Standex International Corp (SXI) 2004 Q4 法說會逐字稿

Welcome to the Q4 2004 Standex International Corporation earnings conference call. My name is Candace and I will be your coordinator for today. At this time all participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mr. Roger Fix, President and CEO. Please proceed, sir.

Good morning, and welcome to the Standex quarterly results conference call. With me this morning is Christian Storch, our Chief Financial Officer. I'd like to start the conference this morning by reading the Safe Harbor statement. Some comments made during this conference call may be based upon management's current expectations, estimates, and/or projections about Standex's markets and industries. These statements are forward-looking statements which are not guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ from what is expressed or forecasted. Among the factors that could cause actual results to differ are uncertainties in competitive pricing pressures, marketing of new products, changes in general, domestic and international economic conditions and market demand, failure to achieve the Company's acquisition, disposition and restructuring goals in the anticipated timeframes, and significant changes in domestic and international fiscal policies or tax legislation.

Earlier this morning, we issued a press release which summarized Standex's financial performance for the fourth quarter and for our entire 2004 fiscal year. I'd like to review those results with you. Christian will then provide some additional financial data, and at the conclusion of the call, we will answer questions. We were pleased with the results of the fourth quarter as we finished our fiscal 2004 with very strong sales and profit growth, as well as achieving an important milestone in our restructuring and realignment program.

The financial highlights for the fourth quarter include total sales growth of 29 percent, as we reported sales of 163.4 million in the fourth quarter versus 126.8 million in the prior year. The organic sales growth rate in the quarter was 14 percent. Net income in the quarter from continuing operations increased 103 percent to 7.3 million or 59 cents per diluted share, versus 3.6 million or 30 cents per share in the prior year. Net income before all special items was up 21 percent in the quarter to 6.7 million or 54 cents per share, versus 5.6 million or 46 cents per share in the prior year.

Our earnings summary release this morning includes a reconciliation of net income and earnings per share from reported GAAP amounts to non-GAAP amounts for both the fourth quarter and full year. Given the many changes that have occurred in our portfolio over the past 2 years, the restructuring charges which we have incurred and other special items which have impacted our P&L, we believe the earnings figures which exclude all special items is the best indicator of our year-over-year financial performance, and more importantly, the earning power of the Company going forward.

Our fourth-quarter financial results were impacted by several significant one-off expenses and gains. These one-off items include the decision taken by our Board of Directors during the fourth quarter to sell James Burn International. The decision to divest James Burn is the last major milestone in our restructuring and realignment program, and resulted in an after-tax non-cash impairment charge of 7.55 million or 61 cents per share, which we took as part of our fourth-quarter financial results. I'll provide an update on our restructuring and realignment program in a few minutes.

Also during the quarter, we booked a gain of 5 cents per share as a result of a favorable resolution of our previously announced efforts to realize a tax refund for prior years R&D expenditures. Including the James Burn impairment charge, all special items and the impact of discontinued operations, we had a net loss in the quarter of 685,000 or a loss of 6 cents per diluted share, which compares to net income of 4.5 million or 37 cents per share in the year-earlier fourth quarter.

The financial highlights for our full year of fiscal 2004 include an 18 percent overall increase in sales, as we achieved sales in fiscal 2004 of $577.5 million as compared to $490.2 million in the prior year. Our sales performance included an 8 percent organic sales growth rate for the full year. Net income from continuing operations for fiscal 2004 was up 104 percent at 22.1 million or $1.79 per diluted share, versus 10.8 million or 89 cents per diluted share in fiscal 2003. Earnings for the full year before special items and discontinued operations were up 29 percent at 22.2 million or $1.80 per diluted share versus 17.3 million or $1.42 per diluted share on a comparable basis in the prior year.

We also saw continued improvement in the area of working capital management, as working capital turns in the fourth quarter were 5.2 as compared to 4.4 a year ago and 3.8 turns 2 years ago. We made further progress in strengthening our balance sheet during the year. Our net debt at year-end was $92 million, down from 98.4 million a year earlier. Our measure of balance sheet leverage or, as we call it, net debt to total capital, was 36 percent at year-end versus 38 percent a year ago.

Our foodservice equipment group had a very solid fourth quarter, finishing off a good year in terms of sales and profit growth. Sales for the group increased in the fourth quarter to 61.2 million, up 48 percent from 41.3 million in the fourth quarter of 2003. The foodservice group delivered a 13 percent organic sales growth rate in the fourth quarter. Operating income from the group increased 35 percent to 5.17 million in the fourth quarter of 2004, from 3.83 million in 2003. For the full year, sales in the foodservice group were up 32 percent to 191.8 million versus 145.8 million in the prior year.

The organic growth rate for the full year for this group was 11 percent. Operating income for the group for the full year was up 49 percent to 15.5 million versus 10.5 million in the prior year. For the group's divisions, namely Federal Industries, Master-Bilt, Procon, and USECO, performed very well in the fourth quarter. Master-Bilt posted record sales and profits for the fourth quarter and for the full year, gaining market share in its traditional drugstore and ice cream retail chain markets, and increasing sales in its targeted growth market of restaurants.

Procon reported very strong sales, profit and cash flow in this traditional beverage market, and extended its penetration into targeted, non-beverage niche industrial sectors. Federal Industries turned in another quarter and year of consistent growth by capturing share in this traditional domestic foodservice segment, and successfully penetrating targeted growth markets in Central and South America.

USECO was a key beneficiary of our realignment initiatives and achieved significant recovery and profitability over the prior year. The industrial group also had a very good fourth quarter as sales rose 26 percent to 79.8 million versus 63.4 million in the fourth quarter of 2003. The organic growth rate for the industrial group in the fourth quarter was 19 percent. Operating income for the group increased 30 percent to 9.37 million in the fourth quarter of 2004, from 7.2 million in 2003.

For the full year, sales in the industrial group were up 18 percent to 294.8 million versus 250.4 million the prior year. The full-year organic growth rate for the group was 11 percent. Operating income for the group was up 5 percent to 340.7 million versus 33.2 million in the prior year.

Several businesses in the group including Standex Air Distribution, Standex Electronics, and Custom Hoists, posted very strong sales and profit performances in the fourth quarter. Standex Air Distribution reported a double-digit sales increase and strong profit performance as it benefited from continued strength in its core market of residential HVAC systems and new growth from sales to the big box do-it-yourself marketplace. Standex Electronics achieved double-digit sales increases due to new automotive platform wins and sales improvement through acquisitions. Profitability in this division continued to improve as a positive impact of previous plant consolidations were realized. Custom Hoists showed continued growth from the impact of market share gains and strengthening markets.

The overall backlog for the industrial group at the end of the fourth quarter of 2004 stood at $86.5 million, a double-digit improvement over prior year. Sales in the consumer group for the fourth quarter were 22.4 million, up slightly from the prior year of 22.2 million. Operating income for the group was 1.1 million, down 30 percent from the prior-year level of 1.6 million. Operating profit for the group was impacted by several onetime charges during the quarter, totaling $369,000. For the full year, sales in the consumer group were 90.8 million, down 3 percent, versus the prior-year sales of 94 million. However, operating income for the group was up 110 percent to 5.17 million versus 2.46 million in the prior year.

During the course of the fiscal year in the consumer group, we achieved dramatic improvements in profitability at both Standard Publishing and Standex Direct. Standard Publishing benefited from closing its commercial printing operation and other cost reduction actions. Standex Direct improved operating efficiencies and reduced marketing expenses.

More recently, our Berean Christian bookstore division experienced some recovery in the religious book and gift markets. Berean posted a 3 percent increase in same-store sales, a 5 percent increase in overall sales, and a 26 percent improvement in operating profit for the fourth quarter. During the quarter, many of our manufacturing divisions saw a continuation of the price increases imposed by our suppliers of steel products and other metal commodities that first showed their sales during the first part of the calendar year. Those metal commodities where we have experienced price increases include galvanized steel strip, stainless steel and carbon steel sheet material, and copper for magnet wire and refrigeration components.

These metal materials and components are key elements in the products manufactured by our industrial and foodservice group. Thus far, our material costs have increased approximately $22 million on a full-year basis, with our ADP group experiencing a significant portion of these cost increases. Our immediate reaction to this pricing pressure has been to offset or delay the timing of the increases, while at the same time increasing pricing to our customer base.

We were successful in the fourth quarter in offsetting most of the price increases realized to this point, but are uncertain as to our ability to continue to offset these metal prices in the future. This will remain an area where we maintain a high level of focus in the near-term.

As I mentioned earlier, during our fourth quarter our Board of Directors authorized management to proceed with the sale of our James Burn division. The sales performance of this business had deteriorated significantly over the past several years, and has been a loss maker for the last 5 years. Elements of the markets in which this business competes have become a commodity. The decision to sell this business was made only after careful consideration and elimination of all reasonable alternatives, including a potential restructuring. The conclusion we came to was the company no longer fits our business model of focusing on businesses where we can achieve superior margins in value-add markets. A divestiture of James Burn will substantially complete the restructuring and realignment program we announced in October of 2002.

Our execution of the program has been accomplished on schedule in line with our financial expectations, and has achieved the goals we originally established. With the divestiture of James Burn, we have sold or closed 6 businesses, representing approximately $97 million in annual sales; consolidated 5 plants and completed 5 bolt-on acquisitions, adding $75 million to the portfolio in annual sales. We have successfully offset approximately $7.7 million of restructuring expense incurred during the past 18 months, with the capital gains we recognize on the dispositions of land and these businesses. As a result, we expect that when we record our final restructuring charges during the first quarter of fiscal 2005, we will be well within our original estimate of 11 to $12 million. The annualized cost savings for the restructuring realignment program will exceed $8 million.

The goals we set for this program will produce a series of larger operating groups consisting of stronger, more agile and synergistic businesses, with the critical mass necessary to establish number 1 or number 2 leadership positions in targeted niche markets and contribute to an overall improvement in operating cash flow. Due to the successful execution of the program's initiatives, we've increased our standing in existing and strategic markets and exited businesses that no longer play to our strengths.

Christian will now provide more detail on the financial data and discuss key balance sheet metrics and cash flow performance.

Thank you, Roger. Good morning everyone. Before I talk about the financial highlights for the quarter and the full year, I'd like to remind you that prior-year numbers have been restated to reflect the effect of discontinued operations. This way, the comparative figures represent the trends of our continuing operations only. The highlights are as follows. On the balance sheet, as Roger mentioned, we ended the quarter with a net debt position of $92 million, which is down 8.7 million from the end of the third quarter. As a result, our leverage ratio which we define as net debt to total capital decreased to 36 percent, and we ended the year with a net working capital which we define as accounts receivables plus inventories, less accounts payable, totaling $121 million.

With respect to operating performance, while gross profit margins for the full year declined 90 basis points to 33.7 percent, compared to 34.6 percent in the prior year, gross profit margins for the fourth quarter increased 60 basis points from 33.9 percent to 34.5 percent. The increase is due to increased sales volume despite the dilute effect that the pass-through of higher steel prices has had on margins in the quarter.

Operating margins by segments were for the full year in the foodservice group 8.1 percent compared to 7.2 percent in the full year last year. For the fourth quarter, foodservice operating margins were 8.4 percent versus 9.3 percent. The consumer group for the full year, operating margins at 5.7 percent compared to 2.6 percent in the prior year. Fourth quarter for the consumer group, 5 percent versus 7.2 percent in the prior year.

Industrial group had margins of 11.8 percent versus 13.3 percent in the prior year, and the Q4 numbers were 11.7 versus 11.4 percent. Operating expenses increased by $4.6 million year-over-year, a trend that should reverse in FY '05. The main reasons for the increase are higher pension compensation expenses. In addition, we saw increased professional fees related to our efforts in implementing the requirements under the Sarbanes-Oxley Act.

On the non-operating performance during the quarter, we made contributions to our pension plans of $900,000 for a total of 6.8 million for the year. We expect to make contributions between 4 and $6 million during FY '05. The effective income tax rate from continuing operations for the year was 30.9 percent, which compares to 30.8 percent for the comparable period in the prior year. As previously announced, during the fourth quarter we settled a refund claim related to a (indiscernible) year research and development tax credit project with the IRS. As a result, the effective tax rate for the full year was reduced by 400 basis points. The R&D benefits also are the main reason for our low Q4 effective tax rate of 17.4 percent.

Interest expense for the quarter was 1.3 million, $320,000 below the prior-year level. For the full year, interest expense was 5.7 million compared to 6.8 million in the prior year, as we continue to benefit from lower average borrowing levels. We continue to invest cautiously in our businesses. Capital expenditures for the 12 months totaled 7.4 million, above the prior-year level of 6.4 million. Depreciation for the quarter was 3 million, flat when compared to the prior year. Depreciation for the 12 months totaled 11.5 compared to 10 million -- 10.9 million in the prior year.

As you know, we don't provide earnings guidance, but I would like to share some data points for FY '05. We expected depreciation at $12 million. Our CapEx levels will increase to somewhere between 11 and $13 million. Our effective tax rate is estimated to be between 35 and 36 percent, and we expect diluted shares outstanding next year to be $12,350,000.

This concludes my remarks, and I turn the conference back to Roger.

Thank you, Christian, and we will now open the conference for questions.

(OPERATOR INSTRUCTIONS) Rob Fulridge (ph) of R.H. Capital Associates.

I had a couple of quick questions for you, just in reviewing the numbers. The first one was the corporate expenses you mentioned were increased quite a bit, over 100 percent year-over-year, and that they were going to decline next year. I was wondering if you could give us a little more sense of the order of magnitude here that you think of moderation in the corporate expenses for next year.

We estimate corporate expenses next year to decline somewhere between 2 and $2.5 million.

That's great. Also, just so I understand, when you are talking about there is a lot of restructuring and special items, and I'm fairly new to -- I haven't looked at the company in some time. I wanted to try to understand the pretax income that you showed, income from continuing operations for both the 3 months and the year, are those that you show on your press release, are those truly from continuing operations or are there some restructuring charges or land sales or other extraordinary items that flow through due to GAAP requirements?

The earnings release includes a little table that is reconciling our numbers from GAAP numbers to what we call income before special items. The income from continuing operations reflects the ongoing operations and, therefore, excludes now the James Burn numbers. It excludes the Jarvis numbers. With Jarvis, we did -- our Caster Group was redivested, and some of the smaller closings that we had. It is after -- that number is after restructuring charges. So what we do in our reconciliation, we start with income from continuing operations and then add back the restructuring charge that we had during the quarter and for the full year. We also eliminate the onetime benefit with respect to the R&D tax credit, which is also part of income from continuing operations, to give you a better sense of what the ongoing operations are.

So the income before special items is really -- would be with your adjustments? That would bring it to more of an operating -- continuing operating number for the year and the 3 months?

Yes.

Now my question related -- the secondary question is, how did the -- looking forward apples-to-apples, you still have divestitures and acquisitions that came in at various times during the course of the year. So it makes it very difficult for us to look forward and say apples-to-apples what your growth will be.

That's why we've given you both the, what I call the all-in or total sales growth year-over-year, quarter-over-quarter, as well as the organic. When I use the words organic, we backed out the effect of acquisitions, as well as the effect of currency. So what you have there is the organic or growth of the base business excluding acquisitions and currency.

And that is very helpful, but can you give us some kind of guidance on how the gross profits are impacted by those variables, as well?

Well, we don't give projections.

I'm not asking for a projection. I'm asking if we're looking backward if we could look at the operations as they stand today, how that compares -- how the gross profit which you reported compares with your gross margins on the continuing operating businesses.

The gross profit margins that we reported reflect continuing operations and, therefore, are a good indication, a good starting point to project future gross profit margins. In other words, the James Burn operation in the FY '04 numbers has been taken out of the P&L, and it is all showing now in the line discontinued operations. So, therefore, the gross profit margins that you see in the fourth quarter are a good indication of what they should be going forward.

So there weren't any other -- aside from James Burn, there weren't any other acquisitions or divestitures that took place in Q4?

There was no acquisition that took place in Q4.

There was a James Burn divestiture, I understand that.

One divestiture in the fourth quarter, exactly.

But no others?

No others.

I see, and in terms of the impact of raw materials, do you feel that your costs in the fourth quarter fully reflect the increases in raw materials, particularly steel, that have taken place up to this point, or will we see continual impact due to a catch-up effect in next fiscal year?

That's a very difficult one to predict. I'd say 2 things. We are hearing rumors or feedback from the market that would indicate that potentially another round or another series of price increases from our raw material suppliers could be out there.

Yes, steel I hear there is another round here.

So, in that sense, if it were to develop how much it would be, we don't know, and clearly that hasn't been reflected in the fourth. I think, in general, we could also say that we probably were able to run slightly ahead of the metal price increases with our price increases. We had a fair amount of material on hand, so on and so forth, so our price increases probably more than covered our metal price increases in the fourth quarter alone.

But if there is future increases in steel, you will have to make adjustments in pricing?

Correct.

Very good. Thank you, I appreciate it.

Michael Gardner of Wedge Capital Management.

Good morning, gentlemen. Nice to have somebody else on the call with me. It's a nice change of pace; it's great. Terrific quarter, and it really looks like the focus is paying off. So forgive me if my questions are sort of just probing to see what is just maybe not quite as good as it looks, or maybe it is. First, just on the tax rate, if I add back the R&D credit to the rate that you -- the very low rate that you show of 17 percent or something like that, I still come up to only about 24 or 25 percent, still much lower than your normal rate. So am I right, Christian, that even the 54 cents you show for the quarter from excluding special items is still helped some by a lower than normal tax rate?

Yes, there's 2 things that have to happen. One is, there is an addition to the R&D tax credit for past years, 90 -- '97 through 2001. We also have reported a current-year benefit on the R&D tax related to the R&D tax credit that had an impact of about $400,000, or roughly -- yes, $400,000.

Okay. So when you -- sorry, go ahead.

Then if you add the 2, you get to probably a 30 -- for the full year you get to the 35 percent tax rate, which in the fourth quarter was additionally lower due to --.

Due to the -- well, the 2 aspects of the catch-up and then the --.

Yes, 2 aspects of the R&D tax credit.

Okay.

That second aspect, we didn't disclose that separately because we are hopeful that we can continue to experience that benefit going forward.

Now, when you say looking for a 35 to 36 percent rate in fiscal '05, that incorporates, what, a conservative estimate of what kind of benefit you can capture this coming year?

The 35 percent assumes that we also in FY '05 will receive an R&D tax credit. There is some uncertainty. Right now, the benefit has expired, but typically Congress has extended the benefit in the past. Right now, we're a little bit in uncertain territory in that respect. If the credit would expire and not be renewed, we would end up at the high end of that range.

Okay. Now, turning to operations, once again just probing a little, any signs of a top on the Air Distribution Products business, Roger, or is it just still going strong?

Well, it had a very strong fourth quarter. I will say that they got off to a bit of a slow start here in the first quarter, but it is really a function of what happens on housing starts, and of course we're in an era where interest rates seem to be going up, yet housing starts have been up and down. So it's really hard to conclude what might be the trend there.

Can you tell us, what is it that you are selling into the big-box retailers?

Much the same product that we sell into the wholesaler line. It is our galvanized pipe and ductwork fittings. If you go into the big box do-it-yourselves and you see all the galvanized sheet metal on the shelves, I can't divulge the chain's name, but one of those chains has our product on its shelf, and this is an area that we started to penetrate -- I think we made the comment back in the January/February timeframe, we started to have sales into that marketplace.

Was there anything in the fourth quarter that would be characterized as kind of stocking up the channel and, therefore, was perhaps running higher than a sustained retail takeaway level of sales, that might be making results look better than they could be on a sustained basis?

Very perceptive, and the answer is we don't know. What we do know is that we implemented price increases back in the March and April timeframe, and we do know that there was a rush of orders before each of those that occurred, and as a result of that, there may have been some stuffing of the shelves, so to speak. But although we've tried hard to quantify that, it is really because we're sawing through some 1100 different distribution points, very difficult to assess what that means.

Have you gotten any feedback as to whether the thing is selling?

Well, definitely is selling through, and it's just a question of what do the housing starts do and how fast does it sell through.

Right, and where your stocking is relative to what's being taken out, but you do have feedback that -- you've been doing it long enough that you know it is at least a fairly successful product there?

Oh, yes. I'm sorry, in the big box definitely. We've been into it now 6 months, and they seem to very pleased with our product as well as our service.

Okay. And then the last thing I had is towards the end of the release, there is the sentence, "The annualized cost savings from the restructuring and realignment program will exceed $8 million." So my question is how much of that 8 million plus is already reflected in the full fiscal year '04 numbers, just roughly?

I would say it is an estimate; on the order of 75 to 80 percent of that number was in the '04 numbers.

So there's a little more still to come in '05. Any -- I hate to ask you this after you've gone through a lot of stuff, but any new substantial program that you could imagine on the horizon that would be another leg beyond this, or is it now just a question of running our business in the normal way to the best of --?

We're really back to the normal running of the business. There will always be from time to time the things that have got to be divested from the portfolio, that type of thing, but our plan was to complete the restructuring charges at the end of this first quarter of '05, and that's exactly what we're going to do.

Okay. Thanks a lot.

Chris Pappiano (ph) of Barrington Capital.

Just a quick question on James Burn. Could you give me a sense as to the top line on that business?

It was on the order of 25, 26 million.

Okay. And just wanted to -- I know we've talked a little bit about materials pricing. And do you guys have sort of a set internal strategy there with respect to how to move up pricing on your products, or do you just kind of see where the market is and adjust accordingly?

Well, we believe that in most cases in the niche markets in which we play that our divisions have pretty strong leadership positions. As a result of that, we believe we have to be market leaders when it comes to price increases. So our -- the guiding philosophy that we've established for the divisions is to be aggressive. When we first went into the price increases back in the January/February/March timeframe, it was very difficult to assess how receptive the markets would be. Candidly, they've been more receptive than what we probably could've expected at that time, coming off 2 or 3 years where price increase was considered to be something you don't even discuss.

But again, having said that, it's difficult to say how far the metal prices are going to go and how far we will be able to go with our prices.

Any sense as to how these price increases are kind of affecting the mom-and-pop competition you have in the industrial sector?

The good news about that, I think, is that the price increases on the materials have been so large that nobody, whether they be a private company or a public company, could try to absorb them; that it is beyond -- if metal prices in the past had gone up a half a point or something like that, you tried to absorb it through increased productivity, that type of thing. But these increases have been very, very substantial and, as a result of that, I think the good news is that both the public and the private companies are in general trying to raise prices.

Just finally on consumer, any view towards additional restructuring there or possible alternatives for that business?

We believe that we've righted the ship, so to speak. Our real focus there, after having a very poor year in the prior year, was to get our profitability back in place. We feel like we've done that. There was a number of pieces of those businesses that were underperforming, particularly the commercial printing area. We've said that. What we feel like we have now are businesses that have shown the can perform, and that we want to continue to improve their performance. We do expect that, whereas our sales have been more or less flat, that we would be able to recover some and start to grow the businesses.

We've announced previously that we do have an intention to invest in these businesses. The Berean bookstore business is a chain of bookstores. We've announced that we do plan to open new stores. We opened one last year and we plan to continue that in the near-term.

Great. Thanks a lot.

Rob Fulridge of R.H. Capital Associates.

A couple questions, gentlemen. The first one being, how much of the impact, the estimated $8 million annual savings from the restructuring program impacted the fourth quarter?

It would be almost -- very difficult to estimate what it would be in the fourth quarter, Rob.

Well, just roughly, are we seeing half the impact, three-quarters, one-quarter?

Well, I said that about 3/4 of the 8 million was in place as of the end of the fourth quarter, and there really wasn't anything that -- the major consolidation that occurred during the fourth quarter was in our -- we announced previously that we're consolidating our Rochester engraving operation into our Virginia engraving operation. That wasn't completed till the end of the fourth quarter. So, in effect, what was in place at the end of the quarter was in place at the beginning of the quarter, would probably be the easiest way to say it.

The other question is, I used to be an investor with you guys a long time ago when you had the books business, consumer business, and it never really in my mind fit with your other businesses, and you guys still have it, but it's underperforming. Why are you still in that business?

Well, I think the history -- I'm not sure how much you've followed us as of recent -- about 2.5, 3 years ago, we did announce that we would attempt to divest of those businesses. Unfortunately, that announcement came just very shortly before September 11th, and the net result wasn't a good timeframe in which the businesses could be sold and maintain shareholder value. Shortly thereafter with the softening in retail spend and a number of other things that occurred, those businesses from a profitability standpoint really started to deteriorate, and it was frankly just impossible to be able to sell those businesses and recover even close to book value, let alone any value for the shareholders.

So our view at this point is that we've got to make these businesses profitable, and at that point in time, we'll have to make a determination as to how they fit into the portfolio.

Because I don't think you're really getting any credit for them anyway. I mean, people are looking at you as a multiple of your profitability, EBITDA, operating income, whatever. And since this doesn't really contribute any, I don't think you're really getting a lot of credit for it anyway.

That's a good point, and we appreciate that input.

Okay. Well, thank you very much.

(OPERATOR INSTRUCTIONS) Ladies and gentlemen, this concludes the question-and-answer portion of today's conference call. I will now turn the presentation back to Roger Fix for closing remarks.

We just want to thank all of you for participating in the call, and thank you very much for the questions. They were very astute and we appreciate your interest. We look forward to talking to you again at the end of our first quarter. Thank you.

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Have a good day.