Trex Company Inc (TREX) 2007 Q4 法說會逐字稿

Welcome to the Trex Company's fourth quarter conference call. Company's fourth quarter conference call. At this time all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. (OPERATOR INSTRUCTIONS) As a reminder this conference is being recorded today, February 26, 2008.

I would now like it to turn the conference over to Mrs. Harriet Freid. Please go ahead, ma'am.

Thank you, everyone, for joining us today. With us on the call are Ron Kaplan, President and Chief Executive Officer, and Tony Cavanna, Chief Financial Officer. Joining Ron and Tony are Brad McDonald, Controller. Brian Burtow, Director of Financial Planning and Analysis, and Bill Gupp, General Counsel. The company issued a press release this morning containing financial results for the fourth quarter of 2007. The release is available on the company's website as well as on various financial websites. The call is being webcast on the Investor Relations page of the company's website. Both would be available for 30 days. I would now like to turn the call over to Bill Gupp, Trex's General Counsel.

Thank you, Harriet. Before we begin, let me remind everyone that statements on this call regarding the expected sales performance and operating results projections of net sales and earnings per share and anticipated financial condition constitute forward-looking statements and are subject to risks and uncertainties that could cause the actual results to differ materially. Such risks and uncertainties include the extent of market acceptance of the company's products, sensitivity to general economic conditions, the highly competitive markets in which the company operates and the company's ability to maintain product quality and performance at an acceptable cost. The company's report on Form 10-K filed with the SEC in April of 2007, and its subsequent filings on Form 10-Q and Form 8-K discuss some of the important risk factors that could cause actual results to differ from those expressed or implied on this call. The company disclaims any obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. With that introduction, I will turn the call over to Ron Kaplan.

Thank you, Bill. Good morning. A few hours ago, we released the Trex Company financial results for the fourth quarter and full year 2007. Revenue for the fourth quarter of 2007 is $30.3 million while 2007's full year revenue is $329 million. Trex recorded a net loss of $41 million or $2.75 a share for the fourth quarter of 2007. This compares to 2006's fourth quarter loss of $13.8 million. Full year 2007's loss was $75.9 million or $5.10 a share and compares to 2006's full year income of $2.3 million or $0.16 a share. Now, I would like to turn the conference call over on to my associate, Tony Cavanna, Trex's Chief Financial Officer. After Tony's more detailed discussion of the numbers, I will return to the conference to discuss the state of the business.

Thank you, Ron. Good morning, everybody. As you are aware, our press release was issued as Ron said this morning and numbers I will reference are contained on the three pages of the press release that is condensed, consolidated statements of operations; condensed, consolidated balance sheets and condensed, consolidated statements of cash flows Net sales for the 2007 fourth quarter as Ron just indicated were $30.3 million compared to $32 million in the fourth quarter of 2006. Net trade sales in the fourth quarter were adversely affected by the return from the distributors of $9 million worth of older generation Trex Accents and the additional reserve against sales of $500,000 for the product deterioration issues related to our Nevada plant production of 2003 to mid 2006. Net loss in the fourth quarter of 2007 was $41 million or $2.75 per share compared to the net loss of $13.8 million or $0.93 per share for the fourth quarter of 2006.

As noted in the press release, fourth quarter charges of $22 million negatively impacted earnings. Net sales for the fiscal 2007 were $329 million, 2.4% lower than the net sales of $337 million recorded for the 2006 fiscal year. The 2007 fiscal year sales were adversely affected by $37 million of charges which were primarily comprised of product development cost -- product replacement cost and distributor returns for older generation Accents. The net loss of $75.9 million or $5.10 per share compares to 2006's full year income of $2.3 million or $0.16 per share. Net loss for 2007 included pretax charges for the Nevada plant product deterioration of $66 million including charges incurred before the reserve was recorded, $9million related to inventory obsolescence, return of older generation Accents of $9 million and fixed asset write-offs of $6 million related to the offline embossing and polywash line. These full year charges amounted to $94 million.

Net interest expense in the fourth quarter of 2007 amounted to $2.8 million, an increase of $1.9 million over the fourth quarter of 2006. Net interest expense for the fiscal year 2007 was $9 million compared to $3 million in 2006. In 2007, our effective tax rate was $14.7 million. As of December 31, 2007, total debt amounted to $133 million, an increase of almost $29 million from December 31, 2006. We did not comply with our debt covenants in the fourth quarter of 2007.

The fourth quarter 2007 debt covenants have been weigh by our lenders and we have negotiated new quarterly covenant for all of 2008 and beyond. Accounts receivable at year-end amounted to $6.6 million compared to $18.1 million at year-end 2006. Total inventories decreased from $111.4 million to $92.6 million consistent with our goal to conserve cash. Cash flow from operations was negative $1.2 million for 2007 compared to a negative $4 million in 2006. Capital expenditures for 2007 was $24 million as we completed our programs to improve quality and increase productivity. That completes my remarks. Ron?

Thank you, Tony. During my short tenure at Trex, it became obvious that an overhaul of the organization was required. While the quality of the people is not in question, we're overstaffed for current business conditions. Therefore, we have right-sized management teams. New organizational structure is established as clear lines of authority both of personal accountability. To achieve that, we terminated the employment of about 30 people, realigned reporting relationships. Resulting organization will now be more effective and responsive as positioned for success. I do not envision further changes at present.

Senior staff of Trex is in the midst of an important transition. Four Vice Presidents have either left the company since the end of the year or will be leaving shortly. Two Vice Presidents have been recruited. Tim Reese, our new Vice President of Operations, comes to us after a 28-year careers in Operations executive with DuPont, will focus on enhanced productivity and overall operational effectiveness. Our never CFO, Jim Cline, starts next Monday. Jim was my Vice President for Finance for 11 years at Harsco . He will focus on enhancing Trex's ability to accurately forecast and report financial results, cost controls and effective deployment of our information technology. In addition, the addition of three new executives, CEO, me, CFO and VP of Operations, Trex's senior staff is certainly intended to have a positive influence on shareholder value.

The common denominators for the kind of executive I want at Trex are competency, credibility and integrity. And I think we're off to a good start. We did record some successes in 2007 that will enhance our ability to grow revenue and income in 2008 and beyond. In a market in which virgin polyethylene plastics price has increased from $0.20 to $0.22 a pound or 35% in 2007, 2007 purchase price of recycled poly for Trex upped only slightly compared to 2006 and yet we maintain the high quality of our products. This result and the fact that our competitors consume virgin plastics further bolsters our competitive cost advantage in the composite decking category .

As has been previously discussed, we have completed the installation of capital equipment to reduce costs by increasing manufacturing rates and product yields while adhering to significantly higher quality standards. We are now in the position of eliminating the need for many quality inspectors in avoiding the process of the inspecting quality end. We believe we have achieved the equilibrium of meeting high quality standards at low cost. In 2007 and 2008, we have taken steps to reduce our cost structure. In 2007, we suspended operations at our Olive Branch, Mississippi plant, an action that will reduce cost by $6 to $7 million in 2008. As I said earlier, we reduced our salaried work force by approximately 30 people across all over head functional areas resulting in an annual savings of $3.5 million.

Based on product development work completed in 2007, 2008 is expected to be another exciting year for Trex's new products. In addition to expanding the color offering for Brasilia and Contours, it made changes to our Artisan railing offerings so that with expanded modularity and offered the home owner more combinations to use different components and design a custom railing system at lower cost. We are also satisfying a Southern California need for a fire-rated duct board by introducing Trex Fire Defense. Also, we are excited about the potential for our ultra low maintenance deck board at Escapes and our venture into a new arena with our PVC trim board portfolio. We continue to be encouraged by the broadened acceptance for Seclusions privacy fencing offering. Although still not a significant option, Seclusions sales more than doubled in 2007 and are expected to grow significantly in 2008. Seclusions product line is continuing to gain broad traction as exemplified by the 41-mile commitment by the Highlands Ranch Metro District near Denver, Colorado.

Two weeks ago, I attended the International Builders' Show in Orlando. I met some of you there. I met with our field sales force and several distributors. Enthusiasm for Trex's higher quality, core products and new product introduction was clearly evident. I came away feeling very good about the strength of our brand, the quality of our sales people. Trex's participation with Home Depot, in its fifth year, and Lowe's, in its second year, continues to go well and we expect to realize significant growth with both customers as Trex gains greater traction. We find it gratifying that our first quarter 2008 sales appear to be consistent with last year's first quarter despite a serious continuing downturn in residential construction. With Trex's unparalleled brand equity and distribution channel and renewed focus on operational excellence, this management team is committed to growing shareholder value.

It is my intention to be more specific with respect to our operating strategy and revenue guidance in the coming months. After only 37 days on the job and tied with a rapidly changing executive team, I believe it is premature to do so at this juncture. Right now my priority is to set the organization right, create a culture of credibility at all cost and we will chart the way forward. Finally, I would like to thank Tony Cavanna for his outstanding contributions to Trex. His insight and technical knowledge and leadership, which has been a credit to Trex, will be missed. His enthusiasm and teaching me the business has been invaluable and I thank him for it. We are now ready to answer

(OPERATOR INSTRUCTIONS) One moment please for your first question. Your first question will come from the line of Carl Reichardt with Wachovia Securities.

Good morning, gentlemen. How are you?

Hi, Carl. Are you out in Las Vegas?

Yes, you will. Yes, sir. I got a couple of questions. It's just about the first quarter, talking about sales consistent with last year, would you say that's similar from a mixed perspective or how is mix altered relative to last year's through the first quarter of '08?

I think it's basically similar.

It's so, I mean, from a perspective of deck versus fence, even though fence has grown. You say it's relatively similar or is that just more like from a margin perspective, ex-production, how do you think of that?

Carl, I think Ron's answer is correct. It's basically a similar mix. The Seclusions fencing is growing as he indicated in his remarks and then we have the material for our Escapes, which is not affecting the overall mix at this time, but, of course, that is at a higher price also.

Okay, it makes sense, thanks. And then I'm curious about the commentary on raw material pricing trends coming in, especially over the last two or three months or so, and especially any significant difference between virgin, poly and recycled.

Again as Ron had mentioned, virgin prices are going up. However, Trex has been able to maintain pricing of the recycled poly. That is true with our investments, poly processing. They are able to maintain and even essentially reduce our growing cross poly.

Okay. Thanks, guys, I'll get back in queue.

Your next question will come from the line of Keith Hughes with SunTrust.

A couple of questions. Number one, Tony, can you tell me very quickly what the balance is on the converts and on the credit facility as of the end of the year?

The balance on the convertible bonds is about $98 million. What was your second question, Keith?

Would the rest of the debt beyond the revolver?

The rest of the debt now is mostly revolver but is not much beyond that, but it's also our mortgages for the plants in Winchester, Fernley and Olive Branch.

And the mortgage on Olive Branch, is it effected by the operating status of Olive Branch?

Is what? What's your question?

In Olive Branch, given that the plant's not - given what's going on with the plant there, is the financing effected by that at all?

No, it's not.

Okay. You had talked about in the release, the credits, the voluntary credits on the older generations Accent products. Are those credits for the distributors applicable to purging any product in the future contracts?

Well, this is a one time -- hopefully it's the only time we'll do this because we had answered when we spoke to you last after the previous conference call, we gave -- covered pretty well and it is from a standpoint that we didn't segregate the new product from the old product and I think I spoke with you specifically, Keith, and told you that if you would have saw a deck made with Accents old products and it wasn't lying side by side with new products, you probably would notice the difference but since we mixed them and wound up having boards, stamped boards, from both processes laid on the same deck we caused ourselves a problem.

Okay, and I guess finally, can you give us any update on the newest product you introduced? I believe it's PVC product. You have a third party making for you. What have sales of that been like?

The sales demand has been robust. The ability to keep up with the demand has been our challenge. Right now we're focusing on is increasing the production of our vendor, but the demand for the product is quite strong.

Can you quantify that at all for us?

I don't think I can.

Okay. And final question for Tony. You guys talk about in the release we're going into a tough year near 2008. You did a good job generating lot of cash out of work capital in 2007. Is the ability to generate working capital in 2008, assuming you're in another difficult environment, is it going to be hampered versus what we saw in '07?

I think the first place we're going to, shall I say, conserve the capital is our capital plans and expenditures instead of being $24, $25 million. It will be closer to $10 million. I think we can bring down our finished goods inventory and poly inventories the more as we optimize our process of production planning and materials control. But I think we can still generate the more cash out of what we have and we're going to spend less.

But the receivables came in very low number, which is good for the end of the year, but is there a lot more to be taken out of the that in the future?

Well, there's not a lot more taken out of that from that number, but, of course as you know, our receivables get high in the first quarter because of terms for the early buy.

It looks as though payables year-over-year were up a little bit. Is that sum another area you could do some work?

Actually, that's just a figment of where we're.

Okay.

We're depending on time.

Okay, all right, thank you.

Your next question will come from the line of John Baugh with Stifel Nicolaus.

Thank you. First, what was EBITDA for Q4 in '07?

Negative $26 million.

I'm sorry, I couldn't hear that, what?

Minus $26 million.

For Q4?

Yes.

And what was it for the year?

For the year, it was negative $57 million.

Okay. I know you can't guarantee that there won't be additional charges of any sort in '08, but describe a little bit the -- everything but the kitchen sink theory in the fourth quarter and is there anything that you anticipate at this point and along that line. I think there was some $5.5 million hit in other expenses. What was that?

We'll do the last part first. Brad, what was the comment on the other $5.5 million?

Yes, those were -- we had some increases on amounts for capital accounts. We had some further impairments evaluations. Those where the drivers.

The comment that I would make is in direct answer to the first prior question is if we anticipate anything else? Clearly, we would have reserved for it. We don't anticipate anything else as we sit here today. In fact, it's our mission, this new management team, to start the dribbling out of bad news. Living life like a death of a thousand cuts. And so, it's our intention to be very decisive about our manufacturing operations and way in which we're going to recognize any future product returns and things of that nature. So, we don't -- I sit here. I'm trying to best what we can to insure that 2008 significantly an improved year over 2007.

Okay. What are the key -- what are the new covenants, Tony, and briefly are the key ones and how did they change from the previous ones?

Well, the covenants we have -- the one we have least difficulty meeting is the net worth although that gets effected this time also because of the tax situation, but basically, debt to capital, fixed charge ratio and basically there are two augmented base on EBITDA and they're the ones we have been struggling to meet. And they've been waived for the fourth quarter and they've been modified consistent with our suggestion of what our income is going to be on a conservative basis and both banks have signed on.

Are those numbers in the filing public somewhere?

They are not.

Dude, would you care to describe for Q1 or Q2?

I'd rather not, John.

When will that information be available?

When we file the 8-K and 10-K related to the debt portion of the documents.

And that should be within -- for two to three weeks? Roughly?

Yes, in the middle of March.

Okay, I'll get back in queue, thank you.

Thanks, John.

Your next question will come from the line of Robert Kelly with Sidoti & Company.

Good morning, guys. Thanks for taking my question.

Hi, Robert.

Just a point on the $5.5 million, other charges, talk about allowance without full account reserve, do you think that will be a bigger problem going forward into '08?

No, we don't have any evidence that's suggesting to your problem. Team at work.

Okay.

Robert, I'd rather not you guys walk away from the impression that we've got a situation of bad debts with our customers. What amounts to as we never -- we had one bad debt in the life of our company and we don't have any right now. We're just -- it's just that some payments were a little late and some recordings on our own internal were late on recording them. So they're really on our balance sheet and what it amounts to is we do not look in the future for anything that relates to bad debt.

Excellent. And then just a point on the distributor situation. You guys have talked a couple months ago you lost one of your bigger ones. Where are we as far as replacing that? Is that all building at this point?

Yes. Both of them have been replaced since October. Actually, we brought on two new distributors and we -- it's just that the distributor who left us had seven locations. We brought on two new distributors and gave one of the locations to testing this. Quite frankly, and you know it always sounds like your knocking your old distributor. I'm not going to do that at all, but we think we have actually enhanced our distribution representation out in the marketplace.

Great. And finally on the raw material costs maybe from 50,000 foot prospective, where you see from your competitors right now? Have you seen some exits? As they're coming off line, anything like that, with the spike in virgin?

Well, with respect to our competitors, we have seen some exits over the past year. Recently, one of my colleagues gave me a list. I can't recite the name on the list, but it does appear that there's some shakeout within the industry.

How about entrance?

Entrance? I haven't seen any.

No. No entrance. About 5% of the capacity that was in place in the beginning of 2007 has exited the market.

Great. Thanks, guys.

Your next question will come from the line of Bill Gibson with Nollenberger Capital.

Thank you, all my questions have been answered.

Thank you, sir. Our next question will come from [Joni Johnson] with Mattman Security.

I'm just going back to your bank facility and your bank covenants. Which are the banks that you're working with and could you maybe characterize how your conversations have gone with them with respect to the covenants? Do you feel that they're definitely willing to work with you? Are they more hesitant?

Ron Kaplan, I'll answer that. Within the first week that I was on the job, I had the occasion to meet with both of our banks at BB&T and J.P. Morgan, and I can tell you categorically they were most constructive. They had an intense interest on what we were doing and on the way forward. We shared that with them and I told them I would -- on a going forward basis that I will tell them what we know when we know it. Our banker and our relationship with J.P. Morgan goes back decades on a personal level. BB&T, my relationship is new but they have been very forthright with responses and I appreciate what they've -- the way in which they've worked with us.

And what is your borrowing base at this point?

Our borrowing base is based on account receivables and inventory. Right now our borrowings are going on the line of creditors. They can lead flow.

Our what? I didn't hear that.

Our current borrowing that's been a revolving line of credit are significantly below the common set that was the borrowing base?

Right, but what is the limit? What is the borrowing base at this point?

I can't give you the number but it's 85% of accounts receivables, 60% of finished goods.

Okay. Thank you.

The absolute limit on the credit line, line of -- revolving line of credit is $70 million.

Right. But is that further limited by the borrowing base at this point in time even though you don't have a drawings.

No, we're okay.

Okay. Thank you.

(OPERATOR INSTRUCTIONS) Our next question will come from the line of Keith Johnson with Morgan, Keegan.

Good morning,.

Good morning,.

For this day, I guess, a couple followup questions just the same as the first charges. Do you guys have additional charges relates to Olive Branch during the fourth quarter?

No.

And then there was, I guess the $500,000 of product, the deck reserves, that were both through the revenue line as a reduction of revenue. There was another $1.5 million, I guess, that is the SG&A question in accounts.

There was $1.5 million in total, $500,000 of revenue and $6million of SG&A.

And could you -- you may have talked about it earlier. I may not have heard the full conversation. Taxes during the quarter. Were they one-time related adjustments in the tax line or exactly how did the tax rate or tax charge in quarter come about?

Due to the loss company reported during the year, it ended up with a fairly large deferred tax asset, accounting rules require that we evaluate it to determine whether it will be realized in the future. And the standard that needs to be applied here is fairly conservative.

Okay.

And as a result of that, we booked evaluation reserves against the deferred tax asset which -- that doesn't allow us to record the benefit, or rather, recognize the benefit of that now. And certainly, the Company generates the taxable income for the future and we would be able to recruit some of that or all of it.

Okay. How much was that charged?

The evaluation allowance we recorded was $19.5 million.

And then on the 9 million-dollar or distributor credit, it looks like that was a little bit higher than, I guess, what you guys may have originally kind of estimated on the preliminary sales guidance, but you guys brought that inventory back in, is that correct?

Some of it were brought back in.

And then the remaining inventory or was there a percentage of it that's still out there in the channel or --

You're talking about about the Accents brought back?

Yes, that's it.

The Accents is brought back. There's no more in the channel. At least there is no more we're going to accept because we've gone beyond the time which people have the ability to send it back us to us.

Okay.

And that's where we're.

And show us a little bit about how the plants operated here in the fourth quarter or I guess maybe how yields looked. You had talked as you came, I guess, through the summer. The new equipment was in place. Some of the yields are weaving up and I didn't know on what range you -- coming out over the last three or four months.

Yes. Let me go back a little bit to our last conference call.

Okay.

We were telling -- we told you we were installing equipment that will allow us to take on poly that would not meet our standards to use in production. And we were spending about $25 million on all our plants and multiple relations of different equipment. If wasn't all one piece of equipment. We were running at that time, early last year we were running at material yields of between 75% and 80%. Unfortunately, a couple of months it was 75%. We are now running in the high 80% and our target is to go above 90%.

And what about utilization rate you're in though?

Utilization rate is we're running at about 55% utilization. That might not be the exact number.

That's about 55% of all of the installed capacity, including Olive Branch.

Obviously, that's a factor of bringing the inventories down as well.

Okay, that's right. And then can you give us any color on the kind of the early buy trends through the March quarter?

Well Ron indicated in his remarks that sales from the first quarter, were looking like they're tracking pretty close to what they did last year. To augment standpoint, early buy is supporting that because that's what your sales are in the first quarter. Overall, early buy has been okay. It's not wowie, but it's okay.

Alright.

More than okay.

Okay, I guess, that Ron's comments are considered refunded. Any change kind of in monthly work our way through a few months?

I'm sorry, Keith.

Any change in the monthly trends in early buy, in other words --

I don't know. Yes, there are, but I wouldn't even comment on them because we can't predict what January's going to be versus the previous January. There's no absolute January to compare it to or February to compare it to or March to compare it to. Overall, the best we can do is look at it over a four-month period.

I follow you. Okay. All right, I appreciate the time this morning.

Thank you.

Your next question will come from the line of [Arty Rosenberg] with Lowe's.

Guys, I wanted to ask you if you could perhaps provide a baseline in terms of your '07 results, whether you want to talk about EBITDA or EBIT, but obviously you took a number of charges in '07, some of which will require or involve prospective cash outflows but I'm thinking more from an income statement perspective when we look at your '08 results versus your '07 results, what's the proper comparison should be because obviously you've taken a number of actions to improve your cost structure that should lead to improved gross and operating margin and I just wanted to get a sense for what the sort of the clean '07 numbers that you are looking at when you grade yourselves in '08?

I'm going to let Brian Burtow answer that. He can take you through some of the specifics of which charges were taken in '07 and then you can double sort out the arithmetic. Brian?

Look at the pro forma financial results for '07 when we take out the $94 million of charges, we actually had 23.7% gross margin on an apples-to-apples that's about 50 bases points lower than '06. Our SG&A was about $72.5 million and net represented nearly 20% of revenue. Earnings per share but exclude these charges and use the statutory tax rate of 37% would have been $0.22.

Okay. Great. That's very helpful, and when you look out to '08, obviously, you are expecting gross margin improvements based on the head count reductions that you've taken, the improvements you've made to your materials yields, some pricing. What about your SG&A line? What do you expect to happen on the SG&A line in '08?

Well, we answered a couple of ways. First of all, I want to reiterate we're not going to speak about a forecast of EBITDA or income quarter or for the year. We do expect to focus on decreasing our discretionary spending, increasing our rates on our yields, our overall operational effectiveness. A lot of that will be mitigated by the fact that we are going to be operating at less capacity than we did for a year because we're trying to reduce our inventory and pot cash out of our working capital. So they'll be some offsets of both, but there are no -- there's nothing on the horizon really that would cause there to be increase in SG&A expenses, certainly we envision that. We envision that we're going to control our costs really very aggressively.

Great, thank you.

That's about as specific as I want to get to at this point.

I appreciate it.

If SG&A charges are going to be across then we held down pretty tight ours.

Okay.

Your next question will be a followup from John Baugh with Stifel Nicolaus.

Comment on that utilization number was that a fourth quarter utilization rate or is that what you're running in the first quarter?

Both.

Both, okay. And then on the 70 million-dollar ceiling, I'm not going to ask you to forecast it, but that's going to get tight, will it not? What in April? May? Any commentary on how much cushion you have there, Tony?

I'm going to let Brian give the first answer and I'll give the commentary after. Go ahead, Brian.

We project the highest level of borrowings on the revolver to be in March. That's due to the fact that of our early price sales who have dictating terms from our customers. As the payments come, we looked at positive cash balance sheets in the second quarter. As far as the highest borrowing revolving line of credit in March, it is right now projected to be significantly below that 70 million-dollar limit.

John, people have been taking more -- more people have been taking a discount rather then the extended terms. So, from a standpoint of availability of cash from the revolver, we're looking at a better situation today than we were looking at 60 days ago.

Great, thank you so much for answering those two questions. Good luck.

Your next question will come from [Gary Malcolm] with Oppenheimer and Company.

Thank you for taking my call. On your business improvement plan of November 6, 2007, it lists an underlying EBITDA results of about $40 million for the nine months. Do you have what that comparable figure would be for the end of the year for 2007?

About $37 million.

I'm sorry?

$37 million.

$37 million. Thank you very much.

Are there any other questions.

No, sir, we have no further questions at this time. You may proceed with your presentation or closing remarks.

Okay, well, ladies and gentlemen, thank you very much for calling in today. As you all know, it's the first earnings conference call for me with Trex. I appreciate your patience. I look forward to the next one and I look forward to any criticisms or comments that any of you may have going forward. I would tell you that the first 37 days have been most challenging but I'm very happy that I've joined Trex. I see the opportunities that are here and the challenges but I'm enjoying it and I look forward -- for those of you that I haven't met, I certainly do look forward to meeting you sometime in the near future. With that, I'm going to say thank you to my colleagues for all of their help. Thank you to all of you for calling in and we'll talk again soon. Bye.

Ladies and gentlemen, that concludes your conference call for today. We thank you for your participation and ask that you please disconnect your line.