Franklin Electric - Q4 2018

Transcript

Operator (participant)

Ladies and gentlemen, welcome to the Franklin Electric's fourth quarter 2018 sales and earnings. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session, and instructions will follow at that time. If anyone should require operator assistance during the call, please press star then zero on your touchtone telephone. As a reminder, this call is being recorded. I would now like to introduce you to for today's conference, Mr. John Haines, Chief Financial Officer. You may begin.

John Haines (CFO)

Thank you, Skyler, and welcome everyone to Franklin Electric's fourth quarter and fiscal year 2018 earnings conference call. With me today is Gregg Sengstack, our Chairman and CEO. On today's call, Gregg will review our fourth quarter and full year business results, and I'll review our fourth quarter and full year financial results. When I'm through, we will have some time for questions and answers. Before we begin, let me remind you that as we conduct this call, we will be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to various risks and uncertainties, many of which could cause actual results to differ materially from such forward-looking statements. A discussion of these factors may be found in the company's annual report on Form 10-K and in today's earnings release.

All forward-looking statements made during this call are based on information currently available, and except as required by law, the company assumes no obligation to update any forward-looking statements. With that, I'll turn the call over to our Chairman and CEO, Gregg Sengstack.

Gregg Sengstack (Chairman and CEO)

Thank you, John. I am pleased to report that our strong organic growth drove record sales and earnings for the fourth quarter of 2018. Our Water Systems unit in the U.S. and Canada grew organically by 23%. Fueling Systems organic revenue growth was 10%, and Distribution revenue, somewhat muted by unfavorable weather, was flat in the quarter. With consolidated organic growth of 9% and tight expense control, our fourth quarter operating income after restructuring increased 17% compared to last year and was a record for any fourth quarter in our history. In the U.S. and Canada Water Systems business, Pioneer branded dewatering pump revenue doubled from last year. Given the growing diversification of the Pioneer Pump customer base and growing international reputation, we expect the Pioneer product line revenue will increase for the full year of 2019 as well.

Other surface pumping equipment revenue accelerated nicely, up 9% in the quarter. Groundwater pumping system sales to third parties from both our manufacturing and Distribution segments was essentially flat in the quarter. Outside the U.S. and Canada, our Water Systems business saw mid to upper single digits organic growth in Europe, the Middle East, Africa, and Asia Pacific. Unfortunately, this was mostly offset by a 10% organic sales decline in Latin America, primarily Brazil. Across the globe, our Water Systems team continues to focus on delivering system solutions, pumping systems and packages that are integrated and energy efficient. As an example, with our expanding line of pumps with permanent magnet submersible motors, we're documenting up to 30% energy savings. Our Fueling Systems team delivered another record quarter.

Revenue in the U.S. and Canada market was up 14% as the team continued to extend its success with major marketers in North America. Internationally, the Fueling Systems team achieved about 60% revenue growth in China. As I previously mentioned, we expect the China underground piping upgrade to add significant revenue and income to our fueling business over the next several years, and some provinces are choosing to extend their upgrades beyond piping systems to pumping and leak detection systems as well. Outside of China and India, international Fueling Systems revenue declined over 10%. While a significant decline, we see it more related to timing on large orders than market or market share issues. Fueling Systems continue to lead the market with new products and services.

During the year, the team launched FFS Pro Verify, an installation assurance program, new containment sump line to address U.S. and China regulations, and a corrosion mitigation system, to name a few. Turning to our Distribution segment, Headwater, fourth quarter revenue is flat organically. Integration and restructuring activities are proceeding well. All Headwater businesses, except Milan Supply, which we purchased this year, are on one ERP system, and the planned branch consolidation in the West is on schedule. However, our operating results are behind plan. Higher product and employee benefit costs contributed to the Distribution segment earnings decline in the fourth quarter. We expect a meaningful improvement in segment performance in 2019 as the team focuses on selling an extended range of clean water pumping systems, wastewater pumping systems, and turf irrigation products.

As we close the books on 2018, I want to take a moment to thank all my colleagues for delivering record revenue, operating income, earnings, and cash flow. A job well done. Looking to this year, we believe the momentum we have in our North America and Europe Water Systems end markets and a global Fueling Systems business to continue. We remain cautious about our Water Systems business in developing regions. Overall, we believe our organic growth will be in the mid-single digits, variable contribution margins will be steady, and with continued tight expense control, operating income before restructuring will grow double digits. However, currency headwinds and a higher tax rate will reduce earnings per share growth to around 7%. Accordingly, we expect our 2019 earnings before restructuring to be between $2.37-$2.47 per share.

I will now turn the call over to John to discuss the numbers in more detail. John?

John Haines (CFO)

Thanks, Gregg. Our fully diluted earnings per share were $0.51 for the fourth quarter of 2018, versus $0.17 for the fourth quarter of 2017. Restructuring expenses were $0.7 million and were primarily related to branch consolidations and other asset rationalizations in the Headwater Distribution segment, and had a $0.01 impact on the earnings per share in the fourth quarter of 2018. Fourth quarter EPS before the impact of restructuring expenses was $0.52 compared to 2017 fourth quarter EPS before restructuring of $0.21. These earnings per share results were a record high for any fourth quarter in the company's history. The company incurred a tax expense of $0.21 per share in the fourth quarter of 2017, related to the U.S. Tax Cuts and Jobs Act of 2017.

Before restructuring and the tax expense, the company's fourth quarter 2017 earnings per share was $0.42. So after considering the restructuring expenses and the 2017 impact of the new tax law, our earnings per share of $0.52 in the fourth quarter of 2018 grew by 24%. Fourth quarter 2018 sales were $316.7 million, compared to 2017 fourth quarter sales of $288.2 million, an increase of 10%. The sales increase was from acquired entities as well as organic sales of about 9%. Sales revenue decreased by $10.8 million, or about 4%, in the fourth quarter of 2018 due to foreign currency translation.

Water Systems sales were $196 million in the fourth quarter of 2018, an increase of $14.5 million, or about 8%, versus the fourth quarter of 2017 sales of $181.5 million. In the fourth quarter of 2018, sales from businesses acquired since the fourth quarter of 2017 were $4.4 million. Water Systems sales were reduced by $9.5 million, or about 5% in the quarter, due to foreign currency translation. Water Systems organic sales were up about 11% compared to the fourth quarter of 2017. Water Systems operating income was $27 million in the fourth quarter of 2018, compared to $19.5 million in the fourth quarter of 2017.

Strong operating income growth in the U.S. and Canada was partially offset by declines in international regions, in part due to weakening foreign currencies versus the U.S. dollar. Operating income margin before restructuring expenses in Water Systems was 13.8% and was 250 basis points higher than the fourth quarter of 2017. Fueling systems sales were $75.9 million in the fourth quarter of 2018, an increase of $8 million, or about 12%, versus the fourth quarter of 2017 sales of $67.9 million. In the fourth quarter of 2018, sales from businesses acquired since the fourth quarter of 2017 were $2.2 million. Fueling Systems sales decreased by $1.3 million, or about 2% in the quarter, due to foreign currency translation.

Fueling Systems organic sales increased about 10% compared to the fourth quarter of 2017. Fueling Systems operating income was $17 million in the fourth quarter of 2018 and 2017, respectively. Fueling Systems operating income was flat in the fourth quarter, as growth from higher sales was offset primarily by negative geographic and product sales mix and higher fixed costs. Distribution sales were $56 million in the fourth quarter of 2018 versus fourth quarter of 2017 sales of $49.5 million. In the fourth quarter of 2018, sales from businesses acquired since the fourth quarter of 2017 were $6.4 million. The Distribution segment organic sales were flat compared to the fourth quarter of 2017.

The Distribution segment recorded an operating loss of $2.9 million in the fourth quarter of 2018, compared to a $2 million loss in the fourth quarter of 2017. Higher product costs, not completely offset by price and higher employee benefit costs, contributed to the Distribution segment earnings. The company's consolidated gross profit was $104.3 million for the fourth quarter of 2018, an increase from the fourth quarter of 2017 gross profit of $94.6 million. The gross profit as a percent of net sales was 33% in the fourth quarter of 2018, compared to 32.8% in the fourth quarter of 2017.

In both the fourth quarter and full year of 2018, the company believes it has offset the impact of raw material inflation with achieved price. Selling, general and administrative expenses were $75 million in the fourth quarter of 2018, compared to $69.4 million in the fourth quarter of the prior year. The increase in SG&A expenses from acquired businesses was $3.3 million. Excluding the acquired entities, the company's SG&A expenses in the fourth quarter of 2018 were $71.7 million, an increase of about 3% from the fourth quarter of 2017, and was due primarily to higher variable compensation expenses in the fourth quarter of 2018 versus the prior year. The fourth quarter of 2018 effective tax rate, net of discrete events, was 14%, and consistent with our previous guidance.

In the fourth quarter of 2017, the effective tax rate was about 63%, and included a net tax expense of $10.2 million due to the U.S. Tax Cuts and Jobs Act of 2017. Had this net tax expense from the new law not been incurred, the fourth quarter of 2017 effective tax rate, net of discrete events, would have been about 14%, or the same as the tax rate in the fourth quarter of 2018. In 2019, we believe our effective tax rate, net of discrete events, will be between 18% and 20%, significantly higher than the 2018 effective tax rate of about 12%. This higher tax rate is primarily due to the inclusion in 2018 of discrete tax events that effectively lowered our tax expense for the full year.

We do not believe these events will reoccur at nearly the same level in 2019. Specifically related to the first quarter, in the first quarter of 2018, the company recognized $5 million of discrete tax benefits from certain deferred tax positions, which lowered our effective tax rate in that quarter to about 9%. Discrete tax benefit and lower tax rate improved earnings per share in the first quarter of 2018 by about $0.11, and without it, our first quarter 2018 earnings per share would have been $0.34. This benefit will not reoccur in the first quarter of 2019. As a reminder to our investors, the inclusion of the U.S. Distribution segment in our consolidated earnings has made our quarterly earnings more seasonal.

As a result, we estimate two-thirds of our earnings will be in the second and third quarters of the year. The company ended 2018 with a cash balance of $59.2 million, which was $8 million lower than at the end of 2017. Significantly higher net cash flows from operating activities were offset by higher repayments of debt and repurchases of the company's common stock in 2018. The company had $76 million in borrowings on its revolving debt facilities at the end of the fourth quarter of 2018, and $67 million in borrowing at the end of 2017. The company purchased about 512,000 shares of its common stock for approximately $21.7 million in the open market during the fourth quarter of 2018.

As of the end of the fourth quarter of 2018, the total remaining authorized shares that may be repurchased is about 1.4 million. On January 22nd, the company announced a quarterly cash dividend of $0.145 per share, an increase of 21% from the previous quarterly dividend amount. The dividend was paid February 15th to shareholders of record on February 1st. This concludes our prepared remarks, and we would now like to turn the call over for questions.

Operator (participant)

Ladies and gentlemen, if you have a question at this time, please press the star, then the number one key on your touch-tone telephone. If your question has been answered, or you wish to remove yourself from the queue, please press the pound key. Our first question comes from Edward Marshall with Sidoti. Your line is now open.

Edward Marshall (Senior Equity Research Analyst)

Hey, guys. Good morning. How are you?

John Haines (CFO)

Good morning, Ed.

Edward Marshall (Senior Equity Research Analyst)

I wanted to talk about the pricing actions that you put in place this year. I think as we were leaving the second quarter, you talked about 250-300 basis points of price, which was ahead of the normal price increases that you normally get. I'm curious, how much of that did you achieve, and will that continue into 2019?

John Haines (CFO)

Yeah, Ed, as we've discussed in the past, you know, the pricing actions vary a bit by business, by region, sometimes even specifically by product line. In the fourth quarter, we calculated an achieved price realization of about $8.5 million in total. As we've said, we believe that that offset what we can discretely identify as raw material inflation, including the impact of tariffs in the United States. So, we feel pretty good about the momentum, price momentum that we have going into 2019. As you know, some of that price action that we took was more back-end loaded, third, fourth quarter, 2018, and will be more fully effective in 2019. We'll continue to monitor this.

This is something we look at on a, obviously, on a monthly basis. Some of our business units have incremental price increases coming yet in 2019. That's all based, you know, there's a balance here between what inflation might seem, what's the competitive market environment look like, and that's how our, our price decisions will continue to be made.

Edward Marshall (Senior Equity Research Analyst)

Got it. And I guess, in the press release and in the comments today, you talk about the Distribution business and the profitability and kind of trending below or your expectations. I'm curious, you quantify or you mentioned meaningful profit growth in the business for 2019 or improvement in the Distribution business for 2019. I'm curious, can you quantify, or maybe can you take us through some of the steps that you guys are thinking about to improve the performance out of Headwater?

Gregg Sengstack (Chairman and CEO)

Sure, Ed. You know, we've been-- if you think about 2017 was a year of getting the business stabilized. We had, you know, a couple major suppliers elect to no longer supply on the West Coast, particularly, and that, you know, took some wind out of the sails. 2018 was all about integration, getting on a platform. You have-- I mean, yes, we can quantify some of those costs. We reported the restructuring, but you just have some natural friction that occurs there. So 2019, we have a, you know, a business that's on one platform, with the exception of the small acquisition we made at the beginning of the year. Yeah, and I think, you know, long term, John has gone out with, you know, our view is 4%-6% range.

You know, we think that for 2019, we should, you know, see at least a doubling of the bottom line of the business, for that year, and that gets us closer to that 4% range at the bottom of the range.

Edward Marshall (Senior Equity Research Analyst)

Got it. Got it. So it's more about just the business' kind of one-year post, kind of some of the disruptions that might have happened in the business and more operating as it, as it should. Did you see signs of that in the fourth quarter, that recovery and kind of the, the maybe the ghost of the past kind of behind you, or, you know, talk about maybe the, what you saw in the fourth quarter?

Gregg Sengstack (Chairman and CEO)

Yeah, I'd say in the fourth quarter, at the beginning of the quarter, is when we put everybody on our or extended the platform, ERP platform we had. You know, of course, that always causes some disruptions. You know, we announced the changes in consolidation and increasing, expanding certain sites in California. So I wouldn't say the fourth quarter was indicative, and that's why we pointed out that we just saw some higher costs and higher operating expenses. We expect that now as behind us, we're entering the year, the business is in a good place, and we expect to see a much better performance in 2019.

John Haines (CFO)

Yeah, the fourth quarter is always gonna be a tough seasonal quarter as well. Ed, you know, a lot of, a lot of the areas where the fourth and the first quarter, you know, a lot of areas where Headwater has real market strength, those are, those are just markets that are effectively turned off in the first and fourth quarter.

Gregg Sengstack (Chairman and CEO)

Due to weather.

John Haines (CFO)

Due to weather and just the season. Right.

Edward Marshall (Senior Equity Research Analyst)

Right. Right. So, and knowing that the first quarter feels some of those same effects, are we kind of thinking more June, September quarters to kind of really see the improvement within Headwater? Is that where it'll start to show up in our models?

Gregg Sengstack (Chairman and CEO)

Yeah, and that's where what John pointed out, as a reminder that, you know, with having a northern hemisphere Distribution business, you know, U.S.-centric, you know, it's going to, you know, shape earnings more in a Q2 and Q3 because of that seasonality.

Edward Marshall (Senior Equity Research Analyst)

Right. Right. Okay. And I noted in the press release that you talked about maybe not getting the price increases within the Distribution that you thought you might, but it sounds like you got them in the water business. So I'm curious if some of the margin compression that you've seen there is related to kind of what's happening with the price and maybe not being able to pass that through.

John Haines (CFO)

Yeah, I think, we for sure, the Distribution segment, Ed, got price in the fourth quarter, so I don't want to leave the impression that we didn't get price. We had some higher cost in the fourth quarter, and the point we made was that, you know, the price didn't totally offset some of that higher cost. Generally, you know, as we've talked, you know, there's a gross profit ratio in this business, and then there's an operating expense ratio. And I would say generally, we're pretty comfortable with the gross profit ratio, you know, where we're at in terms of, you know, net sales less our cost of sales.

I think more of the opportunity that we'll have to capitalize on to expand our earnings, as Gregg mentioned, is probably gonna be more on that OpEx ratio line and just drive a lower fixed cost base, SG&A base, in the company. And we've got ideas and plans for how to execute some of that in 2019.

Edward Marshall (Senior Equity Research Analyst)

Just, just to be clear, that doesn't have anything to do with sales commissions or anything like that?

John Haines (CFO)

No, I think you know, I think the sales commissions will be fairly consistent year-over-year. I mean, obviously, we'll put growth targets in those sales commissions. So, you know, we expect you know, our salespeople to achieve a higher growth rate to get their commission. But generally, there's not any major change in those assumptions going into 2019.

Edward Marshall (Senior Equity Research Analyst)

And I'm sorry if I could squeeze one more in. Did you see? Can you talk about maybe the turnover on that business? Has there been turnover within your Distribution business from operators or sales reps?

Gregg Sengstack (Chairman and CEO)

... No, we've seen quite the opposite, a nice level of stability. And, you know, yes, there's been some involuntary change, but the voluntary turnover is nominal.

Edward Marshall (Senior Equity Research Analyst)

Great. Good to hear. Okay, thanks very much. Appreciate it.

Gregg Sengstack (Chairman and CEO)

Sure. Thanks, Ed.

Operator (participant)

Our next question comes from Ryan Connors with Boenning & Scattergood. Your line is now open.

Ryan Connors (Managing Director)

Great, thank you. Yeah, I wanted to switch gears and talk about, some of the top-line drivers and, some specifics behind that on a few fronts. One of them was, you know, you mentioned good continuing to see good strength in China in the fueling business. Obviously, that's a hot topic these days. So can you talk about, you know, the, the order cadence there, the backlog, anything you can do to give us some visibility going forward in that China piece for fueling?

Gregg Sengstack (Chairman and CEO)

Sure, Ryan. I will have a foot on a dock and a foot on a boat. Yeah, visibility is always tough, but, you know, we saw 2018 unfold pretty much as we expected to maybe slightly stronger than we expected in China. It, the upgrade is going on. It's extending westward. Our team's view right now is that 2019 and 2020 will have similar revenue profiles as 2018. So we see this as being continuing on through 2019 and 2020.

Ryan Connors (Managing Director)

Okay.

Gregg Sengstack (Chairman and CEO)

More specifically, yeah, more specifically, even now, we saw... You know, you have Chinese New Year, and, you know, we saw the slowdown like we did last year. I mean, we're talking now into 2019, but we saw the slowdown as we did in that New Year. New Year's now over, we're seeing the pickup. So, there's no indications at this point that our team's view of having similar results or revenue results in 2019 and 2020 to 2018 is still solid.

Ryan Connors (Managing Director)

Got it. Okay. And the other one was, you know, Pioneer. You know, where do we stand there from a comps perspective? Obviously, we'll start lapping some of these big growth numbers here in the next few quarters. So, you know, what should we expect there in terms of that, you know, kind of a soft landing there in terms of the growth rates or any color there?

Gregg Sengstack (Chairman and CEO)

Yeah, that's why I called that out for 2019, because this has been a business where we have seen, and you may recall, a big cycle back when the oil prices collapsed in 2015. This year, what we're seeing so far is an indication that you know, Pioneer is gonna maintain and actually improve on the revenue that we saw in 2018. We're still seeing some solid backlog, solid interest in North America and the rest of the world for the line. And so, our management team there is confident that 2019 revenue will exceed 2018 revenue. Certainly not by the 60%+ we saw in 2018.

I'd say it'd be more modest in the, you know, the single digits, but that's similar to what we've called out for our entire water business for the year.

Ryan Connors (Managing Director)

Got it. And then one last one I wanted to ask on was, you know, interestingly, you called out wastewater as an area of strength. Any added flavor there in the, you know, types of products? Is that new project versus repair, replace, the geographies? Anything you can give us there?

Gregg Sengstack (Chairman and CEO)

Yeah, you know, it's the wastewater business that we're referring to is specific to the U.S. And we've put more focus on the business on that product line generally in the last year, and I think we're seeing the fruits of that. I don't think the market's growing appreciably any faster. You know, it is gonna grow faster than freshwater. I mean, the freshwater business in the U.S. is mature, but wastewater does have growth, and we've been focused more attention on those products in those channels, I should say.

Ryan Connors (Managing Director)

Got it. Okay. Thanks for your time.

Gregg Sengstack (Chairman and CEO)

Sure. Thanks, Ryan.

Operator (participant)

Our next question comes from Matt Somerville with D.A. Davidson. Your line is now open.

Matt Summerville (Senior Analyst)

Thanks. A couple questions. First, just, with respect to the water business, I think, Greg, in your prepared remarks, you talked about remaining fairly cautious on the emerging markets there. I was wondering if you could maybe just spend a moment speaking to each of your sort of major emerging markets, including Brazil, Thailand, and others, and how—what the right way to sort of frame up to 2019 would be for us.

Gregg Sengstack (Chairman and CEO)

Sure, Matt. I guess after a couple of years of saying we'd be cautiously optimistic, having, again, seeing weakness, we're now more cautious in our comments. But, Latin America, particularly Brazil, we do see that the business is improving, but I'd say it's improving really, really slowly, so I wouldn't get too far ahead. So, you know, we see the improvement. It is their season right now, so they'll be going into the winter months. But we do see some stability, I'd say, now in Brazil. We, you know, acquired business in Argentina. We knew we were acquiring business going into a tough market, but we just saw a really great opportunity to forward integrate in Argentina by acquiring a customer we've known for, you know, for decades.

So that's gonna be tough, but, you know, there isn't gonna be a comp until we lap in the summer. By that time, I suspect that Argentina will be in a good place for us. We are seeing some strength in Southern Africa. We have some level of optimism. You know, you read the press, and you read about the challenges around availability of electricity and continued problems with Eskom. But I'd just say that, you know, generally, we feel a little bit more positive about Southern Africa. You know, we have a nice business in Turkey. It's had a real tough time in the last six months because of the currency devaluation.

So we're gonna have to wait to see the season, which is probably gonna be kind of the April time frame, May time frame. But, you know, farmers are still there. They need products, they need pumps. We're well positioned there, but I think that's kind of a second quarter pickup. We're gonna see some cost pressure in Q1 in Turkey because, you know, the product that was purchased in the latter part of last year now has to go through the income statement. In Asia, specifically in Thailand, again, I think the team's seeing that the curve begin to bend back up. It's still yet to be seen whether we'll see that in Q1.

I think, again, it's kind of more back-half loaded, but we're, we're encouraged in Southeast Asia as well. So a little bit more positive, probably in my unprepared comments than in my prepared comments, but, you know, we've been burned a little bit on, on this in the last couple of years, so that's why I had caution in my prepared remarks.

Matt Summerville (Senior Analyst)

Sticking with the sort of emerging market discussion, as you look at kind of your fixed cost infrastructure throughout these countries, throughout these regions, does the current performance you see in the business, the overall outlook, give you reason to contemplate taking additional cost actions in the near term?

Gregg Sengstack (Chairman and CEO)

You know, Matt, we've been pretty steady and judicious about taking fixed cost actions just generally. I mean, you know, we do work to size the cost structure to the business. You know, that said, we are, yeah, as I think you're going through, we've been delevered in these markets, but they're just such important end markets for us, that you know, we wanna have the infrastructure in place to continue to support the long-term demand in these markets. It's where, you know, all the people live. I mean, the vast majority of the population of the world lives in developing regions, and we just see it's really important to be there. So certainly, you know, we have our leadership is conscious about, you know, fixed costs and managing those fixed costs.

You know, we're in a good place right now from a standpoint of capturing upside when it comes.

Matt Summerville (Senior Analyst)

And then just lastly, with respect to ag, maybe talk globally, but certainly, please comment on what your thought is for the U.S. While I recognize we're out of season, just with all the noise around farm incomes and trade and tariffs, what's your overall outlook for ag, for Franklin in 2019?

Gregg Sengstack (Chairman and CEO)

Yeah. Here again, there hasn't been a real catalyst to drive tremendous ag growth. That said, given the multiyear decline in farm income, generally, as we've talked before, the view is we're mostly now in a replacement cycle with the product. So any type of movement around farm income upward, any type of movement related to drier weather conditions, it would be, you know, good for us. But I'd say that, you know, we're kind of in a, you know, we've been in a multiyear decline of farm incomes, and at this point, you know, we have a stable business in ag in the U.S. Certainly, probably a similar story in Brazil, which would be another ag big ag market for us. I spoke to you about Turkey.

I think that, you know, it's Turkey, it's really just a question of timing for farmers to start buying again after having this currency shock. Those would be the principal ag markets that come to mind that I can comment to.

Matt Summerville (Senior Analyst)

Thanks, Greg.

Gregg Sengstack (Chairman and CEO)

Sure, Matt.

Operator (participant)

At this time, I'm showing no further questions. I'd like to turn the call back over to Mr. Gregg Sengstack for closing remarks.

Gregg Sengstack (Chairman and CEO)

We thank you for joining us on this conference call, and look forward to speaking to you after the first quarter end. Thank you.

Operator (participant)

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.