UFP Industries Inc (UFPI) 2007 Q4 法說會逐字稿

Good day, ladies and gentlemen. Welcome to the fourth quarter 2007 Universal Forest Products, Inc. earnings conference call. My name is JD and I will be your coordinator for today. (OPERATOR INSTRUCTIONS) I would now like to turn your call over to Ms. Lynn Afendoulis, Director of Corporate Communications. Please proceed.

Thank you. Good morning and welcome to Universal Forest Products fourth quarter 2007 conference call. On the call today are William Currie, Executive Chairman, Michael Glenn, President and CEO and Michael Cole, CFO. Please be aware that any statements included in this call that are not historical are forward-looking statements within the meaning of section 21E of the Securities Exchange Act of 1934 as amended. Such forward-looking statements are based on the beliefs of the company's management as well as on assumptions made by information currently available to the company at this time such statements were made.

The company does not undertake to update forward-looking statements to reflect facts, circumstances, or events that occur after the date the forward-looking statements are made. Actual results could differ materially from those included in such forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainty. Among the factors that could cause actual results to differ materially are the following: Adverse lumber market trends, competitive activity, negative economic trends, government regulations and weather. These risk factors and additional information are included in the company's report on form 10-K and 10-Q on file with the Securities and Exchange Commission. This call is the property of Universal Forest Products. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Universal is strictly prohibited. At this time, I would like to turn the call over to Bill Currie.

Good morning, everyone, and thanks for joining us on this cold, wintry morning. I opened the third quarter conference call by talking about our performance and successes under some tough market conditions and I guess I don't need to change the script very much. It was more of the same in the fourth quarter except conditions are even more challenging, if that's possible, and the moves we made to pave the way to a solid future were even more aggressive and more bold. I don't like where the markets are today but I do like where we sit thanks to our strong management team and our hard working group of people. Because when the markets return, no company will be better positioned than Universal for powerful growth and success.

Mike Glenn's management team guided us through tough times with skill and patience and led us to market share gains in all four of our businesses. They made aggressive moves and decisions that will ensure we're a stronger company moving forward. We're continuing to face challenges, the housing market that's not going to do much improving in the upcoming year and enormous price pressure brought on by competitors willing to slice prices to extreme lows to get any business. Effectively destroying margins and the softest lumber market in decades. But we're doing all of the right things. We're consolidating operations and taking advantage of synergies where we can. We're focused on customer relationships and on quality products, service and old-fashioned values like loyalty, respect, and a focus on mutual success.

We're continuing to diversify within our markets and we're always evaluating new opportunities for growth by expanding into new territory and adding successful operations, people and opportunity through acquisition. And because we know Universal is a great value, we bought back over a quarter of a million shares in the last six months of '07. Because of our current acquisition activity, we haven't been in the market recently but we will be again when we can. These are tough times, but the light at the end of the tunnel is starting to get a little brighter. That's partly because the turnaround is inevitable. The fed is working properly and partly because Mike Glenn and his team are doing all the right things to position us for success when the markets return. Mike Glenn will talk more to you about our performance and our strategy and outlook for 2008, but first I'll turn it over to Mike Cole for a review of our numbers. Mike --

Thanks, Bill. I'll start by reviewing our income statement for the quarter. As you noticed in the press release, our total sales for the quarter increased by 3%. We estimate this was comprised of a 6% increase in unit sales offset by a 3% decline in overall selling prices due to a soft lumber market and pricing pressure in the site built market. Reviewing by market, our sales to the DIY market increased 10% compared to the fourth quarter last year primarily due to unit sales growth as a result of our acquisition about [Humboldt] Lumber. Sales out of existing facilities were only down 1% compared with the same period last year in spite of challenging market conditions as a result of market share gains we realized with big box retailers, offset by lower sales to other retailers whose business is more closely correlated to the housing starts.

Our sales to the manufactured housing market increased 8% for the quarter due to a 9% increase in unit sales partially offset by a 1% decline in selling prices. Our acquisition of banks lumber provided all of our unit sales growth this quarter and made up for soft modular and HUD market conditions which resulted in a decline in unit sales out of existing facilities. The industry reported a decrease in HUD code shipments in October through December of 3.5%. Our sales to the site built construction market decreased 16% this quarter due to a 7% decrease in unit sales out of existing plants and a 9% decrease in our average selling prices due to a soft lumber market and intense pricing pressure. Single family housing starts for the quarter were off a reported 32%.

Finally, our sales to industrial marketing increased by 16% for the quarter primarily due to an increase in unit sales. Unit sales growth this quarter was a result of acquisitions and continuing to add new customers, including concrete forming, which helped offset the effect of a decline in sales to certain of our customers that supply the housing market. Moving down the income statement, our fourth quarter gross margin decreased to 10.1% from 13.7% last year. Our gross profit dollars decreased almost 24%. These declines were primarily due to greater pricing pressure due to the market conditions, particularly on sales to the site built market and sales incentives offered to gain market share.

Selling general and administrative expenses decreased by over 300,000 for the quarter. Acquired operations caused our SG&A to increase by over $1.2 million and we recorded severances of approximately $2.1 million. These increases were more than offset by a decrease in the SG&A of existing operations of almost $3.5 million. Our operating income was off approximately $23 million for the fourth quarter due to the factors I just mentioned combined with a $6.8 million impairment charge against fixed assets related to closed facilities and real estate held for sale. The decline in our operating profit was primarily due to this impairment and a decline in profits of our plants that primarily serve the site built construction market.

Our effective tax rate this quarter compared to our -- our effective tax rate was 29% this quarter compared to a $200,000 income tax credit last year. This quarter's rate was impacted by the impairment of fixed assets we recorded in our Canadian subsidiary because we were not able to record a tax benefit against that loss. You might recall that our tax provision last year was positively impacted by a $4.5 million research and development tax credit covering several years offset by a $1.1 million evaluation allowance recorded against the deferred tax asset.

Moving on to our cash flow statement, our cash flow from operations totaled $87 million for the year which was primarily used to fund capital expenditures and purchasing the stock of Humboldt Lumber last February. Despite a 3% increase in sales for the quarter, we were able to reduce our accounts receivable and inventory. These improvements were partially offset by a decrease in accounts payable related to lower inventory levels and a decrease in accrued liabilities due to a decline in accrued incentive compensation.

A few points I would like to make about the balance sheet. First, included in the long-term debt there was $55 million outstanding on our five-year credit facility which has a remaining availability of $214 million after considering the amount outstanding and amounts reserved for letters of credit. Our leverage ratio is 28% compared to 25% a year ago. Our trailing 12-month average debt to EBITDA was 2.1 times versus 1.1 times a year ago. And subsequent to year end, we sold over $24 million of the assets classified as held for sale for cash.

I'll conclude with a review of our targets for 2008. As mentioned in the press release, we're targeting net sales of 2.45 to 2.55 billion, which includes the anticipated sales of International Wood Industries which we just acquired. We're also targeting net earnings of 22 to 27 million. In addition, we anticipate that depreciation and amortization will total approximately $49 million for the year and capital expenditures will range from 20 to 25 million. That completes my comments.

Thank you very much, Mike. Now, I'll turn it over to Mike Glenn for a business review and outlook.

Thanks, Bill. It doesn't seem too long ago on one of these calls you talked about the perfect storm of opportunity that was driving our business to new heights. Well, today we have a different kind of storm. It is one that's unfortunately a lot like the movie. Let me assure you of something. The ship may get battered a bit, but we're staying the course and we will be ready when the seas calm a bit.

The fourth quarter was a tough quarter that was a tough ending to a tough year. There's no good news on the housing market front and I'm not sure we've seen the bottom and we won't see a turnaround begin until next year. Manufactured housing isn't as healthy as we hoped and some of our customers have closed plants and DIY has been affected by the downturn in housing, and we expect it to be soft in 2008. In the lumber market is one of the lowest levels in decades. In fact, the last time lumber traded at these levels based on the composite was in 1991, 17 years ago. It is having a major impact on our selling prices and our ability to be creative with our cups and yields in ways that benefit our customers and our bottom line.

Now that I've gotten the bad news out of the way, there is a lot of good things to talk about. First, there is industrial which continues to be a bright spot for us. It is even brighter with our entry into the concrete forming market, which I'll talk about in a little bit. Yesterday we announced the acquisition of International Wood Industries. This is a company that we've been talking to for some time. IWY is a great addition to universal. It is nearly 40 years of history and success, has great products and solid leadership. We know that they'll add to our bottom line of our success quickly and we welcome them aboard. The proposed financing for manufactured housing will help that industry. And any boost to that industry is a boost to our business and success giving our commanding market share in manufactured housing.

Our consumer products portfolio offers many reasons for optimism and opportunities for growth. In fact, our new treated wood, micropro, is really taking off and getting acceptance by more and more customers and consumers. And our focus on growing the culture of continuous improvement is making our operations leaner, more productive and more exciting than ever. Our employees engage in our future and opportunity in ways I don't think I imagined.

In the fourth quarter, we picked up share in all of our markets and increased our sales in three of them. We put six closed plants up for sale and mothballed eight others, moving production to other nearby facilities. So, in essence, we reduced our operating expenses while maintained the business. We know our business. We know what we have and where our opportunities and challenges lie. We're just fighting for less. Less business and less margin. Fortunately, we have more going into the ring than most of our competitors. Now, I'll review our performance in our markets and talk about what we're doing to grow success.

Let's start with site built construction. There's not much I can say here that you haven't already heard. This industry needs some Prozac. The impact -- the impact on our families and communities of weak home sales and falling prices and foreclosures has been devastating. And that's not to mention the impact on our companies and the economy nationwide. In December, single family starts were down 28.6% on a year-to-date basis. So, we're focused on getting more balance in our site built market by growing our multifamily and light commercial business. Balance is important to our business model in each of our markets and the weakening of single family housing was a wakeup call for us to return to a strong balance and site built and that's exactly what we're doing.

We're focused on being a strong supplier to existing customers and growing relationships that will help us grow within each of them when housing market returns. We're doing whatever we can to improve margins by improving our efficiencies and working closely with customers and programs that focus on mutual success. Unfortunately, we're playing against suppliers that are willing to sell below cost and that will continue to hinder our margins and success.

Looking ahead. Most industry analysts have lowered their forecast based on existing inventory, the impact of foreclosures and more stringent lending standards. The Mortgage Bankers Association is forecasting another 26% decline in single family starts in 2008. And believes starts will bottom out late in the third quarter. The NAHB is essentially saying the same thing. And most analysts expect a recovery to begin some time in 2009. We think their targets are right on. When the market does return, it will be a more modest but sustainable pace. That's why we're focused on balancing our business and site built. By growing our opportunities and multifamily and light commercial construction. It is a more sustainable growth strategy that opens other doors of opportunities for our products, service and expertise.

Lastly, it won't surprise me to see some players to begin exiting the market. When this happens, we'll see relief in price pressure and we'll have the opportunity for more business when housing recovers. Let's look at DIY. This has been a great market for us that has had intense price pressure. Our customers have been aggressive with their price demands but we won't go backwards, so we worked hard to maintain balance with them to ensure long-term mutual success. We're excited about a number of our operations including, including Aljoma, which we acquired in early 2007. Aljoma, which is near Miami, continues to be a bright spot for us. Even though the Florida housing market is terrible, Aljoma is the only treating plant in south Florida which puts us in a great position when the Florida housing market returns.

In addition, Aljoma is opening doors to export sales in the Bahamas and the Caribbean. In fact, in 2007, it was Aljoma's third best year ever for business in the Caribbean and really it was their best in a non-hurricane year. Very soon, we'll open a distribution center in Puerto Rico to handle the big box business in the Caribbean market. We're also well-positioned to grow our industrial business out of Aljoma which is strategically located near the port of Miami.

Then there is our new treated product. Pro wood micro which we continue to be very excited about. Pro wood micro has a clear look, not green look you used to associated with treated lumber. It took awhile but people are starting to understand it and they like the product and its clear look. We're starting to sell more. More and more independent customers are buying from us in more markets. And another thing about pro wood micro is that it is made with the only treating chemical to be recognized as environmentally preferred product which will likely have clout in today's market place.

In addition, our composite products continue to grow in popularity. In fact, we picked up between 5 and 700 additional truckloads for the coming year. We're also starting to look at potential synergies between site built and DIY for of some our engineered wood products. So what's our outlook for the DIY? Analysts expect little growth in the market and we see the same thing. Basically, a soft market in 2008. In fact, the Harvard study recently released their remodeling activity indicator and it said that home improvement would fall by an annualized rate of 2.6% through the fourth quarter of 2008. Basically because of tighter credit and falling consumer confidence.

We expect our DIY business to pick up in 2009 and beyond as home ownership and turnover begin to increase again. We have a portfolio of outdoor living products that is second to none that offers products for the spectrum of budgets and tastes. We continue to be well-positioned as the largest wood treater in the United States. We have significant relationships with the big box and independent customers from coast-to-coast and we have a nationwide footprint in strong purchasing power that allow us to serve our customers better than anyone in the country.

Now, let's look at manufactured housing. The bouts that we saw late in the third quarter in early fourth didn't hold. The market is simply weak. Others are feeling the impact as well and some of our customers have shut down some of their operations over the past few months. But while year-to-date fourth quarter HUDCO shipments were down more than 19%, Universal's year-to-date HUDCO sales increased by more than 7% for the quarter. And our RV segment grew by 50% in the fourth quarter over 2006 due in part to our November 2006 acquisition of banks lumber and our previously mentioned strategy to grow our RV share.

So, what do we think looking forward? If it is approved by Congress, the new financing will have a positive impact for a business by mid 2008. We continue to look for opportunities and move deeper into the home with products like interior doors and millwork. This provides some opportunity for growth as we maintain a commanding sheer with the products we've traditionally offered to this market.

Now, let's talk about industrial. Industrial remains a bright spot in our business. That is opportunities at every turn. As I mentioned earlier, we closed on the acquisition of IWI earlier this week. IWI includes operations in California, Alaska and Hawaii to handle its international business opening new markets for Universal. In April of last year we got started in the concrete forming business and by the end of the year we grew that business by over $25 million. We expect to grow it to $80 million in 2008 because this business is there and it is right in our wheel house. We've also created a strong motivated sales organization modeled after our successful industrial sales organization. They're hungry and they're going after the business.

Looking ahead, we continue to see great promise and opportunity for strong growth in this market. We're adding capacity in many plants and increasing our sales firepower because the opportunity is abundant. We also continue to keep our eyes open for other acquisition opportunities. So that's the business update and outlook. Summary, single family housing will remain weak for 2008. We believe a turnaround will begin in 2009. We will continue to focus on creating balance in that market by growing our business with multifamily commercial and construction customers. We also are working hard to maintain a strong relationship with our existing customers and help them through these tough times so we can grow with them when single family housing returns.

In 2008, we'll be challenged by the economy by continued margin pressure in a very, very weak lumber market. We're pushing hard for every bit of business and we're focused on enhancing our profitability by working hard to improve efficiencies and margin. And as Bill said, we really don't like the condition of the markets, but we like our position. And we're energized and confident as we move forward through 2008 into better horizons.

Thank you, Mike. We're all very proud of this company and working very hard to achieve the results. And our management team is second to none. I thank all of you for your interest and now I'll open up the floor for questions.

(OPERATOR INSTRUCTIONS) Your first question will come from the line of Michael Cox of Piper Jaffray.

Good morning, Michael.

Good morning. Thank you very much for your candid comments on the market place. I would be interested if you could comment on the gross margin conditions you're seeing in the nonsite built areas of your business.

Mike, we're seeing pressures in the DIY business. Everybody's kind of fighting for a little bit of market share and really what's happened in the market place is traditionally there are spreads between -- I don't want to get too technical here, but there are spreads between different grades of lumber. And so our motto was built on taking advantage of the spreads by doing cuts and yields by buying maybe some low-grade lumber, cutting it up and chopping it up and pulling different grades out of it. And what's happened right now is those spreads have compressed and so the difference between number four lumber and number three and number three and number two and number two and number one have really compressed and there's not a lot of difference between them right now. So, that's impacted our margins as much as our customers are -- our competitors chasing us.

Ok. That's helpful. And within industrial, the margin characteristics there also challenging?

It is a little bit of the same thing. Our advantage was that we were pretty creative on how we do some things plus we imported quite a bit out of Honduras and Brazil and a lot of that stuff, advantage is dried up with what's happened with the lumber market and what's happened over in Brazil. We still have a major advantage over our customers in terms of our expertise, but a lot of our margin opportunity has shrunk.

Ok. That's helpful as well. You've done a very nice job in managing working capital through this downturn. I'm curious as to what opportunities you still have as you look to 2008 and then a follow-up on that receivable days have remained very steady. Just wondering if you can talk about the overall health of your customers, particularly in site built and perhaps manufactured housing?

Yes, with respect to working capital and inventory, we have a goal of increasing our inventory turns by 10%. That's part of our 2010 goals and that's one we're starting to make progress on. Started to in the fourth quarter and would expect to continue to make progress on in 2008 and beyond. With respect to DSO, yes, it has remained pretty flat. We have had some pressure on the DSO for the site built market. That's extended out a little bit. The other markets have offset it. So, that's still an area of risk and concern for us, but we manage it very carefully.

Ok, great. Thanks a lot, guys.

your next question will be from the line of Mukul Kochhar of Oppenheimer. Please proceed.

Hi, guys. Good morning.

Good morning Mukul.

Just a couple of quick questions. In site built construction, are you profitable at all at this point? Are you making any money?

Are we profitable? Is that what you asked?

Yes.

Yes, in the fourth quarter, we were not profitable on site build, no.

And secondly, how much has margin declined in the cycle in that segment? Any quantification on that?

Well, yes. It is about 9 points, nine margin points.

Okay. And is there any expectation in the near-term that suppliers will stand back and say this doesn't make sense?

Everybody's -- a lot of our competitors are working for payroll so it is a matter of when they say uncle but, Mukul, I would say that we're going to fight this for at least the first six months of the year.

All right. On the new business in multifamily and life commercial, how would you characterize profitability there?

Well, certainly, it is certainly better than our single family. Our key to that is not just that we sell the trusses and the loose lumber but we come in and frame the whole deal so we bundle it and we bring a whole package to it and that gives us a lot more opportunity.

And profitability generally is much better, I think?

Right now, it is better, yes.

All right. Long run but you expect single family probably to be more profitable or roughly comparable?

Well, I don't know if we'll ever go back to the days of where we had our plants that were totally focused on production builders and single family. We'll always -- we're going to go back to our business model is in all of our other segments and we'll maintain a balance in that business so we'll always have some single family and we'll always have multifamily and light commercial. It will be very difficult for us to answer that question when you blend them altogether because they'll feed off of each other. We think that model in itself will strengthen us and increase our margins as a whole.

Got it. On the DIY, normally as lumber prices go down, you would expect gross margin to expand. What's happening there and is it that any improvement there being completely swamped by other factors like pricing pressure?

What's happened is the big box fellas also have a tremendous amount of pressure on them right now for earnings and so through negotiations this year with those individuals, they put a tremendous amount of pressure on us to reduce -- we weren't so much concerned about our treated products but all of the other products that they came after, the fencing and our strips and our fascia, those took tremendous amount of price pressure deck necessities so we lost a little bit of margin in there right now. That's what we're talking about.

And IWI, when would you expect when will you expect this transaction will be accretive?

IWI will be accretive immediately.

In terms of your composite business, is there any quantification on the kind of growth that you're seeing there?

Quantification on the growth for composite business was up 20% this year.

That's great. Finally, the industrial growth, is that coming from concrete forming?

Is it coming from concrete forming? No, it's not coming just from the concrete forming. That's certainly a part of it though.

Thanks a lot for your help today.

Yes.

your next question will come from the line of Steve Chercover of D. A. Davidson.

Good morning, Steve.

Good morning, Steve.

Good morning, everyone. First question. The facilities that you're selling, is there any chance that when the market perks up that these will be competing against you? I fully recognize that your cost structure is going to make it tough for someone to walk into your old plant and beat you, but will they compete against you?

We will sell those facilities to folks that will have the opportunity to compete against us.

Are you selling just --

just the property -- we're not selling the assets, the equipment.

Got it. Ok. And secondly, on the manufactured homes, I was under the impression I guess as recently as September or so that you were seeing growth in that business not just because the acquisition of banks but because folks who had kind of migrated from manufactured homes into starter homes were now coming back. Did something change there? Was it the economy in general or what happened?

No, that's correct. And I think you'll see that the growth in manufactured housing is back to the single wides, that's true. But what's happened in the fourth quarter and early now is everybody's getting a little skittish and they backed off. That's why it is really important for us to have this FHA financing to get approved by Congress. So, your belief that longer term kind of the marginal first-time home buyer has, in fact, been pushed back legit legitimately to the single wide market? Yes.

Good. Ok. And finally, and perhaps just a little bit of venting. But you guys do strive to give us guidance and at the end of the third quarter, suggested that we would come in between call it break even and $0.15. Then when you gave us your pre-released outlining the charges on the 21st, you didn't mention that the organic business or the stand alone business was going to be a loss in its own right which I compute to be around $0.22. Why did you not, at that time take the medicine and say and by the way, our previous guidance is not going to hold in this environment?

Well, Steve, we didn't know exactly where the fourth quarter was going to come in at. So, when you're going through the year end, you're going through a more extensive process to close your books and going through an audit. And without knowing with some better certainty exactly where we're going to end up, we didn't feel like it was appropriate to come out with preliminary numbers like that.

Got it. Ok, thanks. We'll muscle it out in '08 and better times in '09.

Thanks, Steve.

Appreciate your support.

Your next question will be from the line of Chris (inaudible) of Wachovia.

Hi, Chris.

Just a couple of questions here. Can you give us a little bit of color on the revenue line as far as across the segments, how revenues trended during the quarter and maybe any insight on January as well?

January isn't closed out yet so we're not really prepared to talk about January, but within the quarter October started out -- October started out pretty good. And then things deteriorated in November, and December was much softer.

Ok. Then you guys --

I just wanted to -- I would say that the weather here in the first quarter hasn't helped us.

Yes.

That's really impacted our business.

Ok. You guys said that you had picked up some share with some big box customers and that. Is that general geographic expansion or is that just more product getting pushed through existing stores and that kind of stuff?

A little bit of both.

Ok. What kind of products are you seeing take hold with that kind of market share expansion?

I'll give you one example and that is in the Rocky Mountain area we picked up $2 to $4 million worth of cedar picket business. That may be one yet when you go to California, we may pick up a fence panel business or if you go to Texas it may be 1x2's and 2x2's. So, that's -- it is all over -- we supply them with over 2500, 3,000 SKUs and we're picking up different SKUs in different markets.

Sure. Then Mike, I think you had mentioned how much that your form business had grown in '07. Did you have an actual number? I think you guys were at about $40 million at the end of Q3 if my memory serves me right as far as what the total revenues were in '07.

Yes, about -- between $40 and $45 million.

Ok. So 40 to 45. And then last one here, can you give us an average share price that you guys paid for your repos?

I think it was about $30 in the fourth quarter. You should have the numbers from the Qs from the previous quarters.

Ok. Excellent. Thanks, guys.

You bet. Thank you.

Your next question will be from the line of Robert Kelly of Sidoti.

Thanks for taking my call. Just a question on the price pressure. Is it confined now to the straight lumber packages that you're selling or are you seeing it slip over into the more value add stuff as well?

It is across the board.

Everything is pretty much coming down?

Everything is under intense price pressure.

Within site build, it is all product lines.

So, the value add mix is moving down from '07 -- I'm sorry, '06 levels?

Yes. Our value added sales. We had mentioned that previously but our value added was 59% of total sales versus about 64% last year.

Ok.

Just to illustrate what's happened in the business, two years ago, we had about 27 billion square feet of OSB was manufactured. That supplied about 2.1 housing starts. This year, they're going to manufacture 25 billion square feet to supply, what do you figure, a million housing starts? The chance for prices to get off the floor are almost impossible.

That soft lumber pricing outlook included in your '08 outlook, I assume?

Correct.

Ok. Question on the free cash flow, the guidance you've given with net earnings $2.60, $2.70 a share. How are we going to prioritize the excess cash flow this year?

We are still actively pursuing some acquisitions. So, some will go toward that. And we will be back in the market on our shares when we're free to do so.

Ok. And then the IWI acquisition, was that paid for with cash or debt?

Cash. Well, the cash from the sale of the properties I mentioned. That will basically fund the IWI acquisition.

Ok, great. There was some talk, at least on the composite market, of price increases for '08. Are you seeing a market that would allow that type of price increase through? Or some color on the composite market.

We did get a price increase. It was a modest one but we did move our prices north.

Ok, great. Thanks, guys.

Thank you.

Your next question will be from the line of Ted Crawford of Maple Leaf Partners. Please proceed.

Hi, Ted.

What is your debt maturity schedule in '08 and '09?

In '08, we have a $79.5 million maturity on our senior notes. And I would expect to be able to generate enough cash flow to pay off a portion of that and then we would be able to use that revolver to refinance it or term it out in the debt markets.

Ok. And '09?

I don't have '0 in the front of me but we have some more maturities in '09 but not nearly as large.

Ok. And I'm sorry, did you say -- what was the availability on your credit facility?

What was the availability on our credit facility? Right now, the remaining availability is $214 million. It is a $300 million revolver.

Ok. And do you expect to use that -- I mean do you expect to draw on that other than other than applying it to refinancing these maturities?

That and seasonal working capital. We have seasonal working capital that our inventories and receivables go up a lot during the primary selling season through July and then our debt moves back down very significantly from July through December. So, during that period of time from March until July we will have seasonal working capital needs for our revolver but we're off to that by December.

Ok. And what was your maintenance CapEx in '07?

Our maintenance Cap Ex in '07 was in the neighborhood of 30 to 35 million.

Ok. Thanks very much.

You bet.

Thank you.

With no further questions in queue, I would turn the call back over to Mr. Bill Currie for closing remarks.

Thank you all again for participating in our call. We are trying to be as candid and honest as we can about the markets but also we're pretty optimistic and excited about where we sit and how we'll come out of this. So, appreciate your support and your interest and we'll get back to work. Thank you very much.

Thank you for your participation in today's conference. This concludes our presentation. You may now disconnect.