TriMas Corp (TRS) 2009 Q3 法說會逐字稿

Good day, ladies and gentlemen and welcome to the TriMas third-quarter conference call. (Operator Instructions). As a reminder, this conference call is being recorded.

I would now like to introduce your host for today's presentation, Ms. Sherry Lauderback.

Thank you and welcome to the TriMas Corporation's third-quarter 2009 earnings call. Participating on the call today are Dave Wathen, TriMas' President and CEO, and Mark Zeffiro, our Chief Financial Officer. Dave and Mark will review TriMas' third-quarter operating and financial results in addition to providing an update on our key strategic initiatives. After our prepared remarks we will then open the call up to questions.

To facilitate this review of our results we have provided a press release and a PowerPoint presentation on our Company website, www.trimascorp.com, under the Investor section. In addition, a replay of this call will be available later today by calling 866-837-8032, with an access code of 140-3128.

Before we get started I would like to remind everyone that our comments today, which are intended to supplement your understanding of TriMas, may contain forward-looking statements that are inherently subject to a number of risks and uncertainties. We caution everyone to be guided in their analysis of TriMas by referring to our Form 10-K and Form 10-Q for a list of factors that could cause our results to differ from those anticipated in any forward-looking statements.

Also, we undertake no obligation to publicly update or revise any forward-looking statements, except as required by law. We would also direct your attention to our website, where considerably more information may be found.

At this point I would like to turn the call over to Dave Wathen, TriMas President and CEO.

Thanks, Sherry, and thanks to everybody on the phone for all your support and attention as we continue to transform TriMas to the high-performance company that we all see it becoming.

Our agenda is that I will share my overview of third-quarter and the key activities in each segment. Mark will then discuss our third-quarter financial results and update you on the TriMas key initiatives that we have shown you previously. Then I will summarize with a look at our playbook for 2010. Plus we will have time for questions and answers to help you better understand TriMas.

My perspective of third-quarter is actually quite positive. While this recession has certainly been harder on our revenues than we ever expected, I believe our responses and actions have been fast and efficient, and I believe that this shows in TriMas' third-quarter results with overall margin percentages up on lower revenues.

We are beginning to see differentiation and revenue recovery with our Packaging and Cequent segments taking the lead. The combination of our own new product programs and some market recovery is showing here first, as you would expect.

We have discussed our TriMas business system in the past. And I continue to believe that these processes are driving the right actions. Our productivity results of near 4% and our working capital levels, down to 16% of sales in third-quarter, are the best we have seen in quite a few years.

Of course, the real work here is done by the people running our businesses day-to-day, and I believe that our organizational structure allows each team to maximize its own business' performance and react quickly to changing conditions. We make sure that we have clear goals and measurements, appropriate empowerment, and the right people running each business.

This recession has made every corporation focus more on its balance sheet. You can see the results of our focus at TriMas as we continue to pull down debt and produce results that provide us with sufficient liquidity. Now I would like to drop down a level of detail and share what we view as the key results and activities in each segment.

In Packaging we continue to focus our growth efforts on new products in the specialty dispensing portion of the business, much of this in pharmaceutical and cosmetic applications. Our new product as a percentage of sales here is running above 35%, which of course, is a metric in our incentive pay system for this business, and the team is above target.

You know that Packaging is a high margin business for TriMas and the margins are improving, with operating profit margin up 400 basis points compared to third-quarter 2008. The portion of this business that serves industrial customers tracks industrial activity, so we are starting to see some strengthening here too. Packaging is a global business for TriMas, and our actions to grow outside North America are showing results also.

Our Energy businesses are having a tougher time, with extremely low natural gas prices in the third quarter, and drilling activity and plant rebuilds both still down. But we know that these are cyclical businesses. The management teams know how to flex costs with the market so this segment stays profitable and generates cash, even in this town market.

The people who run these businesses have taken actions that improved margin percentages on a sequential basis. The Arrow business continues to add products to increase our well-site content. And Arrow is also adding to its products and assemblies used in gas compression.

Our Lamons gasket and fastener business continues to ramp up revenues ahead of plan at its recently opened company sites in Salt Lake City and Rotterdam. And Lamons will continue to expand globally.

In Aerospace & Defense, Monogram produces fasteners used in most all aircraft. We track our content on each airframe at Boeing and Airbus, as well as by business jet and military manufacturers, and we continue to chip away at our growing our share, both by adding products and because more complex airframes require the higher tech fasteners that we provide.

The headwind that Monogram currently faces is the still high inventory in the distribution channel being worked off. We, of course, track this inventory and model our own production accordingly. As a reminder, this segment also includes NI, where the management team is successfully converting the business to a service model, being paid to rebuild, move and reinstall a factory of equipment over two years versus building a large stock of ammunition shells in 2008. So NI is still a nice, profitable business, but revenue is down $1.7 million from third-quarter 2008.

Engineered Components has been experiencing the worst of the industrial recession. The largest unit, Norris Cylinder, seeing sales down approximately 60% in third-quarter compared to the prior year, an 11% decline sequentially. Despite this decline, Noris generated more cash in the third quarter compared to Q3 '08, and the segment adjusted EBITDA did improve 360 basis points sequentially.

At Norris we continue to focus on the export sales, and we have been increasing our product sales to the Asia Pacific region. We have been working on consolidations and improving the set of smaller businesses in Engineered Components. We are not done, and we are committed to returning this segment to attractive performance levels.

Cequent has shown very strong improvement this year. The Australian-based is enjoying a decent economy and is adding more products, plus moving more production into the low cost plant in Thailand. The consumer-focused business continues to win business at its targeted retail accounts with new products, merchandising, and utilizing our full product line.

I can't say enough good things about how well the management team at Performance Products is consolidating three businesses into one, merging facilities, simplifying the supply chain, and has put one front-end on the business to be easier to deal with and to leverage our broad product range. The numbers tell a great story about Cequent, but the real story is the permanent improvements in the business that will aid future performance. As you can see, these actions are driving improvements in profitability, with operating profit margin increasing 560 basis points compared to Q3 '08.

Now I would like to turn the call over to Mark to discuss our third-quarter financial highlights and key initiatives.

Thank you, Dave, and good morning. Let's turn to the third-quarter financials on slide eight. As Dave mentioned, we continue to feel the effects of the recession as we report third-quarter sales of $204 million, down 22% compared to the third-quarter of 2008. Although several businesses benefited from new product introductions and new sales promotion, sales in all five segments did decline.

Adjusted EBITDA, excluding special items and gains on bond extinguishment, were $32.9 million, down 13.2%. As you can see, our cost and productivity actions are positively impacting our results, as operating profit and adjusted EBITDA margins both improved during the third quarter compared to the third quarter of 2008 despite the sales decline.

Considering the negative backdrop of the economy, extremely low natural gas prices and delays are key airframe manufacturers, we are pleased with the conversion rate we achieved during the quarter. Income, again, excluding special items and bond gains, decreased 10.7% to $7.6 million or $0.22 per share from $0.25 per share in Q3 2008. This includes the positive effect of $2.8 million in lower interest costs in Q3 of 2009.

We are extremely pleased with our quarterly free cash flow of $43 million, up over 85% from third-quarter of 2008, and year-to-date cash flow of $97 million, up 123% from the year ago period. Our strong cash flow has enabled continued reduction of our outstanding debt. We reduced indebtedness by over $101 million since September 30 of 2008. I will provide more details on these specific results in a few slides.

We also continue to look at our performance on a sequential basis comparing the third quarter to the second quarter of 2009. Revenue was down 2%, while gross profit increased 16%. And adjusted EBITDA, again excluding special items and bond gains, climbed 22%, as cost reductions continue to be materialized. As a result, adjusted EBITDA margin increased 330 basis points compared to the second-quarter of 2009. You will also notice continued reductions in operating working capital, debt, interest costs, as well as significant sequential improvement in free cash flow.

Turning to slide 10, we will review our businesses' performance by operating segment. The Packaging segment, despite lower sales, is reporting an increase in EBITDA for the period. The business improved its margins 480 basis points in the quarter as a result of growth, mix and cost actions. As this segment is early cycle we view it as well-positioned for economic recovery.

Energy, with sales down 35% and EBITDA conversion pressure, has been directly affected by the cyclical lows of natural gas and lower activity levels in the refinery and conversion plants. We recognize that these businesses by their nature are cyclical, and as such, actions have been taken to lessen the effects of revenue retraction. Yet, we remain committed to the growth priorities in this segment. In the interim we have more work to do on improving the relative supply chain and inventory levels in this set of businesses.

Aerospace & Defense, despite a 35% decline in shipment, has held a 36% adjusted EBITDA margin rate. The businesses have taken actions to rightsize their personnel and cost structures. The sales pressures really represent actions of supply chain to reduce inventory. And as demand recovers we are well-positioned for -- from the cost and process improvements.

Engineered Components was most affected by the industrial recession, with a reduction of sales in the quarter of 54% comparing to those record levels in 2008. We do not accept the level of negative conversion in EBITDA to a rate of 8%, and as such, are working on consolidations and efficiency actions to better position this set of businesses.

Lastly, Cequent sales were down 7% for the quarter versus 2008, with an increase of 14% EBITDA, or a 580 point basis point improvement. This business has been most positively affected by the profit improvement program, and has seen significant changes in its relative profitability and cash flow generation. We believe that this business has embraced the continued need of productivity and we will continue to drive for further improvements.

I would now like to spend a few moments focusing on some of our key initiatives. While these initiatives enable us to better navigate through these challenging times, more importantly, they lay the foundation for the new TriMas. I would first like to talk about our improvements in profit and productivity on slide 11.

We continue to make progress and are on track to exceed our goals of $30 million in cost reductions to be realized in 2009, and have realized over $9 million in third-quarter and $23 million year-to-date. We remain focused on execution of our existing initiatives, and we will continue to identify additional fixed and variable cost savings opportunities.

The Profit Improvement Plan launched a year ago was event driven and was needed to streamline our businesses, especially during the backdrop of a recession. Going forward we expect at least at 3% total gross productivity from all of our businesses every year.

Moving on to slide 12. In addition to aggressively reducing fixed costs throughout the businesses, we continue to focus on working capital improvement initiatives to maximize cash flow. We have achieved a 26% reduction in working capital during Q3, and reached our immediate goals faster than we originally expected. Compared to the end of the second quarter, we reduced our investment in working capital by 15% or approximately $23 million.

With the additional working capital as a percent -- with operating capital as a percentage of sales at 16.1%, we have reduced our working capital to a level we have not seen in TriMas for many years.

These results have been primarily driven by efforts to lower inventory, a $48 million or 25% reduction compared to Q3 2008, and Accounts Receivable levels. As we move into the fourth quarter we plan to hold working capital levels relatively flat, despite the fact that we traditionally experience an inventory build during the fourth quarter. While we are pleased overall with the progress we are making, we do believe that we have work to do across this set of businesses in 2009 and beyond.

Now let's move on to our next initiative, debt reduction, on slide 13. During the third quarter we continued to deploy our capital prudently, using approximately $9 million in available cash to retire additional senior subordinated notes. As noted, we reduced our total indebtedness, including amounts outstanding under our receivables securitization facility, by over $101 million compared to a year ago, with $22 million of this reduction taking place in the third quarter.

As of September 30 we had debt of $525 million with no amounts outstanding on our receivable securitization facility, and $25 million in cash on the balance sheet. We ended the quarter with approximately $156 million of cash and aggregate availability under the revolving credit and receivables securitization facility, our highest level since going public in 2007, despite the recession's affect on our revenues. Our leverage ratio of 3.8, which represents an all-time low for TriMas, and as compared to our covenant requirement of 4.75.

We continue to benefit from reduced interest cost resulting from lower interest rates and reduced borrowings overall. As compared to the prior year, our total weighted average cost of our credit facility borrowings decreased from 4.9% to 3.8%. Our cash interest costs have decreased approximately $7 million year-to-date. And we expect approximately $9 million to $10 million in cash interest savings for the full year as compared to 2008.

The result of our productivity working capital and debt initiatives is outstanding free cash flow. Let review these results on slide 14. As you can see, we generated significantly more cash flow during the first nine months of 2009 at $97 million, compared to the first nine months of 2008. In fact, our third-quarter free cash flow of $43 million is equivalent to our year-to-date 2008 free cash flow level.

During the fourth quarter we will remain focused on cash generation, recognizing that Q4 does have our semiannual interest payment and also the historical build of inventory.

Slide 15 summarizes our initiatives and their impact on 2009. Whether it is our cost savings, working capital or interest expense initiatives, you can see we have increased our estimate of their positive impacts on 2009 throughout the year.

As you can see from the results we have discussed in the previous slides, we are already well on our way to exceeding our targets, and in some cases already achieved the projected results of the full year sooner than originally planned. Collectively these efforts will result in a targeted [minimum] cushion with respect to our leverage ratio covenant of at least 0.4 times as we finish the year.

On slide 16 we would like to share a bit of clarity on Q4. For the fourth quarter we still expect revenues to be down year-over-year, but less than in previous quarters. We expect our fourth-quarter revenues to be down 15% to 20%. And we continue to project our full-year revenues to be down 20% to 25% compared to 2008. We expect to see continued bright spots in our Packaging and Cequent businesses and anticipate revenues nearing Q4 2008 levels in those segments. It is important to remember the typical seasonality in Cequent, which directly impacts the fourth quarter.

In Energy we still expect to see topline pressure despite the rise in natural gas prices. It takes time to feel their benefit, and inventory is still high in the marketplace. While we feel confident in our positions at Boeing and Airbus, aircraft demand is expected to continue to be buffered by inventory levels in the supply chain.

At the same time we will continue to selectively invest in growth initiatives that will benefit the quarter and 2010. We will also continue to execute on our profit improvement and productivity plans, not to only reduce costs, but to improve our business processes.

We recognize that we continue to be in a period of economic uncertainty and we will operate our businesses as such. We are committed to maintaining a minimum cushion of 0.4 times on our leverage covenant through the fourth quarter and insuring liquidity for TriMas' future endeavors.

That concludes my comments. Now Dave will wrap up talking briefly about 2010.

Thanks, Mark. I will summarize with a look at our 2010 playbook and a reminder of our key priorities that we continue with at TriMas. So first our 2010 playbook, and I will share my thoughts on 2010 here and where we will be concentrating our efforts.

The summary is that I feel we have the right basic initiatives underway. Number one, we need to be keep building on those operational improvements that we have been getting. Number two, we will increase our activities for revenue growth. And three, 2010 looks like a good time to make further improvements in our capital structure.

I have shared that in 2009 we have been carefully investing in some growth programs, including new products and packaging, expansion of Arrow's oilfield content, and footprint, like the Lamons facilities in Rotterdam and Salt Lake City. We are on a path to increase these activities and to turn loose some great projects that had to be scaled back due to recessionary pressures.

Concerning end market growth, like everybody, we are currently seeing some upticks, my much of the supply chain is stripped out, so fast reactions will win. Having the best possible cycle times is vital, and we intend to capitalize on every opportunity. And we must not back off of holding onto our hard fought share gain.

In 2009 we are gaining strong productivity improvements. My task is to make sure we continually improve productivity at all times, in all cost areas, rather than having to do some of the big catch-up projects we have had to do in '09. We are moving from treating cost out as a special project to our new mode of sustained, total cost productivity. Our intense focus on cost out has set the stage for a strong operating leverage as revenues climb.

Also, in 2000 we intend to continue to reduce our debt level through our exceptional free cash flow generation power. We have made great progress with debt reduction in 2009; we expect to continue in 2010. We will continue to take the actions to protect our liquidity and to ultimately help the Corporation.

Financial markets continue to recover, and we will stay close to our advisors and look for opportunities to improve our capital structure. These actions could include opportunities in debt, equity, or a combination of both. The TriMas team certainly remains committed to ensuring we have adequate liquidity through 2010 to fund the activities we need to grow and improve TriMas.

I'll close by reiterating our priorities going forward -- drive operating profit improvement, manage the balance sheet, and continue to focus on strategic growth initiatives. These priorities have not changed. We believe these priorities are right for TriMas now and in the future.

At this point I would like to open the call up for your questions.

(Operator Instructions). Bob Franklin, Prudential Financial.

A couple of questions. One is cash on the balance sheet is $25 million now. That seems to be higher than you typically carry. Is there a change in strategy; are you saving it for something?

The opportunity is to again keep powder dry and also utilize cash for its highest and best use for the Corporation. We think this provides flexibility in terms of our optionality, and as such, we felt it best to be in that position.

If you were to reflect a little bit on terms of where we closed for the quarter, 3.8 times our leverage covenant, despite having that cash on books, so we viewed that as the best option for us.

Let me ask one other question. I want to make sure I'm reading a couple of slides right. On 14 -- slide 14, your year-to-date cash flow is $97 million?

Yes.

Is that right?

Yes.

On slide 15, your target for the year is $80 million?

$80 million plus, that's correct.

So can I imply that fourth quarter will be a use of cash?

What we have done is we have continued to uptick our relative cash flow performance that we expect for the year across the year. Q4, we are in the process of trying to minimize the use of cash within Q4, as such we expect to be in excess of that $80 million.

I would underline the plus on that number.

Yes, but the math just works out to a minus right now.

That's correct. And if you look at our Q4 related cash uses, you will see about a $16 million use in terms of our semiannual interest payment, as well as basically the uptick in relative inventories that we would expect to see in the quarter. So, yes, to answer your question, our expectation is a slight use in Q4.

Great. Thanks very much.

Matt Vittorioso, Barclays Capital.

Looking at a couple of the segments, I know you talked about the margin improvement, just wondering if these are new sort of run rate margins or were there one-time things or seasonality in the quarter, particularly at Cequent and Engineered Components, are these the adjusted EBITDA margins that we should be thinking about going forward?

Thanks for the question. The Cequent margins -- largely as a result of the fixed cost reductions. And if you weren't reflect back two plus years ago, you would expect to see about a 500 basis point improvement as compared to early in '09. So these margin rates should be more of a sustained a view of that business.

And with respect to the Engineered Components businesses, I would have to say that we expect future margin rates to improve versus where they are today, and get back to more of the sustained level of where you had seen that in 2008 and prior.

Great. Then just more of a high-level question. As you do fix some of these segments, particularly around the profitability, what kind of high-level discussions have you guys had around the core businesses at TriMas? What segments are definitely going to be core going forward and what businesses might not be core? Is that a discussion that has come up yet or are we still just focused on getting out of this current situation?

Priority one is getting through the current situation. But, yes, we do continue to discuss with our Board ranking of the businesses. We have been through that process with -- it is always kind of a grid of current attractiveness and what can it be in the future. I know that is a roundabout answer to say that it is clear to us that we would rank Packaging and Aerospace business very high for us.

But that said, it is not like we have any real clunkers in the lineup. There is enough improvement runway in front of all the businesses that I like what we've got. So nothing that says we should be out of it anytime in the near term.

The last question for me, I would just -- if you could talk a little bit more about potential. I think you said the outlook for capital structure -- restructuring looks better in 2010. Have you had conversations with your lenders on the revolver? Have you thought about options on refi'ing the bonds, any color you can provide would be great.

The fact of the matter is we stay very close with all our advisors in that respect. We have got a very healthy group of banks that are part and parcel of our current revolver and have been very supportive through these challenging times.

What we are looking at is obviously our revolver doesn't come due until August of 2011, so as such we have time to really assess what that means and we want to do about it. The rest of the capital structure is even -- matures even after that.

So the current heat in the markets -- and markets may be too broad, maybe it is just really high yield -- provides us maybe an opportunity. But the fact of the matter is we continue to listen to our experts, and we will come up with what we think is the best alternative for TriMas here through and across 2010.

But it is definitely a front burner activity for us and we will keep at it.

If I could get just one more. I think you had mentioned pressure on the Aerospace & Defense given the high levels of inventory that still exists there. Maybe just how long do you expect that situation to persist? Are you seeing any uptick in activity at your customers? Just a little more color there would be helpful. Thanks.

Yes. We, of course contract -- we know exactly how many fasteners there are in each airframe at each OEM and at each product that we are on, even business jets, which is pretty flat right now. So we count tell that and then look at the inventory, as you can imagine.

We are actually -- I guess on the demand side the uptick we are seeing, and we would say we have increased content via the new products, via the screw fasteners versus the flexible fasteners that we use between panels. So we see content going up, and that has caused some pull through. And we have been seeing inventory dropping in the channel. So the trends are right.

It is months, not years, that is probably as much as I can tie it down for you now. It is an industry that runs with a lot of inventory, because you know how it is. You don't dare run one of those airframe manufacturers out. So they've got all the stocking programs in place, and they are running them down now. So it is months until we see anything real coming through.

Should we think about revenue flat on a sequential basis in that segment for now until there are better signs of some kind of uptick?

That is reasonable. Yes. You know we are scrambling to find anything we can do to do more, but realistically it is a tough slog when there is a lot of inventory in the channel.

Yes. Thanks again guys.

Joe Box, KeyBanc Capital Markets.

My first question is in regards to SG&A. Based on my math, after taking out this quarter's restructuring, it looks like SG&A actually increased by about $2.5 million from 2Q. I know 3Q typically is a little bit lighter than 2Q. Is there anything unusual in the quarter that might not be there in 4Q?

Part and parcel of it is the relative commercial programs in Cequent, as well as basically truing up some of the incentives within the businesses as they have continued to improve relative performance, both in Rieke and Cequent. So that is in large part the relative increases.

Is it relatively safe to assume then maybe a flattish run rate in 4Q?

That's correct.

My next question is in regard to your bonds. They have obviously had a great run lately. And as of this morning it looks like they are trading at about $0.94 on the dollar. Given most of the discount is gone, does this change the way that you guys are thinking about buying back the debt?

It really gets back to best and highest use. I think in large part the market is has reacted, and maybe disproportionately with $0.94 on the $1 with regards to our bonds, as compared to relative trading levels within high yield. But in the grand scheme of things we've got uses of cash that return basically value to shareowners here, and bonds may be one of them, but the relative pop that you are expecting there is just not what it was early in the year.

Fair enough. My last question is in regards to your Arrow business. It feels like natural gases may have bottomed out, but obviously there is a lot of supply out there, especially for the shale plays. So I guess -- I think we're probably looking at it like it, for instance, it potentially remained muted for quite some time. If that is the case, given your exposure to the well-site, do you think that there could be any risk that this business becomes a little bit less relevant going forward?

I continue to like business a lot. The activity going on in the business is to get out of being so dependent on just engines sitting at a well-site. Part of that is content. And, of course, it is -- you are starting to see rig counts tick up little bit. There are some inventory of engines in the channel, but that will come out.

But I mentioned compression. Most natural gas gets compressed from where it comes out of line several times as it is moved around the country. That is why we are increasing our activity on the compression side. A compressor is the opposite of an engine, so it is natural for us. You will see a lot more of that coming forward.

That is a long answers to say, I think there is enough upside in the business given using what they're good at, but going -- expanding the product print some (multiple speakers).

As a follow-up to that, can you maybe just give us a break down, or directionally talk about what percentage of Arrow's business might be on the compression side versus the well side?

I believe we have shipped 200 compressors this year, but that is us. It is not enough to make a big swing in the numbers yet. The action is coming at us in the future.

Got you. So there is plenty of upside?

Yes.

Thanks for your time guys.

Jordan Hollander, Jefferies & Co.

Nice quarter. What is the capacity -- your ability to buy back bonds in the open market, given that you have done so much this year? Is there much left under that basket?

Yes, there is. If you are to look at it, the amount that we have consumed to date is really focused around about -- I am digging for the number here, so bear with me one second. Basically we have used about 64% of the $75 million that is available to us. So we still have more available in terms of the cash deployment that we can get towards bond pay down.

Great. Just on to (inaudible) margin front on the Packaging segment, as we see some of these new projects -- or new products rolling out, can we anticipate your continued uptick on the margin front?

We will get some -- it is a natural to get some uptick in the margin, both from new products, because it tends to be new and different and it is easier to get some margin, and the productivity efforts keep kicking in. That said, the action in this business is growing it. And if I can have everybody in the Packaging segment plug their ears, before our next operating review, I will admit that I like the margins and I want the activity on growing the business.

We will keep the pressure on the margins, but what you should remember is these are darned attractive margins. I like the drop that we get just by growing the topline. And I am willing to spend some money to do that to grow the business.

Great. Just lastly, just CapEx Outlook into 2010, do you have any projects that should be larger than this year, or is it similar type kind of run rate?

It will tick up some just that -- like I said, we've got a lot of pent-up programs that I want to -- at the right time I will cut loose. We will continue to -- I have said it many times -- we will continue to expand our footprint in Lamons -- that requires opening new branches. We spend money for that. We have some neat product programs that we will spend some money on. And, actually, the Packaging segment there is a reason for us to actually increase some capacities. Not everything in the whole load is running at 60% capacity utilization, you know, so pieces of that we will be spending some money on adding to our revenue capability.

So that is a long answer to say you're going to see a little uptick in capital. But we are not a big capital spending kind of a company, and it will stay that way.

Thanks guys.

(Operator Instructions). There are no additional audio questions from the phone at this time.

Well, again, we appreciate all your support. We will stay in touch. And thank you. We will keep at it.

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program. You may now disconnect. Everyone have a wonderful day.