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Executives

Jeffrey S. Laudin - IR

Mogens C. Bay - Chairman and CEO

Mark C. Jaksich - VP and Controller

Analysts

Arnold Ursaner - CJS Securities, Inc.

Ned Borland - Next Generation Equity Research

Jonathan Braatz - Kansas City Capital Associates

Brent Thielman - D.A. Davidson

Michael Coleman - Sterne Agee

Valmont Industries, Inc. (VMI) Q3 FY08 Earnings Call October 16, 2008 9:00 AM ET

Operator

Good morning. My name is Rachel and I will be your conference operator today. At this time, I would like to welcome everyone to the Valmont Industries Third Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. [Operator Instructions]. Thank you, Mr. Laudin, you may begin your conference.

Jeffrey S. Laudin - Investor Relations

Thank you, Rachel. Welcome to the Valmont Industries third quarter 2008 earnings conference call. With me today are Mogens Bay, Chairman and Chief Executive Officer; Terry McClain, Senior Vice President and Chief Financial Officer and Mark Jaksich, Vice President and Corporate Controller.

Before we begin, please note this discussion is subject to our disclosure on forward-looking statements which applies to today's talk and will be read in full at the end of the call. The instructions for accessing a replay of the call can be found in our press release.

I would now like to turn the floor over to our Chairman, Mogens Bay.

Mogens C. Bay - Chairman and Chief Executive Officer

Thank you, Jeff, and good morning everybody and thank you for joining us. Let me begin with third quarter highlights.

First, sales were at record third quarter levels, increasing 33% with each segment achieving third quarter sales records. Second, operating income increased 64% and was 12.5% of sales. Third, net earnings increased 43%. Fourth, the company's backlog is at record levels.

Before I review the results by segment, I'd like to make a few general comments about the current credit tightness and how it might impact Valmont. We'll start with our Engineered Support Structures segment.

A large part of the North American business consists of highway projects. These projects are funded primarily through the highway bill at the federal level with secondary [ph] funding on the state level. The source of these funds is a combination of state and federal gasoline taxes. While some states may currently face budgetary issues, historically, highway spending continues to be funded because of the crucial need to maintain and upgrade highway infrastructure. Another benefit of highway funding has been to preserve the many jobs that infrastructure construction supports at the local level.

In the utility business, utilities have historically had very good credit rating and ready access to credit. They can recover their investments through usage rights. A solid transmission grid is a must to support economic activity worldwide. We expect continued strong levels of utility investment in transmission and distribution infrastructure.

In the irrigation business, in North America, the balance sheets of farmers are generally strong. Land values have increased and the farmer is not highly leveraged. To buy our equipment, most farmers borrow from their local banks or finance company specializing in lending for irrigation equipment. In conversations with ag bankers, they indicate that they would actually rather make loans for irrigation equipment than for other farm machinery because pivots increase productivity and help ensure that other costly inputs such as fertilizer and seed bear fruit. Our international customers also have healthy balance sheets, and for the most part financing for pivots is available.

For our Coatings customers, galvanizing represents a small percent of the final product cost. Our customers value the benefits of corrosion protection. We have a diverse customer base that participates in many industries with a heavy emphasis on infrastructure. It's difficult to determine exactly how tight credit will impact our Coatings customers. We do know that our Coatings business is correlated with the industrial economy and infrastructure, which, at the current time, remain fairly firm.

The other side of the credit issue is the impact on our distribution system and suppliers. In addition to our normal checks and balances, we are closely following developments and, as best as possible, monitoring the financial strength of customers and suppliers. So far, we have not had any agent, dealer, vendor or supplier tell us that they could not conduct business because of tight credit.

Now let's review the third quarter results by segment. I'll begin with the Engineered Support Structures Segment where sales increased 13% to $187.1 million. Operating income increased 2.7% to $16.3 million or 8.7% of sales. The decrease in operating income is the result of costs associated with the start up of a new plant in China, reduced factory performance in a North American plant and increased marketing development expenses for international markets. This was partly offset by the favorable impact of acquisitions and improved North American specialty structures performance. Increased SG&A spending in our international business relates to initiatives to expand into new territories and open new markets.

In North America, sales of commercial lighting was slightly lower due to softer activity in the commercial construction markets. Sales of lighting and traffic products for the transportation market increased, particularly sales for projects funded by the U.S. federal highway bill. The current highway bill will expire in September of 2009. Each successive highway bill has been larger than the previous one. In the past, if there is a delay in signing a new bill, funding has been provided by Congress at the expiring bills' run rate. We would expect the same scenario this coming year.

In international markets, in addition to higher volumes, positive currency translates and contributed to higher sales in U.S. dollars. Europe saw good improvements, particularly in Northern Europe.

In China, sales were higher despite transportation interruptions during the Olympic games. Our new facility in the Shandong province started production in August. We have a strong and seasoned management team in China and view China as both a challenging and exciting place to do business. It should continue to be a growth market for our company as that country builds out their infrastructure in rapidly growing coastal cities as well as inland.

In the Utility Support Structures Segment, sales increased 43% to $113 million due to the additional sales from PennSummit and improved pricing. Operating income increased 45% to $14.5 million or 12.9% of sales as a result of the PennSummit acquisition, the recovery of material costs and better factory performance. The North American utility market is strong.

Following decades of limited investment in transmission and distribution infrastructure, utility companies are investing heavily to upgrade the grid. We expect continued investment to improve reliability and support increased transmission of electricity across state borders. In ongoing discussions with utility customers, we hear no indications of a slowdown. We are experiencing good order flow. We have record backlogs at this time and are pursuing numerous very large projects.

An additional source of growth for Valmont's utility business is the trend towards more wind power. Each wind farm needs to be connected to the grid through new transmission lines, providing opportunities for us, whether structures of steel, concrete or a combination of both. Valmont offers the broadest lanes of materials to match the needs of our utility customers.

In the Irrigation Segment, sales were 77% higher at $150 million in what is traditionally a very slow quarter. Global demand for irrigation equipment and products was high.

Additionally, summer storms in North America contributed to sales growth through the replacement and repair of damaged machines early in the quarter. International markets were particularly strong in Brazil, the Middle East and Australia. The Irrigation Segment operating income nearly tripled. It increased 185% to $25.2 million and was 17% of sales.

This year our irrigation business has achieved record results. The main drivers have been on the demand side of the equation. As diet improvements, particularly in China and India, drive protein consumption, it increases the demand for feed grains and is supportive of crop prices. The emergence of biofuels creates an additional source of demand. Increased demand leads to investment by growers in mechanized irrigation equipment. The combination of further demand on production agriculture and the scarcity of fresh water worldwide creates excellent growth opportunities for our irrigation business going forward.

In the Coatings Segment, third quarter sales of $35.9 million was 5% higher than last year. Volume increases reflect good demand from our external as well as internal customers. Operating income rose 52% to $9.3 million or 25.9% of sales as a result of lower costs, higher volumes and manufacturing efficiencies.

Turning to other financial measures, increased inventories and account receivable largely reflects higher sales and backlogs, inflation's impact on inventory valuation and acquisitions. While we continue to experience the impact of inflation in steel, during the third quarter, steel costs have recently moderated. Accounts receivable terms are consistent with historical levels.

Depreciation and amortization for the quarter was $10 million and capital expenditures were $13.5 million. For the quarter, cash flows from operations were an inflow of $17.2 million, investing cash flow were an outflow of $41.4 million and financing cash flows were an inflow of $28.6 million. For the year, depreciation and amortization is expected to be between $38 million and $40 million and capital spending is estimated at between $55 million and $60 million. Our third quarter tax rate was 34% compared to last year's third quarter rate of 22%.

Our outlook for the balance of the year is positive and we expect a good close to the year. For the year, we expect revenue growth percentages in the mid 20s and now expect operating income as a percent of sales to increase about 1 and 1.5 percentage point.

When we look at 2009 and beyond, trends in most of Valmont's businesses look favorable worldwide. These are unusual times with unsettled conditions in the financial markets. The current credit crisis worldwide will have some impact on our businesses. Exactly where and when we will see it is difficult to determine at this time. However, when we step back and look at long-term drivers, they are strong. Infrastructure spending will continue to be necessary to support economic growth and agriculture will continue to be faced with increased demand to support population growth worldwide and the need for more food and fuel. Recently, we have seen a decrease in commodity prices so far without a corresponding decrease in input costs, which could negatively impact order flow in the short term.

In summary, we believe Valmont is well positioned for 2009 and beyond. We are well diversified along product lines and markets. We also diversified geographically with operations throughout the world. We believe this diversification leaves us well positioned to benefit from global infrastructure development, agriculture's challenge to keep up with global grain demand and pressures to reduce the amount of water that is used in the production of food and fiber.

This concludes the prepared portion of our remarks and we would now like to take your questions.

Question And Answer

Operator

[Operator Instructions]. Our first question comes from Arnie Ursaner. Your line is open.

Arnold Ursaner - CJS Securities, Inc.

Hi, good morning. I guess my first question relates to the transmission and distribution piece of your business. Can you give us a little better feel for the types of orders you're seeing, the types of dialogue you're having and how much of your '09 expectations do you hope to have in place before you begin Europe '09 [ph]?

Mogens C. Bay - Chairman and Chief Executive Officer

Let me start with conversations. I have actually this week met with two companies that are involved either on the engineering sides of transmission lines on the construction side. And both companies confirmed our view that the investments in the grids in North America will continue to be very strong. Our backlog is at record high and I would guess that when we enter 2009, I would guess that about half the year will be in the backlog.

Arnold Ursaner - CJS Securities, Inc.

And my second question relates generally to irrigation and your view going into the selling season in January and February and March. You mentioned obviously some detailed comments regarding input costs not coming down yet. Can you clarify a little bit about what they are? Because things like potash and some other things have come down a fair amount. And at what price levels do you except farmers to be impacted in their orders?

Mogens C. Bay - Chairman and Chief Executive Officer

First of all, when I talk input cost, I talk input cost like fertilizers, which I don't think farmers have seen come down corresponding to what we've seen in commodity prices at the retail level. I think fuel cost will come down as we've seen prices at the gas pumps come down. And I don't think, if we see a slowdown short-term, it is no different from what we've in the past that there maybe an imbalance and farmers are little concern short-term they may postpone some of their purchases.

I would expect that we will maybe see more of a compressed selling season then, because the farmers really don't need their equipment in place until planting next plan. And I think that if we see a slowdown, it has nothing to do with credit which is what we read about in the papers everyday is the main worldwide problem. I think it's just the farmers looking at commodity prices being reduced 20, 30% and just the emotional impact that has on short-term buying decisions.

Arnold Ursaner - CJS Securities, Inc.

Just one final question. I know you won't give any formal views about next year till probably February. But I'm also aware you've conducted a pretty extensive internal review of all of your business, looking out over five years. As we look out over the next few years, how much margin improvement do you believe you still have left in your business model?

Mogens C. Bay - Chairman and Chief Executive Officer

How much what improvement?

Arnold Ursaner - CJS Securities, Inc.

Operating margin improvement you still think you can generate in your business module?

Mogens C. Bay - Chairman and Chief Executive Officer

I can't answer that question because there are so many unknowns out there right now. But I can tell you that we are not slowing down in our efforts to continue to squeeze more quality out of our business as we have done in the past. But clearly, we are not going to see the speed of improvements going forward like we saw over the last five years.

Arnold Ursaner - CJS Securities, Inc.

Thank you very much.

Mogens C. Bay - Chairman and Chief Executive Officer

Thank you, Arnie.

Operator

Thank you. Our next question comes from Ned Borland. Your line is open.

Ned Borland - Next Generation Equity Research

Good morning. First, a question on steel costs. Steel coming off about 25% in September. When do you expect to see some relief from steel, I mean given your backlogs are out and so forth?

Mogens C. Bay - Chairman and Chief Executive Officer

Well, first of all, you have seen some spot prices come down. In general, you are not seeing steel price decreases like you're talking about. And... but if you look at the general economic slowdown, it should provide some opportunities for better steel costs. I would, though, also say that the consolidation in the steel industry over the last number of years have made them better prepared to face a slowdown in demand. In the past, there was a lot of dumping of steel that took place. Recently, we have seen if there is a slowdown in demand, they tend to take furnaces out for overhaul and maintenance et cetera, et cetera. But in general, I think we're going to see the steel industry give back some of the price increases that we saw last year. Exactly to the extent that will happen and the timing of it is still to be seen.

Ned Borland - Next Generation Equity Research

Okay. And then on irrigation, I know over the summer, your lead times at the dealers were way out there. Given we've just come through [ph] a sort of slow seasonal quarter, where do those lead times stand now relative to say last year or a couple of years ago?

Mogens C. Bay - Chairman and Chief Executive Officer

They are back to normal.

Ned Borland - Next Generation Equity Research

Okay. And then the comments on the wind farms, I seem to remember that you guys were working on a wind structure, but you kind of shelved it. I mean is that what we are talking about now of these structures to --

Mogens C. Bay - Chairman and Chief Executive Officer

No, that's not what we are talking about. We're talking about the effects wind farms will have on our transmission, distribution and substation business. Because if you take Texas as an example, the wind doesn't blow where the consumption takes place for electricity. So they will build wind farms in Western Texas and have to transport the electricity to Eastern Texas and to other parts of the country. So each time you put in a wind farm, you have a major investment also in transmission and distribution lines to get it hooked up with the main grid.

Ned Borland - Next Generation Equity Research

Okay, good. I just wanted to clarify that. And then do you have an organic sales growth number for the utility segment?

Mogens C. Bay - Chairman and Chief Executive Officer

Yes, but we are not sharing it.

Ned Borland - Next Generation Equity Research

Okay. That's all I got. Thanks.

Operator

Thank you. Our next question comes from Jon Braatz. Your line is open sir.

Jonathan Braatz - Kansas City Capital Associates

Good morning, Mogens.

Mogens C. Bay - Chairman and Chief Executive Officer

Good morning Jon.

Jonathan Braatz - Kansas City Capital Associates

Excuse me, a couple of question, would you go back and look at irrigation revenues in the third quarter as a percent of second quarter irrigation revenues? Over the past seven years it's averaged about 74% of second quarter revenues. This year it's about a 100% almost.

Is that mostly related to the international side of the business? Or was the North American side of the business exceptionally strong? And that might give you a little bit applause and things that maybe you borrowed some tales form fourth quarter or may for next season?

How do you look at that... how do you look at the strength of the third quarter revenues?

Mogens C. Bay - Chairman and Chief Executive Officer

We saw strengths both internationally and in North America. And North American sales in the third quarter were exceptionally strong. I don't think it was pulling forward form the fourth quarter. It was more probably a result of the long lead times in the second quarter and therefore a late selling season.

Jonathan Braatz - Kansas City Capital Associates

Okay, okay alright, okay. Secondly when you look at the... we're in sort of in a deflationary environment, costs are coming down hopefully they have come downs still few months on.

Will, you have to... when you look at 2009 begin the pass some of those costs savings onto your customers' this year you passed them on considerably and that enhanced your revenue growth. How do you look at sort of the deflationary environment in the raw material area in terms of an impact on your selling prices going forward into 2009?

Mogens C. Bay - Chairman and Chief Executive Officer

Well if you have deflation in our input costs, yes, we will eventually have to give some of that back to the marketplace. Hopefully, it won't affect earnings but it certainly will reflect revenue.

Jonathan Braatz - Kansas City Capital Associates

Okay. When you look at 2008's revenue forecasts of about 25% something like that, how much of it might have been priced versus foreign exchange versus volume?

Mogens C. Bay - Chairman and Chief Executive Officer

Well I would guess that inflation maybe half of it and the rest the combination of volume and acquisitions.

Jonathan Braatz - Kansas City Capital Associates

Okay, okay. All right, Mogens, thank you very much.

Mogens C. Bay - Chairman and Chief Executive Officer

Thank you, Jon.

Operator

Thank you. [Operator Instructions]. Our next question comes from Brent Thielman. Your line is open.

Brent Thielman - D.A. Davidson

Good morning and congratulation on the quarter.

Mogens C. Bay - Chairman and Chief Executive Officer

Thank you Brent.

Brent Thielman - D.A. Davidson

Just want to dig into the ESS [ph] margins a little bit I know you mentioned some expenses that they contributed to the lower margins year-over-year there. Was there any impact I guess related to the higher skill cost as well in those margin?

Mogens C. Bay - Chairman and Chief Executive Officer

Yes there was. Because some of the backlog we have is funded by federal funds, quite a bit. And you cannot go back and renegotiate or have adjustments in your price depending on input cost. So, yes, we had a significant impact on the fact that input cost rose very rapidly and we had to fulfill a backlog at then resulting compressed margins.

Brent Thielman - D.A. Davidson

And I guess as you see some relief as recently reasons to your guidance [ph] going forward. I mean do you expect pricing to catch up at this point, in terms I mean do you expect to see more margin impression here?

Mogens C. Bay - Chairman and Chief Executive Officer

No, we will expect to get some relief and see margin expansions.

Brent Thielman - D.A. Davidson

Okay, okay. And then on the DUS [ph] segment, I just want to be clear did you see any unit volume growth in the quarter?

Mogens C. Bay - Chairman and Chief Executive Officer

In what segment?

Brent Thielman - D.A. Davidson

In the ESS that segment. Utility spread really, sorry.

Mogens C. Bay - Chairman and Chief Executive Officer

Utility, I think that most of our growth came from price and from the acquisition of PennSummit.

Brent Thielman - D.A. Davidson

Okay, okay. And --

Mogens C. Bay - Chairman and Chief Executive Officer

But we did additional capacity and that's where we got with the acquisition of PennSummit.

Brent Thielman - D.A. Davidson

Right. And then on codlings I know you mentioned some pricing pressures there have you seen those pressure increase or I guess did you see in cost pull back quiet a bit? Any sense on pricing going forward here?

Mogens C. Bay - Chairman and Chief Executive Officer

It's... we have seen sink reduce quiet a bit and we've not had to adjust pricing to that extends. Going forward, I would guess that it's not to realistic to expect operating income rates to continue at in the mid-20s.

Brent Thielman - D.A. Davidson

Right, okay. Okay, thanks very much guys. Congratulations again.

Mogens C. Bay - Chairman and Chief Executive Officer

Thanks Brent.

Operator

Thank you. Our next question comes from James Bank. Your line is open.

Unidentified Analyst

Hi good morning.

Mogens C. Bay - Chairman and Chief Executive Officer

Good morning James.

Unidentified Analyst

I was wondering if I could just dig into that irrigation question little bit deeper. Can I assume then that your irrigation sales would be up in the fourth quarter since I guess you necessarily didn't pull anything from the fourth quarter and didn't pull anything for maybe next year?

Mogens C. Bay - Chairman and Chief Executive Officer

I don't necessarily think you can make that assumption because as I pointed out in the talk, I think there maybe a little hesitation in the marketplace right now that is types of the lower commodity prices as supposed to sales moving from quarter-to-quarter in total for the irrigation segment. I expect revenue to be up in this quarter compared to the fourth quarter last year.

Unidentified Analyst

Okay, fair enough. And the inefficiencies in one of the North American plants, is this sort of that same plants that had the promises to the fourth quarter of '06?

Mogens C. Bay - Chairman and Chief Executive Officer

No, no.

Unidentified Analyst

Okay. It's a different one.

Mogens C. Bay - Chairman and Chief Executive Officer

We had one plant, though kind of the wheels went off the track for a little while and we're getting that fixed, but it did have an impact.

Unidentified Analyst

Okay. Could you give more clarity on what went wrong and what's being done about it?

Mogens C. Bay - Chairman and Chief Executive Officer

No.

Unidentified Analyst

So --

Mogens C. Bay - Chairman and Chief Executive Officer

I mean we had production issues, productivity issues in the plant and we've made some changes and hopefully that will fix the issue.

Unidentified Analyst

Okay. Terrific. My other questions have been answered. Thank you very much.

Mogens C. Bay - Chairman and Chief Executive Officer

Thank you, James.

Operator

Thank you. Our next question comes from Arnie Ursaner. Your line is open. Arnie, your line is open.

Arnold Ursaner - CJS Securities, Inc.

Hi. Can you give us a sense of the currency impact please in the quarter?

Mogens C. Bay - Chairman and Chief Executive Officer

Hold on a second, I want to ask Mark.

Mark C. Jaksich - Vice President and Controller

Yes, Arnie, the impact on currency for the quarter was about $1.5 million on the operating income side and I think about $8 million to $10 million on the sales side, give or take. Most of that was in present [ph] and to a lesser extent Europe and China.

Arnold Ursaner - CJS Securities, Inc.

Thanks. And on steel inventories, we've been keeping an eye on your company for several years. Obviously, when the pieces were rising, it made sense to keep what I would call excess inventories of steel, particularly when there was uncertainty about supply. Given much greater availability and declining prices, should we... I guess two specific questions. One is what was the tonnage increase you had in steel? And two, how much inventory would you be comfortable liquidating in this current environment?

Mogens C. Bay - Chairman and Chief Executive Officer

Well I think what we keep an eye on closely is the inventory turns. And they really haven't change very much. So the higher inventories is a reflection on higher revenues either through the current businesses and acquisitions. Now in rapidly rising steel environment and an environment where we could have had supply issues, yes, we tend to be a little more conservative to make sure we are covered. And if the market hits the other way, we are going to try and we always try and minimize inventories and there is no difference going forward.

Arnold Ursaner - CJS Securities, Inc.

How much was your volume... tonnage volume up, let's say, year-over-year?

Unidentified Company Representative

Arnie, I don't know that we have that answer right now. I might be able to get it. I would say very slightly maybe in terms of tonnage volume if you just look at the pure tonnage.

Arnold Ursaner - CJS Securities, Inc.

Thanks very much.

Operator

Thank you. [Operator Instructions]. Our next question comes from Michael Coleman. Your line is open.

Michael Coleman - Sterne Agee

Good morning. Could you talk about, you've had significant margin improvement over the last couple of years from 7.5% or so, 4 to 500 basis points of margin improvement. You talked about unusual times. The environment is going to have an impact and when and where is going to be difficult to say. But if we do go through a down cycle in your end markets, could you talk on a broad level your ability to maintain the significant margin improvement you've made over the last couple of years?

Mogens C. Bay - Chairman and Chief Executive Officer

It's probably difficult to give you a precise answer because it depends on the business unit. Some business units, if volume goes down, will delever significantly and some will not. It depends on what can you take out of cost in any given business unit. Let me use it, the Coatings business as an example. That delevers pretty rapidly because you can't take zinc out of the cattle... out of the kettle or lower the temperature. In other businesses, you can lower your cost environment as volume goes down. But I do not expect us to revert to the kind of operating performance we had five years ago.

Michael Coleman - Sterne Agee

No, I wasn't suggesting that. But I mean you could conceivably maintain a significant portion of what you've achieved over the last couple of years, is that --

Mogens C. Bay - Chairman and Chief Executive Officer

I would... unless the world falls apart, I would agree with you.

Michael Coleman - Sterne Agee

Okay. And I think you were recently... you have some revolvers that you're renegotiating and so forth. Could you just update us on the status of that?

Mogens C. Bay - Chairman and Chief Executive Officer

Yes.

Unidentified Company Representative

Yes. We have substantially completed our revolving credit agreement. In fact, it will be completed this week, so we got that process started. The revolver will be $280 million revolver. That will be replacing about a $18 million term loan plus a $150 million revolver.

Michael Coleman - Sterne Agee

Okay, thank you very much.

Operator

Thank you. There are no further questions at this time.

Jeffrey S. Laudin - Investor Relations

Thank you, Rachel. This concludes our call and we thank you for joining us today. This message will be available for playback on the Internet or by phone for the next week [ph]. We look forward to speaking to you again next quarter. At this time, Rachel will read our forward-looking disclosure.

Operator

Included in this discussion are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions that management has made in light of experience in the industry in which Valmont operates, as well as management's perceptions as historical trends, current conditions, expected future developments and other factors believed to be appropriate under to the circumstances. As you listen to, and consider these comments, you should understand that these statements are not guarantees or performance or result. They have involved risks, uncertainties, some of which are beyond Valmont's control and assumptions.

Although management believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect Valmont's actual financial results and cause them to differ materially from those anticipated in the forward-looking statements.

These factors include among other things, risk factors described from time-to-time in Valmont's reports to the Securities and Exchange Commission as well as future economic and market circumstances, industry conditions, company's performance and financial results, operating efficiency, available end-price of raw materiel, available end-market acceptance have new products, product pricing, domestic and international competitive environment and action and policy changes of domestic and foreign governments. The company cautions that any forward-looking statement included in this discussion is made as of the date of this discussion and the company does not undertake to update any forward-looking statement.

This concludes today's conference call. You may now disconnect.

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