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RTI International Metals Inc. (NYSE:RTI)

Q1 2009 Earnings Call

April 28, 2009 11:00 AM ET

Executives

Richard E. Leone - Investor Relations

Dawne S. Hickton - Vice Chairman and Chief Executive Officer

William T. Hull - Senior Vice President and Chief Financial Officer

Michael C. Welham - President and Chief Operating Officer

Analysts

Kuni Chen - BAS-ML

Luke Folta - Longbow Research

Edward Marshal - Sidoti & Co.

Kevin Money - Cleveland Research

Gautam Khanna - Cowen & Co.

Steve Raineri - Franklin Templeton

Frank Haflich - AMM

Brain Yu - Citi

Operator

Good morning, ladies and gentlemen and welcome to the First Quarter 2009 Results Conference Call. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note that this conference is being recorded.

I will now turn the call over to Mr. Richard Leone. Mr. Leone, you may begin.

Richard E. Leone

Good morning, ladies and gentlemen. Welcome and thank you for joining us today on this conference call to review the first quarter 2009 financial results for RTI International Metals. I'm Richard Leone, Director of Investor Relations.

Today's call will be lead by Dawne Hickton, Vice Chairman and Chief Executive Officer of RTI. In addition, Mike Welham, President and Chief Operation Officer; Bill Hull, Senior Vice President and CFO and Bill Strome, Senior Vice President of Strategic Planning and Finance will be available along with Dawne for your questions at the conclusion of our formal remarks.

As always, elements of this presentation are forward-looking and based on our best view of the business as we see it today. I refer you to our detailed disclaimers set out in the press release.

Now, let me introduce Dawne Hickton. Dawne, please go ahead.

Dawne S. Hickton

Thanks, Rich. Good morning everyone. As Rich mentioned, I will review RTI's first quarter 2009 results. I'll comment on the near-term impacts on our business of the economic slowdown and I'll provide a little bit of insight into how we see the balance of 2009.

Let me start with the financial performance for the quarter. RTI recorded a net loss of $1.5 million or $0.06 per diluted share on sales of $106.1 million. This does compare to net income of $22.2 million or $0.96 per diluted share and sales of 150.6 million in the first quarter of 2008.

Our operating loss was 0.8 million and that compared to an operating income of 33.2 million for the same time frame a year ago. Despite one of the lowest periods for market demand for Titanium mill products since the last down cycle in 2004, its important just to point out that our Ti Group delivered some good operating results during the quarter.

And similarly, our distribution group remained profitable in a very challenging environment for their products. However, our fabrication businesses continue to be impacted by the ongoing delay in the 787 program. And more specifically for this first quarter, we had some operational issues that included cost over runs related to some energy market projects.

And then we had some production issues that resulted in shipment delays at the end of the quarter and lower than expected manufacturing efficiencies one of the segment sites located in Houston.

These operational issues have a direct impact on our ability to achieve the expected revenues during the quarter. We are addressing these issues and at this time, we would anticipate that at least portion of these revenues will be realized in the second quarter. We've made some personnel changes to address the issue and we are enhancing our operational strength in the organization.

Despite the ongoing challenging market in our industry, we began one year ago -- which began one year ago with the first big push-out on the Boeing Dreamliner.

We have continued focus on our cash and managing our capital expenditures even more tightly than we expected since our earning call. And we have ended the quarter with 262.8 million in cash and cash equivalents and an un-drawn $200 million credit facility. Until there is more clarity into the length and breadth of the current down market is that our other down cycles, cash conservation will be a primary focus.

Although we still face near-term challenges, throughout the balance of 2009, we continue to see the strong demand in the next decade for Titanium. This demand for our products and services is supported by the long-term agreement, some that run through 2020 that we have put in place over the course of the past two years.

The open question of course in the near-term is when does demand start to pick back up again. And indeed one of the bright spots for our future continues to be our long-term agreement with Lockheed Martin to supply the first ₤8 million per year of Titanium mill products for the Joint Strike Fighter program.

In Secretary Gates, recent Pentagon speech, his support of this program boats well for RTI's long-term future and in the near- term, the decision to double the number of Fighters on order for 2010 will continue to allow us to maintain some level of profitability throughout the slowdown.

Recognizing the uncertainties of the downturn, we have been focused on expenses and managing cost more effectively. During the first quarter, we embarked down some select workforce reductions and we've implemented in on going cost reduction program across the organization.

Some of the benefits of the cost cutting remediate but what were carried to the balance of the year. A portion of these measures we mentioned in our last call including the elimination of a retirement, the reduction of outside processing. We also during the quarter consolidated two of our distribution facilities, closing our Indiana distribution facility.

We will continue to review our operations for consolidation opportunities that could provide us with some cost benefits. In addition, we're reviewing our compensation and benefit programs with a view towards making our programs more competitive within the industry, while simultaneously saving us money.

We are targeting an annual savings of between 15 and 20 million, of which about half is related to the volume and the balance to overall improved efficiencies. But we will balance the cost cutting in the near-term against longer-term strategic growth opportunities for the company. And that includes the growth in our innovation and technology departments and our commercial focus as we continue to work with customers on our strategy to provide new value added opportunities.

And these opportunities are very real to participate in the supply chain as a fabricator of parts for new programs such as the JSF and the A-350, and they support our strategic plan to become an integrated supplier of Titanium and other specialty metals parts and components.

And indeed, we've been pursuing these opportunities globally and while it's a modest contract, we've just signed a three-year deal with a Chinese manufacturer to supply some machine to sublease on the Boeing 747-8 program. And this will provide a modest boost to Claro as we get into next year.

Now at this point, let me turn it over to Bill Hull, our Chief Financial Officer to address the specifics of the three operating groups. Bill.

William T. Hull

Thanks, Dawne. Let me start with the distribution group. Net sales for the first quarter were down 24% from the same period a year ago and operating income was down 71% reflecting the overall slowdown in the economy as well as a slowdown in demand for products in this group.

Operating income for the first quarter was $2.2 million on net sales of 49.7 million as compared to $7.8 million in operating income on net sales of $65.6 million for the same period last year.

The quarterly results for the fabrication group reflects the direct impact of our production issues as well as the continuing delay of the Boeing 787 program. The group had an operating loss for the first quarter of $7.2 million on net sales of $26.1. This compares to an operating loss of $2.9 million on sales of $29.9 million for the first quarter of last year.

As Dawne discussed previously, the fabrication issues during the quarter included energy project cost overheads as well as production throughput issues that reduced expected revenue within the quarter and resulted in higher than expected cost including lower material yields.

We have mentioned before, that the continuing delay of the Boeing 787 program has led both to lower operating efficiencies and higher manufacturing cost at both our Houston and Montreal facilities. We expect this trend to continue for the next several quarters. However, subject to the 787 delivery schedule, we anticipate increase in production by year-end.

For the Titanium Group, sales for the first quarter were 64.1 million including intersegment sales of 33.8 million. Operating income for the quarter was $4.2 million for the quarter. This compared to operating income of $28.4 million on sales of 102.2 million including intersegment sales for 47.1 million in the first quarter of 2008.

Mill product shipments for the quarter totaled ₤2.7 million at an average realized price of $22.22 per pound. Titanium Group gross margins were 31% on net sales for the first quarter as compared to 23% on net sales for the fourth quarter 2008.

Now, related to taxes, the tax benefits for the quarter was 200,000 or 12% of the pre-tax loss, including a $600,000 charge, primarily related to unfavorable adjustments to unrecognized tax benefits. Exclusive of this discreet item, the annual affective tax rate is higher than normal, primarily because of the mix of foreign and domestic operating results. This impact is amplified by the relatively low level income.

Now, back to Dawne.

Dawne S. Hickton

Thanks, Bill. First, at this point, I'd like to take a moment and update you on our expansion projects. The sponge project in Hamilton, Mississippi is still on hold at this time and until market conditions start to pick up, we don't see a current need for this additional until sometimes after 2011.

Our current raw material contracts provide us with sufficient sponge to support our requirements until that point. So in the meantime, we are continuing to explore long-term alternatives because we will ultimately need additional sponge to support the ramp-up of the Joint Strike Fighter and our long-term supply agreement with Airbus as they accelerate production of the A350 still at this point scheduled for the 2013 timeframe.

We are continuing to explore other options for the supply of sponge and our other raw material needs and depending upon the outcome ultimately of those discussions as well as market conditions, we'll balance those considerations against our production requirements and expansion schedule.

Now, let me talk about our second expansion project and that's our Mill product expansion. The $100 million melting, rolling and forging facility is being built in Martinsville, Virginia. This facility was also undertaken to support the Joint Strike Fighter program and the Airbus contracts.

And we did announce an approximate six months delay of that project but we have continued with construction on a somewhat slower schedule and we still expect Martinsville to be operational at a point and time to support the needs of our long-term agreements.

Looking a bit to the future, I'm still convinced that the long-term demand dynamics for titanium are strong. They're driven largely by a commercial aerospace market that despite current challenges is still fundamentally strong in the long-term.

And as we all know that demand is being driven by the new designs in aircraft manufacturing that reflect the growing requirements of airplanes that operate more cost efficiently and are more environmentally friendly. Hence, those two requirements create a design that as everyone knows is using more titanium.

Now, what we don't expect a dramatic pushback on the production schedules from Airbus and Boeing, we have heard some slight rescheduling changes on the Boeing programs and also we would not be surprised to see some production reductions in 2010. We're staying close to our customers, but our long-term agreements with our minimum requirements will help us balance through this timeframe.

I think as we pointed before, even if you would cancel all of the narrow body orders that are currently in the backlog, you'd only reduce global titanium consumption by about 12%, and that's simply because the large driver for this future demand that taking us into next decade, really is represented by the titanium intensive airframes for programs. The 787, the Airbus 350, the Airbus 380 and the Joint Strike Fighter in which RTI is well positioned for success. In fact, RTI is the only titanium company with a significant presence on all four of these platforms.

Now, let me look to the near-term and the balance of this year. With the many unknowns still in the marketplace, the headlines that impact us daily, we're not in a position to provide any further definitive guidance beyond what we've previously issued. I will like to reiterate and reaffirm what I said at the beginning of year namely, that what we do know is that with our current backlog and our contracted business, we have visibility to approximately ₤10 million of titanium mill products for the Ti Group.

I further stated in the last call that we anticipate our averaged realized pricing will be down from 2008 by about 10 to 15% depending on the product mix and these are holding true in the near-term.

Further, as I've noted in the past, our current pricing does reflects the long-term nature of the contracts with Airbus and the reduced pricing tied to some of our LTAs that have annual industries.

And notwithstanding the first quarter loss, we continue to expect to be profitable at the end of 2009, but the year does continue to be a challenge in depending on how the year progresses, we could be closer to breakeven.

And finally, as we stated in our last call, we had expected that our capital expenditures for the year will be around $125 million. Although we're not providing a revised number at this time, we are evaluating the near-term need for each item related to the 2009 capital expenditure budget and we will adjust where appropriate.

And now at this point, we're happy to turn it over for questions

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. (Operator Instructions) Our first question comes from Kuni Chen from Banc of America Securities - Merrill Lynch. Please go ahead.

Kuni Chen - BAS-ML

Hi, good morning everybody.

Dawne Hickton

Good morning Kuni.

William Hull

Good morning Kuni.

Kuni Chen - BAS-ML

I guess to start off, can you just talk about some of the issues on the Fab Group in the quarter and just give us a sense as to how much in terms of revenues get pushed into the second quarter and from a cost point of view sort of what the impact was in the first quarter?

Dawne Hickton

Well, let me just say we had two issues, they both cropped up right at the end of the end of the quarter. One was with an energy project -- actually two energy projects we're working on, we had some cost over-runs really related to the early stages of a project that had not been anticipated. Those will carryover into the second quarter but ultimately we should be able to work our way through those.

The other issue occurred in our fabrication business down in Houston, we had some operational issues, some manufacturing issues, we've addressed those. We just were not able to get shipments out the door and we expect to make most of those up similarly for a good portion of those in the second half.

Mike, do you want to address total revenues as you see it.

Michael Welham

Yeah Kuni, the -- in round numbers, we would expect to pick-up 6, $7 million of revenue from these issues combined as we move through the year.

Kuni Chen - BAS-ML

All right. So, does it all come back in that second quarter and phases in throughout the year?

Michael Welham

Yeah, it's going to roll into the second and third quarter.

Kuni Chen - BAS-ML

Okay. Got you. And then just on the sponge plants, of the 125 million CapEx, how much of that relates to Hamilton and then as far as your timing on having discussions with other third parties for sponge, can you give us a sense on what you might expect there?

Dawne Hickton

About 75 million is related to the expansion projects, of which the overwhelming majority is Martinsville. And then the remaining balance is our normal maintenance CapEx and that's where we're kind of looking very pretty closely at some of those projects in terms of when we need the maintenance done in terms of the current market conditions, discussions with various alternative sponge suppliers is ongoing. And at this point, we really don't have anything to comment on with respect to timing.

Operator

Our next question comes from Luke Folta from Longbow Research. Please go ahead.

Luke Folta - Longbow Research

Hi, good morning everybody.

Dawne Hickton

Good morning, Luke.

William Hull

Good morning, Luke.

Luke Folta - Longbow Research

Hi. My first question is you reiterate your £10 million guidance in the mill segments, I was just curious -- at the conference a couple of weeks ago, you had laid out a couple different forecast for shipments in 2010, and in each case you're looking for an increase.

And I was just curious if you could provide for us what you're kind of your base line number is for 2010 or what you think the incremental step-up could be that you feel good about at this point?

Dawne Hickton

Luke, what you're referring to was our presentation on the global titanium demand and when we looked at various scenarios based upon some assumptions relating to current GDP, where we see the global economy going, what do we see happening in China and India, what do we see some as some of the global drivers for all aerospace titanium demand across the board not just RTI's.

We were looking at kind of a worst case, severe care -- a base case as severe case and then most likely. Most likely for the overall aerospace demand, we're going to see some drop-off would be about 187 or ₤189 million total world demand that occurred in 2009 total shipments.

We think we'll see that drop-off from between 10 to 20, maybe upwards of 20%. But then we'll see that start to tick back up a little bit in 2010 from that 10 to 20% reduction. And a lot of that will be geared from the titanium aerospace side to the fact that you are going to ultimately start to see the ramp-up of the 787 and the JSF and then ultimately in the future moving into the A350. But we have not provided anything definitive to our numbers.

Luke Folta - Longbow Research

Okay. And just one more follow-up on your fabrication group, can you give us the status of where you are as far as if you are shipping anything unless from the seat track program to the 77 platform and some idea of -- if the current delivery schedule is correct and Boeing starts delivering in the first quarter of '10, kind of when you expect the ramp-up in shipments to be?

Michael Welham

Luke, this is Mike. In general, we supply well over 100 parts on that program. So in general, we're shipping probably at a rate of around 1 to 1.5 ships sets per month right now and that come vary significantly based on the part. As it specifically relates to the Pi-Box Seat Track program, we are in early stages of production on those parts; we expect that to ramp-up as we move to the fourth quarter and assuming first flight occurs, we would expect to ship somewhere less than ten ships this year and increasing to the mid 40s next year on that program.

Operator

Our next question comes from Edward Marshal from Sidoti & Company. Please go ahead.

Edward Marshal - Sidoti & Co.

Good morning everyone.

Dawne Hickton

Good morning, Ed.

Michael Welham

Good morning, Ed.

Edward Marshal - Sidoti & Co.

Could we discuss what your assumptions are for working capital for the year for 2009? Do we expect inventories to come down? How do you -- how shall I look at them?

Dawne Hickton

The inventory level will not be coming down. We think it's going to be staying pretty leveled. And in terms of we're just going to continue to manage the business, particularly as we see it across the Ti Group and you are not going to see, as Mike said, a lot moving forward on fab until you get to year-end.

Edward Marshal - Sidoti & Co.

Okay. So, would you -- working capital, I mean will be close to flat in the year or should we see some kind of benefit from or is it user...

Dawne Hickton

At this point, I think it will be pretty flat and I don't want to say more than that till we get further into the year.

Michael Welham

Ed, this is Mike, just real quick on the inventory. I think, as we said last quarter, we are expecting reductions in our weapon finished goods inventory overall in the company but that's going to be pretty much offset by the increase in raw material due to our sponge commitment.

Operator

Our next question comes from Kevin Money from Cleveland Research. Please go ahead.

Kevin Money - Cleveland Research

Good morning.

Dawne Hickton

Good morning.

Michael Welham

Good morning.

Kevin Money - Cleveland Research

Could you just give us some sort of an outlook on raw material costs, specifically where could sponge invoices go for 2010?

Dawne Hickton

Well certainly, you are talking about negotiations under the LTAs and I'm assuming you're referencing is opposed to spot market.

Kevin Money - Cleveland Research

Right, right.

Dawne Hickton

To draw specifically, those negotiations have not commenced but we certainly would expect to see pricing coming down.

Kevin Money - Cleveland Research

Okay. Just also wanted to get some more color on the distribution environment, are you seeing competitors there selling below price to generate cash, that sort of thing?

Michael Welham

Yes, we are. That's one of the issues facing the industry in general and particularly in the specialty alloys than nickel market that's quite prevalent.

Operator

Our next question comes from Gautam Khanna from Cowen and Company. Please go ahead.

Gautam Khanna - Cowen & Co.

Hey, guys. How are you doing?

Dawne Hickton

Good morning, Gautam.

Michael Welham

Well, Gautam.

Gautam Khanna - Cowen & Co.

Hey, couple of questions, one the ASPU on the Ti Group was up sequentially, was there something about the mix or I mean kind of if you could explain the dynamics on the spot versus the contract business?

Dawne Hickton

That was almost all specifically related to the mix of the products coming out during the month and where we had shipments in.

Gautam Khanna - Cowen & Co.

Okay. And the shipments were ₤2.7 million, you expect that rate to be what the high watermark for the year or to get to 10 million or how should we think about it playing out in terms of...?

Dawne Hickton

We have more visibility in the first half of the year. I think it may weaken a little bit by the time you get to the fourth quarter unless we see some change.

Gautam Khanna - Cowen & Co.

Is F22 is -- they're not going buy the 2012 lot. How does that affect your mill volumes this year and next? And JSF got plussed-up by couple of 2.9 billion in the budget request. So, how does that affect, is there an offset? Are you guys going to ship more to Lockheed this year than last year or less?

Dawne Hickton

Gautam, really in actual fact it relates to us, we're going by schedules that had already been forecasted and in place that assumed some of what actually happened in the budget. And so what we already have in place is what we've told you, so those announcements don't really have a direct impact in '09. We expect though that should be more beneficial to us as we get into the latter half of '10.

The good news frankly, is just there at all we spent a little bit of uncertainty about the long term validity of that program. And certainly, that's been enhanced and I think pretty well put to bet.

Operator

Our next question comes from Steve Raineri from Franklin Templeton. Please go ahead.

Steve Raineri - Franklin Templeton

Hi, good morning.

Dawne Hickton

Good morning.

Michael Welham

Good morning Steve.

Steve Raineri - Franklin Templeton

I just wanted to go back to the original comments on the sponge plan. I think you said you didn't foresee a need until 2011?

Dawne Hickton

Correct.

Steve Raineri - Franklin Templeton

Does that -- help me understand what that means in terms of when the sponge plan actually has to be completed and what money needs to be spend and when?

Dawne Hickton

I will give; let me give you an overview. This is an approximate 300 million expansion project in total and we have already spent or committed approximately 100 that we have announced with respect to underlying engineering design, underlying preparation of the site and environmental permitting.

At this point, we've now put that on hold although we do have some orders in place for some long lead time equipment. But in terms of the actual, once you were to pull the trigger, you're looking at 18 months to 2 years minimum before you've got the facility in its stage, where you're going to start producing. And even then, it would be done at a ramp-up approach; it would not get a full ₤20 million production. You'd have to go through about six months of certifying your early material.

So, at this point, we've got a sufficient amount of time to consider at the marketplace before we need to make any decision on that.

Steve Raineri - Franklin Templeton

Okay. I'm just trying clarify what exactly that means. How much money -- assuming we don't need any new sponge capacity by 2011, assuming we haven't found an alternative supply, which I would really like to see, I think we would all like to see, we wouldn't want to see another 200 plus million going out the door here under this environment, it's almost the whole market cap for the company, assuming you cannot find suitable replacement for that sponge and consistent with the original statement, what would be the timeline for expenditures going forward?

Michael Welham

The majority of that balance of roughly $200 million would be spent over the 2010-2011 timeframe.

Operator

(Operator Instructions). Our next question comes from Frank Haflich from AMM. Please go ahead.

Frank Haflich - AMM

Yes, a couple of questions. Maybe you can -- I still need further clarification on the sponge plan. As I understood it, earlier you postponed the start-up from 2010 to 2011, now where do you stand?

Dawne Hickton

As I've stated, we put that project on hold and we are monitoring it on a regular basis against market conditions and our requirements.

Right now, we do not have as we see where we're going for the next couple of years, based upon current information and knowing what we have with our sponge contract commitments. We don't have a need for the additional sponge until sometime in 2011.

So, I think what you're asking Frank is, at this point, we wouldn't need to start to operating that facility until after 2011, even then, it would be at a slow ramp up, assuming we would not be able in the interim to find alternative sourcing.

Frank Haflich - AMM

So, just to re-clarify, so its -- the latest was 2011 startup and now you've pushed it beyond that, right?

Dawne Hickton

Well, what we said was 2011 in market trends. So, as we see it today, that's correct.

Frank Haflich - AMM

Right. And it's indefinite now, right?

Dawne Hickton

It's on hold.

Operator

Our next question comes from Gautam Khanna from Cowen & Company. Please go ahead.

Gautam Khanna - Cowen & Co.

Mike, could you update us on what your view of the titanium inventory overhang is across the industry?

Michael Welham

Yeah, I don't think it's changed much since the last quarterly call. We still think that Boeing is going to be dealing with a number that surround 40 million and at least currently, Airbus is probably relatively in balance but that could change based on what happens to production rates in the future.

Gautam Khanna - Cowen & Co.

And we know production rates are declining at least in '10. How long do you think it will take for that overhang to be absorbed?

Michael Welham

I think, particularly as it relates to Boeing, I think you are dealing with at least a two-year issue and may be even three. You got to remember they have minimum commitments in addition to the inventories, so they've got a kind of balance how that inventory gets bled out over a period of time.

Operator

Our next question comes from Kuni Chen from Banc of America Securities-Merill Lynch. Please go ahead.

Kuni Chen - BAS-ML

Hi, can you guys just comment on particular for the Ti Group, how you see the cost changing on a sequential basis as we move through the year?

Michael Welham

On a unit cost basis, obviously it's depended on mix and things of that nature. We don't see it changing that dramatically from what we saw on the first quarter. But again that's all going to be based on what the operating levels are at and assuming that we hit the volumes that we're currently forecasting.

Kuni Chen - BAS-ML

Okay. Good enough. Thanks.

Dawne Hickton

Thank you.

Operator

Our next question comes from Frank Halflich from AMM. Please go ahead.

Frank Haflich - AMM

Yeah Mike, can you tell me what you see now as the dealer buying price for bulk weldables and maybe just discuss briefly what the outlook is for that part of the scrap market?

Michael Welham

Yeah, what we're seeing right now, unprepared bulk weldables scrap is about $2, if you're really in the market looking to buy it. You can see numbers out there depending on where you look below a dollar but frankly there's still just so little activity that it's hard to get a handle on what the actual number is unless you're out buying.

We have bought a very little amount of scrap this year and it's been in roughly the $2 range on unprepared basis.

Frank Haflich - AMM

And that would you buying it -- if you were generating it, what would the scrap people be paying?

Michael Welham

Yes, frankly I don't have any idea Frank, I mean we don't -- we keep all of our internally generated scrap ourselves.

Operator

Our next question comes from Brain Yu from Citi. Please go ahead.

Brain Yu - Citi

Thanks. Question on the pricing in Q1 Dawne, I think you had attributed to mix, is this one-off or do you see it continuing for the rest of the year?

Dawne Hickton

Well, there is -- in every quarter, this is the business that there is a little bit of ups and downs to it in terms of what you're shipping out the door on a monthly basis and a quarterly basis, so that you get more mill-- bill it out or more sheet or plate.

And so, in the first quarter it ended up a little bit of the higher price product in the second quarter we may see a little bit of that but we may see level-off. But I think overall across the year, what we saw is that 10 to 15% reduction from last year's average.

Brain Yu - Citi

Okay. And also in terms of contract or LTA versus spot market mix, do you have those numbers?

Michael Welham

Yeah, I mean originally what we said on our last call I believe is we expected the spot market to be about 10% of our shipments in 2009. Its -- it could be that, it could less than that its, they really don't have a lot of visibility past the current quarter or early next quarter on a spot basis.

Operator

We have no further question at this time.

Richard Leone

Thank you for joining us on today's call. The operator will now give you replay information. Please go ahead, John.

Operator

Thank you, ladies and gentlemen. This concludes today's conference. A replay of this call will be available in one hour and remain until May 12, 2009.

Using playback numbers 888-843-8996 for USA/Canada, again 888-843-8996 for USA/Canada or international at 630-652-3044, again international at 630-652-3044, and your pass code of 24169704 again 24169704. This concludes today's call. Thank you for participating. You may all disconnect.

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