Casella Waste Systems, Inc. (CWST) Q4 2012 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen. Welcome to the Casella Waste Systems Q4 2012 Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to your host, Mr. Joe Fusco. You may begin.

Thank you for joining us this morning, and welcome. Our group for today's discussion includes John Casella, Chairman and Chief Executive Officer of Casella Waste Systems; Paul Larkin, our President and Chief Operating Officer; Ed Johnson, our Senior Vice President and Chief Financial Officer; and Ned Coletta, our Vice President of Finance and Investor Relations. Today we'll be discussing our fourth quarter and full fiscal year 2012 results. These results were released yesterday afternoon. Along with a brief review of these results and an update on the company's activities and our business environment, we'll be answering your questions as well. But first, as you know, I must remind everyone that various remarks that we may make about the company's future expectations, plans and prospects constitute forward-looking statements for the purposes of the SEC's Safe Harbor provisions. Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in our prospectus and other SEC filings. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our estimates change. And therefore, you should not rely on those forward-looking statements as representing our views as of any date subsequent to today. Also, during this call, we will be referring to non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with Generally Accepted Accounting Principles. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in the Financial Tables section of our earnings release, which was distributed yesterday afternoon and is available in the Investors section of our website at ir.casella.com. Now I'll turn it over to John Casella, who'll begin today's discussion.

Thanks, Joe. Good morning, and welcome to our fiscal year 2012 fourth quarter conference call. Our goal today is to discuss the quarter results and to introduce our guidance for 2013 and to update you on our strategy. I'll start with a brief overview, and then Ed will take you through the numbers. The fourth quarter was a solid operating quarter with year-over-year solid waste pricing driven by strong collection price, higher MSW volumes at the landfill, higher recycling volumes driven by continued customer adoption of Zero-Sort Recycling services and lower operating costs. We made great progress during the fourth quarter and fiscal year '12 on a number of strategic fronts, including the introduction of a successful collection pricing program, the issuance of permits and resolution of legal challenges at 3 landfills and the consolidation of back office functions into a shared service center. Pricing gains in the Solid Waste business were primarily driven by our successful collection pricing programs, with collection price up 2.3% in the quarter and 2.6%, or $5.1 million, for the fiscal year. These gains are a reflection of the hard work by the organization to develop intelligent pricing tools and effectively manage yield in each market. We're building on this success with solid waste pricing target of 1.5% to 2% for fiscal year 2013. At the landfills, we made tremendous progress on permitting and legal fronts during fiscal year '12. At Southbridge, we received a permit expansion for roughly 119,000 tons per year of MSW, and the Massachusetts Supreme Judicial Court dismissed all appeals on the merit. At Chemung, we received a permit expansion for 60,000 tons of MSW, and at North Country, the town voted to approve a zoning change and approved the settlement agreement of all ongoing litigation. The zoning change and the settlement agreement allows us to expand the landfill by approximately 1.5 million tons of airspace. We'll begin ramping tonnages in the fourth quarter to Southbridge and Chemung, and we expect these sites to contribute an additional $3.5 million to $4 million of adjusted EBITDA in fiscal year 2013. On the cost side, we continue to focus on ways to improve customer service while becoming more efficient. Our biggest achievement in fiscal '12 was the consolidation of certain functions to our new shared service center. The center now handles all the customer care, cash management, accounts payable, collections, tax and IT services for the company. Another initiative that is making a big difference on the cost side is our conversion of the fleet to CNG. We've converted about 5% of the fleet to CNG and have built out 3 filling stations. With CNG at about $2 per diesel gallon equivalent cheaper, we're buying mostly CNG trucks for fiscal '13 and beyond. These improvements in the core fundamentals of the business were again muted by negative macroeconomic factors, including lower special waste volumes to the landfill and lower energy and commodity prices. Special waste volumes were down on lower drilling activity in the Marcellus Shale and less infrastructure work by state and local governments, which translated to less contaminated soil and sludges, with the most pronounced impact on Western New York. Overall, these high-margin volumes were roughly down 10% year-over-year, approximately 215,000 tons in 2012. We've not seen a rebound in these volumes in the first 2 months of fiscal '13. As discussed last quarter, the drop in natural gas in late fall has negatively impacted energy pricing in the Northeast. Electricity prices were down roughly $20 per megawatt hour for the fourth quarter as the unseasonably warm weather in early spring reduced natural gas and energy demand in the region. Energy prices remain at low levels, and we do not expect a near-term catalyst for energy markets to rebound during fiscal 2013. We're working to reduce our exposure to the energy markets with the sale of our waste-to-energy facility. Its process is going well. We substantially reached terms to sell the facility to our local municipal partner for ultimate closure, and we expect this process to be completed by the fourth quarter of our fiscal year. In fiscal year 2012, adjusted EBITDA was negatively impacted by $7.2 million year-over-year by lower special waste landfill -- volumes at the landfill, lower energy prices and higher landfill operating costs from historic rainfall. Even with these headwinds, fiscal year 2012 adjusted EBITDA was up $1.9 million year-over-year, demonstrating the strength of our asset base and the results of our operating initiatives. We have maintained stable operating performance in this challenging environment by restructuring operations, reducing our costs, and now we're poised to grow as the economy recovers. Looking to fiscal year 2013, we've provided a fairly muted outlook that forecast the regional economy to remain flat and special waste energy and commodity price headwinds to persist. Our fiscal year has gotten off to a slow start because of the factors I just discussed and because revenues were pulled forward from Q1 into Q4 due to the early start of the construction season in the Northeast. We experienced unseasonably warm temperatures in March and April, causing most of the Northeast ski areas to close 4 to 6 weeks earlier than usual. This gave us a headwind on the commercial collection side as seasonal customers reduced or canceled service much earlier than in a typical year. On the flip side, we saw our construction activity ramp up early and pulled forward work we would have expected in Q1 of fiscal '13. We remain committed to improving free cash flow in the business and plan to focus in the following areas to drive improvement: sell additional resource solutions to existing and new customers; continue to drive intelligent pricing and collection line of business through our customer profitability tool; harvest value from the landfills with the expanded annual permits at Southbridge, Chemung landfills, as well as the opportunity to move forward with North Country on the settlement there; further improve our cost structure and service performance through continued execution of key operational initiatives and shared service consolidation; develop the water treatment and waste solidification at our landfills located in the Marcellus Shale; and manage capital allocation. On top of the operating focus, we continue to find strategic solutions for Maine Energy, GreenFiber and RecycleBank, all noncore assets that are not contributing to results. And with that, I'll turn it over to Ed, who will take you through the numbers.

Thank you, John. Good morning, everyone. We finished the year in line with the revised guidance that we gave after the last quarter. I'm happy to go through a brief overview of the quarter but would like to spend a little more time on where we are strategically and walk through our thinking on the fiscal '13 guidance. On a consolidated basis, revenue came in at $109.2 million, about the same as the fourth quarter last year, with Solid Waste revenues up $2.4 million, offset by a decline in our brokerage revenue of $1.4 million and Recycling revenue of another $1.4 million. Commodity prices were down 13.4% as compared to this time last year, and this was partially offset by volume increases due to our continued success with our Zero-Sort offering. Growth in Solid Waste revenue was driven primarily by the success of our core pricing program as our division managers continue to be price leaders, yielding 2.3% from the market. On the third quarter call, we talked about the unexpected problems that we were experiencing as a result of the residual effect of the rain from Tropical Storm Lee and Hurricane Irene on our landfills. Although the storms were in August, directly take cost and the indirect order problems caused by the excess moisture in the landfills spiked our operating cost in the third quarter. We're pleased to report that we were successful in getting all that under control, and our cost of ops dropped from $81.4 million last quarter to $77.5 million this quarter. This compares to $79.9 million in the fourth quarter of last year as our continuing efforts to reduce cost and improve operating efficiency are now more evident. SG&A decreased by about $3 million compared to last year, primarily salaries and bonuses, but is up from the third quarter due to equity-based comp adjustments. John mentioned our ongoing efforts to sell Maine Energy, our refuse-derived fuel plant. In accordance with GAAP, we are taking a noncash impairment charge in the quarter to write down the plant to anticipated fair value to be received on the sale. Adjusting for that and other unusual items this year and last, as laid out in the table at the back of the press release, operating income improved $800,000 from the fourth quarter last year to $2.9 million. Adjusted EBITDA for the quarter came in at $19.9 million, up from $18.3 million last year. Now I'd like to spend some time walking through our guidance, as this should provide you with a clear picture of current trends and our thoughts on the timing of some of our more significant strategic initiatives. Perhaps the most important thing to discuss upfront is 2 potentially significant things that are not reflected on our guidance. We have not reflected the sale of Maine Energy or the refinancing of our 11% second lien notes. Maine Energy has been included in our guidance as a continuing operation at current low power prices, albeit at a reduced capital cost. As we have disclosed, we are in meaningful discussions regarding the sale of this plant to our host community partner. The transaction is complex and the timing is somewhat out of our control as it requires a political process to run its course. Due to the delicate nature of the matter, we are not commenting on any details at this time. If and when the sale occurs, we will disclose the final details of the transaction and offer a revision to our guidance. Similarly, the timing of the second lien note refinance has become less certain. These notes are first callable after July 15 at 105.5, a premium of $9.9 million, and callable at par on or after July 15, 2013. Our original estimates were cash a interest savings of over $10 million, worth the one-time charge of the premium. The markets have moved against us, hopefully temporarily, and the premium now exceeds one year of the cash interest benefit. Over the past 2 years, we've been very disciplined on making sound financial decisions for our shareholders, so as much as we would like to lower interest cost now, it is not prudent to rush into a significantly negative NPV trade that would make us pay for it in the long run. We continue to monitor the market, and we'll complete a transaction when the benefit exceeds the cost. The refinancing has not been reflected on our cash flow guidance and again, we will disclose the transaction when it occurs and restate guidance at that time. Our revenue guidance for 2013 is fairly flat at $482 million to $492 million. Not as bad as it looks, though, when you break out the pieces. $4 million less in major account revenue due to the waste management acquisition of Oakleaf. Fortunately, this was real low-margin business. $2.5 million to $4 million less in Recycling revenue due to commodity pricing. This assumes a continuing weak market. No improvement in disposal pricing, which is more market driven, but continued success with our yield management system on the collection side. And no acquisitions, except for rollover effects, are in the guidance as we only reflect acquisitions after completion. One major driver and potential upside is the landfill volumes. During this past year, we saw declines in special waste due to a lack of government-backed projects. Before that, it was the loss of construction and demolition material. Some of this was offset by drill cuttings, but we've seen a decline in those volumes and have had to forecast accordingly. A positive is that our permit increases in Southbridge and Chemung are in locations that are easy to find volume and should start to benefit from price improvement over the next few years. Due to timing concerns, this pricing benefit is not reflected in our 2013 guidance. I should note here that our guidance assumes a slow start to the year. The early end to winter weather brought forward many customer projects normally scheduled for spring into March and April. And accordingly, roll-off work and landfill volumes fell off in May, where we would normally see them. We expect Q1 revenue to come in roughly $4 million to $5 million below the first quarter of last year and adjusted EBITDA to be down $2 million to $3 million. With that analysis of the guided revenue, we can quickly take it down to EBITDA and cash flow. On fairly flat revenue, EBITDA benefits from continued positive collection pricing and volume increases at Chemung and Southbridge, offset by the percentage of the commodity price declines, hit the bottom line, which is about 35% due to our naturally hedged position. The loss of major account revenue does not have much of an EBITDA effect. Free cash flow further benefits from reduced capital requirements. The cash flow guidance reflects our estimate of $45.5 million in cash interest cost and about $500,000 in cash taxes. The long-term strategic picture remains strong. We still believe that our landfills are perfectly located both in markets where disposal supply is on the decline and in locations to take advantage of the direct and indirect benefits of the Marcellus Shale drilling activity in Pennsylvania and in New York at some time in the future. Natural gas prices have slowed the drilling activity in Pennsylvania, but we certainly believe this will change as our economy shifts towards this clean and abundant North American fuel. Southbridge is still on track to benefit from an additional 105,000-ton-per-year increase, and its permit is scheduled to occur next winter. And we still anticipate this volume will eventually be filled internally after the expiration of our put-or-pay agreement in Peabody at the end of calendar 2014. One last comment on our 2 investments that John described as noncore, RecycleBank and GreenFiber. We continue to look to monetize these assets but have not had success to date, so I'd like to point out our thinking. RecycleBank has interesting prospects and could be a significant value at some time in the future. As it is only on the books for about $4 million and does not take any management time or any further investment, we feel we can be patient. GreenFiber continues to struggle with the depressed housing market, but that market is now starting to show positive signs and they have some interesting product developments about to go into test marketing. The management team has done an excellent job, and although we have had to invest some cash this past year, we do not expect any significant further cash requirements. Like RecycleBank, there are no meaningful offers on the table at this time, and it seems prudent to be patient. We wrote our investment down in the third quarter and currently have only about $6.5 million on the balance sheet. That concludes our overview of the quarter and guidance for 2013. I'd like to now turn it back to the operator to open the lines for any questions you might have on the quarter or our strategy going forward.

[Operator Instructions] Our first question comes from Scott Levine of JPMorgan.

So you characterize your guidance as conservative. And with regard to the backdrop, you sound pretty optimistic with regard to the initiatives underway at the company. And I'm wondering how we can think about the level of happiness, I guess, or success that you have in the pricing side and whether you see the operating environment as a limiting factor with regard to you guys continuing to be successful in executing on your pricing initiatives and also on any cost control initiatives that you have underway.

Well, I think, we're very happy with our pricing initiatives and our ability to change pricing to an ongoing core process of the company that we all focus on every week. That's been very successful. We also benefit from our positioning in most of our markets as the leader in the market. And even in -- a big transition we've had is even in markets where we weren't the price leader a year or 2 ago, we've now become and established ourselves as a price leader. And this can only be done by our willingness to make tough decisions on customers where we're losing money or are not making a decent margin. And when those customers get pushed out into the market, it's sends a very good signal to the market.

Got it. Maybe turning more towards the balance sheet. Could you remind us where your leverage is today? And it sounds like with the -- the refi plan is a little bit of a wait-and-see given the market environment. Has your attitude or thought process changed in terms of your roadmap to delevering the balance sheet? And might that change depending on how the operating environment trends as you move through fiscal '13?

Yes, I think our -- we still recognize that leverage is an issue for us, and we continue to look for solutions to delever. I think we have to be very smart about the way we do things, though. And my comment about the second lien notes is we just can't do a negative net present value trade just to get a quick benefit when it would really and could encumber the company with higher interest rates than we need over the next 6 or 7 years. So I think we're being smart about it and opportunistic, and we will continue to strive to delever the balance sheet.

That makes perfect sense. Maybe one last one, a housekeeping item. Any help you can give us in modeling your tax expense? It's a big swing factor on your EPS.

Well, when you're looking at GAAP taxes, it's just a very difficult thing to predict for a company like ours. I had the same experience in the past. We're looking at about $2 million in GAAP taxes for next year, that's our estimate. And we really can't project much past next year.

So like $0.5 million a quarter? Is that fair, or is there any unusual quarterly anomalies?

Well, the way they do the tax provision is they project what it will be for the year, and then they allocate it based on relative net income or loss before tax in any specific quarter. So it bounces around pretty significantly in a quarter, but you will get to the $2 million level by the end of the year.

Our next question comes from Bill Fisher of Raymond James.

Couple things. One, on the EBITDA improvement for next year. You touched on leachate costs in the third quarter this past year. Is that part of the benefit next year, assuming you don't have any more floods?

Absolutely. Yes, we're projecting -- I mean, we certainly don't anticipate having the kind of weather that we had last year. So part of the improvement is lower operating cost at the landfill.

Okay. That's something like $2 million to $3 million, in that ballpark?

About $3 million.

Okay. And then on the landfill side, Ed, I think you mentioned Southbridge and the other 105,000 tons to 400-and-some thousand. When -- can you walk through the steps of when that would start? And would that be in the '13 guidance?

Well, that's built into the permit as far as when it starts. That starts a year after our landfill gas-to-energy started producing electricity at the landfill. So we anticipate to get the tick-up in the permitted volume in early winter. Now because of the timing of when it comes in, that's not an easy time to fill that volume. So we haven't projected much in the fiscal guidance for the additional volume.

Could be more of a calendar '13 benefit than fiscal?

Yes, yes.

And then just lastly, real quick. You had a competing landfill in Vermont that had a permit expansion rejected. Any new information on what's going on there?

The only update is they're still in permitting. They're still trying to re-permit the facility. And it's not -- we don't have any more information other than that. The original permit, they've had to resubmit. And they resubmitted, and they're in the process and don't have any more color than that at this point.

Our next question comes from Corey Greendale of First Analysis.

First, I was hoping you could just elaborate on the outlook for refinancing the notes. I heard what you said. I was just looking for a little bit more background on what rate you would refinance them at. Just to help to get -- help us to get just negative NPV and what we should be watching to get a sense of when you might be willing to pull the trigger.

The markets have been very fickle this year. Had we been able to do a transaction 2 months ago, we would have looked to save from $8 million to $10 million a year in cash interest. Now the markets have moved a little bit against us and made that transaction negative because of things like LIBOR floors and original issue discounts that we'd be required to accept. The timing is very difficult because it depends on what happens to the market. What happens in Europe is having a big effect. So it's just very hard to guess when that could get done.

Okay, and all right, I hear you, Ed, but just -- and I don't want you guys to have to play economist too much. But based on your past experience, I mean, do you think this is just volatility and it will get better some point in the next year? Is there some possibility depending what happens in Europe and inflation concerns kick in that we've seen the bottom of the market and it may never happen?

Well, the market right now is on a risk-off position. Just 2 months ago, it wasn't. As the fluctuations in Europe happen, we just -- it just is impossible to predict when it goes back to a stronger position.

The premium goes away in the next 12 months. The 105 goes far less than 12 months now, no, another 12 -- sorry, 12 months.

Yes, 12 months.

12 months.

Okay. And then on the main market, I understand you're not going to elaborate on market at this point. But I was hoping you might be able to comment on what the status is of possibly getting -- taking ownership on an expanding old town and whether that could still be tied to the marked [ph] divestiture.

Yes, that's all tied together. I think that clearly at this point in time, we've already laid out where we are. We expect to have it done before the end of the year, but we're in negotiations right now and really can't elaborate anymore on that. Once, as Ed said before, once we're -- once the transaction has been completed, then we'll come back out and revise guidance.

Okay. And one question on price, and great work on the yield side given the weakness in the markets. In the press release, I think you refer to yourselves as being the price leader at this point, which is great on the price side but could come with some offset on the volume side. So I was just hoping you could comment on the competitive pricing environment and if your guidance assumes some level of competitive -- or I'm sure it does, but what level of competitive volume loss risk because of the price leadership.

I think that it is incorporated into the guidance. I think, one thing to remember particularly as it relates to the municipal side of the business is that we have -- as it relates to Massachusetts, there's obviously price pressure from a municipal standpoint because of budget constraints and because of the issues that municipalities, local governments are dealing with. In our case, it really represents an opportunity for us in that we just don't have a very significant portion of the municipal business. So as an example, in the last couple of months, we've gotten 4 new municipal contracts, small, not really very, very large ones, but again, small incrementally moving things in the right direction. So some of that price pressure that is there in the marketplace, particularly on the municipal side, there's 2 edges to that, and one for us is a positive.

Okay, and just one last one. What is the guidance you give in terms of landfill pricing?

Corey, we didn't explicitly provide landfill pricing guidance for the year. However, we expect the pricing to be pretty much flat like last year on the landfill side and most of the solid waste pricing to be driven by a positive collection price.

Our next question comes from Michael Hoffman of Wunderlich Securities.

Within your guidance, you had no ski season in 3Q, 4Q. So what are you assuming for winter when you give guidance for '13?

We assume a normal winter.

Okay. So there's a pretty good comp in comparison then in that second half of your fiscal year is one of the other things to think about?

Yes.

All right. And then on Southbridge in the guidance, the progression from 180 to the low 300s, if -- you're not -- well, let me ask it this way. Are you at the full 300 already? Or is this going to be a gradual buildup, and therefore, what's the average for the year that you think you'll be at? Because that creates -- that carry plus the 105 is the benefit into the next fiscal year.

Yes, I think that we'll be at a run rate towards the end of the year on the 300.

So you could assume you're basically getting half of that on it from an average standpoint. So you're kind of doing...

I think that's probably about right, Michael.

Okay. So I guess -- so I basically get the rollover of the full 300 plus the 105 ramp up in '14 as I think about the progression of my EBITDA?

I think so. I think that's probably true. We could probably take a look at that for you, but I think there's some truth to that. The real question is whether or not it's half of it on a rollover. It's probably not quite that high. But there will be some rollover effect and we could probably get you an answer on that.

Our next question comes from Al Kaschalk of Wedbush Securities.

To the point on pricing and particularly on SW, or the Solid Waste business, did I interpret this that 75% of that business, which is collection disposal, that's getting the upper end of that pricing range that you gave, while Power and Recycling are flat to down 50 basis points? Or could you just help us maybe get it through...

Yes, the Power and Recycling are actually down.

Are you willing to share the component of assumption that you have either for the full year on those 2 businesses, either in aggregate or some measure? My next question is, it seems as if you've gotten great pricing. And now to the point earlier is if you segment that revenue by competitive and noncompetitive markets, how much headwind should we expect in terms of that pricing calc [ph]?

I think we had a good year with pricing. I think we've -- as I said, it's a process now, so it happens every month. The first -- I will let you know, the first 2 months that we started out this year were right on plan, so we continue to get price. I don't think it's going to be a big headwind.

Al, in the Solid Waste price guidance number, the 1.5% to 2%, that's just price in the collection and disposal on transfer lines of business. We don't roll the commodity impacts of energy or other sale of recyclables through that number. We just netted that in the volume guidance we gave for the Solid Waste business. It's kind of wrapped up. But as you reflected, there is a negative headwind to energy.

Okay. Are you able to give us an assumed recycle price or commodity price that you're using similar to what some of your competitors do? Or is it something you care not to share?

You want to give that?

Yes. We rolled our commodity price on an ACR of around $125 for our average basket of commodities for the year, that's the average commodity revenue per ton. And as a level of context, we ended last quarter at around $130 for the same basket of commodities.

Okay, that's helpful. Finally, on -- 2 more. One, what's the cash investments you need to make in '13? And obviously, that's getting at how much you may have to make with any potential asset sales that you realize. So can you share what's included in terms of that free cash flow, what type of cash investments you need to make in '13 or plan to make?

Do you mean our CapEx?

CapEx, and then I think -- and there's some annual maintenance related to these facilities that may not be core. And so I appreciate what you're sharing and not wanting to say timing of sale and things like that. But is that something that we may need to think about or is it already included in the guidance and could provide you a little tailwind if you don't have to make it?

Well, there is very little cash anticipated for the noncore business, a little bit to GreenFiber, but nothing significant, and RecycleBank doesn't take any cash. And our CapEx number for the year is projected to be around $45 million to $46 million.

Okay. Finally, on terms of -- if you think about the midpoint of guidance on a rather than EBITDA basis, adjusted EBITDA, it's the low 20s. Can you share where you're at in the operation on the contribution of the recent permit expansions that drive the $3.5 million, $4 million contribution of EBITDA? In other words, is that coming on -- are you running at a rate that, that's well north of 30%? Or where are you at in terms of that contribution from that specific volume?

Yes, that's ramping in, but it's offset by price on the commodities in the Power, so that affects the margin as well. So they were kind of offsetting.

Al, the landfill lease payments are about the same year-over-year as well.

We have a follow-up question from Michael Hoffman of Wunderlich Securities.

On MERC, am I correct there's a public hearing process that starts in July? There's 2 of them, and that's sort of a part of this? And we're not looking for anything more than sort of public mechanics. There's a public hearing process. If you get through that favorably, that leads to the next series of events of dealing with the state on the permits for the landfill. And if you can that, then we're kind of Bob's your uncle and we're done, right?

Yes, I think that's fair. There is a public hearing process that we'll be going through that will start in July, early July.

All right. And then on the tax rate, Ed, what was your tax rate x all of the unusual items for the fourth quarter?

I don't think the unusual items really affected the tax provision. So the $2 million -- or you're talking about the last quarter?

Like fourth quarter, yes.

Yes, I don't think that would've had much of an effect on the provision.

From a non-GAAP standpoint, Michael, our loss would have been roughly $0.31 fourth quarter fiscal '12 and same kind of $0.38 loss for fiscal '11, non-GAAP. If you add that to nonrecurrings, to add point, it doesn't really change the tax provision.

Okay. And then you touched on the capital spending. So that number coming down, it sounds like there's not much growth capital spending and that, that's the running-the-business capital spending.

That's correct. The maintenance CapEx.

I'm showing no further questions in the queue at this time. I'll hand the call back to John for closing remarks.

Terrific. Thank you. Thank you, all, for your attention this morning. Our next earnings release and conference call will be in late August when we'll report our first quarter fiscal '13 results. Again, thanks for your attention this morning, and everyone, have a great day.

Thank you. Ladies and gentlemen, this concludes the conference for today. You may all disconnect, and have a wonderful day.