Teledyne Technologies Inc

NYSE:TDY

Earnings Call Transcript 2017-Q4

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the Fourth Quarter Earnings Call. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will be given at that time. [Operator Instructions] Also as a reminder, today's teleconference is being recorded.

At this time, we'll turn the conference over to your host, Mr. Jason VanWees. Please go ahead, sir.

[Jason VanWees, SVP, Strategy and Mergers & Acquisitions]

Thank you, Tony. Good morning everyone. This is Jason VanWees, Senior Vice President, Strategy and M&A at Teledyne, and I'd like to welcome everyone to Teledyne's fourth quarter and full year 2017 earnings release conference call. We released our earnings earlier this morning before the market opened.

Joining me today are Teledyne's Chairman, President and CEO, Robert Mehrabian; Chief Operating Officer, Al Pichelli; Senior Vice President and CFO, Sue Main; and SVP, General Counsel, Chief Compliance Officer and Secretary, Melanie Cibik. After remarks by Robert and Sue, we will ask for your questions.

However, of course before we get started, our attorneys have reminded me to tell you that all forward-looking statements made this morning are subject to various assumptions, risks and caveats as noted in the earnings release and our periodic SEC filings, and yes, actual results may differ materially. In order to avoid potential selective disclosures, this call is simultaneously being Webcast and a replay both via Webcast and dial-in will be available for approximately one month. Here is Robert.

[Robert Mehrabian, Chairman, President and CEO]

Thank you, Jason, and good morning everyone, and thank you for joining our earnings call. We ended 2017 with a truly great quarter. Record sales of $704.4 million reflected growth in each business segment and major product category with overall organic growth exceeding 9%.

Full-year 2017 was by any measure a record year, record sales, record earnings, record operating margin, record cash flow, and a successful acquisition and integration of Teledyne e2v, our largest acquisition to date. Furthermore, we achieved record GAAP earnings despite significant nonrecurring charges associated with the acquisition of e2v and the U.S. tax reform.

In particular, our Digital Imaging segment continued to perform exceptionally well with organic growth of 13% and 17% in Q4 and full year respectively. Furthermore, nearly all of our other businesses achieved mid to high single-digit organic growth in the fourth quarter.

On a full-year basis, organic sales growth was over 7%. While end markets were more cooperative, years of increased R&D leading to new product introductions gained significant traction. Also, our 2017 performance reflected difficult cost reductions in prior years and a disciplined execution to remain lean.

Turning back to our quarterly results, total revenue increased 27.4% and GAAP earnings per share increased 24.3% compared to last year, while GAAP operating margin increased 122 basis points. Adjusted for charges related to U.S. tax reform and the e2v acquisition, earnings per share increased 19% in the fourth quarter and 25% for the full year.

I do want to comment briefly on the presentation of our fourth quarter and full-year 2017 results. 2017 was a singular and unique year, given the magnitude of the e2v acquisition related expenses, primarily in the first quarter, and charges related to the U.S. tax reform legislation in the fourth quarter.

While we have provided results adjusted for these items, it is worth noting that we have only adjusted earnings for these two specific nonrecurring charges. We do not and never have adjusted for ongoing non-cash expenses, such as amortization of intangible assets or stock-based compensation. For reference, in the full-year 2017, amortization alone was approximately $40 million or about $0.80 per share of non-cash expense. In addition, our 2018 outlook is 100% GAAP.

Now turning to our four business segments, in our Instrumentation segment, fourth quarter sales increased 13.4% from last year. Segment operating profit also increased, but margins declined slightly due in part to a facility relocation and some product line inventory rationalization in our marine product lines.

Sales of marine instruments increased 7.7%, due primarily to higher sales of sonar systems, autonomous underwater vehicles, and interconnect and cable solutions for land-based energy application. This was our third consecutive quarter of year-over-year increases in sales of marine instruments.

As a reminder, these product lines in the aggregate declined significantly in 2015 and 2016, given compression in the offshore energy industry. While offshore energy only represents about 6% of Teledyne sales, we are reasonably optimistic about current industry trends and long-term upside in 2019 and beyond.

In the environmental domain, sales increased 20.5% overall and organically 9.8%, largely as a result of increased sales of laboratory and life science instruments. The total sale increase included the acquisitions of Hanson Research and Scientific Systems, known as SSI, as well as continued growth in industrial and monitoring instruments.

Sales of electronic test and measurement systems increased 15.6% overall and 11.1% organically. Sales of protocol analyzers, including the Bluetooth and High Definition Multimedia Interface or HDMI products acquired in 2016, as well as SP Devices business from e2v were especially strong in the fourth quarter. In addition, operating margin for electronic test and measurement products continued to increase and was a record.

Turning to the Digital Imaging segment, fourth quarter sales increased 80.1%, with organic growth of 13%. The organic increase in sales was broad-based across both our commercial and defense businesses, with particularly strong growth for industrial machine vision cameras, X-ray detectors for life sciences applications and laser-based geospatial mapping systems. Teledyne e2v was a major contributor, adding approximately $75 million of revenue in the quarter.

GAAP segment operating margin increased 363 basis points from last year. While the margin benefited from the reversal of some prior acquisition related costs, even excluding this benefit segment operating exceeded last quarter's record.

In the Aerospace and Defense Electronics segment, fourth quarter sales increased 18.8% due to contribution from Teledyne e2v but also strong underlying organic growth of 8.6% driven by greater sales of commercial avionics, and defense and space microwave and interconnect devices. Segment operating margin increased 168 basis points to 20.5% due to greater sales, favorable product mix and improved margins across the majority of product categories.

In the Engineered Systems segment, fourth quarter revenue increased 5.9%. Operating margin was the highest in 2017 but declined slightly year-over-year solely due to a record tough comparison. The higher revenue primarily reflected greater sales from marine manufacturing and missile defense programs.

In concluding my comments, I want to offer some perspective on our businesses, the U.S. tax reform and our 2018 outlook. We currently believe that organic revenue growth in 2018 will be approximately 3% compared to 7% for the full year 2017. I want to emphasize that this does not represent a deceleration, but rather the fact that Teledyne e2v will be included in the organic growth numbers for three of the four quarters next year.

While the e2v businesses collectively are high margin growing businesses, some of the medical and defense-related product lines are likely to grow at a lower rate than Teledyne DALSA which was the very strong contributor to Digital Imaging and the whole of Teledyne in 2017.

We also currently estimate that as a result of U.S. tax reform, our total effective tax rate will be lower by approximately 300 to 400 basis points going forward. This reflects the U.S. federal rate reduction from 35% to 21% and tax benefit for U.S. exports, but also some negative offsets such as potential tax on higher profit foreign income, the loss of some manufacturing and compensation related deductions, unknown state by state impact in the U.S., as well as lower level of anticipated favorable discrete items compared to prior periods.

Finally, I want to emphasize that 2017, our 18th full year as an independent company, was our most successful and personally most rewarding. Also, due to our record cash flow, we reduced leverage from 3.0 to 2.3 in nine months following the e2v acquisition. Furthermore, I believe Teledyne now has the solid foundation, the right business mix, and the financial strength to continue its profitable growth in the foreseeable future.

I'll now turn the call over to Sue.

[Susan L. Main, SVP and CFO]

Thank you, Robert, and good morning everyone. I will first discuss some additional financials for the quarter not covered by Robert and then I will discuss our first quarter and full-year 2018 outlook.

In the fourth quarter, record cash flow from operating activities was $126.4 million compared with cash flow of $66.3 million for the same period of 2016. The higher cash provided by operating activities in the fourth quarter of 2017 primarily reflected the impact of higher operating income, cash flow from Teledyne e2v and lower income tax payments. Free cash flow, that is cash from operating activities less capital expenditures, more than doubled to $108.4 million in the fourth quarter of 2017, compared with $43.1 million in 2016.

Capital expenditures were $18 million in the fourth quarter, compared to $16.7 million for the same period of 2016. Depreciation and amortization expense was $25.6 million in the fourth quarter compared to $21.7 million for the same period of 2016. We ended the quarter with $1.0 billion of net debt. That is approximately $1.07 billion of debt and capital leases less cash of $70.9 million for a net debt-to-capital ratio of 33.9%. Our leverage ratio was 2.3x at the end of the fourth quarter of 2017 compared to 2.6c at the end of the third quarter of 2017.

Stock option compensation expense was $3.2 million in the fourth quarter of 2017 compared with $2.8 million in the fourth quarter of 2016. In the fourth quarter, we recorded provisional charges of $4.7 million, or $0.13 per share, related to the U.S. Tax Cuts and Jobs Act. This primarily resulted from a $26.2 million repatriation tax charge partially offset by a reduction in net deferred tax liabilities and other items resulting in a gain of $21.5 million.

Also in the fourth quarter there was a minor favorable pre-tax adjustment of $1.1 million related to inventory step-up amortization as part of the e2v transaction. On a full year basis, e2v related charges were $27 million, or approximately $0.54 a share.

Turning to our outlook, management currently believes the GAAP earnings per share in the first quarter of 2018 will be in the range of $1.50 to $1.55 per share, and for the full year 2018 our GAAP earnings per share outlook is $7.51 to $7.61. The 2018 full-year estimated tax rate is 21.5% before discrete items, which is currently expected to be lower in 2018 than in prior periods.

I will now pass the call back to Robert.

[Robert Mehrabian, Chairman, President and CEO]

Thank you very much, Sue. We'd like now to take your questions. Operator, if you are ready to proceed with the questions and answers, please go ahead.

[Operator]

[Operator Instructions] Our first question comes from Greg Konrad with Jefferies. Please go ahead.

[Greg Konrad, Jefferies]

Just wanted to start on a quick question about the quarter, just in terms of Instrumentation margin, it seemed a little bit light, can you maybe talk about the moving pieces there?

[Robert Mehrabian, Chairman, President and CEO]

Sure. There are two parts to that. One is our marine businesses and the other is our environmental and electronic test and measurement businesses. In the marine businesses, our margins declined somewhat primarily because we are still continuing to consolidate some of our operations. As an example, we are relocating an operation from the United Kingdom to Florida, and where as a consequence of that there are some changes that we took, our margins declined to 8.3%. That's in the marine businesses.

On the flipside, the rest of Instrumentation had really good margins. Environmental had margins of 19.8% and test and measurement margins were up 75 basis points to 14.8%. So, it's the combination of the two that lowered the overall margins to 12.3%. But I think going forward, with the marine charges behind us, the marine margins hopefully will increase to double-digit again.

[Greg Konrad, Jefferies]

Thank you. And then, generally around this time you provide an outlook just for the margins by segment. Can you give us a little bit color on expectations for 2018?

[Robert Mehrabian, Chairman, President and CEO]

Yes. There are two things, Greg, that we should be cognizant of. The first is what the guidance is for future charges in pension benefits. What's happened is that, first, our legacy pension program is very healthy, it's at a 100% overfunded and it's been closed to new hires for over 14 years.

Nevertheless, there are some new accounting guidance that has been issued that requires in 2018 we split pension expense into two components. One, service cost is now going to move above the operating income, which will lower operating margin. Other income components will be below the operating line.

EPS won't change compared to our current financial statements, but this change in pension accounting will cause about 45 basis points contraction in the margin going forward, and of course we will restate the prior periods for comparability.

Having said that, I expect that our overall margin for next year, if we were to keep the current accounting system for pension, would improve about 45 to 50 basis points, as it's done in the current and prior years. However, because of the change I just noted, and there's some effect from stock options because we did not issue any stock options in 2015, now we have three years of stock options hitting our earnings, all in all I think we will give back the margin improvement and end up next year in the new accounting system with about a 13% margin versus 12.9% this year, recognizing that we are taking a 45 basis point contraction from just the pension accounting, but we'll restate 2017 for comparison. That's the broader margin going forward. Did you have any other questions on margins that I can help with?

[Greg Konrad, Jefferies]

I just want to go back to one thing, what was the size of the charge in marine? I'm just trying to do the walk into 2018.

[Robert Mehrabian, Chairman, President and CEO]

It was approximately about $1.5 million, maybe a little more.

[Greg Konrad, Jefferies]

Thanks. And then just one last one for me, I mean listening to earnings calls since tax reform, it seems like there's been a lot of companies announcing step-ups in CapEx, a large part of your business is probably directed towards that type of spending, any indication from your customers in terms of CapEx budgets and how we should think about that in terms of top line growth?

[Robert Mehrabian, Chairman, President and CEO]

I think we are seeing CapEx growth among our customers. I did project CapEx growth. We have generally been very cautious with our capital, except this year. We have two or three projects that are very important for us to invest in, in capital investments.

The first one is our MEMS foundry in Canada, in Bromont, Canada, is under capacity constraints right now. We have so much work that we are not able to meet all of our customer needs. So we are going to invest somewhere between $10 million and $15 million more next year and expand that facility by another at least 10,000 square feet.

Second, in our X-ray businesses, in our detector businesses which are for medical and dental applications, in our CMOS X-rays, we are again capacity-limited. We do most of that work in Canada near Toronto. We also have another operation in the Netherlands. We are going to take over part of a former Philips cleanroom facility to also start making detectors in Europe to expand our capacity to meet needs.

And then lastly, we bought e2v. It has been – some of the operations there have been starved for capital investments and we'll be making some serious capital investments to upgrade our facility, especially in Chanceford where we make a lot of our products.

So, for us, the normal CapEx expenditures, which are approximately $50 million to $65 million, with these additions we think that our CapEx will move another $20 million to about $80 million.

[Greg Konrad, Jefferies]

Thank you.

[Operator]

Our next question comes from Jim Ricchiuti with Needham & Company. Please go ahead.

[James Ricchiuti, Needham & Company]

Rob, really just want to make sure I heard you, in terms of organic growth this year, it's somewhat in the area of 3%, is that what you're suggesting?

[Robert Mehrabian, Chairman, President and CEO]

No, this year's organic growth – 2017 or 2018, which one are you asking?

[James Ricchiuti, Needham & Company]

I'm sorry, 2018.

[Robert Mehrabian, Chairman, President and CEO]

2018, yes, you are right. I am estimating currently, we are estimating currently about 3%. Partially it's because we don't expect marine to grow much. We think 2019 would be the year it will grow, based on everything that we see.

The other side is that in environmental and test and measurements, we are expecting about 3%. Also should do better than that our Digital Imaging, over 4%. So, overall we think 3% organic growth and another 3% acquisition impact. Total right now at this moment we are looking at about 6%.

[James Ricchiuti, Needham & Company]

Got it. And you have some difficult comparisons coming up with Digital Imaging. So you mentioned you think DALSA is going to have another good year. Are you anticipating decelerations in other areas of the Digital Imaging? I'm wondering what the outlook looks like for say the industrial machine vision part of the business. How are you viewing the Digital Imaging business after the year that it experienced in 2017?

[Robert Mehrabian, Chairman, President and CEO]

Jim, I am fairly positive about Digital Imaging. Our book-to-bill at the end of the year is about 1.16 for all of 2017 when we ended the year. So, that bodes well going forward. We think that the only problem with that business is that some of it is very short cycle businesses. It could be better but I'm being conservative.

I'm positive about it because we have a lot of new products that are really introduced and are doing very well in the market. The U.S. based digital imaging market is estimated right now to grow about 14%. Overall, I would say I'm positive about Digital Imaging, both because we are introducing new products but we also have some new products in the infrared domain.

And then finally, as you know, we do have a part of Digital Imaging that is here in Thousand Oaks area, in Camarillo, where we do government infrared imaging business. We are getting traction, really good traction in some classified programs. We don't show all the margin improvements there because as you know, our research lab which is located here which we acquired in 2016, we reinvest all the income in that business to develop new products, and we've done that since 2006.

So, all in all, we think Digital Imaging will do well. But where we think there is going to be some tough comps, as you put it, it will be in the other areas, especially in the A&D section/segment in avionics because of record work that we had in aftermarket product. So, Digital Imaging I'm very positive about, maybe a little conservative.

[James Ricchiuti, Needham & Company]

And the last question for me, Robert, you alluded to the book-to-bill for the year, and I believe it was the Digital Imaging business, can you give us the book-to-bill for the quarter for the Company and would you be able to give it provided for the major segments?

[Robert Mehrabian, Chairman, President and CEO]

I'll try. I think for the Company it's closer to 1 for the quarter. Going back to Digital Imaging, for the quarter alone is about 1.12. In the Instrument area, overall it's about 0.9 with environmental and T&M being closer to 1, marine being below that. AD&E, which is our Aerospace and Defense Electronics, it's a little over 1. And Engineered Systems, right now it's below 1 but for the whole year it's 1.04. As you know, that's a lumpy government business, so you got to take a longer-term view of that. So, overall for the quarter we are close to 1 if you look at overall. If you look at the whole year, we are about 5% up, so it's 1.01. I'm sorry, we're up 1.05.

[James Ricchiuti, Needham & Company]

Got it. Thank you.

[Operator]

Next in queue is George Godfrey with CLK. Please go ahead.

[George Godfrey, C.L. King & Associates]

Robert, first question, Aerospace and Defense, did I hear you say that you're a little bit more cautious on that segment, offsetting the optimism in Digital Imaging?

[Robert Mehrabian, Chairman, President and CEO]

Yes, a little bit. There's two parts to that, George. One part has to do with avionics, which is our radar acquisitions and communication systems of Boeing commercial aircraft and some defense aircraft. We are a little cautious in that domain because we had such a great year this year, especially in the aftermarket.

The flipside, we are more positive about our microwave product in the defense portion, partially because investments even the sequestration, or continuing resolution I should say, the electronic warfare budgets are moving up because of the problems that we have with our adversaries. So, we expect an uptick in the rest of our Defense Electronics businesses.

So, combining the two together, we think it's going to be, if up, relatively modestly up. I should also note that in Defense Electronics we do have some serious opportunities for growth next year which are not defense related. These have to do with our products that are going into the new satellite systems, like in OneWeb. There we have, we ship the channelizers, which essentially permit the signal to be divided in 16 or so channels, and we are expecting we are provided all the engineering products and we expect the launch contract there for the future. And as you know, that's going to be over 1,000 satellites that would be launched sometime in 2018 and forward.

[George Godfrey, C.L. King & Associates]

Got it. Thank you. And then looking at Instrumentation margins, you talked about how they were down this quarter due to some one-time charges and relocation. If I go back looking at like 2012 for example where the Instrumentation margin was 18%, is there anything tied to that margin level that requires oil prices to be say over $100 a barrel, or is that margin achievable at 70 or 80 or 85? I'm just trying to get an understanding of how much the equipment might be tied to companies purchasing that can be justified when oil is very expensive or perhaps not so much when it's at a $70 level. Thank you.

[Robert Mehrabian, Chairman, President and CEO]

That's a good question. The years you mentioned are, marine margins were about 18%. As you'll recall, two things happened. One, our marine revenue between 2014 and 2016 went down over $200 million. And even in 2014 it was $655 million. We finished 2017 closer to $430 million. So, that's a serious contraction.

The contraction primarily happened in our oil and gas exploration and production business. The rest of our marine businesses have remained fairly good. But in order to maintain content on our offshore platforms, we've had to reduce price significantly by about 20% to 25%, which is effective margins but at the same time it's enabled us to get long-term majority, commitments for majority of their products to be bought from us.

So, coming back to the oil prices – by the way, concurrently though with that of course we have cut costs significantly, have taken out almost 800 to 900 of our employees. On the oil price, as you know, Brent hit a three year high this year, close to $70.

We see signs of commitments to offshore production. They take anywhere from 12 months to 24 months to become realized. We see some improvements in Christmas trees, which are the equipment that go on to oil-head in the bottom of the ocean. 2016 was the very low. 2017 doubled from 80 to 170. 2018 is projected to go to 236 and 2019 to almost 300 Christmas trees.

Now remember, the years you mentioned going back before 2013, the average was about 400. So, I don't think it's going to get up there but I don't think oil has to be at $100 for those businesses just to get traction, partially because everybody has reduced their breakeven cost and some of the deepwater offshore production is now profitable at less than $50.

And so, while volume we expect we'll begin increasing in 2019, margins would go for what was in the Q4, the best on 10%, should go above 10%. Whether they'll ever get to 18, I don't know but that certainly improves somewhere between where they are now and where they were then. I hope that answers your question.

[George Godfrey, C.L. King & Associates]

Yes, it does, Robert. Thank you very much. And then just my last question is, e2v has been just proven to be a home-run acquisition and it's fundamentally changed the margin structure in the Digital Imaging segment. Is that a function of their products just being fundamentally more profitable or have you been able to significantly improve those operations, and then I'm thinking can you bring that IP into other segments of Teledyne?

[Robert Mehrabian, Chairman, President and CEO]

Let me just answer the first part. It's been a great acquisition by any measure for us. But if I go back, I look at our other large acquisition, DALSA, when we acquired it in 2011 it had relatively compressed margins. Now, e2v has good margins. But DALSA this year enjoyed margins approaching 20%.

e2v on the other hand, while it has good margins, please recall that overall their margins are lower than DALSA and partially because we have intangible amortization. In the Digital Imaging for example, e2v's amortization for this year 2018 is about $11 million. So, that compresses the margin. And consequently, e2v's overall GAAP margins are lower than DALSA.

Going forward, I think because of the intangible compression, e2v will grow the overall margin for Digital Imaging. Having said that, DALSA used to have a compressed margin, but its margins have more than doubled. The same thing with LeCroy. When we bought LeCroy, it had very low margins. It has more than doubled since our acquisition. And if we do what we did in those domains with e2v, I think our margins will improve with time.

There also you asked a question of how some of those products may carryover to other segments. First, in the space imaging domain we have between DALSA, Teledyne Imaging here, and e2v, we practically own the visible and the infrared businesses for astronomy and we are making some large in-roads in defense programs.

Similar to e2v, because e2v has not had access to the U.S. defense market, we expect that we'll be able to introduce some other product into our defense markets here, which is of course a bridge across to our other products.

Also, we have inherited some really outstanding high-performance analog-to-digital and digital-to-analog conversion devices that cut across all of our businesses. Between what they bring and what we have, I think we'd have a significant overlap, and certainly hope in all of our other segments.

So, it's been a great acquisition. It doesn't have the margins that DALSA has. But DALSA didn't have the margins it has now and when we acquired it, but it does have highly margin. We've got mid double-digit margins even with amortization of intangibles that I mentioned.

[George Godfrey, C.L. King & Associates]

Great. Thank you very much, Robert.

[Operator]

We do have a follow-up in the queue from Jim Ricchiuti with Needham & Company. Please go ahead.

[James Ricchiuti, Needham & Company]

Just with respect to acquisitions in general, I guess you're coming up on the one year anniversary of the e2v acquisition next month. Robert, I wonder if you could talk a little bit about where we might see Teledyne going next and what does the pipeline look like? Is it more difficult to find acquisition opportunities in this current valuation environment?

[Robert Mehrabian, Chairman, President and CEO]

I think the valuation of course is problematic to a certain extent, but it's not a very good excuse in a lot of ways. If we find the right thing and we pay the right price, even if it's a little over what we would have paid two years ago, we would acquire businesses.

Our focus right now is in two areas. Obviously Digital Imaging and anything related to that domain would be very attractive for us. And the other we have a bit is in the environmental portion of our Instrumentation business. We make a lot of different products there, ranging from water quality monitoring, air pollution monitoring, particulates in air, and we made one small acquisition, SSI, in mid-year this year, and we would like to do more of that.

So, we will make some acquisitions. The size of course we prefer if it was significantly larger so it moved the needle, but we expect to – we have the money, we have the financial resources as I said, our debt-to-EBITDA ratio is right now about 2.3, was 3 when we acquired e2v. Our net debt is about $1 billion.

If we even generate the cash we did this year, which was over $300 million, that was significantly down this year. We have anywhere from right now about 600 million to 700 million capacity to buy things and by year-end that should go up by another $300 million. So, we'll buy things if we can find the right products, Digital Imaging being first, environmental being second in terms of our preferences.

[James Ricchiuti, Needham & Company]

Okay. Thank you. Good luck.

[Operator]

Thank you. At this time, there's no additional questions in the queue. Please continue.

[Robert Mehrabian, Chairman, President and CEO]

Thank you, operator. I'll now ask Jason to conclude our conference call please.

[Jason VanWees, SVP, Strategy and Mergers & Acquisitions]

Thanks, Robert, and again, thanks everyone for joining us this morning. If you do have follow-up questions, please feel free to call me at the number on the earnings release and of course all our news releases are available on our Web-site. Tony, if you could please conclude the conference call and provide the replay details for the audience, we'd appreciate it. Thank you.

[Operator]

Thank you. And ladies and gentlemen, this conference will be available for replay after 11 AM Pacific Time today, running through March 1 at midnight. You may access the AT&T Executive playback service at any time by dialing 800-475-6701 and entering the access code of 442739. International participants may dial 320-365-3844. Once again, those phone numbers are 800-475-6701 and 320-365-3844, using the access code of 442739. That does conclude your conference call for today. We do thank you for your participation and for using AT&T Executive TeleConference. You may now disconnect.