Toro Co (TTC) 2004 Q4 法說會逐字稿

Welcome to the fourth-quarter earnings release conference call. (OPERATOR INSTRUCTIONS). As a reminder this conference is being recorded Wednesday, December 8, 2004. I would now like to turn the conference over to Mr. Ken Melrose, Chief Executive Officer. Please go ahead.

Good morning ladies and gentlemen, and greetings from our Minneapolis headquarters. I would like to just introduce the gentlemen with me to assist in the Q&A. They are Mike Hoffman, our new President and Chief Operating Officer, along with Steve Wolfe, our Chief Financial Officer, and Tom Larson, our Assistant Treasurer. And I'm also pleased to introduce John Wright, who was recently appointed Director of Investor Relations. John joined Toro eight years ago and has been instrumental in leading the marketing efforts in our commercial equipment division. We're pleased to welcome him, too, to the investor relations team.

So today we would like to review Toro's fourth-quarter and year-and results, but before we begin I would like to once again review our Safe Harbor policy.

Please keep in mind that during the call we'll make certain predictive statements to assist you in the understanding of the Company's results. You're all aware of the difficulties in making predictive statements in a highly seasonal and cyclical business. The Safe Harbor portion of the Company's press release, as well as SEC filings, detail some of the important risk factors that may cause actual results to differ from those in our predictions. Our press release was issued this morning by PR Newswire and can also be found in the Investor Information section of our corporate Website, thetorocompany.com.

Now on to the highlights for the fiscal year and fourth quarter ending October 31, 2004. I am very pleased to report that The Toro Company marked its 90th year with another remarkable record-setting performance. The success we experienced and the ongoing momentum we generated from our previous 5x5 initiative accelerated the transition to our next generation three-year 6+8 initiative that focuses on profitability and growth.

As we once again raised the bar, Toro employees once again rose to the challenges with discipline, creativity and teamwork. Together we exceeded our first year 6+8 goals by achieving a 6.2 percent profit after-tax yield and 10.4 percent net revenue growth, which was a gratifying achievement for all of Toro. For the year, Toro reported record net earnings of $102.7 million on record net sales of 1.652 billion. Net earnings rose $21.1 million, or 25.8 percent compared to the previous year, while net sales increased by $159.9 million.

Earnings per diluted share for fiscal '04 were 44.04, and that compares to $3.12 the previous year for an increase of 29.5 percent. In our fourth quarter, net earnings improved 23.2 percent to $6.9 million, or 28 cents per diluted share, while net sales rose 8.6 percent to $336.9 million. We were pleased to see this sales increase given that earlier-than-anticipated demand shifted some of our shipments of our planned fourth quarter snow thrower orders into the third quarter.

Sales performance for both the quarter and the year reflected generally favorable market conditions, supported by solid growth in each of our business segments. A significant contributor to our growth this year was our international sales, which grew just over 18 percent, giving support to our long-term strategy to build this part of our business to better balance our portfolio geographically. And as we are able to do this, of course, our vulnerability to weather on the domestic front is lessened.

On the profitability side, we accelerated our productivity improvements and expense reductions by applying lean methods to our manufacturing and business processes. This helped us stay on track by offsetting a great deal of unexpected steel and other commodity cost increases. In addition, we generated record cash flow from operations, repurchased approximately 10 percent of our outstanding shares, and used lower average working capital as a percent of sales.

As a reflection of our past performance and recognizing that we are well positioned to sustain continued improvement, I am pleased to announce that our Board of Directors voted yesterday to double our quarterly dividend rate to 12 cents per common share, payable January 10, 2005 to shareholders of record on December 20, 2004.

So now let's turn to our businesses to see how these results break down by segment

Leading the way is our professional segment with net sales of $1.0289 billion for the year, up 10.7 percent compared with fiscal 2003. For the fourth quarter, sales rose 9.6 percent over last year to $194.8 million. Most markets showed gains with a particularly strong contribution from our landscape contractor equipment business.

Professionals and consumers with large lawns indicated their preference for our Toro and Exmark brands, and the new Toro Z400, which is a compact zero-turn radius mower, was a big hit this year with its superior combination of performance and productivity.

In the aggregate, our irrigation sales were lower than expected. In the golf irrigation market, where we continue to hold the leading share, sales levels mirrored the industry where the rate of new course construction seems to be bottoming out. Our residential and commercial irrigation business was down compared to last year, but ag irrigation turned in strong growth and recorded significantly improved profitability due to the lean initiatives that we implemented over this past year. Earnings in our professional segment rose 18 percent to $173.1 million for the year, and for the fourth quarter earnings were $18.6 million, up 39.7 percent over last year.

Now turning to our residential segment, net sales for the year rose 9.5 percent to $554.3 million, while fourth-quarter sales were up 6.4 percent at $117.4 million. Much of these revenue improvements for the year came from growth in walk power mowers and electric blowers. In addition, with winter at our doorstep it's always good to report that retail demand for snow products was strong again in the fourth quarter.

Leading the way were two recently introduced products that saw expanded distribution in this season -- the revolutionary Power Max two-stage snow thrower, and the lightweight electric power shovel/sweeper combination. At year end, operating earnings for the segment were $61.8 million, an increase of 11.4 percent, but for the quarter declined 1.7 percent to $9.1 million, primarily due to raw material cost increases and costs to modify a new snow thrower model in the field.

In our distribution segment, sales for the year increased 13.6 percent to $152.2 million. Fourth-quarter sales, on the other hand, rose 9.9 percent to $40.6 million. We saw minimal impact from the mid-October sale of a Toro-owned distributor in the Southeast to one of our existing distributors. I'm also pleased to report that our ongoing strategies to improve distributor profitability helped this segment reverse previous losses and turn profits of $2.2 million for the year and $500,000 for the quarter.

Now let's move away from segment results and take a look at our operations.

Gross margins for the fiscal year improved slightly to 35.9 percent from 35.8 percent the previous year. Production growth and our ongoing application of lean methods in our plants helped us preserve our margins without in-season price increases in 2004. Lower warranty costs from improving quality, better logistics management, and tighter warehousing expenses lead a reduction in SG&A expense from 27.2 percent in 2003 to 25.9 percent in 2004. For the fourth quarter, SG&A expenses were 30.7 percent of net sales versus 31.4 percent last year.

Our balance sheet reflects the continuation of the favorable trend and our ability to manage assets and grow the business without inflating the balance sheet. In fiscal '04, by focusing more on inventory and receivables management, we drove our average net working capital as a percent of sales down from 23.2 percent to 21.8 percent. Specifically, net inventories were down $1.7 million to 227.2 million, and in addition net receivables increased just 2 percent at $285.7 million, which is a favorable outcome in light of our greater sales increase in the fourth quarter.

For the year, interest expense declined $0.8 million because of lower average borrowing level and the use of earnings to retire debt. In addition, as I mentioned at the beginning of the call, Toro reported record cash flow in fiscal '04 by generating $185.1 million from operating activities, an increase of 56 percent over last year. We spent $169 million during the past year by repurchasing 2.6 million shares of common stock on the open market, as authorized by our Board of Directors and discussed in previous conference calls.

The outlooks for the economy and our industry are both positive, and with our multiple brands and leading product lines we expect to see continued growth in market share and customer demand. However, we continue to face the same uncertainties we always have, including shifts in the global economy, prices for steel and other commodities, as well as transportation costs, and of course, the always unpredictable weather. All in all, our confidence grows in our ability to manage the business model and deliver sustainable financial performance despite these external challenges.

We have instilled greater disciplines and continuous improvement, including lean and no-waste methods. We've improved asset management and a better portfolio mix. We've also raised our prices for '05, which we did not do last year, as I said before, and have sufficient reserves, we think, to combat further increases in commodity costs. All of these things, along with the exceptional engagement by our workforce and our 6+8 initiative, will enable us to continue delivering strong financial results both in '05 and well into the future.

In our second year of 6+8, we'll continue to increase our investments in innovation and technology and new product development, as well as in our businesses and brand development. Moreover, we fully expect our profit yield in the years ahead will improve through a more extensive implementation of lean and no-waste methods in both our plants and offices. As a result, we believe that fiscal 2005 will be another excellent year, with expected diluted earnings per share growth of 12 to 15 percent and net sales growth of 7 to 9 percent.

Let me just say a few perspective words about our first quarter. Our November through January period is a preseason quarter, as you know, and thus, its revenues are considerably less than 1/4 of the year's sales. It is therefore more sensitive to some of the common shifts in buying and ordering that occur as our distribution channels ramp up for the season. In addition, our plants now run at a fairly high level of capacity during the main selling season. So in order to accommodate projected demand, we need to produce more in the first quarter, making it more of a challenge to deliver earnings growth in this period commensurate with the rest of the year. Having said that, our early earnings view for the quarter indicates a diluted earnings per share of 38 to 43 cents.

In conclusion, as I'm sure you know, we announced in October the Board's selection of Michael Hoffman as President and Chief Operating Officer. Mike is a 27-year veteran of the Company and most recently has been Group Vice Precedent of the Consumer, Landscape Contractor and International businesses, representing over 65 percent of the Company's revenue. Moreover, he has provided significant contributions over the last several years in the areas of business strategies and our culture and values. In his new role he'll be responsible for all Toro businesses. Toro's succession plan calls for my stepping down as CEO sometime during the fiscal year '05, and the Board's action was a key step in this process.

Let me now stop so that we can answer any questions you may have, and I will turn it back to you, Maria

(OPERATOR INSTRUCTIONS). Jim Lucas.

First off, congratulations, Mike. A few questions if I might. You talked about the increased spending going into the new year, Ken. One of the things that when you announced 6+8 was looking at reinvesting a lot of these savings into the growth initiatives. How did that pan out in fiscal '04, and is there any type of catching up that you're having to do from deferring spending in '04 to accelerating in '05?

Well, in '04, Jim, we launched a major initiative in reinvigorating the Lawn-Boy brand, so we put money in both the marketing of the brand as well as extensive new product development. We'll continue to do that in '05 as Lawn-Boy as a brand gets more traction in the retail segment. That is one area that we started last year. We will continue to do that fairly aggressively.

I would say all of our new product development will ratchet up another notch in '05. We've slowly been increasing our spending as a percent of sales in product development, again focusing on innovative new products to command a better share of each segment. And we will do that in '05. Today we're spending -- or '04, I think we spent about 3 percent of sales. Our goal in '06 is to spend 3.5 percent of sales in new product development or in engineering and R&D, and that will help us achieve the goal of creating more and more of our total revenues from new products. And our goal is to achieve 35 percent of our revenues in each year from new products.

So all of our business segments are trying hard to put more innovations out into the marketplace, and so that will continue in '05. '04, we lost a little traction early on because it just took us longer to bring on some new engineering resources and to ramp up the effort, but I think '05, we'll continue to be ramping up further in that area.

We will also put more effort in strengthening our brands both here in the United States as well as abroad in Europe, and Australia especially, not only for Toro but some of our other brands like Exmark and Irritrol, and a brand that has very high market share in Australia called Pope, as well as Toro. We will continue to keep developing our brand equity. That makes a big difference in the retail segment and so we know that's an important investment to make.

We also have markets that we talked about a year ago that we think are under-served by Toro, and yet with new product innovation and strong distribution we believe we can gain share. I'm speaking of residential and commercial irrigation; I'm speaking of the professional grounds area, sports fields, municipality government accounts for equipment. And as I've stated before, we are continuing to invest more in our international business so that it becomes a greater piece of the pie. And that will continue in '05. Long answer to your question, but I hope that gives you a sense of how we're continuing to invest more aggressively in some of these segments.

That's very helpful. A second part of the question, switching gears to the cash situation, which is a good problem to have, clearly we haven't seen the benefit on the P&L, but the cash generation has become a lot more consistent. Even after buying back the stock this year, you ended with a pretty strong balance sheet. Where is the thought process these days of where to spend that cash going forward?

We can always go back to the share market and do some repurchasing. We still have authorization to purchase almost 2 million shares that are still outstanding. We will do that either aggressively or not aggressively, depending on our prospects for an acquisition or two. Quite frankly, our preference would be to make some strong strategic acquisitions. We talked about this before. We have some candidates that we are particularly interested in; now the trick is to get them interested in us. But we continue to pursue that, and if we are successful in '05, we will slow down our share repurchasing to perhaps more of a strategy of just continuing to keep -- to offset stock options and other new shares that flow into the market as options get exercised, or to just be in the market on weakness (ph), but more of a non-aggressive posture. If the acquisitions don't look like they have good prospects, then we very likely will want to be more aggressive in our share buyback.

Final question before I jump back in the queue -- could you just talk a little bit about what you're seeing from a competitive standpoint in the professional segment? Clearly on the equipment side there are two big players. Is there anybody new in terms of whether it's landscape contracting or any of the other professional segments that you're seeing? Could you just talk a little bit about what you're seeing competitively?

The two big players you're talking about show up predominantly in our golf and large-turf area, grounds areas segment. But in the landscape contractor business -- and I'm not saying that in golf we don't have intense competition, because we have very intense competition from the other two big players -- but in the landscape contractor business, instead of two, we have over 30 other brands to compete against. Now, we enjoy with Exmark and Toro combined a very strong number-one position in the market. But you'll see a lot of competitors that are aggressive, that are investing in the business in marketing the new products.

When we went to the various tradeshows over the last three or four months, we'd see more and more zero-turning radius mower brands. Everyone is attracted to the market because it still seems to be a double-digit increasing market. So we do see a lot of competition and there are more brands than I could enumerate here on the call.

So in the irrigation side, it's again two large players as well, in both the Res/Com and the golf irrigation side. So that parallels more the golf equipment competitive set. And they are well known to us as we are to them, and we tend to duke it out aggressively as they do with us.

Sam Darkatsh.

This is John Tate (ph) calling in for Sam; he's actually in New York today at the Scots (ph) analyst day. I had a few questions for you. I was wondering first on residential trends at your big box retailers, what do the field inventories look like at the retailers at this point?

Do you want to answer that, Mike? Mike is closer to that than I am, and it will be good for Mike to say a few words.

If you're talking about snow, I would say inventories may be a little bit higher this year, because last year by this time we'd had some snowfall. But I think it's in very manageable -- at a very manageable level. And for us we're just starting to build the spring and summer goods inventories as we move that product in over the next few months in anticipation of the spring season. So I guess I would sum it up by saying the inventories are in pretty good shape.

The next question on the international side. Were there any currency impacts from your international sales in the fourth quarter?

Yes, there were. Steve, if you want to talk about that. We did have some currency impacts that were favorable for us.

For the quarter it was top-line about (technical difficulty) percent, for the year just a tad over that. On the bottom-line, we hedge most of our exposure there as we've told you all along, so it's a very minimal impact either way for the quarter or for the year. But on the top-line, I think for the year it was $17 million or something like that. So it's not a big number.

Continuing along the international line of questioning, what kind of growth would you expect for 2005, excluding any currency impacts?

We would anticipate and are planning for double-digit growth in excess of what the Company would grow, and we're talking about 7 to 9 percent for the Company. We don't report the precise estimates for international. But again, our strategy is to grow that faster to give a better balance against the effects of weather patterns in the United States. So that would suggest that we're looking at a double-digit figure for international growth.

Another question I had on orders, and I don't know if I've ever asked you this question before. What kind of visibility do you have or what kind of lead time do you all have with orders for the 2005 season?

I'm not sure what --

I guess -- let's see here. What do the order trends appear to be shaping up for the 2005 season? Are they in line with your expectations, better than expected?

John, this is Mike again. We get good forecasts from both our direct partners, mass partners like The Home Depot, as well as our distributors. And I would say the forecast at this point for the '05 season looks very solid. We don't have any concerns there. Now as we know, as we head into that spring time period it can change as weather plays a role, but right now the outlook for the '05 season is very solid.

Richard Turner.

One thing, congratulations on a great quarter. I just wanted to go through, Tom and Steve, a couple of more of the balance sheet type of things, one being I saw inventory turns really accelerated. Is that what we should be modeling forward, that 4 6 type of level?

Yes, roughly. That is a good number. In that range.

And the days, that days level -- is that what I should be looking at forward?

A lot of that depends on the mix of our sales, on what the terms are. But we would expect to continue that same type of number in '05.

And A&P -- would that go back to more historical levels? There was a little bit of an uptick but not too much.

Depreciation and amortization?

No, accruals and payables.

Oh, yes. Well, most of the accruals go up and down on sales volume, so they would go up consistently with the volume numbers that we have given you.

But on the days out it upticked just a little bit. You were usually like 110, and then 112 in '03, 117 '04. Is more 110 like a 350 number for next year, 350 million?

I guess I don't have that detail with me.

My last, and then I will jump back in the queue more for the income statement, but my last question was -- going through the share buyback, just doing some rough numbers off the top of my head, even using $75 a share, if you spent that amount in '04 on common stock buyback -- call it $75 a share -- but the diluted shares outstanding dropped by 760. I'm still missing quite a bit of shares there; it's more like a 3 percent reduction in actual shares outstanding. So there's like $100 million. Was that all options in some type of treasury reduction?

Let me see if I can clear that up for you. We bought during the fiscal year 2.6 million shares at an average price in the $64 range. The bulk of that was back-end loaded, so there was very little purchased the first six months. Most of that was in the third and fourth quarter. So when you look at that, you can look in the table and it gives you the diluted averages for both the quarter and for the year. As we go into '05 we would expect that number on average to be in the 24 million share range.

Right. But you didn't issue shares, so there's still -- I'm still trying to figure out with the net reduction of 760,000 where the other 100 million went, because that's sort of roughly in line with cash flow, free cash flow.

I'm not sure I follow you. Why don't you call me and we'll take this up off-line.

Okay. I'll jump back in the queue for the income statement.

Like I said, the main point that you need to factor in is we bought 2.6 at about $64, so that's where the $169 million went.

Right. But your net reduction of shares was only 700,000, so you must have issued 1.9.

That's average for the year and most of it was back-end loaded. Most of those shares were bought back-end loaded, so it doesn't have as big an impact.

The actual reduction from the first of the year to now is about 1.8 million shares. Is that right? (multiple speakers). It's about that. I think it went from 26.2 to 24. (multiple speakers). Let us -- we just don't have those tables with us, and we can nail that for you precisely. But can we do that on a call?

I'll call Tom back. Thank you.

Fritz Von Carp.

I want to discuss steel. You guys seem to have done an admirable job offsetting the increase in steel prices so far this year in 2004. Were you buying steel primarily spot or were you buying it primarily contract? And if the latter is the case, what are the dynamics of contracts rolling over from '04 to '05.

A lot of it is on contract, but we are in an environment where the steel suppliers -- if they wanted to raise their prices or add surcharges, they were able to do that even in spite of the contracts because of the tremendous demand they had. So it was more of a question of do you want the steel or not. So we ended up incurring, as everyone else did, quite a bit of steel cost. I don't know if that answers your question.

Let me put it this way; what was the increase in what you paid for steel in '04, and what do you expect it to be in '05. I'm wondering if some of those contracts -- would they be repriced in '05 or were you effectively paying the market price in '04 already? Because some people are seeing an increase in what they pay in '05 as the contracts roll up.

We spent about $18 million above our plan in '04. Half or a little more than half was offset by the cost reductions and lean manufacturing activities that we employed during the year in our plants. Now, for '05 we expect that the steel prices will be somewhat higher than that. That is what we expect. Steve?

What happened last year is the steel increase really didn't impact us in the first half of the year measurably. The steel in the first quarter were at the old prices. The steel in the second quarter that we purchased didn't get reflected in our financials until the products were shipped in the third quarter. So third and fourth quarter we were hit pretty hard with the steel hike. We'll have the effect of steel higher prices throughout all of '05, but we don't think it's going to ramp up again like it did in '04, and that it will be fairly constant at a high price that we built into our plan.

Jeff (inaudible).

Just a couple of questions on your strategy for engines and then also for Lawn-Boy. I guess first on engines. I think you recently outsourced your two-cycle snow thrower engines to a major engine manufacturer. Can you give us a sense of how much of your engine sourcing you're currently doing in-house, and if this relationship is the first step in kind of a broader move to extend your relationships with engine manufacturers?

We're not doing any engine sourcing in-house anymore. We are buying them all outside the Company. The two-cycle engine product that we used to build in Mississippi to support primarily Lawn-Boy, we now have a joint venture agreement with Briggs & Stratton to build those engines together under a joint venture arrangement, eventually to do that in China. All the other engines, the four-cycle engines we buy from several engine manufacturers around the world. Briggs & Stratton is one of them, but there are several others that are U.S. as well as foreign manufacturers.

And then in regards to Lawn-Boy, you touched on a previous (indiscernible). I'm wondering if you can give us some things to look for in the future in terms of tracking your progress, maybe a rough time line on when we might see new products or new retail relationships established for Lawn-Boy?

You will see two new product segments, a brand-new walk power mower line for this year -- walk power mower line for this year, and also a new zero-turning radius mower for the Lawn-Boy line. Besides being painted green and not red, it will carry a much more distinguishing feature set around comfort, ease, convenience, as opposed to high-tech performance orientation that is more an embodiment of the Toro brand and product lines. So it's really trying to serve families that want ease of use and to have more time to enjoy their yard. So that is reflected in both the zero-turning radius motors, the riding motors, as well as the walk mowers. In terms of new products in '06 and '07, we will have some other new products coming down the pike. I'm not at liberty to talk about them here of course, but that will continue. So we're pretty optimistic about Lawn-Boy as another very strong premium brand offering different benefits to perhaps a different segment of the lawn mowing population.

Jim Lucas.

First question, Steve, just housekeeping. 2005 CapEx and D&A outlook?

CapEx 40 to 45, depreciation and amortization 35 to 40.

And in that 40 to 45 million of CapEx, where is -- is that mostly tooling for new products? How much of it is maintenance? Could you give a little bit of color of where you're spending that capital these days?

It's spread across most of the plants. Probably if there's any concentration it might be in the irrigation area, where we have had -- we have a lot of old tooling, Jim, that would be in your maintenance category that has caused us some problems in the past. So we've got to get that updated, and they have a lot of new products that are coming that we'll be spending CapEx on, too. The biggest chunk of that, I think, is irrigation, but I don't have that with me. Once you get past that it's just pretty standard normal level of maintenance and new product mix.

Two strategic questions. Lawn-Boy was covered in the previous question, but if we look first, Res/Com irrigation -- surprised to hear that it continues to be down. I know you've struggled there in the past and have been working to get the quality and service levels back up, and was wondering if you might be able to expand on the outlook there. And second, international has been a big focus throughout the call. Could you talk a little bit about geographically where you are looking and what type of products you are focusing on internationally?

Sure, Jim. When we look at Res/Com, we were disappointed this past year. I think in spite of the fact that contractors today would say, well, you finally got the product right, you've got some new products, we're excited about it; we're still from Missouri though, and we're going to go slow in starting to shift some of our purchasing back to Toro, as well as Irritrol, our other Res/Com irrigation brand.

The whole industry as it turned out Res/Com was fairly flat, and it started out strong but it ended up not very robust. And the other two major competitors, as well as the whole general field, probably were somewhat disappointed that it didn't continue growing like it had in the previous years. We think, again, if it's not too wet or too dry, the Res/Com industry ought to have very nice growth this year. There are a lot of projects because of weather that just didn't get done. That was part of the reason for the industry kind of slowing up during the second half of the year. So we think the environment will be good.

We know from our warranty rates and our customer response that our product is a lot better. It's a lot better in quality and it's a lot better in features. So we think the environment is right for Toro to start not only growing the business but taking some market share, and we think that that's very likely to happen if the industry doesn't continue to be in the doldrums for '05.

In the international business we have got some very strong new product activity going on for Europe. Europe of course is the second-largest single lawn and garden market. But we have got some new consumer products, we've got some products for Res/Com, as we talked about, and for the commercial side that we think will be strong for Europe.

We see -- going over to the Asia-Pacific market, China is going to become a very good golf market. There are over 100 golf courses now in China. They will have 500 or more over the next few years, and we have a very strong position for golf equipment as well as golf irrigation. We think the Pacific Rim market will continue to be a very good golf market. It's not terribly robust in many of our other product lines and certainly not the consumer products yet, but it's becoming more important and high-growth on a low base high-growth market.

Australia is strong, Canada is strong. Latin America is emerging. But all in all we see -- and the economies are getting a little better too. And it again is, from kind of a global standpoint or a macro standpoint, we think, some good growth opportunity and some good share-building opportunity for us.

(OPERATOR INSTRUCTIONS). There are no further questions at this time. I will now turn the call back to you. Please continue your presentation or closing remarks, sir.

Thank you, Maria. Once again, let me thank all of you, ladies and gentlemen, for joining us today. Toro is certainly an enduring company and I think we have proven our ability to respond and adapt to an ever-changing market. In our 90th anniversary year our eyes are on tomorrow to accelerate our future and deliver continuous improvement and sustainable financial performance.

I appreciate your attention this morning and look forward to the call in three months, and hopefully we'll have some good news on that call. Thank you again and good-bye.

Ladies and gentlemen, that does conclude the conference call for today.