Good morning. My name is Holly, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Valmont Industries Incorporated Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions] Thank you. I’ll now turn the conference over to Mr. Jeff Laudin, Manager of Investor Relations. Please go ahead, sir.

Thank you, Holly. Welcome to the Valmont Industries’ third quarter 2015 earnings conference call. With me today are Mogens Bay, Chairman and Chief Executive Officer; Mark Jaksich, Executive Vice President, Chief Financial Officer; Tim Francis, Vice President and Corporate Controller; and Steve Kaniewski, Group President Utility Support Structures. Before we begin, please note this conference call is subject to our disclosure on forward-looking statements, which applies to today’s discussion and will be read in full at the end of the call. The instructions for accessing a replay of the call can be found in your press release. We now like to turn the floor over to our Chairman and Chief Executive Officer, Mogens Bay.

Thank you, Jeff, and good morning, everyone. Thank you for joining us. And I trust you’ve all read the press release. Today, I’m going to provide an update on our restructuring plan announced earlier this year. Then review third quarter company results and segment performance, before turning it over to Steve Kaniewski, who heads our Utility Support Structures business. Steve will provide a deeper dive into this business. From time to time, we will invite our segment presidents to join the call to discuss their businesses to provide additional insights and exposure to our operational management. Mark will then provide context on our financial performance before we open it up to Q&A. With that, let’s turn to our efforts here in the third quarter. We made significant progress on executing our restructuring plan, which we began in earnest in April of this year. We’re now estimating that the annual cost savings from restructuring and other cost reduction actions will be $30 million, up significantly from our initial objective of $19 million. This cost alignment touches all areas of the company. At a high level, the focus has been on consolidating production into lower-cost facilities while maintaining the capacity to meet our customers’ present and future needs. To recap, there been several major actions taken today. In Asia and Australia, we consolidated production of seven facilities into our remaining ones. In North America, we consolidated concrete pole production into fewer plants. We also reallocated production from our Brenham, Texas plant to lower cost facilities and consolidated two composite structure plants and did the same with galvanizing, moving production from three to two facilities in Canada. Finally, we have reduced global headcount across the company by approximately 700 so far this year. Also, we have significantly streamlined our footprint over the past…

Thank you, Mogens, and good morning, everyone. I will address our Utility Support Structures business, including proactive measures taken to address continued headwinds, to best position us for the current environment, as well as an overview of the current industry landscape. During 2015 federal mandates directing utilities to reduce coal-fired generation has led to some capital deferrals away from transmission CapEx. Meanwhile, a dramatic decline in steel costs resulted in a significant drop in revenue this quarter compared with last year, and we continue to experience a greater mix of smaller projects and poles. We maintained pricing discipline in the bid market. While we may be forgoing a nominal amount of business in that bid market we are filling our plants with business that is more attractive for us over the long-term, and that will drive improved earnings quality. The major driver of long-term demand for our transmission poles and substation products is the regulatory emphasis on improving grid reliability. Secondary drivers are the interconnection of regional transmission grids and the integration of new generation sources including renewables. While the influence of the massive policy driven project of the past, such as CREZ and CapX 2020 has waned, we believe there is significant investment remaining to be made in the North American transmission grid. This is confirmed by industry specialists. There has been a lot of discussion about FERC rule 1000, which allows non-incumbent utility investors to compete in a local utilities home territory. The regulator’s goal is to make investment in transmission infrastructure more competitive. Our initial reaction to this rule is that the increased complexity of the competitive process could favor Valmont’s capabilities in project management, engineering, and product design and materials. Meanwhile, there has been some concern that pressure on allowed rates and utility returns on investment…

Thank you, Steve, and good morning everyone. There were a lot of moving parts in this quarter, which include restructuring and impairment charges. I will take a moment to review these items and then comment on the financials and general for the quarter. Included in this quarter’s results were intangible asset impairments totaling $15.2 million on a pre-tax basis, were largest of these was $9.1 million impairment of goodwill in our Asia-Pacific’s Coatings business unit. We also reported $6.1 million of trade name impairments related to our Asia-Pacific coatings and access systems business units. The impairments with the result of difficulties in these markets over the last couple of years, and the general state of the mining and energy investment in the Asia-Pacific region. Restructuring charges during the quarter totaled $8.89 million. These charges related mostly the actions we disclosed earlier this year, and which are now being recognized in the income statement has incurred. Most of the cash charges of $5.5 million were related to severance expenses for workforce reductions. In addition $3.3 million of fixed asset impairment charges were record. On the whole, the restructuring actions of progressing as planned and we believe these difficult but necessary actions will position us to take full advantage when core markets begin to improve. We continue to see negative effects to currency translation as the U.S. dollars much stronger against most global currencies of share. The effect on sales and operating income in the third quarter was about $58 million and $6 million respectively. While, largest impacts for us were related to the Australian dollar, the Brazilian real and the euro. Based on current rates, we do not expect, the effect to be quite as large in the fourth quarter as the U.S. dollar started to appreciate the fourth quarter of…

Thank you, Mark. 2015 has been a difficult but busy year. We remain squarely focused on executing what is within our control, and what have most of the restructuring behind us by year end. We look forward to delivering improved earnings next year as a result of our actions taken this year. We are also currently assessing how we may improve our communication with the financial community, and you understanding our businesses strategy and market. Today we took the first step with introduction of Steve Kaniewski, and as I previously noted we’ll continue to have our divisional management participate from time-to-time on future calls. As well, we will host an investor day in New York City on February 25, 2016. Our group presidents and senior management will participate and we look forward to seeing you there, and that was February 25, 2016. Thank you. And at this time, we will take your questions.

[Operator Instruction] Your first question will come from the line of Schon Williams with BB&T Capital Markets.

Hi, good morning.

Good morning.

Mogens, I wonder, and maybe this is good timing on the utility side, but I just wanted to maybe address some of the concerns in the marketplace on just kind of the volume of projects that are out there. I mean, we’ve seen two of the large contractors in that space come out this week, this past quarter and basically say they’ve seen a pretty significant slowdown in projects, and I guess looking at kind of more smaller projects versus larger projects. I just want to get a sense of how much of that is essentially what you’ve already been experiencing kind of for the last six to nine months. And how much of that is maybe some kind of incremental concern about where the next six months lay on the utility side?

Hey, I’m going to have Steve to answer your question.

Good morning, Schon. This is something that we’ve already seen in the marketplace and actually have guided on in previous discussions. So we don’t anticipate any new risks from what you’ve heard from the two contractors. We’ve already seen that in our business over the past year, frankly. There are a couple of large projects in 2016. There are a few more in 2017. But the general mix of smaller poles and smaller projects is something that we’ve already been dealing with.

Okay. That’s very helpful. Thanks, and then, maybe if we could just touch on the pricing strategy. I mean, so last quarter, Mogens introduced initiative. Potentially, it sounds like you’re going to be walking away from some of the lower margin business. As you look out, I mean, does that mean we should be seeing a scenario as we move into 2016 where volumes are probably still going to be down in utility as you walk away from business, but we could actually see the margin profile improve? Is that - I don’t know. Is that plausible?

I think what you’ll see is that it will be flat. The markets really out there at this point are projected to be flat. And most of any erosion in business that we’ve already had is taking place going back into the early part of this quarter and second quarter. So you will see the improved margin on our orders. But ultimately, we should not see any further big degradation on the top line.

All right, thanks, guys, very helpful. And I’ll get back in the queue.

Your next question will come from the line of Tim Mulrooney with William Blair.

Hello.

Go ahead, Tim.

Hello.

You’re live.

Okay. Yes, good morning. In the Irrigation business, I think the fourth quarter is typically stronger than the third quarter. But last year, actually the fourth quarter took a step down from the third quarter. And I’m just wondering from what you’re hearing from dealers so far through October, do you expect sequential improvement in the fourth quarter or do you expect it to take another step down like last year?

Well, last year, the reason you saw us step down in the fourth quarter was really because of the storm damage in the first quarter. If you just looked at the non-storm-damage sales in the third quarter of 2014 you would have seen a sequential improvement in the fourth quarter. This year we did not have the storm damage in the third quarter. And you will probably see a sequential improvement in the fourth quarter, keeping in mind though that the markets are soft, net farm income is going down. So I think you will see an improvement, but I wouldn’t expect a large improvement.

It’s very helpful. Thank you, Mogens. And then, just one more on acquisitions, how much should acquisitions add to revenue in the quarter on an absolute basis? I think it would just be Shakespeare and AgSense.

About $7 million - $17 million.

$17 million, okay, thank you. And maybe if I could just fit in one more about your corporate expense, I think the run-rate was about $13 million to $13.5 million per quarter, if you go back a number of quarters. But it was only $9 million this quarter. I’m just wondering if there was a good - what the reason was for that, and maybe what we should think about for modeling corporate expense going forward. Thank you.

Yes, this is Mark. And there are really a couple of things that really drove the change in corporate expense. One, of course, is incentives, because I think probably the time period you are talking about for years where incentives were relatively strong. And, of course, with where we are this year, the incentives are going to be pretty small. That’s the first thing. The second thing is, is that we do have some adjustments that take place related to our deferred compensation plan and that’s something in this quarter gave us a benefit to corporate expense of about a-million-nine, but that was offset by other expense that was in the area below operating income. So those are the two main things. But on a go-forward basis, we would expect to see that corporate expense to run around $8.5 million to $9 million per quarter or about $35 million or so per year.

And your next question will come from the line of Nathan Jones with Stifel.

Good morning, everyone.

Good morning, Nathan.

I guess I’ll start in utility, Mogens. We had seen nonconsecutive quarters of the margin declining sequentially in utility up until this quarter, where we have now seen that on corner and an increase. I know it’s still lower than you would like it to be. Do you feel like we have passed the bottom-line pricing there? Have you seen pricing get any better or not get any worse or how should we be thinking about that going forward?

I’ll give you a couple of comments and then I’ll turn it over to Steve. But I would say that - I wouldn’t say that pricing is getting better, but our costs are going down. And that’s what’s driving the margin improvement. And as Steve pointed out, we think that if you take the average of the operating income of utility this year and you will take the average a year from now for next year, that’s where they expect to deliver the 200 basis points in improved margins without expecting any improvement in the pricing environment, but be more selective in the jobs we take. And I’ll have Steve elaborate on that or confirm it.

Yes, Nathan, what we’re seeing overall is that market is staying still highly competitive. Pricing discipline is still kind of over the board and not necessarily the same project-to-project. There are still people trying to take business to fill plants. We decided to take a disciplined approach to look at operationally can we deliver the results to the 200 basis points before we quote the job itself. So there’s not really any pricing stability per se. The market though remaining flat, I think you’ll start to see the other players in the market decide where which the level can be set, but it still remains to be seen.

Is there an opportunity to close or to at least idle one or more plants in the utility business, while you’re looking at finding the bottom here in the demand level?

Well, as I mentioned in opening comments or that was in the opening comments we have already consolidated production into a number of facilities. The hours that we’re producing right now, in total production hours, is very similar to the 2013 levels and almost equal to the 2014 levels. So I can’t really close another facility and continue to deliver even what we have right now. It’s just that the mix of products and project size which Quanta and some others have mentioned is just gotten smaller. So we’re doing smaller poles and smaller projects overall. But they still consume a number of hours to produce them.

And your next question will come from the line of Julian Mitchell of Credit Suisse.

Hey, guys. This is Ronnie Weiss on for Julian.

Hi.

I just want to touch on the restructuring plan. What type of macro background is this kind of predicated on? And if you guys do see some even worsening of the macro-environment, is there more cost able to come out and bigger opportunity there?

Well, in general, we increased our restructuring benefit by continuing to look at places to take our cost from $19 million that we talked to you about earlier this year to now $30 million. And it is predicated on the headwinds we are seeing between currency and mining and energy investment and low agricultural commodity prices and limited investment by public energies and infrastructure development not getting any better. Do we expect it to get worse? I wouldn’t say that, but that we are not see - there’s no reason today to say a quarter or two quarters from now this is really going to turn around. It may, but if it does, our leaner operation and more focus on productivity will give us good leverage. So the macro-environment has not changed and we will continue to look at ways to get more productive.

Looks like great. And then, just on the M&A, just maybe little more focused on kind of where the focus is between the segments, if one has priority over the other, and what kind of metrics you guys look at? Is there a minimum ROI target you guys kind of aim for when looking at some potential deals?

Well, first of all, I’d say that it all comes down to what kind of deals would give us the best return on invested capital. And I wouldn’t say that we favor one part over the - or one segment over the other. But it really comes down to beating our cost of capital within a fairly short period of time. And we are kind of an EVA type company. And we look at how fast can we have positive EVA. We are not looking at just EPS accretion because in today’s debt environment that’s not difficult. We are staying disciplined and making sure that we would beat our blended cost per capital going forward. We did accomplish or finalize one this quarter. We have a pipeline that’s pretty significant, but often we lose out to in many cases private equity that would pay a higher price than we can.

Okay. Thank you.

[Operator Instruction] Your next question will come from the line of Ryan Connors with Boenning & Scattergood.

Great. Thanks for taking my call. I wanted to focus on the irrigation business if we could for moment. Obviously, the commodity price pressures are a big part of the headwinds here, but also it’s been a very wet season and lot of flooding issues this year. So I wonder if you can - is there’s any way you can isolate the impact of that on your business in the third quarter and year-to-date, to what extent weather contribute to the declines, and hence if all else equal, if we get a more normalized weather environment next year, in theory we’d get some of that business back?

I think that’s going to - Ryan, I think that’s going to be - it’s difficult to do. The one thing, well, weather, and in this case, good wet growing conditions early on have hurt the parts business, because the pivots have not been operating in this country, as Mark said, they usually do. But, I would say, the closest correlation short-term to our short-term business is net farm cash income. And if you look at the expectation that farm income will drop anywhere from 30% some to close the 40% this year, it’s a lot like what we have seen in the Irrigation business. So at the current time, when we plan for next year, we do not plan for an improvement in the Irrigation business. There are no indicators out there that would say it’s going to get better. There are some indications that ending stock in corn maybe slightly less than what it was last year, but we haven’t finished the corn harvest yet. And here in the Midwest for sure the weather has been good for harvesting. So I don’t see anything out there that will say Irrigation will get better next year. Now having said that, it is a very unpredictable business, if you have difficult growing condition somewhere in the world or you have a demand change, it will change commodity price as fast. But at the current time for planning purposes, we are not planning on it, but we will be ready for it.

Got it. Well, that’s very helpful. Thank you for that. My follow-up is also related to Irrigation and just on the margin side of that business, it seems like margins there had held up pretty well, but then kind of took a bit of leg down in the third quarter. And there is a - in the press release there were relatively minor one-time adjustments to that number. So can you just talk about kind of what happened there from a margin standpoint in the quarter and the outlook on that side going forward?

Yes. I mean this is really a volume-driven and therefore absorption decline in the margin. We have not seen a major decline in pricing. On multiple system deals things are more competitive than they otherwise are, but in general pricing discipline has stayed pretty good in this business in North America. But when you have - the third quarter is usually a very weak quarter from a volume standpoint, because that’s when farmers are growing their crops. They’re not installing pivots. The exception is when you have a lot of storm damage. So last year you saw a tremendous leverage from having a busy third quarter and this year you saw the deleverage. So when volume goes back, which it will in quarters that are seasonally stronger or if the market environment changes you will see the other side of that, you will see good leverage.

Okay. Well, that’s great. We’ll look, we’ll see you in February in New York. That should be very timely. Thanks for setting that up. Take care.

Thank you.

And your next question will come from the line of David Rose with Wedbush Securities.

Good morning. Thank you for taking my call. Couple of questions just to go on the restructuring side, it sounds, I mean, you obviously had a little bit more traction than you expected and I guess that’s all part of the process. Can we expect more actions in 2016, some incremental actions?

I would say, probably, yes, but not to the extent that we saw this year. There is couple of geographies where we are looking at further actions that we may be able to take but nothing to the level of what we did this year.

So part of the - any processes you think you go through this, as we’ve discussed many times, it’s a journey. So I’m assuming that you’ve all of a sudden, you’re starting to build a nice funnel of project activity too. Have you been able to quantify your funnel of projects for cost takeouts or productivity?

Yes.

Okay. Can you give us a range on that?

Well, we’ve given you the range that we think that the cost takeouts are going to be now in the neighborhood of $30 million. Now, we hope that depending on volume that we’ll also see some improvements as more volume go through fewer plants.

Okay. And the cost takeouts if largely, we haven’t discussed in the Irrigation side, and your point is, is that that farm income is down mid to high 30s percent, at least estimated net farm income. So is there an opportunity to improve productivity on the Irrigation side or reduce the structural costs as well?

Well, actually that irrigation - the Irrigation business is pretty good of doing that. And already starting last year Irrigation was downsizing their cost structure. Now you have to weigh that also against what kind of investments do you need to make in technology, other parts of product development to be ready for when the cycle changes again. We’ve been in this business for 60-plus-years. And the cycles always change; and every time we get into a down-cycle, it kind of ends higher than the previous one. And the tip of the cycle or the top of the cycle ends higher than the previous one. So we try to balance between maximizing profitability by taking out cost where we can, but not hurting the future of the business by cutting out investments in product development that are necessary to continue to stay the leader in this business.

Okay. I understand. It’s a cyclical business and you want to be able to flex-up when you can. And for my last question is on the cash flow, you had some really nice progresses. Is there anything structural that improved on the free cash flow or was this simply a timing issue?

Yes. David, this is Mark. I don’t know if there was anything really structural. I would say though that we were probably - we’re carrying a little bit more inventory than we would probably normally carry at this time. But I think to some degree that’s a consequence of some of our mill-direct [ph] programs and utility where we got longer lead times. But one of the things we’re paying a lot attention to is our - is that cash flows on a monthly and quarterly basis, so that we can really understand where we’re going to be from a cash position so we can execute on our capital allocation objectives.

Okay. Thank you, Mark. I appreciate it.

Holly, are there…

Your next question will come from the line of Jon Braatz with Kansas City Capital.

Good morning, guys.

Good morning, Jon.

Good morning. Mark, I have a question. Obviously, currency has been a tremendous headwind this year. And I’m not going to ask you to try and be a currency trader. But if the currencies stabilize at this level for 2016, will currency be still a headwind or pretty much neutral?

I’m trying to think here for a second. I would say, if they stabilize from where they are right now, I think it will be - if there maybe a little bit of headwind or a tail - or headwind, excuse me, but not nearly to the extent we saw this year. I think the dollar - excuse me, did get a little bit stronger during the year. But now it’s kind of retreated a little bit as well. So I wouldn’t expect to see a big FX impact if we into go into next year comparing 2015 and 2016.

Okay. Can you refresh my memory, what - how much of an impact so far we’ve seen this year on currency? Do you have that number?

I’m going to say it’s in the neighborhood of about $13 million or $14 million at the operating profit level.

Okay.

So far this year, year-to-date.

Okay. All right. Okay. And, Mogens, a follow-up question. The $30 million in restructuring benefits, cost savings, will they be fully realized in 2016 or will they extend into 2017? Can you give us sort of a timeframe there?

Yes, the $30 million will be fully realized in 2016. A small amount of it has probably already been realized, that will be realized during the second half of 2015. But we are not expecting any of the $30 million to have to wait till 2017 to see that.

Okay. All right. Thank you very much.

Your next question will come from the line of Jose Garza with Gabelli & Company.

Good morning, guys.

Good morning.

Mogens, I was just hoping you could add a little bit more color in South America on the Irrigation side and the decline in the volumes, maybe give a little bit more on - maybe magnitude and country-specific.

Okay. In general, the biggest market in South America is Brazil by far. And it has been a very strong and very profitable market for us. You all know about what’s happening in the Brazilian economy in general, the political situation and the increase in the interest rates charged by FINAME, which I think now is 7.5%. So we have seen a significant drop in revenue in Brazil particularly translated into US dollars, because the real has weakened substantially over the last year. So Brazil is kind of an unknown right now as to what’s going to happen going forward. There is further talk now about FINAME financing being tied to the inflation rate in Brazil and may be changing on a more regular basis. Our businesses down there, they are doing a good job of managing through this. They are still nicely profitable and - but not to the extent we saw last year. Argentina is another area with lots of issues both from a currency standpoint and from a political standpoint. But it is a country where our business is much, much smaller, so it doesn’t have the impact that we will have from Brazil or have had from Brazil.

Okay. Thanks. And, just switching gears into the Coatings business, you guys continue to perform pretty well there and are adding to it with the American Galvanizing acquisition. What are the opportunities to kind of grow the value in that business a little more kind of considering there seems to be a little bit of value disconnect between it and its biggest peer?

Well, I think in North America we continue to operate those businesses well. We continue to drive for productivity improvements, fine-tuning zinc pickup et cetera, et cetera. The problem or the challenge we have in the Coatings business is mainly Australia and to a certain extent Southeast Asia. And there we are looking at or will have already consolidated plants and taking out cost. So we plan to see improvement in the profitability of that business going forward. We’ll continue to look for acquisitions. But again, when you look for acquisition in this business these are not businesses that are high growth businesses. They basically grow with the general economy. So therefore when you buy them you better buy them right or you will live with no returns for a long time. So we have to stay disciplined.

Was there any opportunity for financial engineering with that business potentially?

Could you expand on the question financial engineering?

Potentially a spin-off of that business as a sole entity.

Well, I don’t think that it would make much sense as a separate company. In theory, yes, it probably could, but I don’t think that’s on the drawing board here. We like the collection we have on businesses. We say that over time they all to a certain cyclical, but they don’t run in the same cycles. A couple of years ago they were all in an up-cycle on most of them, and right now they’re all in a down cycle. But I think when we look at the future we’ll probably revert to having businesses that are not exactly running in the same cycle.

Okay. Thanks very much.

[Operator Instructions] Your next question is a follow up question from Schon Williams with BB&T Capital Markets.

Thanks for taking my follow up. Mogens, could you just split out the $30 million among the divisions?

I could, but I don’t have it here, but most - well, maybe we have it here. Hold on a second.

This is Tim. I’m sorry. Is your question the $30 million of savings or is your question the $30 million of restructuring cost that we’re going to incur during the initial phase?

Well, I guess, how are they different? And I guess, I was more concerned about the savings that are going to be realized, how those are going to be split among the divisions.

We don’t have - we have a list of $30 million. At this time, we don’t want to share that because there is a lot of different input that are going into our estimates. I can tell you how the $30 million costs are going to be incurred. And from a utility perspective, it will be approximately $5 million, Irrigation will be $1 million, Coatings will be $5.5 million, EIP will be $14.5 million, and then corporate and our other segments will be the remaining $5 million. And again, those estimates are what we’re going to incur in this initial phase of restructuring cost.

And why would the savings be substantially different than kind of that allocation that you just laid out?

Some of this are asset impairments and the depreciation - although we will save on depreciation run-rate we will save more in terms of what we’re going to incur in cost savings versus fixed asset impairment.

Right, and the asset impairments would be mostly in the - I guess, Coatings and EIP division for Australia?

That’s correct.

Yes.

Okay. That’s helpful. And then, if I could back up a little bit, in the press release, Mogens, you talked about, there was commentary around North American telecom being weak because of the absence of, I guess, a carrier this quarter. Can you just talk a little bit about kind of what the situation is there? Just telecom had been a source of strength within the EIP division the last couple of quarters. So I just wanted to see, has that dynamic changed, the communications products has been up on a year-over-year basis. I just want to get a sense of it, if that market is changed.

What I would say, that the big carrier that has been absent in North America for a while has actually been absent for I think more than a year now. We have had good strength in the wireless communication business in China over the last several quarters and that still seems to be the case. And our components business has improved this year despite the weakness with having a big carrier kind of sitting on the sideline for a while. So otherwise I don’t think there’s any big change in the wireless communication business.

With communication products, I mean, would that - that would be negative this quarter then on a year-over-year basis?

I don’t think so.

Well, you mean, a negative comparison to last year same quarter?

Yes, just in terms of the growth rate year-over-year. I mean, it had been positive in the first-half of the year, has that turned negative in Q3?

Hold on a second here and we’ll get you that.

Our sales for communication products are actually up year-over-year for third quarter. But you also have to remember that that includes our China business. And China has been building out its 4G network. We’ve been getting some tailwind from that.

Okay. That’s very helpful. And then, one more if I may. Mogens, hopefully this question is not too brash. But can you just talk a little bit about maybe what the lesson learned is from some of the Australian asset purchases? I mean, when you think back to kind of the original thought process into enquiring some of those businesses, do you feel like to some extent the timing which is for just given what we’ve seen in the commodity complex and what that’s - what’s to the effect that that had on the Australian economy? Was it simply just a bad part of the cycle to be getting into that business? Did - was there - I don’t know. With pricing was - in your mind was pricing not favorable when you entered that transaction? Can you just talk a little bit about kind of - maybe what you would have done differently given you had the benefit of hindsight, if you would have done anything differently?

Well, first of all, it all goes back to the Delta acquisition, which is five years ago. And for the first several years those businesses performed very well. Then you had the mining decline, which affected the Australian economy. And so, maybe even bigger extent, the currency changes between the Australian dollar and the US dollar. So are those businesses going to be good businesses going forward? Yes, we think so. The biggest challenge in Australia is profitability in the coatings business. The other businesses are actually operating a fairly good profitability levels, but not to the extent we saw a couple of years ago. Now to your general question, if we lived in a world of 20-20 hindsight, they are lot of things we would do differently. What do we think that long-term these businesses are not good businesses, no, we do think that they would be good businesses. We would have to as we have done restructure them in such a way that we can maximize profitability in a weak economy in Australia, but Australia is resources not going to be needed in the future, no, that’s not the case, and we will continue to participate there. Is that answer your questions?

Yes, yes. I appreciate the insight. Thank you, Mogens.

And your next question is a follow-up question from the line of Nathan Jones with Stifel.

Yes. Thanks. So could you just go back to the corporate expensive for a minute. Mark, can you talk about how much incentive comp has come out over the corporate line over the last couple years. And if you look forward into 2016, how much of that you think, it is likely to come back in?

I would say, Nathan for this year, there is little of any in the base number. And if you look at target level incentives that’s in the neighborhood of about $4.5 million to $5 million on an annualized basis. And if you went back into 2013 that number was a lot higher than that because we’re above target and then, of course, there is the share impact on the long-term plan. I don’t have the 2013 figures at my fingertips at the moment.

It’s reasonable… [Multiple Speakers]

Sorry, go ahead.

I was going to say that was the largest impact if you look between 2013 and 2015 it was the incentive side of it.

So what would you expect if you perform that plan for 2016, in terms of incentive comp to come back into the cost structure?

It would be about that $4.5 million to $5 million…

Okay.

Yes. And that would be part of the $35 million corporate spending.

Okay. That’s helpful. Thank you.

And that will conclude the Q&A session of today’s conference call. I’ll turn the call back over to Mr. Laudin for closing remarks.

Thank you, Holly. And thank you for joining us on our third quarter conference call. A replay will be available online for a week. And you can get the details for accessing that replay through our press release. And at this time, Holly will read our disclosure on forward-looking statements.