmonton building, which was-- the construction was completed just at the end of 2003.

So depreciation began at the beginning of 2004, so that would explain part of that as well.

[Operator Instructions]

Just, sorry, to continue on this, but just while we're on that, Ben asked a question earlier about the rental cost that we should expect to see in addition, having-- once we complete the Edmonton building sale.

And just checked on that, and that will be in the range of 2.3m to 2.4m per year.

Ben Chernowsky.

Thanks, and thanks for asking that previous question, Don.

I had a follow-up, though, just looking at your quarters here, and I'm not fishing for hand-holding or guidance or anything, but when I look into the fourth quarter, or when I look back at your previous fourth quarters, the earnings seem to dip from the third.

Is that we should expect this year, like even though you've done this latest acquisition and I don't think it's material enough to cause a big swing in your fourth quarter - I'm talking about the [Dunlop] one, but maybe you can just explain what happens or remind me what happens there in the fourth quarter, as your earnings slip?

Is it just seasonality or is it something else there?

Ben, it's Don, and I think the answer is that there is some seasonality, we have seen that in the past, where you take a look back over enough years, sometimes the third quarter was the strongest, sometimes the fourth quarter was the strongest.

But typically, it is one of the-- either the third or the fourth quarter that is the strongest quarter, and I don't know that in any particular year you can look that and figure out what it's going to be in the fourth quarter, especially when you start layering over the impact of any acquisitions that were done during the year, and the integration process that goes on in terms of getting those acquisitions up to speed as well.

But you do take some- you do have some cost provisions that you make throughout the year that may unwind in the fourth?

Is that correct?

That's correct.

We are-- we take provisions against projects at a top level, or at a consolidated level, to make sure that at the end of the year, when we take a really in-depth look at all of our projects, that we get the appropriate results coming out at the end of the year.

So if your estimates during the year are correct, then it would have no impact at the end of the year.

Right, OK.

But we may see SG&A lower in the fourth than it was in the third?

We may-- I think, Ben, and I think Tony indicated it earlier, in our G&A costs, we expected at the beginning of the year the range to be 39 to 41%.

We're in that range right now, and at this point, we still expect for the rest of this year to remain in that range.

OK.

Maybe I'll just ask one other question with respect to the acquisitions and asking you-- I know you guys probably get tired of us beating a dead-- beating this thing to a pulp, but what's going-- how do you respond to a scenario where acquisitions get more competitive and prices go up?

I mean, to you re-evaluate the end markets and if you start seeing things recover, you can pay more or are you just going to sit this out and wait for prices to come more in line?

I guess what I'm getting at is, what should we expect in this new environment that your acquisition trail may slow down a little bit?

Well, it depends.

I think what happens is, as we'd indicated, is that we're obviously in a environment where prices are higher than they have been.

Therefore, if we're going to pay a higher price and get effectively the same as what we may have gotten in the past, try to find, you know, a really good fit, probably a larger acquisition, so that there's less in terms of integration stress and so forth, that they have more viable systems and things and so forth.

But still, because of the size, provides an opportunity for us to look at some synergies.

Like, you know, if you have a larger company that already has some type of enterprise system, for example, we have one now, so you know, we could probably save, you know, a million bucks on getting rid of one of the systems.

And the annual licensing fees and stuff for that -- we can take advantage of, you know, wholesale on things like software licensing for things like auto CAD or [Bentley microstations] where, if we go on a per seat basis, and depending on the time zones and how they do it, that we can add, you know, 20% in staff and only have to add, you know, 10% in terms of overall licensing.

Now that most of these things have gone to a subscription licensing as opposed to individual licensing, and so forth.

So what we would be looking at is that we would look for firms where we can get a little bit better synergy to- and I hate to say the word-- I don't want to give the wrong impression, when I say ``to rationalize'' the higher valuation, but to make sure that if there is a higher valuation, that we have sufficient potential areas of cost reduction and so forth over a reasonable period of time, say 12 to 24 months, that we can get closer to our valuation multiple that we've looked at in the past.

And that would apply to what I would call the larger type of acquisition.

On the smaller acquisitions, our strategy is basically to wait some of them out, because what's happened is as the prices for the larger firms go up, it tends to drive the expectations and the pricing of all the firms, and quite honestly, the smaller firms aren't worth it, even though some of the larger firms may be, and I think they need a period of time for the smaller firms to shake out on the price, so we have to wait out the ones that have higher expectations than we think are reasonable, because we know there are always going to be higher integration costs for the smaller firms.

That all sounds reasonable enough to me, but it also implies, at least, that if you're going to get more selective, then perhaps the frequency of your acquisitions, the number of potential targets and the success rate could slow down for a while, especially if you're going to wait out the smaller ones?

It could, but on the other hand, if we do a bigger one, we can afford to wait longer.

Right.

OK, fair enough.

Thanks very much.

Steve McMillan, KBSH Capital Management.

Just quick question -- what impact did the weaker U.S. dollar have on your revenues and your earnings for this quarter versus the same quarter last year?

Don's just looking that up.

That is in one of the notes to the financial statements, or in the MDNA.

OK, great.

Yeah, the impact of foreign exchange rates on revenue, Q3 of 2004 versus Q3 of 2003 was 1.4 million.

OK, great, thank you very much.

[Operator Instructions] Richard Stoneman, Dundee Securities.

Tony, the very sharp increases in pricing for things like cement and steel, is that having any impact on you?

It's forcing up construction costs, but in terms of your services, are those inflationary pressures having any impact?

In some of our projects, where the fees are based on a percentage of construction value, you know, obviously, if the construction value has gone up, then we've been able to get some higher fees.

So some of the margins in some of our work internally have, in fact, increased.

Now unfortunately, they've been offset, for the most part, because if you look at our overall gross margins, you know, they have-- if you look at our overall gross margins, are still in the same range as they were at the year-end last year.

That's because, you know, for the most part, they've been offset by some of the work that we're doing in other areas like the industrial market in both power resources, chemicals, and biopharmaceuticals, where the gross margins in that area tend to be lower.

But then so are some of the other costs.

But- so the answer is, in some markets, yes, but because of our mix of business is also changing, the overall number is still about the same as where we were before.

Supplementary-- in about half the U.S. states, there is no cement available.

There's a total stock-out on it.

Is that impacting you at all?

To be honest, I haven't specifically heard it from any of our staff.

That doesn't mean it isn't happening.

I'm just not specifically aware of it, Richard, but it's probably a good point, and I'll follow up and get some- you know, I'll ask, I'll start asking that question.

But to date, no one has mentioned in terms of the projects that we were working at in any of our internal reporting, that the shortage has had a direct impact on some of the work that we were doing.

I mean, it's specific to regions, but the cement companies just don't have any supply to deliver.

Yep.

Andrew Lee, Light Year Capital.

Just want to follow-up -- last quarter, we had talked about the Winter Olympics.

Can you give me an update on the five contracts, I believe?

Well, that's a good question, because we did get-- we do have our first contract.

I guess we were-- since it's only happened in the last couple of weeks, we haven't kind of put it in our stuff yet, but we were successful in the sliding facility, you know, the bob sled, the luge, and all that, and the jump-- I think it has jumps or things in it.

But it's all the sliding stuff, and you know-- but quite honestly, we don't have all the details, other than we were successful in our proposal and we will be announcing a few more details on that, and there's also some-- I think there's still projects left that haven't been awarded out of the four or five that were there.

Of the two that were awarded, we got one and didn't get the other, so we're batting about 50% so far on the proposals that we had submitted.

And any idea on the dollar amounts on those, or--

No.

I think we've-- like I said, as the details get finalized, we will be issuing probably a release on that and provide a little bit more information.

Great, thank you.

[Operator Instructions]

If there are no more questions, I would like to thank everyone for joining us, and Don and I will look forward to speaking with you again at the year-end results, so thank you to everyone for participating in our conference calls.

We'll sign off now.

[Operator Instructions]