Feb 5, 2009
Executives
Steve Rowley - President and CEO Mark Dendle - EVP, Finance & Administration and CFO
Analysts
Kathryn Thompson - Avondale Partners Trey Grooms - Stephens, Inc. Glenn Wortman - Sidoti & Company Todd Vencil - Davenport Mike Betts - J.P.
Morgan Garik Shmois - Longbow Research Alan Mitrani - Sylvan Lake Asset Management
Operator
Ladies and gentlemen thank you for standing-by and welcome to the Eagle Materials Third Quarter Fiscal Year 2009. During the presentation all participants will be in a listen-only mode.
Afterwards we will conduct the question-and-answer session. (Operator Instructions).
As a reminder this conference is being recorded, Thursday, February 5, 2009. I would now like to turn the conference over to Steve Rowley, President and CEO.
Please go ahead, sir.
Steve Rowley
Thank you, and welcome to Eagle Materials conference call for the third quarter of fiscal year 2009. Joining me today are, Mark Dendle, our Executive Vice President of Finance and Administration and CFO; and Craig Kesler, our Vice President, Investor Relations.
There will be a slide presentation made in connection with this call. To access it, please go to www.eaglematerials.com and click on the link to the web cast.
While you are accessing the slides, please note that the first slide covers our cautionary disclosure regarding forward-looking statements made during this call. These statements are subject to risk and uncertainties that could cause results to differ from those discussed during the call.
For further information, please refer to this disclosure which is also included at the end of our press release. Exceptional business performance is always magnified during difficult economic periods.
Eagle Materials wallboard, paperboard and cement operational performance during the third quarter was outstanding. Our third quarter financial results were better than expected and reflect the incredible performance of our plants, sales and customer services organizations.
When building materials, the construction products sales opportunities become difficult and when the outlook for future sales opportunities continues to trend down, Eagle Materials knows how extremely important it is to rapidly redefine the focus of every valued Eagle employee towards completely new and different challenges that will improve our competitive position in a weak marketplace. This may sound easy but in reality it requires a lot of hard work and flexibility.
Eagle’s positive results show the amazingly swift transformation of our smart, loyal and dedicated employees. The willingness to quickly accept new direction has greatly benefited our shareholders.
I have been asked to pass along a message from our employees to our shareholders. Rest assured that we realize that the current austerity optimization process is a journey not a destination.
And that everyday we continue to improve our ultra competitive low cost positions while maintaining the absolute highest levels of safety, quality and customer service. Dramatically lower wallboard sales opportunity combined with a maximum amount of new wallboard capacity coming online during the past 12 months as the US wallboard industry is operating near 50% capacity utilization, while several US wallboard plant closures have been announced, competition for sales remained keen.
To illustrate this severity of reduced wallboard sales opportunities, our third quarter quarterly comparative revenues declined 17% even with improved order pricings and with the addition of our new Georgetown plant selling product in a new southeast region. The October wallboard price did not hold.
And in fact it created some marketplace disruption. The January wallboard price is partially holding predominantly where pricing had been irrationally low.
On a positive note, energy cost and freight to the marketplace continues to improve. American Gypsum’s margin improvement continues to come from exceptional execution in our plant, logistics and sales department.
Currently the outlook for wallboard sales volume continues to decline because of further reduction in residential construction combined with waning commercial construction. The combination of lower wallboard and paperboard sales volume combined with slightly higher energy cost resulted in our wallboard and paperboard operating earnings declining by 31% when compared to last year's third quarter.
As I stated back in October, our wallboard operations returned to profitability in July. They have remained profitable each month since.
Additionally, as previously mentioned, our wallboard's net sales price has modestly improved as a result of the January price increase. An 18% decrease in sales volumes was the primary driver of the decline in Eagle's quarterly comparative of cement revenues.
A majority of the volume decline was in the Midwest and the West, where current economic conditions in construction remains very weak. Import of foreign cement into the US continued to receive in favor of supplementing regional supply demand imbalances with US manufactured cement from neighboring regional markets.
Our third quarter cement earnings were down 17% compared to the prior year, primarily due to our lower sales volumes, higher energy prices and operating our Illinois Cement plant at 60% capacity. Our concrete and aggregates operating earnings were down 87% from the prior year.
Lower ready-mix and aggregate sales volumes, combined with lower ready-mix and aggregates pricing were the major factors contributing to our reduced revenues and earnings. I will now turn it over to Mark to discuss Eagle's financial position.
Mark Dendle
Thank you, Steve. Eagle's financial position continued to improve during the quarter, thanks to operating cash flow improving significantly from the previous quarter to $41.2 million.
Capital spending in the quarter was approximately $1.8 million. We anticipate our capital spending to remain at these low levels during the current economic downturn.
As of December 31, 2008 our net debt to capital ratio improved from 48% in the September quarter to 45% in the December quarter. We are in the process of repurchasing $100 million of our senior notes.
The purchase will be funded by borrowings under our revolving credit facility, which currently has a lower cost of debt than our senior notes. In addition to lower cost borrowings, the purchase of the senior notes modestly reduces our outstanding debt and improves our financial flexibility with the combination of fixed term debt, variable revolving debt in cash, while at the same time, maintaining a large amount of readily available liquidity.
Thank you for attending today’s call. We will now move to the question-and-answer session.
Operator
(Operator Instructions). And our first question comes from the line of Kathryn Thompson from Avondale Partners.
Please proceed with your question.
Kathryn Thompson - Avondale Partners
Hi, thank you. First on the wallboard segment, where did pricing end up at the quarter end versus the quarterly average that you stated?
Steve Rowley
Very near the average, right around the $105.
Kathryn Thompson - Avondale Partners
Okay. And then also given that your, there's already been some capacity takeouts over the past couple of months, do you see additional capacity coming out of the industry other than that’s been announced.
And if so where geographically do you think it should come out?
Steve Rowley
We have not seen or heard of anybody announcing capacity coming out of the marketplace. The only thing that we know, the majority of the new capacity that’s been added in the last one to two years is all been predominantly in the Mid West or East predominantly in the East.
So that’s where the biggest supply-demand imbalance currently resides.
Kathryn Thompson - Avondale Partners
Okay. Moving to cements.
Did you saw your cement volume out of your plants in the quarter and what are your prospects for the current quarter?
Steve Rowley
No, we have not sold out our Illinois cement plant for some time for at least fall of this year. I think in the quarter this year we sold that plant out of that exception.
Go ahead.
Kathryn Thompson - Avondale Partners
For excluding Illinois which is running at two-third capacity as you said earlier excluding Illinois have your other plants sold all its volume.
Steve Rowley
We continue to sell out our volume, although we have grown some inventory out there.
Kathryn Thompson - Avondale Partners
Okay. The same question on cement side as did in wallboard, what was pricing at the end of the quarter, does it include the average, and kind of tagging onto the previous question, do you anticipate idling any facilities in '09?
Steve Rowley
The price was about the same as the average right here at $95 range. And if business does not pickup in the west we certainly will consider having to idle some capacity out there as well.
Kathryn Thompson - Avondale Partners
And as far as pricing goes, we are hearing that if you include transport, import pricing is about on par and taxes as current production. Could you confirm if that is a similar trend that you are seeing?
Steve Rowley
Yeah, I think you have to take that on a case-by-case basis in the board and in the marketplace. So that would be hard for me to discuss.
I can just tell you, I know that in Texas even though the import prices come down dramatically, it is nowhere near our cost of manufacturing.
Kathryn Thompson - Avondale Partners
Okay, perfect. Also to the aggregates, I have seen that there was a bit of a mix that continued to be a factor in your pricing in your just reported quarter.
Do you expect mix to continue to be a factor in the current quarter?
Steve Rowley
Yes, this quarter maybe not as much because a lot of that had to do with a base or a sub-base job in Northern California with the weather being difficult, now there is very little work taking place this quarter. Maybe that will moderate in the fourth quarter, but again a large volume of our current sales are less than aggregate is going into base month.
Kathryn Thompson - Avondale Partners
Okay. All of it seems to equal on in terms of aggregate pricing in California.
I understand mix was an issue in this quarter and the previous quarter, but all things equal for your California aggregate pricing. What has pricing done sequentially and year-over-year?
Steve Rowley
It essentially hasn’t moved much, it may move a little on a specific job, but in reality even if you build some inventories in aggregates. You don’t have a tremendous amount of capital tied up in the inventory build.
So it’s much easier just to be patient and wait till the market turns rather than to try to dump that inventory into the marketplace.
Kathryn Thompson - Avondale Partners
So would you characterize I guess flattish year-over-year?
Steve Rowley
That’s correct.
Kathryn Thompson - Avondale Partners
Okay. And what about Texas?
Steve Rowley
Texas, the same thing. The issue always in Texas is because the deposits are fairly poor.
There is a fair amount of base that has to, it will be mined when you are producing the washed aggregates. And so the base tends to get pretty competitive whereas the pricing on your concrete aggregates and asphalt aggregates tends to remain pretty stable.
Kathryn Thompson - Avondale Partners
Okay. What was D&A for the quarter?
Steve Rowley
Deprecation and amortization?
Kathryn Thompson - Avondale Partners
Yes.
Steve Rowley
For the quarter ended December 31st it was $12.7 million.
Kathryn Thompson - Avondale Partners
Okay. And then also I guess your interest expense on annualized basis will be about $1 million below on a quarterly basis from the Q3 run rate, is that a correct assumption?
Steve Rowley
That's correct.
Kathryn Thompson - Avondale Partners
Okay. That's all I have for right now.
Thank you.
Operator
And our next question comes from the line of Trey Grooms from Stephens, Inc. Please proceed with your question.
Trey Grooms - Stephens, Inc.
Good afternoon. Just a couple of questions, one Steve, with cement volume and demand obviously down, can you talk about how you guys are running your cement plants differently in this environment.
And then also how you see plant cost trending in '09?
Steve Rowley
It's really important to properly maintain cement plant as we said all along. We stay ahead of that instead of getting behind it.
If properly maintained, these plants are very efficient and they generate tremendous amounts of free cash flow. But when the market turns and they have to operate not at full capacity, it really requires a completely different mindset throughout the entire organization.
Cost reduction versus producing that incremental tonnage capacity becomes paramount, but you have to do that not at the extent of maintenance. So you force the efficiencies to be better and the cost of the materials that you use as well as you find ways to use less energy and less fuel and ultimate fuels that may cost a little less to produce the products.
So tremendous amount of energy that goes into that, you also minimize your maintenance cost as opposed to really bringing in a lot of outside help to have an outage instead of being , get a ten day outage performance in eight or seven days, that gives you a lot of contract, lot of contractors they are coming in to help out, you just go ahead and accept that your maintenance is going to be 10 or 11 or 12 days and you do perform all the maintenance with your own employees.
Trey Grooms - Stephens, Inc.
Okay. And so with all that said, looking at cement cost or plant cost on a per unit basis, would you expect that to trend down somewhat in '09 given what you just said?
Steve Rowley
The answer is yes, we believe that’s going to be the case.
Trey Grooms - Stephens, Inc.
Okay. And then for wallboard, would you mind giving us a kind of your best guess on where you see wallboard consumption shaking out in '09?
Steve Rowley
It’s pretty difficult right now and if I had to put a guess, the front half is going to be annualized at less than $20 billion per annual basis. Let’s hope that the second-half of the year is a little higher and maybe we come in near that $20 billion square feet of demand for '09?
But the front half is definitely less than that and trending down.
Trey Grooms - Stephens, Inc.
Okay, and then last question is, with all of the distress assets in aggregates in cement industry we are seeing out there right now. Are you guys seeing anything interesting, that you think you could possibly make a run at some point this year.
Steve Rowley
We are always open to look at opportunities, but it has to be the right opportunity, I think it's a little early but if things continue to decline from an economic perspective maybe something becomes available that peeks our interest.
Trey Grooms - Stephens, Inc.
Okay, thanks a lot, and congratulations on a good quarter.
Steve Rowley
Thank you.
Operator
Our next question comes from the line of Glenn Wortman from Sidoti. Please proceed with your question.
Glenn Wortman - Sidoti & Company
Good afternoon, guys.
Steve Rowley
Good afternoon.
Glenn Wortman - Sidoti & Company
Aside from, yes, the cost controls you just discussed is there anything going on in cement that’s allowing you to preserve margins?
Steve Rowley
That’s really the lever that we are pulling.
Glenn Wortman - Sidoti & Company
Okay. And then looking to the paperboard segment, what's behind the profitability improvements there, because it looks like you are seeing some volume declines as well but margins look like they are going higher.
Steve Rowley
Very similar to what we talked about in cement; we were able to buy fiber that’s nice right now, that’s something that’s just happening because the economy fiber costs are lower but we dramatically reduced the freight to bring the fiber in. We have reduced our natural gas consumption by 27% that is a huge impact to the cost of producing paper.
We reduced our waste quality product by 75% versus last year, and we have reduced our chemical spend by more than 34% by operating that machine better. So, it’s really that focus on cost control that is making the difference.
Glenn Wortman - Sidoti & Company
Okay. And then finally with respect to cement pricing, it came down a little bit in the quarter.
Was that due to weakness across all your markets or was that in any particular market?
Steve Rowley
It is primarily in the Midwest and the West, although things are starting to get difficult in all markets.
Glenn Wortman - Sidoti & Company
Okay. Alright, thank you very much.
Operator
And the next question comes from the line of Todd Vencil from Davenport. Please proceed with your question.
Todd Vencil - Davenport
Hi guys, how are you? Nice job on the margin performance in the quarter.
Steve Rowley
Thank you.
Todd Vencil - Davenport
Remind me the magnitude of the January wallboard price increase?
Steve Rowley
The magnitude was 10% to 15% on labor, (inaudible) about 10%.
Todd Vencil - Davenport
Okay. And only part of that sales, would you want to venture a guess as to how much of that’s held?
Steve Rowley
It's still a moving target, less than half though. But it's still a moving target.
Todd Vencil - Davenport
Okay. And when you think about wallboard, do you have a feel for how much of a benefit you are getting from lower energy cost at this point?
Steve Rowley
Sure do. From a sequential perspective, we have had about a $7 or $8 benefit.
Year-over-year I think we have had a benefit of about 2.5 months or so I think.
Todd Vencil - Davenport
Okay. And do you have those numbers for cement as well?
Steve Rowley
For cement it’s a minor benefit there. I think and in fact just the opposite power cost are up about a $1 and fuel cost is essentially flat.
Todd Vencil - Davenport
Any outlook for that to change or is that basically where you think you are going to be for a while?
Steve Rowley
No. I think we can improve on that.
We are working on alternatives that will help improve those costs.
Todd Vencil - Davenport
Alright. Steve, I have realized this is a question everybody shun to answer, but I would love to hear your thoughts on it, as the most educated of the two of us who are talking right now, anyway.
With demand continuing to fall off, I am thinking specifically about wallboard, demand continuing to fall off. And with a really nice decline in your energy cost, looking at something like a 50% capacity utilization number, how is it that the competitive situation is allowing for you guys to continue to get price in that business?
And that’s what I am really scratching my head. But I am glad you did it and you are doing a good job, but do you think you can continue to do that this year?
Steve Rowley
You just have to look, now you are talking about maybe some regional differences. The majority of this price increase as I mentioned a little bit earlier on the prepared comments was in some markets that were just irrationally low in the pricing, just made note of that.
And people were at or below cash cost on average in those marketplaces. So, it makes sense to get some price increase there and we are achieving that.
As you go forward, it's really a function of each competitor and how efficient they are. But as I look at wallboard, I am looking at all of our plants here and I see waste in the 1% level, the low 1% range.
That’s incredible performance. And that’s what gets your cost below and gives you that advantage over the price in the marketplace.
So, when you get to capacity utilization in the 50% level, it’s more a function of what is your delivered cash cost in the marketplace, and if you are more effective at that you are going to make money, if you are less effective at that or there is some transportation costs that impact that, then you have an advantage and you have a chance and if those costs move in, you are not going to continue to operate below cash costs, so you will have price improvements when those things occur.
Todd Vencil - Davenport
Okay, that makes sense. Have you seen any in the areas maybe where the price increase isn’t holding, where the pricing wasn’t as irrationally low, are you seeing any discounting behavior by the competition, or is everybody kind of hanging in there?
Steve Rowley
In those cases, I don’t think we achieved much benefit, but I don’t think we gave much back this time. In November, we actually did get some back, but the October-November price increase was little difficult, this one I have not seen a lot of give back from the original price.
Todd Vencil - Davenport
Got it. And on the cement side, I mean any kind of regional pricing or competitive differences any place standout has been either.
You have talked about what the demand situation looks like, is anybody really pushing down on price in any of your markets?
Steve Rowley
We are not seeing that in any markets?
Todd Vencil - Davenport
Okay. And then final question I guess, in the concrete business, can you just talk a little bit about how the sort of price cost dynamics are sort of playing out there where you guys are operating?
Steve Rowley
That’s difficult and the further in the value chain, you go down the tougher the competition you always get. So that’s very difficult for us in both the Texas market as well as in Northern California market.
So margins are pinched down very-very small in both of those businesses.
Todd Vencil - Davenport
Has your material spread declined in the last quarter?
Steve Rowley
Maybe not in the last quarter but they are pretty low.
Todd Vencil - Davenport
Got it. Okay, thanks a lot.
Operator
Next question comes from the line of Mike Betts from J.P. Morgan.
Please proceed with your question.
Mike Betts - J.P. Morgan
Hello?
Steven Rowley
Hello?
Mike Betts - J.P. Morgan
Hi, Steve. I had a number of questions.
Can I just firstly clarify, you talked about $7 to $8 in terms of the natural gas benefit, that’s per 1000 square foot or is that some of the unit?
Steven Rowley
No, that’s correct.
Mike Betts - J.P. Morgan
Okay, could I ask then firstly, how much hedging you had in the quarter, I mean if you had a little benefit now with the natural gas prices or was there any hedging in place?
Steven Rowley
We had some hedging in place, not a tremendous amount, but we had some hedging in place, less than half maybe 40%. And then going forward we are about that same level 35% to 40% hedged and it's fairly low numbers.
Okay, less than $7.
Mike Betts - J.P. Morgan
Okay. And the decline in waste paper costs and therefore I guess in liner board paper cost.
Was that a benefit in the quarter in terms of a significant dollar saving there as well?
Steven Rowley
Absolutely.
Mike Betts - J.P. Morgan
Are you able to quantify what the saving was?
Steven Rowley
The fiber cost is down from about $165 to about $110.
Mike Betts - J.P. Morgan
That’s ton a fiber?
Steven Rowley
Per ton of fiber, that’s correct.
Mike Betts - J.P. Morgan
And how many tons of fiber did you use per size and square feet of wallboard?
Steven Rowley
I would have to get, I will get back with you on that.
Mike Betts - J.P. Morgan
Okay, thank you. And maintenance cost, I don’t think there were any in Q3, correct me if, in terms of major cement plants down for maintenance in Q3.
Are you expecting any in Q4?
Steven Rowley
Yes, we will have a long kind of maintenance inventory shutdown at Illinois Cement. Even though we have been running that reduced capacity for winter, has been very difficult there.
So we do have some maintenance to do, and with sales very-very weak, we are going to take an extended outage and perform some maintenance.
Mike Betts - J.P. Morgan
So will we see a cost that was much different from in terms of maintenances in Q4 as this year versus Q4 of last year?
Steven Rowley
I would have to check and see if we had maintenance at another facility last year’s Q4, but I am not certain. I am guessing you will see it little different.
Mike Betts - J.P. Morgan
Okay, and than I had a question if I could just on the financial side. I guess this one is for Mark.
Are you using some of the committed credit facilities to refinancing this bond? What do you now have left in terms of committed credit facilities from the banks?
Mark Dendle
Well the bank credit facility is a $350 million facility and we will be drawing down $95 million for the purchase of the notes and then we have about $15 million outstanding on letters of credit which also goes against the facility.
Mike Betts - J.P. Morgan
And how long is it committed for?
Mark Dendle
Through June 2011.
Mike Betts - J.P. Morgan
Okay. And I really mind when I guess but I just wondered why the tax rate increased in the quarter?
Is that the nine-month tax rate a pretty good guide to what you would expect for the year? And why did it go up?
Mark Dendle
It went up for a several minor reasons and adjustment in the depletion factor also true up of the state taxes and once we follow-up the return, the actual return in December 2008 for the prior year, we were also able to true up the rates for any return to accrual differences.
Mike Betts - J.P. Morgan
Okay. That's good and then last one just for Steve.
From your comment earlier Steve, the $15 cement price increase, the industry stride in some market I mean no sign at all of that’s sticking in any of your market by the sound of it, would that be a fair judgment?
Steven Rowley
Absolutely.
Mike Betts - J.P. Morgan
Okay. Thanks very much.
Operator
And our next question comes from the line of Garik Shmois from Longbow Research. Please proceed with your question.
Garik Shmois - Longbow Research
Hi, good afternoon. Thanks for taking my call.
Just first off on aggregate prices, just wondering if you have any price increases in the market right now for first of the year?
Steven Rowley
We do not.
Garik Shmois - Longbow Research
Okay. Any thoughts on whether you might be able to secure some price increase in 2009.
Steven Rowley
I believe the aggregate inventories released in our market are pretty high. And so until the inventory levels come down, it will be difficult.
Garik Shmois - Longbow Research
Very good. And just lastly most of my questions have been answered.
Just wondering as we look at cement import and there has been a lot of discussion about whether or not they will make way into the US and most of the answers we have been getting is no, but one of the markets that may be vulnerable in our estimation maybe Northern California. Just assuming let’s say import do enter the Northern California market are lower priced and domestically produce cement.
Would it pose a threat theoretically to your cement produced out of the Nevada facility?
Steven Rowley
We really have a very small amount of sales in Northern California and it would just have a minor impact.
Garik Shmois - Longbow Research
Okay, very good, good quarter. Keep it up.
Operator
And your next question comes from the line of Alan Mitrani from Sylvan Lake Asset Management. Please go ahead.
Alan Mitrani - Sylvan Lake Asset Management
Hi, thank you. Just to understand the debt buyback, looking at the trenches of the debts you have, you said you bought back the Series A from 2005 and the Series A 2007 issues, is that correct?
Steven Rowley
It’s primarily the 2007, it primarily came out of the 2007 Series.
Alan Mitrani - Sylvan Lake Asset Management
If the trench A from 2007 was only $20 million and the trench A from '05 was only $40 million. So maybe you can tell us which are the trenches that were taken out?
Steven Rowley
It was primarily out of the 2007 Series A, B and C.
Alan Mitrani - Sylvan Lake Asset Management
A, B and C?
Steven Rowley
A, B and C. with a little bit out of the '05.
Alan Mitrani - Sylvan Lake Asset Management
Okay. And is the goal, maybe I can understand the goal because you were good at laddering these explorations throughout starting in 2012/2014, I understand you can get a little bit buying back at a discount, 5% discount or maybe save some by arbitrage and the LIBOR, because LIBOR is low now on the credit line versus the fixed rate here.
But is the goal to push out maturities and then figuring you will be able to over the next couple of years pay down the bank revolver?
Steven Rowley
Clearly it’s just really to give us the flexibility that we need almost to the point of, if the world really has some very-very difficult issues, what do you do if these markets really collapse? We don’t have any worries there.
We feel that we are able to maintain the current amount of debt, they used to be $400 million without having any issues with covenant requirements. But as the world remains uncertain you wanted to have the flexibility to not have a gross debt covenant but more of a net debt covenant.
So switching over to having a piece of term debt, a piece of variable revolving debt as well as cash on the balance sheet it allows you to handle any situation that may potentially come your way.
Alan Mitrani - Sylvan Lake Asset Management
Okay, so just understood. Thank you.
I think I understand, basically what you are saying is this gives you the ability if you wanted to deplete down pieces of the debt. As you go to pull down your gross that were as before you could not pay it down because it was fixed and trenched out?
Steven Rowley
That’s correct.
Alan Mitrani - Sylvan Lake Asset Management
Perfect. Also do you expect to stay profitable this whole year this whole coming year?
Steven Rowley
Yes we do.
Alan Mitrani - Sylvan Lake Asset Management
Okay, and do you feel like because your wallboard business has managed to stay profitable basically throughout this downturn maybe one quarter out, didn't I think you came close. Do you think the wallboard business also can stay profitable for that even with permits and housing starts continuing to trend down?
Steven Rowley
Yes I do.
Alan Mitrani - Sylvan Lake Asset Management
And then lastly commercial construction, you always had a decent crystal ball, seems like there's not much on the drawing board for the back half of '09 into 2010. What’s your best guess as to what kind of commercial construction declines you are going to see for calendar ‘09?
Steven Rowley
Commercial construction is really an 18 to 24 month build out. So far the last maybe, certainly 6 to 9 months we have been starting to align.
So, another 6 to 9 months out we should kind of hit a very low level and then see whether anything new comes about where you might start to see an improvement, but clearly it's going to continue to wind for another six to about nine months.
Alan Mitrani - Sylvan Lake Asset Management
And the Stimulus Package when it gets passed how do you see that impacting you?
Steven Rowley
Probably not a whole lot in calendar '09, the majority of that would start to impact us in '10.
Alan Mitrani - Sylvan Lake Asset Management
And I realize there’s not much money around for acquisitions these days but what are you seeing from distressed sellers or how often you are looking at books from competitors or small assets and maybe just give us a sense to what the market is like?
Steven Rowley
Yes, I think it's still a little early while there are some assets that will become unavailable we haven’t seen anything that really has enticed us to do a lot of work, but more and more become available every month. And we will remain vigilant because we think there are somethings that will really improve our position.
Alan Mitrani - Sylvan Lake Asset Management
Great, thank you.
Operator
Mr. Rowley, there are no other questions at this time.
I will turn the call back to you.
Steven Rowley
Thank you. I look forward to talking to you again in next quarter.
Operator
Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.