Spectrum Brands Holdings, Inc. (SPB) Q4 2012 Earnings Report, Transcript and Summary

Good afternoon. My name is Kyle, and I'll be your conference operator today. At this time, I'd like to welcome everyone to the Spectrum Brands Fiscal 2012 Full Year Earnings Conference Call. [Operator Instructions] After the speaker's prepared remarks, there will be a question-and-answer period. [Operator Instructions] As a reminder, ladies and gentlemen, this conference is being recorded today, Wednesday, November 14, 2012. I would now like to introduce Mr. David Prichard, Vice President of Investor Relations. Mr. Prichard, you may begin your conference.

Good afternoon, and welcome to Spectrum Brands Holdings Fiscal 2012 Earnings Conference Call and audio webcast. I'm Dave Prichard, Vice President of Investor Relations for Spectrum Brands, and your moderator for our call today. Joining me to lead the call are Dave Lumley, our Chief Executive Officer; and Tony Genito, our Chief Financial Officer. Also with us today for the Q&A session are Terry Polistina, President, Global Appliances; and John Heil, President of Global Pet Supplies. Now our comments today include forward-looking statements, including our outlook for fiscal 2013 and beyond. These statements are based upon management's current expectations, projections and assumptions, and they are, by nature, uncertain. Actual results may differ materially. Due to that risk, Spectrum Brands encourages you to review the risk factors and cautionary statements outlined in our press release dated November 14, 2012, and in our most recent SEC filings and Spectrum Brands Holdings' most recent 10-K. We assume no obligation to update any forward-looking statement. Also, please note that we will discuss certain non-GAAP financial measures throughout this call. Reconciliations on a GAAP basis for these measures are included in this afternoon's press release and our 8-K filing, and they're both available on our website in the Investor Relations section. Now let me quickly review our GAAP results. For the fourth quarter of fiscal 2012, the company reported net income of $5.5 million or $0.10 per diluted income per share on average shares and common stock equivalents outstanding of 53.1 million. This compares to a net loss of $33.8 million or $0.65 per diluted loss per share in the year-ago quarter, which was based upon average shares and common stock equivalents outstanding of 51.9 million. Now by segment. For the fourth quarter of fiscal 2012, the Global Batteries & Appliances segment reported net income, as adjusted, of $55.2 million versus $24.8 million a year earlier. The Global Pet Supplies segment reported net income, as adjusted, of $23.1 million in fiscal 2012's fourth quarter versus net income, as adjusted, of $6.3 million in fiscal 2011. And finally, the Home and Garden business segment reported net income, as adjusted, of $11.9 million in the fourth quarter of fiscal 2012 versus net income, as adjusted, of $12.9 million last year. With that, I'm pleased to turn the call over now to our Chief Executive Officer, Dave Lumley.

Thanks, Dave, and thank you, all, for joining us today. These are exciting times for Spectrum Brands. The record fiscal 2012 results we just reported provide strong momentum as we focus on delivering another year of measured improvement in 2013 and as we near the closing on our exciting and accretive acquisition of HHA -- HHI, which is expected before the end of the calendar year, Our record 2012 performance met or exceeded our financial guidance. It was highlighted by strong growth in net income; EPS, both on a GAAP and adjusted basis; and adjusted EBITDA, this, along with record free cash flow of $208 million or approximately $4 per common share. These numbers were delivered in spite of an extraordinary negative foreign currency impact; challenging global economies, including the financial crisis in Europe; cautious, restrained consumer spending; and ongoing major commodity and Asian supply chain cost increases. In fiscal 2012, we also swung to net income of $48.6 million, an EPS of $0.91, from a loss of $75 million or $1.47 per share in 2011. More importantly, on an adjusted non-GAAP basis, our 2012 EPS jumped 25% to $2.28 from $1.83. This is our third consecutive year of increased adjusted EPS. Record net sales of $3.25 billion, an increase of 2.1% versus last year, and in line with our guidance, at or above the rate of GDP, and our operating income increased an impressive 32%. It is our third consecutive year of record adjusted EBITDA, $485 million, a solid 6% increase versus 2011 and grew about 3x the rates of our net sales gain. Now on a constant-currency basis, our results were even stronger and I believe, more noteworthy. For example, net sales increased 4.3% and adjusted EBITDA grew at a solid 10% or more than 2x the growth rate of our sales. What does our record performance mean? It says Spectrum Brands has an important role in the global consumer goods marketplace. We are winning with a balanced combination of volume growth, retail distribution gains, new products, geographic expansions, select pricing actions, continued spending controls and investment paybacks from our global cost improvement programs. Our results reinforce the importance of our largely nondiscretionary, non-premium price replacement products and the returns they provide to our retail partners and consumers worldwide, especially in difficult economic times. Our acquisitions of Black Flag and FURminator in early fiscal 2012 were solid contributors to our record performance. These 2 businesses were fully and quickly integrated ahead of schedule and above initial synergy targets. They will remain significant contributors in fiscal 2013 and beyond. Our primary financial goal and strength, which is strong and consistent free cash flow generation, was evident again in 2012. We delivered record free cash flow of $208 million or approximately $4 per common share, as I said earlier, on an increase from $190 million in 2011. Finally, our fiscal 2012 year-end target leverage ratio of approximately 3.4x was achieved due to term loan voluntary prepayments of $150 million in the fourth quarter. Over the long term, our objective is to maintain a total leverage ratio in the range of 2.5x to 3.5x. Our steady growth is being driven in large part by our Spectrum Value Model. We think it continues to be the right go-to-market strategy for retailers and customers who sell and purchase our largely everyday replacement products. Our Spectrum Value Model delivers real value to the consumer with products that work as well or better than our competitors' for a lower cost. It provides higher margins and lower acquisition costs to our retail customers, along with retail category growth and market share gains. We continue to believe consumers are embracing our "same performance for less price" value brand proposition versus both premium price competitors and private label approaches. We are also increasing trial and brand conversion through our strategy. As a result, we continue to generally outperform our competition in our market categories. Let's turn to our individual businesses. First, Global Pet Supplies. They delivered record sales and a fifth consecutive year of EBITDA growth in fiscal 2012. Its EBITDA margin increased a solid 120 basis points. In short, it was a breakout year for this business. Pet's net sales and profit growth were primarily driven by a turnaround in North American aquatics, in effect, 5 straight quarters of year-over-year net sales growth; the positive impact of the higher margin FURminator acquisition; and an over-delivery of global integration and continuous improvement savings. Pet benefited from first half distribution wins and new product launches throughout the year in both aquatics and companion animal categories, along with select and targeted pricing actions. We're pleased with Pet's performance, and we see even better results ahead in fiscal 2013. In Global Appliances, we experienced, as expected, major commodity and Asian supply chain cost increases in fiscal 2012, along with significant foreign exchange headwinds. Yet, we were ready, and in the end, we're able to offset most of these increases with global new product development programs, restructuring and integration cost synergy programs, retail distribution and share gains and stringent expense controls. Our personal care business part of this division or Remington delivered another record year, with increased net sales and adjusted EBITDA. Remington continues to win in the global marketplace from a combination of new products for men and women, product line extension, geographic expansion and distribution gains. Among bright spots last year was solid growth in our European shaving and grooming business. As evidenced by our announcement of a 56% controlling stake in Shaser Bioscience, our major Remington initiative is to expand our consumables product line at a faster rate than durables. The Shaser acquisition significantly enhances our position in more than a $50 billion global market for home-use dermatology and hair removal devices. We expect the acquisition to add substantial incremental revenues to Remington's consumables business, approximately doubling consumables revenues in 2013 and continuing rapid top line growth in fiscal 2014. U.S. women's hair care accessories are a recent addition to growing our higher-margin consumables business. We have had initial success at several key retailers in the $1 billion U.S. market for women's hair care accessories. Our i-Light Pro Hair Removal System, part of the Shaser acquisition, continues to sell well in Europe and the U.S. In the coming months, you will hear exciting news about expansion of our Remington consumables business. Finally, Remington is the foundation for our increasing company-wide investment in global e-commerce, which we see as a new platform for higher-margin growth across Spectrum Brands. In the home category of Global Appliances, with products like Black & Decker and George Foreman, we delivered solid revenue growth in both Latin America and Europe, including Eastern Europe where expansion is progressing well. In fact, we rolled out Russell Hobbs products in 23 new European markets through our own organization, achieving new sales in fiscal 2012. In North America, lower results were due to the fact that the level of Asian and commodity cost increases were more than we were able to price for and/or offset with cost improvements. As we told you throughout last year, we did reduce the base North American business with the phase-out or replacement of low-margin appliances, eliminating approximately $30 million in sales. In fiscal 2013, we will continue to work with our supply chain and retail partners to replace SKUs in brands where it makes sense, to sustain our collective margins given the cost pressures from Asian suppliers. However, we do see some indication that the rate of Asian cost increases should moderate somewhat this year from fiscal 2012 levels. Fiscal 2012 is a success story for our other division, Home and Garden, which delivered record net sales and adjusted EBITDA of its own. At 22.5%, its adjusted EBITDA margin in 2012 represented the fourth consecutive year of improvement. Home and Garden has been a consistent success story for a number of years. And with its adjusted EBITDA more than doubling from $41 million in 2007 to $87 million in fiscal 2012, excluding the impact of exiting the growing products or big bag business in 2009. Throughout the roller coaster weather patterns of this spring, summer season of 2012 Home and Garden outpaced its competition. Results show that its value alternatives are winning at the store shelf. Our core brands, such as HotShot, Cutter and Repel, gained share. We performed ahead of category growth rates in controls, households and repellents. Our Black Flag/TAT brands acquisition clearly was a major contributor to Home and Garden's record performance. Like FURminator for the Pet division, the accretive Black Flag acquisition was fully and quickly integrated ahead of schedule and with synergies exceeding our original target. Operationally, Home and Garden implemented cost improvement programs to offset commodity pressures; in point of fact, record cost improvement. Looking ahead, we have secured new and expanded leases at all major retailers again for fiscal 2013. We have exciting new product extensions set to launch in controls, repellent and household categories. And with the Black Flag acquisition fully integrated, we have a detailed strategy for even more contribution from these brands in the coming year. Lastly, let's talk about our Global Battery business, which we view as a growth vehicle for Spectrum Brands. It remains a strong EBITDA-producing cash-flow-generator as evidenced by its record EBITDA in fiscal 2012. The point to leave you with is this: Rayovac and Varta are winning with many existing retailers and new consumers. Our strategy of "same or better performance for less" continues to resonate with consumers. Market shares were at record highs, and points of distribution continue to climb through new accounts and existing ones. Important distribution gains secured in fiscal 2012 will bear fruit this holiday season and especially, next spring here and abroad. For example, Rayovac today has its highest North American battery share ever and so far this year, is the fastest-growing consumer battery brand in the United States. Our goal remains, help the retailer, grow the category and increase market share. Finally, we still expect to close the year on our accretive acquisition of the Hardware and Home Improvement Group from Stanley Black & Decker. We remain very excited about the many compelling strategic and financial benefits this transaction will bring to Spectrum Brands in 2013 and beyond. Some of these include: the addition of the leading maker of residential lock sets, residential builders' hardware and faucets with #1 position in North key (sic) [key North] American markets; increases Spectrum Brands' top line growth and margins and is expected to be neatly accretive to EPS, adjusted EBITDA and free cash flow. It will significantly increase Spectrum Brands' scale, product breadth and geographic diversification. It provides the ability to grow HHI further domestically, as well as internationally, by leveraging Spectrum Brands' global infrastructure and business model. It brings excellent additional growth opportunities, including entry into the integrated residential security, lighting and fire categories, as well as the light commercial business. And strong free cash flow will enable Spectrum Brands to deleverage balance sheet, our balance sheet, to return to the higher end of the total leverage ratio target of 2.5x to 3.5x in approximately 2 years. In addition to all this, it further strengthens our relationships with our core retail partners and provides attractive cross-selling opportunities and creates a platform for significant future global growth. So in summary, we are excited. We also want to reaffirm plans to initiate our regular quarterly dividend of $0.25 per share in fiscal 2013 and evaluate increasing the dividend in future years based on free cash flow growth. Thank you for listening. And now to Tony, our CFO, for some additional comments.

Thanks, Dave, and good afternoon, everyone. We were pleased with several key margin percentage increases in fiscal 2012. Operating income as a percentage of net sales improved over 200 basis points to 9.3% from 7.2% last year. For the sixth consecutive year, adjusted EBITDA as a percentage of net sales improved to 14.9%, rising from 14.3% in fiscal 2011 and back in fiscal 2007 was 11.7%. Let's turn to our tax rate. Our fiscal 2012 effective tax rate was 55%, at the top end of our 45% to 55% guidance, and 80% for the fourth quarter. Our book income tax rate is impacted by our high level of profits in foreign jurisdictions. This means we provide some foreign income taxes even while having a book loss in the United States. Our U.S. book loss results from substantially all of our debt and integration and restructuring costs being incurred in our U.S. entities. Since there is a valuation allowance against U.S. deferred tax assets, we are unable to book any financial statement benefit related to our U.S. domestic losses. This impact is magnified by the tax amortization of certain domestic indefinite-lived intangible assets. Let me highlight a few more key items in our financial statement. Cash restructuring, acquisition and integration charges fell to $56 million versus $68 million in 2011. We expect a further decline in fiscal 2013 to $20 million to $25 million as our major synergy and cost reduction programs have ended, primarily in Russell Hobbs and Global Pet. Cash interest for fiscal 2012 was $179 million compared to $172 million in 2011. Excluding onetime cash cost related to the refinancing of our term loan in 2011 of $6 million and excluding onetime cash cost related to the refinancing of our 12% PIK notes in 2012 of $25 million, cash payments declined by $12 million in total. Cash taxes for 2012 were $39 million lower than our projected range of $55 million to $60 million, primarily due to the timing of payments in Germany. Based on the level of NOLs we expect to be able to utilize, we do not anticipate being a U.S. federal taxpayer for at least the next 5 years. However, we will continue to incur foreign and a very small amount of state cash taxes. Cash taxes are expected to be $55 million to $65 million in fiscal 2013 due to our overall higher foreign profits but mainly due to the timing of payments primarily in Germany. Excluding the timing of payments, cash taxes are expected to be $45 million to $55 million in the normal course. We ended fiscal 2012 in a solid liquidity position, with no cash draws on our $300 million ABL working capital facility and with a cash balance of about $158 million. As of the end of the year, total debt was $1,665,000,000 at par. Regarding our cash flow projections, given the strong cash flow potential of our businesses, our goal is to generate at least $200 million of free cash flow or approximately $4 per share in fiscal 2013. We expect capital expenditures to approximate $50 million to $60 million in 2013, of which more than 2/3 will represent investments in battery production capacity, technology infrastructure, new product development and cost reduction projects. Our capital expenditures will be higher in fiscal 2013 than our normal long-term run rate of $40 million to $45 million due to the investments we are making in technology infrastructure, which we believe will be accretive -- which will accelerate research and development, new product enhancements and new product introductions. Thank you. And now back to Dave for Q&A.

Okay, thanks, Dave and Tony. And operator, would you please now begin the Q&A session.

[Operator Instructions] Your first question comes from the line of Dan Oppenheim from Crédit Suisse. Daniel Oppenheim - Crédit Suisse AG, Research Division: Since you talked about the battery business, talked about the growth that you're seeing in Rayovac in terms of market share and such, how are you feeling about the holiday season here in terms of further share gains in just the battery business overall for this current quarter?

I'm -- we're feeling pretty good. Most of our retailers had embraced batteries. They have more points of distribution in the store, which means all the battery companies have more points of distribution, but especially us. They -- you're seeing better traffic. They're doing more promotions. So I feel pretty darn good about it. December is the battery month and the 1st week of January, so we're looking forward to it. Daniel Oppenheim - Crédit Suisse AG, Research Division: Okay. And then, I guess, in terms of the -- you talked about the consumables business in terms of personal care. How much more should we expect to see? Are you looking for further acquisitions in that area? And when would you expect to see more introductions in terms of men's wet shave and such? When would that come?

I think as we look at the coming year, i think we have plenty to do between the hardware group and the Shaser acquisition. And frankly, that's right on plan. Our hair care accessories have been internally developed, and they're doing well. Shaser lets us drive the whole i-LIGHT business. And wet shave is a 2-step proposition, and we've got a really good partner. So I don't think you're going to see anything there in '13.

Your next question comes from the line of Lee Giordano from Imperial Capital.

Thinking about the Pet business and the Home and the Garden business, can you talk about the organic growth rate for those 2 businesses, excluding any acquisitions, like what type of growth should we think about going forward?

This is Dave Lumley. Both of them, on an organic basis, are growing in the low-single digits, both aquatics and companion animal. I think you'll see that continue to go that way. I think you have some isolated products in there that could do much better as we move-- things like dog treats and things like in our Nature's Miracle line. Several of our key customers are doing extremely well in this category, especially customers, and we see a lot moving there. And for instance, our FURminator line, I think, will do better than that. But I think this business can grow at most likely better than GDP and some of those in the high-single digits. So we're very optimistic about the Pet business in '13.

I think it's probably good to note, Lee, that the aquatics business, we saw a turnaround, with a stabilization and most important, a turnaround in North American aquatics. And that was really driven by actions that we took. And we're actually growing -- we've seen a growth in the category, which is very positive, and we're gaining market share in that which we were the market -- we are the market leader, but we continue to gain share. One of the things that we've identified is an opportunity to bring our learnings from North America to Europe with respect to the aquatics category, where it's been typical on the lower side of the growth, say low-single digits. So hopefully, we can leverage off our learnings in North America. And as Dave said, the companion animal category, it does grow at a faster rate than aquatics overall, and it really depends upon the specific product. But we're encouraged by what we've seen. And keep in mind that several years ago, we launched the introduction of companion animal products in Europe, and we're seeing some nice growth in that geographic area. So as Dave said, we're excited.

Great. And then same question for Home and Garden, is low-single digits the right type of organic growth for that segment as well?

Yes. Yes, it is.

And then just lastly, following up on the previous question. Did you see any boost in the battery business from Hurricane Sandy in the Northeast?

Yes, we did. Most of it though -- I know you saw the pictures of people with no batteries, but that was basically on iPhones, right. Most of it was lights. And so we saw a very good uptick in lights and then, of course, D batteries and so it did pretty well. Hurricanes usually can boost sales depending on who you are anywhere from $5 million to $10 million for about a week or so. And then it gets back to normal.

Your next question comes from the line of Reza Vahabzadeh from Barclays.

I did take advantage of some of your lighting products, by the way, and the D batteries. So I appreciate it and hopefully, you will restock them in the stores in the Northeast.

Absolutely. Thank you.

As far as line of use for 2013 across your businesses, anything that you can -- any color that you can provide on that as far as batteries and As and D in particular?

Well, those lines of use are ongoing. The battery one is kind of done for a while until the spring. We did very well in Home and Garden, which we've said, very well. In Pet, we've done pretty well as well. And again remember that we have business in the specialty stores and small pet stores and then the large retailers, and we've done well there. And the Remington has done very well in all its businesses and the appliance business, as we restaged it with our new products. So we're -- there's no business we have that, I would say, that we are disappointed in line of use.

Correct.

I think that our value propositions being embraced as retailers look to balance their premium products with their value branded products and in some cases, private label depending on the industry. Although private label increasingly is becoming more risky if it's being imported from Asia due to all the reasons you've heard of. But pretty good, pretty good. We're happy with it.

Got it. So you talked about the commodity costs that I assumed are impacting your small appliance business. How should we think about that dynamic going forward? Will you be able to pull enough leverage to mitigate the impact of higher commodity costs?

We're very cautiously optimistic, that by midyear, we think that the cost increases subside and the cost improvements and the global new product development amounts we have could pull that back to even. It's been a long 2, 2.5 years here of cost increases, currencies, supply chain. And it's just not that they're increasing costs. They have cost increases. They have less government subsidies. They have problems in getting labor. They have shipment costs and other consolidation costs, so it's going to be an interesting ride. I think America, North America and South America, has a unique opportunity in the next 3 years to bring back manufacturing jobs or assembly jobs as supply chain lead times and costs become more higher. So I think you're going to see that happen. Unfortunately, for appliances, it will take more than 3 years, but economics drive these things . I think also, we've been very successful in moving within Asia, outside China to other countries, in Indonesia, Cambodia and others. And I think you're going to see more of that as well, so 6 more months to go, I think, at least before our companies can balance that, then it should get better.

Right. So within that division, can your higher sales, and therefore EBITDA of the battery business, along with personal care, offset any downward pressure in some small appliances in 2013?

Well, yes. Well, that's the plan. That's -- clearly, as batteries grow, that helps. Remington grows, that helps. The consumables investments we're making to grow hair accessories, when we get into -- more into wet shave and we get into the hair removal devices of i-LIGHT, which has quite a robust platform of new products beyond the one that you've seen. The goal is that by the end of this fiscal year, that we should be able to offset that and go buy it. And I don't think that small appliances forever can be priced the way they are and have people lose money on them the way they have. It's good. It is changing.

Right. A couple of housekeeping items for Tony. What was cash restructuring in 2012? I didn't hear it. And what it's going to be in 2013?

For 2012, it was about $55 million, $56 million. And we said that for 2013, we would anticipate it to be $20 million to $25 million.

Got it. And the cash tax number that you mentioned was a little bit higher than normal. Is that just a timing from 2012?

That's exactly right, Reza. That has to do with the timing of a German tax payment that was made -- was supposed to be made in 2012, but because of -- it has to do with the way the taxes are paid in Germany. I don't want to get into the weeds. But basically, the value returned when you make your final payment, once the government reviews the return and approves that, that is the payment. As opposed to the United States, as an example, where you would file your return. If you have an amount due, you would make a payment at that point as well. So we didn't get the notice that the final payment was approved until after the year-end -- fiscal year-end, so it's a timing issue solely. Our normal run rate for taxes, is, as I've said, as I know it's approximately, call it, about $50 million range. That's where we typically should be on a -- based on our current profile of our composition of U.S. income versus foreign income, and a long-term rate would be about $50 million.

Your next question comes from the line of Carla Casella from JP Morgan. Carla Casella - JP Morgan Chase & Co, Research Division: I was wondering if you could give us a little bit more color on the holiday. I guess, specific to the battery business, how are retailers or the programs positioned this year versus last? And would you say that you've got greater strength in either any specific channel, food, drug, mass versus specialty, toy?

Let me go through each one separately. Like I said earlier, the retailers have gotten behind battery sales more this year than in years past. And I would say that's true across the board, whether it's mass merchants, home centers, clubs or food and drug, but especially mass merchants and home centers. So that's good news for the battery business and us. Number two is the -- your question was how... Carla Casella - JP Morgan Chase & Co, Research Division: I guess where you think you have the best opportunity, yes.

Yes. Well, we -- Rayovac traditionally has been strong at mass merchants, home centers and industrial channels, where our principal 2 competitors, which have been strong everywhere, but especially in food and drug, where we now, I think, have done better in our strongholds than before. And we're entering in some of those other areas now where we haven't had the opportunity to do that before. Like I said, retailers are looking to balance their offerings and battery is a great category because they make so much money on batteries, retailers do. So to have a premium brand -- just premium brands is not necessarily working too well. So having a premium brand, a value branded offering has been working real well, and I think we'll continue to see a trend in that direction. Carla Casella - JP Morgan Chase & Co, Research Division: Okay, great. And then on the -- I guess, on the small appliances, is there anything you do there in terms of packaging or I guess, basketing products for any kind of special holiday season promotions? Is it different this year versus past?

Yes. That's a great question. A lot of the retailers have done a great job of trading the experienced buy or a packaged buy. Let me use an example, something we're not in, popcorn makers and popcorn in a basket all displayed together, right? And they get the whole sale. I think you're going to see more and more of that small kitchen appliances when you think of the tools that go with it or the pots and pans or the spatulas. And we're going to -- we're starting to see them starting to do that. Some of the retailers in some departments, I think, you're going to see more and more of it. That we really help us, I believe, because we sell so many categories. Black & Decker is a leader in everything from irons to toasters, to toaster ovens, then you get into coffeemakers and blenders and all those things. Usually, the buyer wants them all to match, if he or she can get it that way. So I see that as an exciting trend, and the retailers have told us they're working on it. We're trying to help them do it. Now clearly, you will see some cool things from us, which I can't tell you about. But on our George Foreman, where we've taken that even beyond that buy but we've tied it to what most people like to do starting January 1, and that is to lose weight, right. And all the things that, that could mean. And George Foreman can play a very big role in any healthy cooking, but more importantly, getting you kickstarted on weight loss. And we're going to -- we're putting a lot behind that this year. You're going to see it. I think it's an exciting development.

There are no further questions at this time.

All right. Well, with that, I think we will close down the call. Our thanks, of course, to Dave and Tony and everyone on the call. And on behalf of Spectrum Brands, all of us here do want to thank you for participating in our fiscal 2012 earnings call this afternoon. Have a good day, and we'll talk to you in the New Year. Take care.

This concludes today's conference call. You may now disconnect.