Nov 7, 2008
Executives
Donald M. James - Chairman and CEO Daniel F.
Sansone - Sr. VP and CFO
Analysts
Kathryn Thompson - Avondale Partners Timna Tanners - UBS John Kasprzak - BB&T Capital Markets Garik Shmois - Longbow Research Ajay Kejriwal - Goldman Sachs John Fox - Fenimore Asset Management Trey Grooms - Stephens Inc. Michael Betts - JPMorgan Todd Vencil - Davenport & Co.
Operator
Good day, ladies and gentlemen, and welcome to the Third Quarter 2008 Vulcan Materials' Earnings Conference Call. My name is Gina and I will be your coordinator for today.
At this time, all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference.
[Operator Instructions]. As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the presentation over to your host for today's call, Mr. Don James, Chairman and CEO.
Please proceed.
Donald M. James - Chairman and Chief Executive Officer
Good morning. Thanks for joining this conference call to discuss our third quarter results and outlook for the remainder of 2008.
I am Don James, Chairman and Chief Executive Officer of Vulcan Materials. We appreciate your interest in Vulcan and we hope our remarks and dialogue and Q&A today will be helpful to you.
A replay of this conference call will be available later today at our website. Joining me today is Dan Sansone, our Senior Vice President and Chief Financial Officer; Ron McAbee, Senior Vice President, West; and Danny Shepherd, Senior Vice President, east.
Before I begin, let me remind you that certain matters discussed in this conference call contain forward-looking statements, which are subject to risks and uncertainties, Descriptions to these risks and uncertainties are detailed in the company's SEC reports, including our most recent report on Form 10-K. During the third quarter, we experienced reduced demand for our products due to a variety of factors.
Construction activity weakened further as a result of economic uncertainty, turmoil in the financial markets, higher credit standards and higher energy related construction costs. Adverse weather from major hurricanes and tropical storms slowed shipments in August and September in markets along the central Gulf coast, in Texas and in Florida, and then those storms moved up through the upper Midwest and through the mid-Atlantic markets.
As a result aggregate shipments declined 13% versus the prior year. Higher energy related input costs accounted for approximately $0.38 per share of the total year-over-year decrease in earnings.
Increased costs for liquid asphalt used to make asphalt mix and diesel fuel used to operate our large mobile equipment fleet accounted for most of this year-over-year decrease in earnings per share. Our average price paid for liquid asphalt increased a 106% from the prior year third quarter reducing earnings $0.25 per share.
The average price paid for diesel fuel in the third quarter increased 51% compared to the prior year lowering earnings another $0.08 per share. Our management teams are running their businesses well in an extremely tough economic environment.
In particular, I want to emphasize their effectiveness at managing controllable cost while continuing to gain price improvements despite lower shipments. To underscore this point a ton of Vulcan aggregates today generates more cash earnings for us than it did last year at this same time and significantly more than at the peak of the construction cycle in 2005.
This fact highlights a solid fundamentals of Vulcan's aggregate business, capabilities of our organization and the attractiveness of the markets we serve. The average freight adjusted unit sales price for aggregates increased approximately 6% from the prior year's third quarter.
The current downturn in demand for aggregates began in the second quarter of 2006. We have since recorded 10 consecutive quarters of lower shipments and 10 consecutive quarterly increases in the average selling price of aggregates.
We approach pricing for aggregates product-by-product, customer-by-customer in every market we serve. This is why we do not make across the board price increases.
The 6% increase in aggregates prices in the third quarter was achieved despite declines in shipments in several of our higher price markets, that were proportionally greater than the overall decline. Changes in product mix such as relatively more base materials for large industrial projects as opposed to clean stone ready-mix concrete and asphalt negatively affected our average selling prices.
Average selling price was also affected by the unfavorable shift in geographic market mix due to relatively lower sales volumes and higher price markets such as California and up and down the east coast and relatively higher volumes and lower price markets such as Texas along the Gulf coast. During the quarter, we continued to adjust production levels to match our lower level of demand.
Our plant managers did an excellent job of managing cost in the quarter despite the outward pressures caused by higher energy prices and lower volumes. Key operating parameters that measure labor efficiencies at our production site show that we have made improvements over last year's third quarter.
This contributed to higher cash earnings per ton of aggregates compared to a year ago. Excluding energy-related costs, such as diesel fuel and electricity, our unit variable production cost in legacy Vulcan aggregates operations were actually down slightly from the prior year's third quarter.
Additionally cash fixed cost at legacy Vulcan aggregate operation were approximately 10% lower than the prior year's second quarter… prior year third quarter rather. The effectiveness of these cost control measures demonstrates the greater production flexibility of an aggregates plant versus continuous process manufacturing facilities used in many other industries.
Earnings for our asphalt and concrete segment were lower than the prior year's third quarter due to lower earnings from our asphalt mix business. Asphalt mix prices increased approximately 18% from the prior year's third quarter.
However, we were not able to increase prices fast enough to offset the sharp increase in the prices we pay for liquid asphalt. The average unit price we pay for liquid asphalt at the end of the third quarter was 106% higher than the prior year's third quarter.
And approximately 38% higher than the average unit price, we paid at the end of the second quarter of this year. The rapid escalation of liquid asphalt prices during the second and third quarters made it difficult for us to increase our selling prices for asphalt mix fast enough to cover these costs.
We expect some of this timing difference to dissipate in the fourth quarter of this year, if liquid asphalt prices remain at current levels or continue to decline. Selling, administrative and general expenses in the current year's third quarter were approximately $76 million versus $66 million in the prior year.
Legacy Vulcan SAG expenses declined 11% versus the prior year. The overall increase was due to the inclusion of rock operations.
Turning to our outlook for 2008, we expect demand for our products to remain weak through the end of the year. The prolonged downturn in residential construction continued in the third quarter and that end market should remain weak for the rest of the year.
New construction contract awards for many non-housing related end markets have also slowed due to weakness in the economy and volatility in the financial markets. Large industrial and transportation projects continue to be a bright spot in a number of our markets.
Vulcan is currently supplying a number of such projects throughout sunbelt states and in the upper Midwest. We expect an echo effect on aggregates demand to continue for many years as a result of these projects, which will result in major additional economic growth in the affected areas.
Some examples of these projects include the automobile manufacturing plants for Volkswagen and Kia in Tennessee and Georgia. A large new greenfield steel plant, a new railcar manufacturing plant and a refinery expansion here in Alabama, LNG energy project and a port expansion in Mississippi, a tank terminal in Louisiana, and a major intermodal rail yard in Illinois.
These types of projects typically require large quantities of aggregates to be shipped over several years. In recent weeks a second economic stimulus package has been gaining momentum in Washington.
Infrastructure spending is being increasingly viewed by policy makers in congress, by governors, by mayors and state DOTs as an important element of any proposed financial stimulus program. Industry associations are actively engaged in these discussions and are working with other stakeholders emphasize how investing in infrastructure projects will help bring meaningful and long lasting positive changes in employment and to the economy.
The American association of State Highway and Transportation officials has identified some 18 billion in ready-to-go highway and bridge projects around the country that could be in construction within 90 to 120 days of enactment of stimulus legislation. A letter from a group of prominent economists to the Federal Reserve chairman and the Treasury secretary on October 24th estimated that there are 15 billion to 20 billion worth of transportation projects, which could be put out to bid in the next 30 days leading to contractors on site in the next 60 to 90 days.
You are aware house bill 7110, which passed the house, which included 36 billion in infrastructure projects, US conference of mayors has recently proposed a $150 billion stimulus package with about $90 billion of infrastructure spending. Last week the Transportation and Infrastructure committee held a public hearing to examine a proposal of about $175 billion to $200 billion of stimulus including about $75 billion of infrastructure spending.
Vulcan strongly supports efforts to promote infrastructure spending at the near term economic stimulus and as a means of putting capital to work in America. Aggressive infrastructure investments will improve our economic productivity and our competitive position in the global economy.
While infrastructure funding is part of a second stimulus packages of vital importance and we support it's a good passage. Implementation of such package would not benefit aggregates demand, obviously for the remainder of 2008.
Full year aggregate shipments including the Florida Rock operation for the full year are expected to decline by 9% to 10% compared to last year. Aggregate pricing is expected to increase 7% from last year's levels.
We expect to achieve this price improvement in spite of lower shipments in our higher price markets, Particularly Florida and California. And market environment that recognizes the high cost of replacing reserves has been a key factor in helping us achieve price improvement despite the 10 consecutive quarters of lower volumes.
Our outlook assumes that the reduction in diesel fuel prices that began in the third quarter will continue in the fourth quarter. Even though liquid asphalt prices did not decline in the third quarter, October pricing is showing some evidence of price relief and we expect our asphalt earnings to benefit from a modest price decline for liquid asphalt in the fourth quarter.
Overall, we now expect consolidated earnings from continuing operation to be in the range of $2.25 to $2.45 per diluted share. And we expect EBITDA of $900 million to $940 million for the year.
In the fourth quarter, we expect to reduce total debt by $150 million. This will be achieved through the use of approximately a $100 of cash that we had on our balance sheet on September 30 and through operating cash flows in the fourth quarter.
Our plant and equipment are in very good condition. Reinvestment in these assets over the last few years has increased production efficiency and capacity and reduced the average age of our mobile equipment.
As a result, we are evaluating every capital project, whether underway or not yet started for opportunities to reduce cash spending. These efforts have lowered our projected capital spending for 2008 to approximately $425 million and our capital budget for 2009 is approximately $200 million.
In closing, I'd like to reiterate our confidence in future sales and earnings growth for Vulcan. This confidence comes from our successful strategy to establish an aggregates Vulcan business and has the compelling advantage of great locations in major US markets that are expected to experience above average growth in aggregates demand for many years into the future.
It is certainly true that these were challenging economic times, but our organization is meeting the challenge and preserving our profitability in our businesses by staying focused on pricing our products to reflect their great value and the attractive markets we serve. And by aggressively managing costs, we continue to create value for our shareholders.
We thank you for your continuing interest in Vulcan. Now, if our operator will give the required instructions, we'll be happy to respond to your questions.
Question and Answer
Operator
[Operator Instructions]. And your first question is from the line of Kathryn Thompson with Avondale Partners.
Please proceed.
Kathryn Thompson - Avondale Partners
Hi, thank you.
Donald M. James - Chairman and Chief Executive Officer
Hey, Kathryn.
Kathryn Thompson - Avondale Partners
I just had a couple pricing questions related to your aggregate side. What was the pricing at the end of the quarter, if you can give that, and were there any changes versus the average price for the quarter.
And also, point out a little bit further, we also saw double-digit price increases in the Southeast, could you also talk about a little bit more about regional pricing differences in some of your key states?
Donald M. James - Chairman and Chief Executive Officer
Kathryn, before I answer your question, I want to commend you on the write-up you did on infrastructure programs that are pending in Congress now. I commend that anyone who is interested in following the various proposals that are out there, it's… I think is very well done.
Pricing for the quarter is right at…
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
996
Donald M. James - Chairman and Chief Executive Officer
996, right at $10 a ton.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
943 or so
Donald M. James - Chairman and Chief Executive Officer
And that's up from about 943 or so last year.
Kathryn Thompson - Avondale Partners
Were there any changes in the quarter, one trend we have been watching is that in certain markets there have been some price slippage as the quarter progressed, I'm just trying to get a better sense, were you seeing--?
Donald M. James - Chairman and Chief Executive Officer
As I mentioned, our overall price increases about 6%. Now, that has affected not only by the price of individual products and individual markets, but it's also our average price is affected by the product mix that is whether it's based on or railroad ballast and is always affected by geographic mix.
So as you know, we have the highest prices. We have relatively higher prices on the markets on the east coast, particularly Florida, and in California.
And then in the middle of the country, our prices tend to be lower in Texas, the Gulf Coast and up in the Midwest. So as volume, as relative volume moves around that has an impact on pricing and as we bring, as you know, we've brought several new operations into Vulcan primarily in the west, and generally when we buy a quarry their pricing is not as good as our own legacy pricing, so that's...
and we have brought in three new operating quarries, we've had them really for the first full quarter and the third quarter all in California and those have led their pricing is lower than ours.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Kathryn, I'd also add if you look at our prices for the month of September, across the whole system they were slightly higher than what the average price was for the third quarter.
Kathryn Thompson - Avondale Partners
Okay.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
If you start looking at individual business units, there's a couple that had a September average price that was a little bit lower than the quarter than we had obviously more that posted September numbers that were actually higher than the quarter average. But across the whole company, the month of September standalone was about $0.09 or $0.10 higher than the third quarter average.
Donald M. James - Chairman and Chief Executive Officer
Now, certainly there are markets and pockets where an individual producer decides that they need to try to build volume by cutting price, that happens, it's happening today, we see it, we respond to it. But so far those are certainly there, but that's not the general trend in the industry that we see and we monitor other public companies reporting statements about price changes and we're, you know, encouraged by what we see.
Kathryn Thompson - Avondale Partners
Okay. And kind of touching on your comments on assuming that nothing changes, there's not a stimulus package that's passed, where do you see pricing trends going into the next fiscal year.
And then where would you see pricing if there were an infrastructure heavy stimulus package that passed?
Donald M. James - Chairman and Chief Executive Officer
We have not built our model for how we see pricing yet in 2009. So I can't give you any specifics on that.
Generally, we believe the environment of limited reserves and very high cost of replacement reserves will not change going into 2009. We would expect to continue to get price increases in 2009, I can't quantify that today, I will quantify that for you as we… when we give our '09 guidance.
A stimulus package will certainly help pricing, although I don't think it would dramatically change average pricing in the near term. I think that's driven more by other factors than demand.
Now, if one of the things… if the stimulus money goes into areas of infrastructure with tighter specifications like federal highways and airports, that will change product mix. And when you change product mix, move to higher price products, you will see the average pricing go up, but it's a product mix change more than anything else.
Kathryn Thompson - Avondale Partners
Sure.
Donald M. James - Chairman and Chief Executive Officer
If that makes sense to you.
Kathryn Thompson - Avondale Partners
Yeah, it does, it does. And just a final question for you, switching gears to volume.
Kind of on the same line as pricing, what type of trends were you seeing with volume as the quarter progressed and since the end of the quarter and any type of color on visibility for volume?
Donald M. James - Chairman and Chief Executive Officer
Well, volume in the third quarter is indicated in my remarks was negatively affected by a number of things. I think certainly the economic conditions of the turmoil in the financial markets and availability of credit are all negatives for our volume.
But we also had some really tough weather conditions in some of the markets where we were having our larger… relatively larger volume shipments, that is Texas, the Gulf Coast. And then we had a lot of, a lot more rain days in this year's third quarter in the vast majority of our markets than we did a year ago.
And while we don't like to make weather excuses for volume, I think on the margin that certainly had an impact in the third quarter, although, the basic problem is economic conditions and the credit market.
Kathryn Thompson - Avondale Partners
Okay. Great, thank you very much, I'll jump back in the queue.
Donald M. James - Chairman and Chief Executive Officer
Okay.
Operator
Your next question comes from the line of Timna Tanners with UBS. Please proceed.
Timna Tanners - UBS
Hi, good morning.
Donald M. James - Chairman and Chief Executive Officer
Hey, Timna, how are you?
Timna Tanners - UBS
Good, thanks. Wanted to ask along the lines of the financing a little bit more detail.
If you could give us an update on the status of the bank borrowing and also with regard to the April $250 million and the $50 million that was supposed to be due this fourth quarter, yes, the $150 million will pay down a good chunk of that in the fourth quarter, but first quarter is not usually very good quarter seasonally for cash flows. If you could give us a little more detail on plans.
Thanks.
Donald M. James - Chairman and Chief Executive Officer
Okay, Dan [inaudible] question.
Timna Tanners - UBS
Thanks.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Timna, as you know, we… as you pointed out we have some maturities that come due in the fourth quarter, about $48 million worth. We have very small maturity due in the first quarter of next year of only $15 million.
And then in the second quarter of 2009, we have maturities totalling $265 million. As of right now, our short-term borrowings are just at a $1 billion, give or take, that number changes slightly every day.
We have currently in place a five-year syndicated bank facility that has four years of life remaining on it. That facility is a $1.5 billion.
So we think we have with… excuse me… with the debt reductions that we expect to generate in the fourth quarter, in fact, we've already paid down since the quarter end about $123 million of debt since September 30th. With that pay down and the additional amount we expect to pay down between now and December 31st, as well as the capacity that we have on the five-year facility, we think we have ample liquidity to meet those maturities without any difficulty.
In addition, we have a 364 day syndicated bank facility that will expire in the middle of November of this year and we're currently in the process of renewing that with our bank group. We are confident that the facility will be renewed, although it will not be renewed for $500 million, it probably will be at an amount somewhere in the neighborhood of $250 million to $300 million.
So when you put that on top of the $1.5 billion of borrowing capacity that we have, we have more than ample room to meet these obligations. In addition, the good news that we've seen in the last few days is a thawing of the commercial paper market for A2, P2 issuers such as Vulcan.
10 days ago that market was either not open or was extraordinarily expensive. Starting at the end of last week, we began to see commercial paper rates for tier-two issuers get back in line and we currently have actually issued about $230 million of commercial paper replacing a bank borrowings on the bank lines at attractive rates of about 3%.
So we're, I think we're in good shape for being able to meet the maturities that are coming in the next two quarters.
Timna Tanners - UBS
Okay. And can you remind us about your status relative to the covenants.
I didn't think there were --?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
There's only one covenant in our bank agreements and that covenant is that debt-to-total capitalization cannot exceed 65%.
Timna Tanners - UBS
Yeah.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
We were at about 48% at the end of the third quarter. We think there's very, very, very limited chance that we'd ever breech that covenant, we're not at all worried about that.
Timna Tanners - UBS
That makes sense, okay. The next question I really wanted to ask about is can you help me understand how the economists and I think it's [Esto] that was talking about how quickly financing could be put to work with available construction within 90 to 120 days, how do things move that quickly, can you talk to us a little bit about how conceptually how that could happen.
Donald M. James - Chairman and Chief Executive Officer
Sure. Several months ago, I think the state DOTs were all told by the Federal Highway Administration to ask what projects do you have that are engineered, ready to go out to bids, that are… that will put people to work very quickly.
And these are jobs that would be resurfacing and to some extent lane additions, not big engineering projects with dirt moving necessarily or bridges, but things that would be labor-intensive like resurfacing and the DOTs responded, that's where you get the $18 billion of projects that are ready to go. So the process would be putting those up for bids, getting a bid, awarding the contract, and having the contract a mobilization schedule and starting work within a relatively short period of time.
And there are plenty of highway contractors who can mobilize very quickly today, because of the relatively low volume out there. We certainly can mobilize to supply the materials very quickly.
So this is a, this is a very job rich part of a proposed stimulus package that not only generates something of benefit to the economy once it's finished, but will really put a lot of people to work in a hurry, which I think everybody, all the economists that have looked at this and state/local officials are all in complete agreement that this will generate a lot of jobs for people who probably need jobs because of the downturn in construction and residential construction, and certainly in aggregate plants, in concrete plants and asphalt plants and truck drivers. So we're, we believe that the case is made for quick hit infrastructure spending as part of the next stimulus package.
I think the person has got to be convinced of that probably lives in the White House.
Timna Tanners - UBS
Okay, great, thank you. And then just to clarify finally is when you're talking about the stimulus package spending, we're not just talking about federal spending, of the half of your sales that usually go to infrastructure are public works, you're talking about both federal and state influence then not just the federal side.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
The stimulus package that's get in the most press right now is the one in Washington for federal dollars. But as you know, governor Crist in Florida came out recently and said they've got 1.4 billion of quick hit highway projects in Florida that they're about to kick-off.
And he earlier said that there was about $25 billion of infrastructure projects in Florida that he had ordered his administration to accelerate and cut the red tape and get them out for bids and get them going. So we've got that one in Florida as you're well aware of the big infrastructure spending program in California, that was not initially envisioned as a stimulus package.
But it certainly is going to stimulate the construction economy in California. It's very large.
The voters added to that Tuesday by approving maybe $10 billion more in bonds for school and college building construction. So there's a lot, there's a tremendous amount of support both at the federal level and the state level for infrastructure generally and as a stimulus package, and we believe we will… we're cautiously optimistic that certainly by the time Congress comes back after the inauguration that those things will move forward very quickly whether they can get it done in a meaningful way between now and the meeting of the new Congress and new President is a tougher question.
Timna Tanners - UBS
Okay, great, thanks very much.
Operator
Your next question comes from the line of Jack Kasprzak from BB&T Capital Markets. Please proceed.
Donald M. James - Chairman and Chief Executive Officer
Hello, Jack Kasprzak, how are you?
John Kasprzak - BB&T Capital Markets
Thank you, Don, I was going to say it myself, but you did a better job than I could even. My first question is can you remind us how many gallons of diesel fuel that you guys use per year.
Donald M. James - Chairman and Chief Executive Officer
I'm going to get one of my colleagues to write that down for me.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
About 45 million gallons at current operating rates. We would love for that to go up.
John Kasprzak - BB&T Capital Markets
Sure, sure and price to come down. And on that note, I mean, obviously oil prices are down and these various energy costs are coming down.
Another large aggregate supplier indicated last week when they reported earnings that they thought it could be down diesel $0.50 to a $1 a gallon in '09, obviously it's been very volatile. But would you care to quantify, give us any projection about the price of diesel in '09.
Donald M. James - Chairman and Chief Executive Officer
I don't have… we didn't prepare our remarks for '09. We certainly have in our procurement group people who study that and have a lot of data.
I don't know what it is. Certainly it's come down significantly so far in '08.
And depending on whatever starting point you want, but it's I think is a lot more than $0.50 in '08.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
We're about… we're looking at about, if everything holds together Jack, it could be a $0.75 decline based on what we're seeing today. But as you know, it's a very volatile, unpredictable market.
John Kasprzak - BB&T Capital Markets
Yeah.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
You're talking about '09?
John Kasprzak - BB&T Capital Markets
Just if it stayed where it is and the comp going through '09.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Yeah.
John Kasprzak - BB&T Capital Markets
And then --
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
That's not a guidance number, that's really looking at the futures markets.
John Kasprzak - BB&T Capital Markets
Understood. Okay.
With regard to your cement plant have you guys taken that down for any extended period of time or do you plan to?
Donald M. James - Chairman and Chief Executive Officer
We took it down twice in the third quarter and we will do that as necessary going forward to match production and demand.
John Kasprzak - BB&T Capital Markets
Cemex had announced a big concrete price increase $25 a yard. Are you seeing that in Florida?
What impact, if any, has that had in your Florida market?
Donald M. James - Chairman and Chief Executive Officer
I think those prices in many markets are sticking. Now, there are individual markets where there is an independent producer that may decide to not follow that, but certainly that has had an impact.
John Kasprzak - BB&T Capital Markets
Right. Okay.
And lastly, just more of a general question on the subject of housing, but are you seeing any indication anywhere in your markets that housing has bottomed?
Donald M. James - Chairman and Chief Executive Officer
Well, it's interesting when you look at our concrete shipments they are not… the legacy Vulcan concrete shipments are down only 1% from a year ago. Florida, they're down certainly low double digits.
But I can't really tell you we've seen anything that looks like a bottom in housing from a macro standpoint and from a data standpoint. But it does appear that among product lines concrete is holding up very well, which had some impact.
Our northern concrete business in Virginia and Maryland is doing very well. A lot of that is commercial industrial and transportation as opposed to housing.
John Kasprzak - BB&T Capital Markets
Okay. Okay great thank you Don.
Operator
Your next question comes from the line of David MacGregor from Longbow Research. please proceed.
Garik Shmois - Longbow Research
Hi. It's Garik Shmois in for David.
First question is on commercial construction that Don you said, you are seeing some stability still in the heavy manufacturing and industrial work. Is it possible to parcel out how much of your commercial business is tied to this heavy stable demand and how much is tied to more cyclical I guess office and retail?
Donald M. James - Chairman and Chief Executive Officer
Well, that mix is shifting greatly. Coming from the period from the collapse of the tech sector and the 9/11, industrial construction tanked office building construction tanked retail was the only part of that that was strong.
That has now rolled over and industrial is very strong at least in our markets retail has certainly weakened sharply. And we expect while office buildings have… are not nearly as sensitive as retail to the overall economic environment, they are very sensitive to the financial crisis.
And so we think that generally office buildings and retail will continue to be weak and that's we can look at… you can look at contract awards and see that happening. The industrial projects though are large already financed really based on energy and automotive and transportation in our markets.
And those are all… those are helping and they have a… as we said they have a substantial echo effect. But, overall, we expect private non-res area to be down full year '08, but the strongest part for us of these large projects, which we can reach efficiently through our series of quarries and transportation assets.
Garik Shmois - Longbow Research
Okay. Thank you for that.
And switching gears to asphalt, you're expecting to see higher prices in the fourth quarter relative to the third, but we're seeing liquid asphalt costs come down to sort of...
Donald M. James - Chairman and Chief Executive Officer
Right.
Garik Shmois - Longbow Research
How sustainable is asphalt pricing just beyond the fourth quarter?
Donald M. James - Chairman and Chief Executive Officer
Well, there is always a lag between the pricing of asphalt mix and the pricing of liquid asphalt. We got caught on the wrong side of the lag in the third quarter, while our prices were up 18% for mix our prices for liquid which is 5% of the basic the weight of asphalt mix was up 106%.
Generally, where we do best in asphalt mix is when there has been a period of rising liquid and then it peaks and it starts down, and then our lower price contracts get worked off and our higher priced contracts start rolling forward. So, we think we'll get a benefit certainly in the fourth quarter from that lag effect.
And hopefully, it will continue into '09.
Garik Shmois - Longbow Research
Okay. Thanks.
And just my last question is on goodwill. Dan, I was just wondering if you could talk about the process that you use to review it and maybe the timing of when you are usually testing this impairment.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Yeah. Give you the short answer.
We've taken a real hard work at the goodwill that we have on our books flowing out of the Florida Rock transaction. And are as confident as we can be at this point in time that we're not facing a goodwill impairment.
We, typically, do that early in the first quarter of each year. We have historically used a discounted cash flow model to evaluate the value of the underlying business units that are carrying goodwill.
And we have about eight or nine distinct reporting units that are carrying various amounts of goodwill that we test. And as we… as you would imagine, we're in the final stages right now of finalizing our purchase accounting adjustments for the Florida Rock transaction.
You have 12 months from the date of closing to finalize those numbers. And so, we have some pretty real time estimates of what the values of the underlying business units are.
And as of right now, we feel pretty good that we do not have an impairment.
Garik Shmois - Longbow Research
Okay. Thanks.
Actually just one more quick question if I can.
Donald M. James - Chairman and Chief Executive Officer
Sure.
Garik Shmois - Longbow Research
Just going back to the potential infrastructure stimulus package just, Don real quick, the 18 billion that you cited in quick start projects, how much of that money could actually be aggregates?
Donald M. James - Chairman and Chief Executive Officer
I don't have an estimate of that. I am sure, we can come up with one.
It certainly depends on the nature of the projects. But the quick start projects will all be aggregate intensive, that's almost by definition.
It won't be right away acquisition. It won't be a lot of dirt moving.
It won't be a lot of engineering, so it will be aggregate intensive. But I think of the 18 billion, this doesn't answer your question, but it is another data point about 12 billion of that is in our market.
6 billion is not. So two-thirds of that 18 billion… and we've got the list from every state DOT about the quick hit projects they have proposed to the Federal Highway Administration.
So, we are in good shape there. And there is some aggregate intensity factors we use for various kinds of infrastructure spending.
But we haven't run that through these models yet. But it will be a significant benefit to the aggregates business.
It'll also be a significant benefit to our asphalt business and to a lesser extent to our concrete business. So, all of those will benefit from the infrastructure spending not just aggregates.
Garik Shmois - Longbow Research
Great thank you very much.
Operator
Your next question comes from the line of Ajay Kejriwal with Goldman Sachs. Please proceed.
Ajay Kejriwal - Goldman Sachs
Thank you, and good morning gentlemen. Just following up on that 18 billion stimulus spending, I mean could you talk about the nature of those projects are they SAFETEA-LU funded meaning if this spending were not to come about, would those projects still be funded under SAFETEA-LU or are these additional projects that have been identified?
Donald M. James - Chairman and Chief Executive Officer
Well, these are projects that would ultimately be funded out of the regular… to the extent they are highway projects. They would be ultimately funded through the regular funding sources.
This stimulus would accelerate those and then those projects that get built under the stimulus package would then be replaced by the backlog of projects. I think this would not be accelerated spending, which would reduce infrastructure spending down the road because we'd run out of projects, if you look at all of the state backlogs and you look at all the data, we are so far behind on infrastructure spending particularly highways that there is a never ending supply of very significant projects out there to fund.
We just haven't funded them for the last 10 or 12 years. And so, we're very optimistic that these are all good projects.
They are projects that would be built anyway. It's just accelerating the spending on these particular projects.
These projects would all be replaced by new projects coming down the pipeline. And there is some conversation in Washington, which I think is very positive that these projects would be reviewed at some level for their efficiency and their need… current need as opposed to being things that have gotten flat for being earmarked.
We don't see… none of these projects would be things that are unnecessary spending, which I think is a critical point in this environment.
Ajay Kejriwal - Goldman Sachs
Basically the point there is that if these projects were to be funded, they would not cannibalize on your existing funding that would come through the SAFETEA-LU channels?
Donald M. James - Chairman and Chief Executive Officer
That's certainly our view which we think is well founded and well recognized throughout the infrastructure funding community.
Ajay Kejriwal - Goldman Sachs
Got it. Just trying to frame how much this could result in additional aggregate demand, maybe if you could help us with how much of the cost of a resurfacing project is aggregate?
Is it in the 5% to 10% ballpark or is it a different number?
Donald M. James - Chairman and Chief Executive Officer
I think that's a good number probably 8% or 9% is an estimate. It will vary from project to project but there is a fair amount of aggregate.
The flip side of that we always say there is no price elasticity of demand. You're not going to build a highway project or not build a highway project because of the price of aggregate, which is absolutely true.
But aggregates are a modest portion, but nevertheless, for us a significant portion of the stimulus.
Ajay Kejriwal - Goldman Sachs
And moving to CapEx, blot [ph] the cut in CapEx budget for next year, maybe, if you could talk about how much is maintenance? In the past, you had characterized maintenance CapEx as in-line with DD&A
Donald M. James - Chairman and Chief Executive Officer
Right.
Ajay Kejriwal - Goldman Sachs
And that $200 million would be substantially below DD&A. So is there any postponement of maintenance to 2010 or what are we seeing there?
Donald M. James - Chairman and Chief Executive Officer
Well, we have the advantage as I indicated in my remarks that we have… as you know, we have spent a lot of CapEx over the last three or four years. And as a result of that, our plant and equipment is in really good shape particularly coming out of a period of relatively low volume.
Our plant and equipment depreciates not on the basis of days or months, but really on the basis of the number of tons we run through it. So we're in very good shape there.
Some of the $200 million are actually for strategic projects, meaning not all of it is just replacement capital. And we're able to do that again because our equipment is in really good shape.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
And Ajay, also, don't forget there is a significant step-up in DD&A growing out of purchase accounting. If you think about a historic run rate of DD&A for the life cycle of a piece of equipment, we're marking a lot of that up on the Florida Rock assets, so you're getting a little bit of disconnect in the historical trend lines.
Ajay Kejriwal - Goldman Sachs
Got it. So the maintenance CapEx is probably lower on a run rate basis?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Yeah. Right.
That's right.
Donald M. James - Chairman and Chief Executive Officer
Yes.
Ajay Kejriwal - Goldman Sachs
Your cash fixed costs were down 10%, which is a positive. And you have been reducing costs for several quarters now.
Maybe if you could talk a little bit about what are the other areas where you could cut further. I mean given you have been doing this for several quarters, is there a lot more room left or is this kind of a trough in terms of cost cutting?
Donald M. James - Chairman and Chief Executive Officer
Well, we've had a significant drop in operating hours at our plants. As productive [ph], we have matched production to demand that hurts accounting earnings in the short-term because we are actually producing less in many places than we are shipping.
But it does improve cash flows. We have probably 7.5% to 8% fewer employees today than we had at the beginning of the year.
We have… our labor productivity has actually improved that is our tons per man hour is up this year's third quarter versus last year's third quarter. Our plant managers and the people responsible for running our plants have done a very good job of working on efficiency and productivity, which will benefit us greatly when recovery comes.
I think we, probably, as an organization benefit from downturns in the sense that we really have to look hard at everything we do and tighten our belt when sometimes when markets are blowing and going, it's easy to not do that. So I think this has been good for us and much of the benefit we've achieved will be available to us going forward.
Obviously, we will continue to match production to demand and if demand continues to weaken in '09, we're not saying that but if it does, we will continue to adjust our cost structure. We have really no other choice but to do that.
Ajay Kejriwal - Goldman Sachs
Great. In terms of your guidance for fourth quarter… implied guidance for fourth quarter what are you assuming for legacy volume?
Donald M. James - Chairman and Chief Executive Officer
Well, full year legacy volume will probably be down 20%.
Ajay Kejriwal - Goldman Sachs
And what was it in the third quarter please?
Donald M. James - Chairman and Chief Executive Officer
It's about the same, down about 20%.
Ajay Kejriwal - Goldman Sachs
Good. Thank you.
Operator
Your next question comes from the line of John Fox with Fenimore Asset Management please proceed.
John Fox - Fenimore Asset Management
Thank you. Good morning, everyone.
Donald M. James - Chairman and Chief Executive Officer
Hey, John.
John Fox - Fenimore Asset Management
I just wanted to try and get some more details on the asphalt business. And I mean you said from the press release, it costs you $0.25 in earnings which I guess is around $38 million pre-tax, which is a lot.
So maybe if you could talk about the average price of liquid asphalt third quarter this year versus last year? Don, you mentioned the 5% by weight, but how much liquid asphalt do you actually have to buy given your, I guess, about 3 million tons of asphalt that you sold?
So just can you give us a little bit more so we can work on the economics of that business?
Donald M. James - Chairman and Chief Executive Officer
Okay. I think liquid asphalt tonnage, we paid something like $695 a ton.
Now, we're in Texas, New Mexico, Arizona, California with asphalt. So the prices in all of those markets are very different.
John Fox - Fenimore Asset Management
Okay.
Donald M. James - Chairman and Chief Executive Officer
But if you look at our total, in the third quarter we paid less than that because it continued to rise through the quarter.
John Fox - Fenimore Asset Management
But I saw September was the highest month?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Right, September was the highest month. The average for the quarter was about $675 a ton.
John Fox - Fenimore Asset Management
Okay. That's fine.
What was that in the year ago quarter?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
About 325.
John Fox - Fenimore Asset Management
Yes. Okay.
So you shipped 2.8 million tons of asphalt. Can we just take the 5% of that number and say that's how much liquid or--?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Yes. That's a good number.
John Fox - Fenimore Asset Management
Okay. So that would…
Donald M. James - Chairman and Chief Executive Officer
Yes.
John Fox - Fenimore Asset Management
So we could calculate your input costs that way?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
We put rap in there too but use 5%.
John Fox - Fenimore Asset Management
Okay. So now in this quarter is the price of liquid asphalt coming down you said?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Yes.
John Fox - Fenimore Asset Management
And your increase--? So we're at the inflection point where the third quarter was the worst part of the curve, so to speak?
Donald M. James - Chairman and Chief Executive Officer
We certainly hope so.
John Fox - Fenimore Asset Management
We're at the inflection point where your sales prices are going up and hopefully, the input of coming down, where we can reverse some of that lost profit?
Donald M. James - Chairman and Chief Executive Officer
Yes. And if you follow-up historically as I know you do because I know you.
You see profitability of asphalt moves around a great deal based on liquid asphalt costs.
John Fox - Fenimore Asset Management
Right.
Donald M. James - Chairman and Chief Executive Officer
And it's really the timing of increases and decreases.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
And John you actually saw that in the quarter. The way we look at it is tracking the material margin, which is the difference between the average selling price and the cost of the material inputs to produce the product.
And the material margin for the month of September, actually, exceeded the average for the quarter. So we began to see that catchup.
But still we haven't recovered all of it, but the pricing actions are beginning to catch up and inch their way to where they ought to be to recover that lost material margin.
John Fox - Fenimore Asset Management
Okay. Well, I will work on that, if I need more I will call you back.
And then just in terms of the balance sheet the new item medium term investments is that just some type of cash with longer than a year or something?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
The medium term investment is essentially a reclassification. We had some cash that was invested in a AAA rated money market fund that was imagined by an outfit called The Reserve.
You may have…
John Fox - Fenimore Asset Management
I am familiar with it.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Yes. Well, we had some money in The Reserve and when they broke the buck, they were not able to make redemptions and they were beginning to work through that.
But because we cannot guarantee that we could get access to that money quickly or overnight, we've classified it as a medium term investment
John Fox - Fenimore Asset Management
Okay I understand. And I just want to make sure I understand this shipment guidance.
What is the base number for 2007 that you are using to say you will be down whatever down 10% what is the base starting number?
Donald M. James - Chairman and Chief Executive Officer
We are pulling that up
John Fox - Fenimore Asset Management
Okay.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
I think it is 231 million tons.
John Fox - Fenimore Asset Management
Okay. Thank you.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
That's legacy. You understand.
Donald M. James - Chairman and Chief Executive Officer
No it has got everything. But it has the Florida Rock.
John Fox - Fenimore Asset Management
Yeah, I wanted...
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Right.
John Fox - Fenimore Asset Management
So, Florida Rock from the middle of November is included in there?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Yeah. That's right.
John Fox - Fenimore Asset Management
Okay, thank you.
Operator
Your next question comes from the line of Trey Grooms with Stephens Inc. Please proceed.
Trey Grooms - Stephens Inc.
Good afternoon.
Donald M. James - Chairman and Chief Executive Officer
Hey, Trey.
Trey Grooms - Stephens Inc.
Just a couple of real quick questions on the Newberry expansion is that still on track for early to mid '09?
Donald M. James - Chairman and Chief Executive Officer
Probably more like mid '09.
Trey Grooms - Stephens Inc.
Okay. And as far as the shutdowns there, how long did you have to shut it down in the quarter?
Donald M. James - Chairman and Chief Executive Officer
We shut it down about 11 days in the quarter of not running the plant.
Trey Grooms - Stephens Inc.
Okay. And then I know you addressed the CapEx, some CapEx questions earlier, but you said that you were delaying some capital spending in the fourth quarter and with the 200 million being at a much lower level, can you talk about what type of spending projects you are delaying or pushing back?
Donald M. James - Chairman and Chief Executive Officer
Well, generally they would be in two categories. One would be plant and equipment routine replacement, which we're not… that's not a big deal for us in 2009 because of the condition of our plant and equipment today.
But primarily, we're deferring what we would call strategic projects, where we would expand distribution facilities, transportation facilities and to some extent production capacity. We have those things relatively ready to go.
We just want to see some stabilization and growth in demand before we commit the capital to do that. But they are projects that are good projects and once we get back to a level of demand that we can be more confident in, we can pull those out and proceed very quickly.
But that's basically what we are deferring.
Trey Grooms - Stephens Inc.
Okay. And just one last question.
On cement, can you kind of give us your thoughts on how the cement industry is kind of shaping up here with the… the demand has fallen off significantly, but it sounds like most players at least at this point sound like they are trying to stay in their own lane. Is this looking at the industry the way you see it now?
Is it... do you see this continuing most players trying to control capacity and so forth or do you see any type of risk for pricing on the cement side of the business?
Donald M. James - Chairman and Chief Executive Officer
Well, I think I have never heard that expression, but it's a very good one stay in your own lane. That applies to probably all of our products.
But there is a very wide disparity between the efficiency of the US cement capacity, higher energy costs certainly accentuate that. I think what we're seeing some competitors doing is mothballing or closing their older higher cost less efficient cement production capacity and going with their new capacity.
Fortunately, all of our cement capacity is virtually brand new and is very efficient both from an environmental standpoint and an energy standpoint. I think going forward, we'll probably see much more environmental pressure on cement capacity in the US, which will really put more and more pressure on the older plants.
I think we're in for a short-term sort of excess domestic production of cement really for the first time in a very long time. But as you know, from following other cement producers in the US, people are even though they are adding capacity, they are taking out their old capacity which I think will ultimately be the saving grace here.
Trey Grooms - Stephens Inc.
Okay, thanks for that Don. Good luck.
Operator
Your next question comes from the line of Mike Betts with JPMorgan. Please proceed.
Michael Betts - JPMorgan
Yes. Good morning.
Donald M. James - Chairman and Chief Executive Officer
Hello, Mike.
Michael Betts - JPMorgan
Hi, Don. I had two questions maybe one for you and I suspect the second one is for Dan.
The one for you Don, a year ago or so, we had about a $5 price increase in Florida when the Lake belt quarries were closed. They have now reopened.
I guess that price increase has progressively come off. Did that have much of an impact in Q3… well, firstly am I right?
Did that have much of an impact in Q3 or was it more of a comparative or more of an issue for Q4?
Donald M. James - Chairman and Chief Executive Officer
I think with the exception of one market that price increase has remained in effect. The one place that there has been some erosion has been in the Fort Myers area.
And basically, there you have got an independent producer that didn't follow. But everywhere else in Florida it has held.
Michael Betts - JPMorgan
Okay. And then maybe just another one quickly before I go on to Dan.
How much of your asphalt work is fixed price? I guess I'm trying to work out what the average lag is before you can recoup current pricing?
I mean it's sort of 50% of it fixed price or is the lag sort of three months? Can you help me at all on that?
Donald M. James - Chairman and Chief Executive Officer
Well some states index liquid asphalt pricing on jobs that go on DOT projects. But there is always a lag from the market price to the index price.
So when you get the kind of movements we've had in liquid asphalt price even though the ultimate price paid on the job is indexed, you still have the lag effect. On the non-DOT work or in states that do not index liquid asphalt typically, we will quote a job of dollars per ton.
We don't quote them these days out six months or a year, but a month or 45 days or two months or something about that. And if liquid moves like it did in the second and third quarter, we do get caught on those kinds of projects.
So we don't bid jobs that have a liquid asphalt rider in them basically. Because when you back up from the owner of the projects to the contractor who puts the asphalt down, all of that's still a fixed contract business.
Which means work that we have booked over the last weeks and months we will price on the basis of what we expect liquid to be, but liquid is certainly moving the other way fortunately. And that is why we think we have some upside there.
Michael Betts - JPMorgan
Okay. Thanks for that.
My question for you Dan, my basic question is how much of your debt is LIBOR based? There was a big spike in LIBOR rates at the end of September.
Do you have much debt that was rebased in terms of September LIBOR rates or I mean maybe you can answer the general question and then the specifics?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
What we do Mike, as I mentioned earlier, we currently have approximately $1 billion of short-term debt outstanding. And virtually all of bad debt is LIBOR based.
Whether it's borrowed on the bank lines that is a LIBOR based financing mechanism. It is LIBOR plus X number of basis points.
Right now the bank borrowings on those lines are LIBOR plus 30 basis points. Commercial paper, obviously, when it gets back into normal territory tends to follow LIBOR around not precisely, but it tends to track it.
And the only other piece of our debt that is LIBOR based is the term loan $300 million term loan that we entered into in June of this year through a syndicate of banks. That loan was fully funded at closing.
And that's also LIBOR based. I believe we're currently paying LIBOR plus 125 basis points… excuse me… 125… LIBOR plus 125 on that term loan.
And that's the only portion of our debt structure that is tied to LIBOR.
Michael Betts - JPMorgan
And is most of it three months LIBOR and was a lot of it therefore reset at the end of September for the next three months?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
In the bank lines we are typically resetting for a month.
Michael Betts - JPMorgan
Okay. Okay, thank you for that.
Just one final question for you Don that I missed earlier apologies. Transport surcharges, I mean is that for most of your haulage and other stuff is that a significant factor that those will come down now they will automatically come down with lower diesel cost?
Donald M. James - Chairman and Chief Executive Officer
We don't have any transport surcharges.
Michael Betts - JPMorgan
You have none at all okay.
Donald M. James - Chairman and Chief Executive Officer
The one place where we are using our own ships when we give you our average price, it is freight adjusted. So, to the extent and this is an issue that runs through the comments I made earlier about large projects on the Gulf Coast as the fuel prices escalated that left lower freight adjusted realized prices at the yard.
As ship fuel goes down, we will realize larger freight adjusted average prices at the yard. So yes in that sense there is an impact, but it's not a surcharge it's just our own cost of delivery and our own ships if you follow that.
Michael Betts - JPMorgan
Yes I do. Thank you for explaining that.
Thank you very much.
Operator
Your next question comes from the line of Todd Vencil with Davenport. Please proceed.
Todd Vencil - Davenport & Co.
Hello.
Donald M. James - Chairman and Chief Executive Officer
Hey Todd.
Todd Vencil - Davenport & Co.
Dan, a couple of quick sort of wrap-up questions for you. Given all that discussion on LIBOR and things like that and what you guys are planning to do with the balance sheet do you want to weigh in on what you think your interest expense line is going to look like for the year then for next year take a stab at next year maybe?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Yeah I will be… what I can tell you what I think it's going to look like for this year. We are not yet prepared to give you any guidance for next year but I think interest income… excuse me… interest expense net will be at about $170 million for 2008.
That leaves about $47 million for the fourth quarter.
Todd Vencil - Davenport & Co.
Okay. And then looking at DD&A and thinking about the purchase accounting adjustments how should we think about that?
And just remind me, do those things roll off or are they kind of in there for the life of the equipment?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
They'll be in there… well, first of all I think the full year 2008 DD&A number that I'd go with is about $390 million.
Todd Vencil - Davenport & Co.
Right.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
And in the application of purchase accounting to the acquired assets from Florida Rock, you will value those assets at estimated fair value on the date of acquisition and that will be amortized over the remaining useful life of those assets.
Todd Vencil - Davenport & Co.
So that doesn't roll off. So we're probably at a reasonably good run rate now?
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Yes, I mean, that's correct. They will roll off on processing equipment that could be seven or eight years, 10 years before all of that depreciation comes off.
Todd Vencil - Davenport & Co.
Got it. Okay.
Thanks a lot.
Daniel F. Sansone - Senior Vice President and Chief Financial Officer
Mobile equipment obviously a lot shorter.
Todd Vencil - Davenport & Co.
Yes. Okay, thank you.
Operator
That concludes the Q&A session. I will now turn it over to Don James for a closing statement.
Donald M. James - Chairman and Chief Executive Officer
Well, thank you very much. In summary, I think we are doing as an organization a good job of managing our controllable costs and managing our production in relation to a period of relatively weak demand.
I think to me a high point of the quarter is the fact that our cash margin per ton of aggregate is significantly higher than it was at the peak of the cycle. That is a tribute to the quality of our management and our plants and in our divisions.
With a little help on volume, we will have tremendous earnings leverage. As we look forward, the greatest opportunity for help on volume will come in a stimulus package.
Large industrial and transportation projects are helping, but they are not offsetting obviously the decline in housing and other sectors but I think if you follow what happens in Washington over the next two to three months I think you will get a better sense of what our opportunities will be in 2009. So, thank you very much for your interest and we look forward to talking to you again after the conclusion of the year.
Have a good day.
Operator
Thank you for your participation in today's call. This concludes the presentation.
You may now disconnect. Have a great day.
.