Jul 24, 2012
Operator
Ladies and gentlemen, good morning, thank you for standing by and welcome to the CTS Corporations Quarter 2 Earnings Call. [Operator instructions] I would now like to turn the conference over to our host, Director of Investor Relations, Mr.
Mitch Walorski. Please go ahead.
Mitchell Walorski
Thank you, Tom. I’m Mitch Walorski, Director of Investor Relations, and I will host the CTS Corporation Second Quarter 2012 Earnings conference call.
Thank you for joining us today.
Mitchell Walorski
Participating from the company today are Vinod M. Khilnani, Chairman of the Board and CEO, and Tom Kroll, Vice President and Chief Financial Officer.
Mitchell Walorski
Before beginning the business discussion, I would like to remind our listeners that the conference call contains to forward-looking statements. These statements are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.
Additional information regarding these risks and uncertainties was set forth in last evening's press release and more information can be found in the company's SEC filings.
Mitchell Walorski
To the extent that today's discussion refers to any non-GAAP measures relative to Regulation G, the required explanations and reconciliation are available on our website in the Investor Relations section.
Mitchell Walorski
I will now turn the discussion over to our Chairman and CEO, Vinod M. Khilnani.
Vinod Khilnani
Thanks, Mitch, and good morning, everyone. Last evening, we released our second quarter financial results for 2012.
I’m pleased to report that total sales, adjusted net earnings, and free cash flow were all higher year-over-year from second quarter of last year and up sequentially from the first quarter.
Vinod Khilnani
New business activity was healthy, and new product introductions remain on schedule. We also took some restructuring actions proactively in the second quarter to capture some productivity savings and further lower our overhead expenses.
Vinod Khilnani
Our global headcount at the end of the second quarter was reduced by approximately 4%, while our sales from the quarter went up 5%. As a result, our productivity in terms of sales per employee improved by 9% year-over-year.
Vinod Khilnani
The actions in this restructuring will also reduce our global manufacturing and office floor space through consolidation by approximately 10%. The excess floor space is now being either sublet or sold.
Tom Kroll will comment further on our restructuring actions and savings going forward.
Vinod Khilnani
Sales in the second quarter of 2012 at $154.3 million were up 5% year-over-year driven by a strong 12.9% increase in our Component and Sensor segment sales. This was partially offset by a 1.8% decline in the EMF segment sales, mainly due to weakness in the defense and aerospace and communications market.
Vinod Khilnani
Within our Component and Sensor segment, total automotive sensor and actuator sales at $47.3 million were up a strong 17.3% from the same quarter last year, while global light vehicle production in units was up only 10% in that period. European light vehicle production was actually down approximately 10%, and a strong U.S.
dollar versus Euro also had an adverse impact on revenue and earnings.
Vinod Khilnani
Despite these factors, new product introductions, increased market share, and a strong bounce back in sales to Honda and Toyota helped record double digit sales growth year-over-year in the second quarter of 2012.
Vinod Khilnani
Examples of new products and increased market share which helped record strong sensor and actuator sales in the second quarter included earlier than expected launch of our new grill shutter actuator program, shipments of new pedal modules to 3 different Asian OEM’s. A new sensor program for European luxury vehicle platforms also began to ship, a recaptured sensor program for Asian markets, which was lost in 2010, and lastly, we became a sole-source supplier for a North American pedal module on a popular Japanese family vehicle.
This business was split between CTS and a competitor previously.
Vinod Khilnani
In the second quarter of 2012, we captured 7 new sensor and actuator programs with total revenue opportunity of approximately $45 million over program life compared to 3 program wins in the same period last year. These new awards to not include replacement program wins.
Vinod Khilnani
Continuing with the Component and Sensor segment, sales of electronic components at $29.5 million were up 6.5% from the second quarter of 2011, driven by strong piezoceramic business and the Valpey-Fisher product line. Weak European sales combined with soft telecomm infrastructure in military and defense markets kept component sales from increasing double digit year-over-year in the second quarter.
Vinod Khilnani
Our electronic component piezoceramic group received a supplier of the year award from a leading global film and printer head manufacturer. Our piezoceramic sales improved a healthy 38%, primarily helped by increasing shipments to the disc drive industry.
Vinod Khilnani
Our EMS segment sales in the second quarter of 2012 at $77.5 million were $1.4 million, or 1.8%, lower than last year due to both weakness in the defense and aerospace and communication markets, and our decision to exit some low margin small customers.
Vinod Khilnani
As a result of one of our restructuring actions, we have now ceased our small and unprofitable EMS operation in Scotland.
Vinod Khilnani
Sales to industrial and medical customers were up double digits year-over-year. Looking forward, we do not expect macroeconomic conditions to improved much in the next couple of quarters; however, we expect sales to grow in the second half of 2012, primarily through increased market share and new product introductions.
Vinod Khilnani
Our smart actuator launch in the late fourth quarter of 2012 to a major global diesel engine manufacturer is on track. We expect this new product to generate $20 million in new sales next year as we have discussed before, and then, ramp up to approximately $30 million and $40 million in 2014 and 2015 respectively.
Vinod Khilnani
Because of the weak global economic growth expectations over the next few quarters, primarily driven by negative economic growth in Europe and the impact of stronger U.S. dollar, we are reducing our full-year 2012 sales growth guidance to an increase over 2011 of 4% to 7% from 10% to 13%.
Vinod Khilnani
However, because of our proactive restructuring actions to further improve our cost structure and improved segment mix in favor of components and sensors, we expect to offset the impact of lower volumes. As a result, we are leaving our previous adjusted earnings per share guidance unchanged.
Vinod Khilnani
Now I will turn the meeting over to Tom Kroll, our Chief Financial Officer, who will provide further details regarding our financial results. Tom?
Tom Kroll
Thank you, Vinod, and welcome, everyone. Before we review the financial results in detail, I would like to comment on a couple of unusual second quarter items.
First, our restructuring actions and second, our EMS Thailand facility flood-related insurance recoveries and expenses.
Tom Kroll
So first, we proactively initiated a $5 million restructuring action to, number one, further reduce CTS’ overhead cost structure by consolidating a couple of manufacturing sites, and two, move some production to low-cost facilities, and finally, capture some synergies from our recent acquisitions by consolidating engineering functions. This restructuring will reduce head count by 260 employees and provide annualized savings of approximately $6 million.
Tom Kroll
During the second quarter, we recognized $3.8 million, or $0.08 per share, of this $5 million restructuring charge. The remaining $1.2 million will be recorded in the second half of the year.
Of this $5 million total restructuring amount, $3.2 million will be cash and $1.8 million will be noncash.
Tom Kroll
Secondly, we received $7.4 million of insurance recoveries and incurred approximately $5 million of flood-related expenses and lost margins. The net of these 2 items benefitted the quarter by about $2.4 million, somewhat greater than expected, and as discussed in our first quarter earnings conference call earlier this year.
All Thailand flood-related disruptions and transfers are now substantially complete.
Tom Kroll
Now I’ll discuss the results. Our consolidated second quarter 2012 sales were $154 million, a 5% increase from both prior year and prior quarter.
Our diluted earnings per share were $0.10 compared to $0.12 in prior year. Our adjusted earnings per share, which excludes restructuring and related charges, were $0.18 compared to $0.14 in the prior year, a 29% improvement.
This improvement was due to a better business segment sales mix and higher sales volume.
Tom Kroll
The quarter included a couple of offsetting non-operational items, specifically the positive impact of the net insurance recoveries that I just discussed which was approximately $2.4 million or $0.04 per share. However, this $0.04 was offset by higher pension expense of $0.02 per share and unfavorable currency losses of $0.02 cents.
Tom Kroll
Our adjusted gross margins, which exclude the $5 million of flood expenses and lost margin, and our restructuring charge discussed earlier, is 20.5% compared to 19% last year, an increase of about 150 basis points. About 2/3 of this improvement was due to a more favorable business segment sales mix as our component and sensor sales were 50% of total revenue in the second quarter compared to 46% last year.
The other 1/3 was primarily due to lower precious metal costs.
Tom Kroll
Our Selling, General, and Administrative expenses were $19.4 million, or 12.6% of sales, versus 18.1 million, or 12.3% of sales, last year. The increase from last year was primarily due to higher pension and legal expenses.
Tom Kroll
Our second quarter Net interest, Currency, and Other expenses totaled $1.1 million compared to $0.5 million of income last year, primarily due to higher foreign currency losses as the U.S. dollars strengthened against the Chinese renminbi and the European currencies that CTS conducts business.
Tom Kroll
Our second quarter effective tax rate was 26.9% compared to 17.9% in the same quarter of 2011. The increase in the tax rate was primarily due to changes in the mix of earnings by jurisdiction and the expiration of certain tax benefits.
Much of our insurance recoveries are taxed at the higher U.S. tax rate.
Tom Kroll
During the second half of this year, we expect some of our expired tax benefits to be reinstated, such as the U.S. R&D tax credit and a requalification of one of our China facilities as a high-tech enterprise, which will result in a lower tax rate.
Therefore, we continue to expect our full-year 2012 effective tax rate to be approximately 25% compared to 20.4% in 2012, unchanged from our previous estimate.
Tom Kroll
Now, let’s look at the balance sheet. From a working capital perspective, our accounts receivable days improved to 50 days from 53 days in the second quarter 2011.
Our accounts payable were at 69 days compared to last years’ 72 days. During the quarter, we reduced our inventory by $13.4 million, or 15%.
Our inventory balance of $78.7 million compares favorably to the $92.5 million balance at year end 2011, improving our terms to 6.5 from 5.4 last year.
As expected and previously discussed, the inventory decrease occurred primarily in the EMS business segment as we recovered from the Thailand flood-related production disruptions. As a result, controllable working capital, which we define as these 3 accounts
receivables, payables, and inventory, improved to 16.7% of annualized sales, significantly improved from the 18.3% last quarter and better than the same quarter a year ago.
As expected and previously discussed, the inventory decrease occurred primarily in the EMS business segment as we recovered from the Thailand flood-related production disruptions. As a result, controllable working capital, which we define as these 3 accounts
Our second quarter 2012 cash flow from operations was a strong $16.1 million compared to $11.3 million last year, and cash usage of $4.1 million last quarter. Capital expenditures were $2.5 million versus $3.4 million a year ago.
We expect our capital expenditures to remain in the range of $16 to $18 million as previously projected.
As expected and previously discussed, the inventory decrease occurred primarily in the EMS business segment as we recovered from the Thailand flood-related production disruptions. As a result, controllable working capital, which we define as these 3 accounts
Our second quarter free cash flow, defined as cash flow from operations less net capital expenditures, improved to $12.5 million compared $0.8 million a year ago. Year-to-date, our free cash flow is positive $4.5 million compared to $2.3 million last year.
Based on our strong second quarter, we now expect our full year free cash flow to be in the $19 million to $24 million range, improved from our previous guidance of $16 million to $21 million range.
As expected and previously discussed, the inventory decrease occurred primarily in the EMS business segment as we recovered from the Thailand flood-related production disruptions. As a result, controllable working capital, which we define as these 3 accounts
Our net debt, defined as total debt less cash and cash equivalents, decreased $10.3 million during the quarter improving our debt to capital ratio to $26.8 million from $29.1 million last quarter per cent. We expect this to further improve in Q3 and Q4.
As expected and previously discussed, the inventory decrease occurred primarily in the EMS business segment as we recovered from the Thailand flood-related production disruptions. As a result, controllable working capital, which we define as these 3 accounts
During the second quarter of 2012, we repurchased 300,400 shares of CTS stock for $2.9 million at an average price of $9.68, essentially completing our current buyback authorization.
As expected and previously discussed, the inventory decrease occurred primarily in the EMS business segment as we recovered from the Thailand flood-related production disruptions. As a result, controllable working capital, which we define as these 3 accounts
This concludes our -- the financial overview. And Tom, I would know like to open the call for questions.
Thank you for joining us today.
Operator
[Operator instructions] Our first question today comes from the line of John Franzreb with Sidoti & Company.
John Franzreb
Actually, I want to start with the restructuring. Could you talk a little bit about how much is allocated to the EMS segment and how much to Components and Sensors?
A little bit of color there would be helpful.
Tom Kroll
John, for the quarter, approximately 2/3 of that was EMS, but with the total restructuring about 60% will be EMS-related. For the full-year, as I mentioned, the annualized savings will be approximately $6 million.
Full-year won’t be quite $3 million, but $2 million to $2.5 million of savings is what we would expect.
John Franzreb
Now was the restructuring deemed necessary due to the customers lost from the downtime in Thailand, or is it more of a macro call, or is it a -- why did you deem it necessary at this time?
Vinod Khilnani
Good question, John. Let me give you some color and give you some examples of what is included in this restructuring.
From the EMS point of view, you know in Scotland we have a fairly large automotive operation and with it we also have a small EMS operation. That operation standalone, nothing to do with Thailand floods, we did not think was -- the critical mass and was, in the long run, a profitable operation.
And so, we essentially exited from EMS operations in Scotland. So that’s probably the big chunk of the EMS.
Since we did that we selectively looked at all of our operations and over the last year or so all the productivity improvements really helps, the little bit of work which we have been doing. We took the opportunity to tweak our indirect head count down a little bit.
But the main thing was the Scotland operation. Along with this restructuring, as a result of the Valpey-Fisher acquisition, we had recognized synergistic opportunities between the 2 engineering organizations.
We had our own frequency engineering capabilities near Chicago, and Valpey had their own in Hopkinton, near Boston, so we’re consolidating those 2 and achieving those synergies from that acquisition, and so we are reducing our engineering capabilities in Chicago and consolidating that with Valpey-Fisher. We also found opportunities to move from manufacturing from our Tucson facility and take it either to our Albuquerque facility or Nogales, Mexico facility in electronic components.
So, we are consolidating our Tucson manufacturing and thereby eliminating all manufacturing in Tucson. Another example of some productivity improvement is that when we bought -- when we did the little acquisition in Switzerland, Fordahl, they were doing some manufacturing, which was overlapping with either our Singapore facilities, or Boston, Valpey-Fisher facilities.
So we are exiting that manufacturing, nothing big, just small. But, we found a lot of synergistic opportunities, either created by the Valpey acquisition, or our other productivity improvement actions we have done.
As a result, as I pointed out, we have roughly 200,000 square feet of freed up space. Which we are either pursuing subletting, or selling or doing some combination of sale/leaseback kind of transaction, so that we can bring our footprint and make it more efficient.
John Franzreb
Okay. Vinod, so, then with the combination, and again, I just want to stick to the EMS side of this conversation.
The combination of exiting from lower profitable customers, some of these consolidation actions on the EMS side, let's talk about some of the historical target margins you've had on the EMS. Is it now more achievable?
Is the number now higher, or do macro conditions make that still a bit of a stretch?
Vinod Khilnani
I think, I will not make the target higher, John. You do these actions to make them more achievable, higher probability, quicker, or all of the above.
John Franzreb
Okay. You know, I'll just ask one more question, and then I'll let somebody else go.
Regarding the insurance recoveries; how much are you allowing for in Q3?
Tom Kroll
John, we expect to recover $3 to $4 million, in Q3. [indiscernible] expenses.
John Franzreb
Say that again.
Tom Kroll
John, Q3 will also have expenses of $1 to $2 million. So, net-net should be positive by $1 million to million.
Operator
Our next question today, comes from the line of Gary Prestopino, with Barrington Research.
Gary Prestopino
A couple of things. Number one, did you, or do you give us what the actual revenues were from the piezo product were?
Vinod Khilnani
John, in investor presentations we have a slide on piezo. In that slide, we have said in the past, that in 2012 our piezoceramic sells would be more around $30 million.
While 2011 was $20 million. You know, that number has been going up and down.
If you would have asked me that question a couple of weeks back, we heard that the disk drive industry was pairing down their orders. Today, I think they are putting some of those back, in the fourth quarter.
I suspect, based on the forecast we have today, we'll come very close to that $30 million number, which we had projected earlier.
Gary Prestopino
Okay. But you don't give it for the quarter year.
That's what I'm trying to get at.
Vinod Khilnani
We historically haven't, but we can give you an approximate range. Tom, you have the piezoceramic sales, approximately in the quarter.
Tom Kroll
Yes. The piezoceramic sales, Gary, were about $6.5 million.
Gary Prestopino
Okay. That's fine.
Thanks. And then, a couple of housekeeping, then some other big picture.
You said your effective tax rate for the year is going to be about 25%?
Tom Kroll
That's correct.
Gary Prestopino
So, there will be some catch up in Q3 and Q4, because you didn't, you had very minimal taxes in Q1, or am I reading that wrong?
Tom Kroll
No, you're right. But we also had very minimal income in Q1.
Gary Prestopino
Right. Okay.
That's fine. Then, in terms of in the verbiage in the press release, we're now talking about lower economic growth, including negative economic growth in Europe.
In my recollection this is the first time this has kind of come up, but if we look at your guidance where it was and where it is now; you've got a delta of about $35 million of revenues. I guess, just for our purposes, can you maybe break that down into how much is currency, how much of that is negative economic growth in Europe.
Is most of the negative economic growth coming out of Europe, then further between your various divisions?
Vinod Khilnani
I think it's a combination, as you said of FX, Europe and softness in some specific areas like defense and aerospace. My guess, Gary, would be, and we can do some more work and give you some more clarity on that.
Our estimate is that FX is probably $4 to $5 million, of that amount. We believe Europe is probably another $10 to $15 million.
The remaining is softness in industries like defense and aerospace. Where we have seen some of our large customers just push out the orders.
They may yet materialize, but it's just that everybody is hedging their bets. We have seen some defense and aerospace weakness; we have seen weakness in our distribution and buy/sell side of the business.
So it's a general, one notch more weaker, and more globally, I would say, combined by a much sharper drop in Europe.
Gary Prestopino
Is Europe, most of what you're doing in Europe is not auto related, or is it?
Vinod Khilnani
Not what related?
Tom Kroll
Not auto. It is auto.
Vinod Khilnani
It is primarily auto, but it is also electronic components and some EMS. Did that address your question, Gary?
Gary Prestopino
Well, I guess it is, just looking at, as I said this just started cropping up, and so this is some good directionally, where things could go. But, this is not any cancellation of any programs or anything.
Vinod Khilnani
No.
Gary Prestopino
It's just across the board slows.
Vinod Khilnani
No, not at all. The other thing, Gary, that happened was the bulk of our sales drop, is primarily driven by EMS.
That's not to say that we only saw weakness in EMS. We saw weakness in other of our component sensors too.
However, we had some positive news on component sensor, which was not expected. In fact, we pulled up the launch of the [indiscernible] actuators.
So, some of the component sensor sales declines, or negative surprises are offset by some of the market share which we gained, which was not expected, frankly. So the net-net, our guidance down is primarily coming from the EMS, which helps from a bottom line impact, point-of-view.
Gary Prestopino
Okay. So there's been nothing, all the other product launches are on track, like the hard disk drive pedal module, and then the diesel engine products?
Vinod Khilnani
Yes. We had no program cancellations, we had no business lost.
Gary Prestopino
I just -- what is the total sales going to Europe now? About 17% or 12%?
Vinod Khilnani
Tom is checking. I think it's more like 17%, but let us double check that.
Tom Kroll
Yes. Gary, just give me one moment and I'll give you that.
[indiscernible]. 15%, 14% to 15%.
So, Gary it's approximately 15%, 16%.
Operator
Our next question today, comes from the line of Hendi Susanto, with Gabelli & Company.
Hendi Susanto
First question is, I would like to understand better, like how we should think of the profitability related to the guidance. You are lowering the annual revenue growth, but keeping the same earnings guidance.
I'm wondering what drove higher profitability, despite the lower revenue target. I would think that part of it is driven by more favorable product mix, and any color is appreciated.
Vinod Khilnani
Hendi, as we said, the bulk of the reason we are lowering the sales projection is because of EMS. That is by definition, a lower margin business.
So we have a smaller amount we have to overcome, because of the lower sales. We are expecting that the savings generated from these proactive restructuring actions we have taken in the second quarter, and will take some more in the third quarter, as Tom indicated.
Some more would be in the third quarter, which I included in the numbers. They should help us offset the bulk of the sales decline, is our expectation.
Because, bulk of the sales decline is coming from EMS, it slightly improves our segment mix, which makes it easier to do that.
Hendi Susanto
Okay. Then, if I look at your EMS segment, the operating margin is stronger than my expectations.
It's running at like 5.4%, which is relatively high compared to the previous several quarters. I'm wondering whether you can provide any insight into that.
Vinod Khilnani
Yes. Hendi, as Tom said, the segment is benefiting from the insurance proceeds.
Which are disproportionately large in this quarter, compared to the accrual expenses. So, just like we had the first quarter where EMS had the flip side, they had expenses but no insurance recoveries, they were hurt by that, it was fourth quarter last year.
Tom Kroll
And the first quarter.
Vinod Khilnani
And first quarter. This quarter has the opposite effect.
So, I think this year, when the year is complete, we probably need to highlight for you what were the true insurance, flood related expenses and the reimbursements. So that you can get a better gauge of what the true margins are.
Hendi Susanto
Okay. Then, may I know how much sales of [indiscernible] was in Q2, and what's their projection for the remainder of the year?
Vinod Khilnani
I think the Q2 number was fairly small. Probably $1 million range.
Q2 number, I think should be more -- Q3 numbers should be -- between Q2 and Q3 -- I'm sorry. Between Q3 and Q4, probably we'll do another $3 million.
Hendi Susanto
Then, when will you see the full production ramp of the grill shutter?
Vinod Khilnani
The full production ramp should be by the fourth quarter. We had said earlier, Hendi, that the grill shutter, on a full year basis, is probably in the $8 million per year, kind of a business.
Hendi Susanto
Okay. Then, I would like to think of what OpEx looks like, excluding the, like flood reimbursement and cost.
May I know where the $5 million related costs is buried in the income statement?
Tom Kroll
Yes, Henry, or Hendi. That's a very good question.
That $5 million is all in cost of goods sold, on the statement of income.
Hendi Susanto
Okay. I see.
So, the OpEx run-rate is something we can think of for the remainder of the year?
Tom Kroll
I'm sorry. Ask your question again.
Hendi Susanto
The OpEx run-rate, should we expect OpEx to run about at the same level, for the remainder of the year?
Tom Kroll
Yes. Pretty much.
If you look at the selling and general and administrative expenses, they're about $19.3 million. That, coupled with about $5 million, of R&D.
That's a pretty decent run-rate.
Operator
[Operator Instructions] And we will go to the line of John Franzreb, with Sidoti & Company.
John Franzreb
I just want to kind of review your expectations on the top-line, guys. What, in your guidance, what are you assuming is the EMS revenue outlook for the balance of the year?
Vinod Khilnani
John, I think historically, we have not broken out our guidance, from looking at my notes.
Tom Kroll
So, John, if we look at EMS for a full year standpoint, it's going to be slightly down, probably, to last year. In a very rough range.
John Franzreb
Okay. That makes sense with what I'm looking at now.
And, if I strip out new program revenues, like the Somalian actuator and the grill shutter. What is the, call it organic growth, in components and sensors, how does that kind of play out?
Vinod Khilnani
Let me give you some directional help on that. I think that within our component and sensors, my sense is that the sensors piece, will still have very strong double-digit growth, year-over-year.
Because of new programs, or, if you remember last year, we were affected by the tsunami, and so the year-over-year increased its shipment to our Japanese customers, is pretty robust.
John Franzreb
Easy comp there. Right?
Vinod Khilnani
Easy comp there, and combined with new products. As I gave you examples, there were a couple of platforms which we shared with the competitors, in the U.S.
This year, we're full force on that one. So between components and sensors, sensors and actuators would be very strong.
An electronic component piece is a little bit worrisome, and we're watching some indicators. Because it looks like that within that piece, we have a stronger piece, which is piezoceramics, which is helped by the disk drives.
But we have a couple of fairly weak pieces, one is the distribution and buy/sell business seems a little weak. The other piece is some ceramic filters, or some of the electronic components we're selling to tier 2 people who then sell to the tier 1 defense and aerospace customers, like Raytheon type people.
That segment seems weak, and a lot of question mark on it, on whether it's going to bounce back in the fourth quarter or not. So, we're worried about defense, we're worried about some telecoms infrastructure projects, for customers on a global basis, and we're worried about some distribution and buy/sell businesses.
So, we're kind of trying to balance a weak electronic components side, with a fairly strong sensors and actuators side; and that's creating some uncertainty.
John Franzreb
That's perfect, Vinod. That's exactly what I was looking for.
I guess, on the CapEx side, is there any major spending that's going on here? Or, can you just address the CapEx budget for the balance of the year?
Vinod Khilnani
Nothing major. However, we do have a possibility of somewhat of an uptick, in the third and fourth quarter.
Purely because we are winning new business.
Operator
Ladies and gentlemen, there are no further questions at this time.
Mitchell Walorski
I would like to remind our listeners, that a replay of this conference call will be available from 1:30 p.m. Eastern daylight time today, to 11:59 p.m., on Tuesday July 31, 2012.
The number for the replay is 800-475-6701, or 320-365-3844, if calling from outside the U.S. The access code is 254229.
Thank you for joining us today.
Operator
Ladies and gentlemen that does conclude our conference. Thank you for your participation and for using the AT&T Executive Teleconference.
You may now disconnect.