AMCOL International Management Discusses Q1 2013 Results - Earnings Call Transcript

Apr.26.13 | About: AMCOL International (ACO)

AMCOL International (NYSE:ACO)

Q1 2013 Earnings Call

April 26, 2013 11:00 am ET

Executives

Ryan F. McKendrick - Chief Executive Officer, President, Director and Member of Executive Committee

Donald W. Pearson - Chief Financial Officer, Chief Accounting Officer, Senior Vice President and Treasurer

Analysts

Richard Wesolowski - Sidoti & Company, LLC

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

L. Todd Vencil - Sterne Agee & Leach Inc., Research Division

Andrew Nelson

Operator

Good morning, ladies and gentlemen, welcome to the AMCOL International First Quarter Earnings Results Conference Call. I would now like to turn the call over to Mr. Ryan McKendrick, President and CEO. Please go ahead.

Ryan F. McKendrick

Thank you, Wayne, and good morning, everyone, and welcome to AMCOL International's First Quarter 2013 Earnings Conference Call. We're going to start out today with Don Pearson, our Chief Financial Officer, to provide an overview on the financials -- he'll be providing an overview on operations and then taking questions.

So Don, if you'd like to start us off?

Donald W. Pearson

Thanks, Ryan, and good morning, everybody. The first thing I wanted to mention is that we have completed our restatement in all of our SEC filings within the last several weeks, so we're very happy to have that done.

The first thing I want to talk about in the quarter is just walk you through the restructuring costs and the restatement costs. In the press release, we highlight the $2.2 million of restructuring costs that are sitting in SG&A in addition to the $1 million of the cost of the restatement. So we talked about $3.2 million in SG&A. There is an additional $0.5 million in cost of goods sold. So the total special items was $3.7 million, and that was $0.10, $0.02 was from the restatement -- or yes, the cost of the restatement and $0.08 was from the restructuring. I will point out that the countries that we have the restructuring in have very low effective tax rates. So the tax rate that was used on those numbers for the restructuring was about 5%.

Looking at the P&L. In summary, sales were up about just under 1%. Gross margin declined 80 basis points from the prior year. I will point out that the restructuring had a 20 basis point impact on that in the current year. All of the special items had a 150 basis point impact in the current year's quarter. So the 6.9% operating margin x items is 8.4%.

Effective tax rate of 27.5% is about in line what we'd expect for the year. I continue to look at about a 28% effective tax rate for the year.

Debt is in the range that we would have expected. It was up a little bit from December, principally due to the funding of our investment in Novinda.

We look at our working capital metrics. And given the seasonality of the business, particularly in Q1, we're comfortable with the performance on working capital. I will, again, highlight the fact that we do have incentives pushed pretty deep into the organization on the working capital management.

On the cash flow statement, you do see the investment in joint ventures and affiliates. That $5 million, again, as a reminder, was our investment in Novinda, the mercury removal company that we now have a minority interest position in.

That is the -- my summary of comments, Ryan.

Ryan F. McKendrick

Okay. Thank you, Don. So as Don described, there was were some -- there was some noise in the quarter with restructuring and restatement expense amounting to about $0.10 per share impact on earnings. From an operating perspective, there was some very strong performances in a couple of problem areas. We were pleased with our energy services segment, which posted record sales for the quarter and with the continuing good performance by our metalcasting product line, both in the U.S. and in Asia.

On the downside, for the quarter, lower sales for drilling fluids and pet products as well as paper products, which we have exited, accounted for $0.07 per share negative impact versus prior year.

As we have mentioned in previous calls, AMCOL is continuing to invest in development of new technologies in line with customer's requirements. We're pleased to report that our lining technologies group has received commitments on a significant amount of new business based upon the superior performance of proprietary technology that's been under development for several years. We expect sales revenue in excess of $25 million derived from this technology scheduled to shift over the next 12 months. We're also making headway with mercury sorbent technology for the power industry and with a number of products in the agricultural market sector.

So we'll move onto a quick summary of the segments, starting out first with Performance Materials. Metalcasting sales globally were up about 1% with improved gross margin. The margin improvement was due mostly to product mix and some lower raw material costs for some components going into our blended products. Market conditions are good. Auto sales in the U.S. in March continued at the strongest pace since 2007. And at the recent CastExpo trade show, most of our major foundry customers expressed positive outlook for casting demand. In Asia, as we had anticipated, we're continuing to see an upward trend for volume in China with margin improvement being driven by continued shift to higher-value blended products. Demand in Thailand and South Korea is also steady.

So moving on to our specialty materials product line within the segment. Within this category, we have 3 major product areas: fabric care, personal care and bio-ag. So first, fabric care. Sales there declined slightly, but we saw improvement in margin in Q1 with improved outlook for demand in our established product lines. So the future is looking brighter in this area. We've also made some good progress on product development for a couple of new applications within the fabric care product area.

Secondly, in the personal care area. This is our health and beauty area, as we used to call it. Sales declined about 12% in this product group. And we continue to encounter challenges in growing significant sustainable sales for this product area. We're evaluating a number of strategic alternatives to better position this business as the year progresses.

And thirdly, in our bio-ag product line. Sales were up 34% for the quarter. This is an important global growth area included as a strategic target area for AMCOL. The combined grouping of products in bio-ag right now amounts to about $20 million on an annual basis and we're looking for some high growth in this area. Our target is, within 3 years, to be at $50 million for that product group, bio-ag area.

So moving on to basic minerals within the Performance Materials segment. Drilling fluid additives are the biggest component that go into basic minerals. And in this area, we showed slight improvement in sales sequentially, but still significantly behind last year's first quarter pace. Demand continues to be impacted by lower drilling activity and by increasing competition, but we are seeing a gradual increase in volume. We've recently brought in experienced oilfield sales personnel to further develop our customer base here, and we expect some improvement as the year progresses in this area.

In pet products. The outlook for increasing volume appears promising here, based upon some recently negotiated supply agreements and increased activity with several customers for whom we are providing fully packaged products. So we should see improving results in the pet products area as the year progresses.

So moving on to the Construction Technologies segment, starting out with building materials. This includes sales of products for concrete and waterproofing. We had growth in several of our international markets in the first quarter, but that was offset by weather-related softness in domestic sales. We had an unusually strong start last year in the U.S. so the comp was pretty tough. But the outlook for this product line is positive for the balance of the year. We expect 10% to 12% growth in building materials globally in 2013.

Drilling products also concluded a strong quarter globally with record first quarter sales and operating contribution. Lining technologies was the primary contributor to the drop in first quarter sales for this segment. Demand is expected to remain relatively weak globally for our traditional products. However, we are gaining momentum for sales of these newly developed liners with significant performance advantages based upon proprietary technology. As I mentioned earlier, we've now secured purchase commitments for over $25 million in new business based on this technology. And just to conclude, for Construction Technologies, the restructuring throughout the segment is now well underway.

Finally, in our Energy Services segment. Sales for the quarter were up 32% with operating profit up 71% versus prior year. The majority of the sales increase was from domestic business as our 3 largest service areas, which are coil tubing, well testing and water treatment for filtration, all showed sales increases globally. Our filtration water treatment technology contributed the largest share of the growth. International locations, which accounted for 21% of the segment sales in the quarter, continued to perform well.

So that concludes the quick summary of results. Now, we'll open the call to questions. Wayne?

Question-and-Answer Session

Operator

[Operator Instructions] The first question is from Rich Wesolowski from Sidoti & Company.

Richard Wesolowski - Sidoti & Company, LLC

I'm wondering if you wouldn't mind reviewing or re-reviewing, as you've done in the past, the restructuring programs as a whole, maybe what business lines you're targeting and what the outlays are spent and maybe if all these are cost-cutting actions or other business development changes as well? And then lastly, the annual savings that you would expect to see in 2014 and thereafter?

Ryan F. McKendrick

Okay. I think as we had indicated previously, we anticipated restructuring expenses in the range of $3 million to $5 million in total for 2013, with the majority of the restructuring effort directed at the Construction Technologies European operations. So year-to-date through the first quarter, we've incurred a total of $2.7 million in restructuring expense for the company, of which $2.2 million is for the Construction Technologies segment. Don, that's consistent with the numbers you just went through, right? There is more to come in the second quarter, but it appears we'll end up closer to the midpoint of our estimated range, probably at $4 million range as far as the total expense we incur. So restructuring is well underway. A large part of the effort has been directed towards streamlining business processes and reducing administrative costs. So far, 6 European offices are either closed or in the process of being closed. They include areas like France, Czech Republic, Germany, Morocco, Norway. But in each one of these areas, we've maintained a sales presence. The overall impact that we're expecting as a result of these reductions is about a $1 million per quarter reduction in SG&A expense for the segment. We've also undertaken initiatives in the manufacturing area for optimization of costs there. And we're going to see that in the form of allowing us to be more competitive on pricing, basically to retain market share and our gross margin profile. So I think that pretty much covers it.

Richard Wesolowski - Sidoti & Company, LLC

Are there any actions in the minerals business?

Ryan F. McKendrick

In our U.K. detergent operations, we have made some changes there and some restructuring there. I think the overall costs was somewhere in the $450,000 to $500,000 range, and that was directed more towards the restructuring of sales and some manufacturing as well.

Richard Wesolowski - Sidoti & Company, LLC

I wonder if you could give us laymen an idea of the changes that you made to the lining tech product and how it looks different today from a customer's point of view?

Ryan F. McKendrick

Well, I think when it comes to the lining tech business, we've got -- our traditional end-use markets are continuing to become less attractive, okay, and those are served by our traditional product lines. But our strategy with lining tech is really to drive manufacturing to the point where we're a low-cost producer for those traditional products and then to augment those traditional products by new technology, which will enable us to enter into a new end-use opportunities. So we're a lot more optimistic on this new technology and obviously validated by recent success in securing major projects. From a technical viewpoint, what we've done with the product is to enhance the performance of traditional bentonite, making it much more resistant to deterioration by certain types of leach shapes or chemicals that are present in a variety of waste products from mining operations, from coal, ash and so forth. So it's really a chemical modification of clay that has resulted in this performance enhancement as part of this new technology.

Richard Wesolowski - Sidoti & Company, LLC

So the $25 million in prospective sales that you called out for the next year of the enhanced product, is that coming from traditional customers or a different sort?

Ryan F. McKendrick

It's coming from a new customer base, primarily.

Richard Wesolowski - Sidoti & Company, LLC

Okay. And then last one. As you look at the land base, are the Oilfield Business and the margins there, am I correct at assuming the land-based margins are perhaps pulling back a little bit and it's offset by a higher share of the business in the traditionally more profitable international offshore?

Ryan F. McKendrick

What's happening with the Oilfield Services area is that we are seeing some pricing pressure and contraction of margin on the land-based businesses, primarily well testing and coil tubing. But our water treatment business, both domestically and internationally, is increasing as a share of our total sales and the margins are also increasing there. So they are offsetting, that's correct.

Operator

The following question is from Al Kaschalk from Wedbush Securities.

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

Ryan, just a follow-up on the last question. So pricing within coil tubing and well testing are -- you're seeing some headwinds, but would you say filtration is different or similar? Just trying to get an update on what you've seen in the quarter and outlook.

Ryan F. McKendrick

Okay. So, basically, positive outlook for Energy Services altogether. And I think what we've seen this past quarter is a gross margin of 26.8%, so a drop 1 percentage point versus the prior year, but sequentially is improved by 70 basis points. So looking forward, as offshore activity in Gulf of Mexico increases, we expect to see gradual margin improvement approaching that 30% range. What's been happening in North America though, is that revenue is up 33% versus prior year Q1, and it's driven primarily by filtration business, which is a higher-margin business. We're above 30% margin on our filtration water treatment business. Coil tubing and well testing sales also increased, but we're starting to see some pricing pressure resulting in gross margin compression for land-based work in those service areas. Our equipment utilization rates though remain fairly stable, so we're getting as much business, but at lower price.

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

How is that -- I appreciate the color. How is that different maybe than what you had indicated, I won't say a year ago, but I think when you had some, not only volume issue but pricing as well, to keep some of the work? We still then -- it's obviously a competitive market, but is it deteriorated further or just hasn't picked up, again, I guess, on the pricing side?

Ryan F. McKendrick

On the pricing side, with the land-based services, especially coil tubing and well testing, we are keeping the work. But in order to keep it, we've got to drop pricing. And I think as we saw the slowdown in rig count and more of that pressure pumping equipment coming from Marcellus into the oil-rich areas where we're operating, we anticipated that some of those might take place and it is. But I think the customer relationships and the experience we have in the areas where we're operating enables us to keep that customer base, even though the pricing pressure is causing us to have to drop prices somewhat.

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

Within North America, have you picked up any new either shale locations or what's the -- where are you seeing the demand increase?

Ryan F. McKendrick

We're primarily concentrated in Southwest Texas, the Eagle Ford and the Permian Basin area. And we really haven't moved out of that area significantly in terms of the coil tubing-related work, which is mostly related to the high-pressure pumping in the shale plays. We're not in the Marcellus area at all.

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

Great. And then my final question, on Construction Technologies, can you elaborate -- I think you said there are new customers. It was $20 million of sales, I think you said from the new product right, not $25 million?

Ryan F. McKendrick

$25 million.

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

$25 million, okay. What end markets are -- is this customer base in? Is it different than mining? Is it -- could you just share where this demand...

Ryan F. McKendrick

Primarily mining and power. But we don't want to get too deep into the specifics on any projects at this point.

Operator

The following question is from Todd Vencil from Sterne Agee.

L. Todd Vencil - Sterne Agee & Leach Inc., Research Division

Just to follow up on that last question about the new lining technologies. You get $25 million in orders right now. I mean, how big do you feel like this business can be, and what sort of the trajectory to get there that you're thinking about?

Ryan F. McKendrick

When you look at our sales of the entire product group last year, it was about $90 million. So this, the way I view it, is incremental sales to that, Todd. It's difficult to predict how much upward momentum we're going to have on a sustainable basis long term. But I'll tell you, we're very encouraged with the acceptance we're seeing in the marketplace at this point. So I think this could be 1/3 to 1/2 of our business on an ongoing basis, long-term basis.

L. Todd Vencil - Sterne Agee & Leach Inc., Research Division

Got it. So keep in -- so just to make sure I understand what you're saying. Keeping the $90 million, which you said you want to work on getting the costs there, right, so you can be a low-cost producer to maintain that business. Keep that $90 million, so maybe this is a $30 million to $45 million business?

Ryan F. McKendrick

It could be, but it's very difficult to predict at this point.

L. Todd Vencil - Sterne Agee & Leach Inc., Research Division

No, no. I just want to make sure I was understanding the comment. Got it. And let's talk a little about your focuse on the construction business for the restructuring and things like that. But there are couple of things going on, obviously strategically, within the Performance Materials. Can you talk about the paper-related business that you're exiting and what went on there and just the thoughts behind that?

Ryan F. McKendrick

Okay. The paper-related business was a business that we felt as though we could not really become a market leader, commodity-based sort of a product line, in our view. We did not really have good control of the raw material or the reserves, the mineral reserves. So as a result, when you look at the future for that product line, it just didn't appear to fit the strategic kind of growth objectives that we have. So we decided to exit that business.

L. Todd Vencil - Sterne Agee & Leach Inc., Research Division

What was the mineral there?

Ryan F. McKendrick

It was a bentonite-based mineral, but it's a grade of bentonite that we did not have within our reserve mix.

L. Todd Vencil - Sterne Agee & Leach Inc., Research Division

Makes sense. And then on personal care, you mentioned that you're looking at strategic alteratives. I mean, can you elaborate on that a little bit and talk about where your head is on that business?

Ryan F. McKendrick

I think -- well, as you may remember, we encountered some serious operational challenges with that group about 3 years ago. And we made significant improvements in operations there. The challenge there is that we haven't been able to create any significant growth in sales. So we're evaluating a number of opportunities and it's probably best for me not to elaborate on them to any great extent at this point, but I'll leave it at that, okay?

L. Todd Vencil - Sterne Agee & Leach Inc., Research Division

If I can ask, and obviously you don't have to answer this, but are you evaluating opportunities to somehow change the business or grow it or go the other way?

Ryan F. McKendrick

It could be repositioned within the company to broaden the potential customer base or we could go the other way and look at strategic alternatives.

L. Todd Vencil - Sterne Agee & Leach Inc., Research Division

Got it, got it. In energy, I just wanted to make clear, I mean there was a little bit of dancing around and I think I know the answer from a broad perspective. But in the Gulf of Mexico, in the Energy business, filtration side, I mean, are you seeing -- did you see that business grow in 1Q? And are you seeing indications that, that's going to continue to sort of come back on?

Ryan F. McKendrick

Yes, we're seeing strength in that business. So we think that as the activity improves in the Gulf of Mexico, that we're going to be able to ride that wave and see steady performance within that segment of our business.

L. Todd Vencil - Sterne Agee & Leach Inc., Research Division

Can you, at all, kind of size up the extent to which it has improved so far and kind of the trajectory that you see, at least in the near term?

Ryan F. McKendrick

Let me take a quick look here. If you look at this thing -- if you look at it sequentially, the filtration business -- I'm looking at this globally, actually. It's up about 5% versus last quarter. But on a year-on-year basis, for the domestic market, we're up about 41% versus last year on that segment of our business domestically. So it's a pretty big improvement versus last year. We don't expect that kind of growth rate to continue. But I think somewhere in the 15% range for year-on-year, full year, will be something that we'll be well within achievability.

L. Todd Vencil - Sterne Agee & Leach Inc., Research Division

Got it. And a final question for me. I know a lot of companies are having issues with the weather comp, you mentioned that in the U.S., the comparison. Very good weather last year, very tough weather this time. I mean, can you talk about what specific parts of the business maybe you saw that in, and if possible at all, size up what you think the impact was?

Ryan F. McKendrick

Yes, I think in one area is particularly in our building materials group within the Construction area, we had a slower first quarter this year in comparison to last year, primarily because of the weather. So we expect overall though, that for the full year, we will see something like 10% to 12% growth in BMG, Building Materials Group, globally. So we'll more than make up that shortfall as the year progresses.

Operator

[Operator Instructions] The following question is from Rich Wesolowski from Sidoti & Company.

Richard Wesolowski - Sidoti & Company, LLC

The building materials, we know it's higher margin. It's thought over the years to lead this segment. The sales have fallen flat a little bit during the last year and I'm wondering if you would review where, geographically, those sales are primarily based and whether you would expect the recovery to be only demand driven by construction spending or in the business development internally?

Ryan F. McKendrick

Okay. So just some brief history on building materials. When you look at the top line sales, all right, you go 2010, $58 million; 2011, $80 million; 2012, $78 million. So you're right, last year was kind of flat. And first quarter, we're slightly behind first quarter last year. But all together, I mean that's a pretty good growth rate from 2010. And as I said, the expectation is for about 10% to 12% growth this year. The way that this thing is -- this business is split up globally, so you get about 5 -- maybe 7% of our sales in Asia and the rest of the business is split about 50-50 between U.S. and Europe. So in terms of the growth expectations, we're seeing some fairly decent construction spending increase here in the U.S. and we're pretty well set with our product line here, with our distribution setup, with our sales force. So we expect that in the U.S., that increased construction spending is going to be the main driver that helps this business grow domestically. In Europe, it's a different story. The overall nonresidential construction expenditures there are pretty depressed. But we've got some real opportunities there because our market share is fairly low. We've got opportunities to broaden the product line and capture a number of significant projects, which should foster growth there. So it's kind of a mix. U.S. is more like riding the wave of increased spending. In Europe, we're expecting sales to increase there this year as a result of gaining more market share.

Richard Wesolowski - Sidoti & Company, LLC

Okay. That was an excellent comprehensive review. And lastly, in your press release in discussing the Energy Services, it suggests the international operations increased revenues to construct service equipment under contract with certain customers of our Malaysian operations. It just seems like an odd sense to me because I thought most of the international businesses was filtration media and I was under the impression that you weren't constructing anything.

Ryan F. McKendrick

We do have a business, which is based in Malaysia, where we fabricate equipment, either for rental or for sales to customers. So that's part of the product mix there.

Operator

The following question is from Andrew Nelson from Nelson & Associates.

Andrew Nelson

Just a couple of quick questions. Do you anticipate any more write-offs for bad debt or technologies for this coming year?

Donald W. Pearson

Well, that's something we never plan for. But after this restatement and improvement in the controls, that's -- some of the lumps that we've seen in the past we expect to not encounter.

Andrew Nelson

Okay, do you have an estimate on CapEx for this year?

Donald W. Pearson

Yes, we're going to be higher than last year. There are a lot of growth opportunities and then with our Oilfield business, that is a high capital consumer. So I'd expect that probably at least $90 million, could be $90 million to $100 million. And then depending on a couple special projects and opportunities, it could trend higher than that.

Andrew Nelson

And on your currency, are you then influenced or affected by the currency? It looks like you have. Is there one that's caused greater impact, let's say, in the last quarter? And how do you foresee that occurring in the future for this year?

Donald W. Pearson

Yes, we're in 25 countries, but the currencies that impact us the most would be the sterling and there's the loti, some of the Asian currencies and Brazil as well. So what we do is we actually -- we do some hedging for transactions. So we hedge receivable -- working capital in certain of the areas and we've needed that. There's been a lot of volatility in the last couple of quarters. So the hedging program has been less effective. I think in the quarter, we probably had hedged our currency losses and they're coming through that other line, other net, it's about $600,000 in losses. But we do have a program in place to mute that and the effectiveness of that continues to improve.

Andrew Nelson

Is -- just from my own edification, so loti, not on top of that...

Donald W. Pearson

That's the currency in Poland.

Andrew Nelson

Okay. Great, all right. Is it such -- I noticed that you're having -- doing strong growth in your domestic nitrogen business. Is that part of your Energy Service sector?

Ryan F. McKendrick

Yes, it is.

Andrew Nelson

And is the Novinda, which is a very small acquisition, will that become part of your Energy segment then or division?

Ryan F. McKendrick

Novinda is included in the Construction Technologies segment actually.

Andrew Nelson

Okay, and...

Donald W. Pearson

And just to be clear, that wasn't an acquisition. We actually bought in a minority position, just to be clear.

Andrew Nelson

Okay, I was unfamiliar with that.

Operator

The following question is from Al Kaschalk from Wedbush Securities.

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

Ryan, what percentage of the business revenues or operating income is European-centric? I know you disclosed on that quarterly presentations by segment, but I think you did it by Europe, Middle East and Africa. But the broader question here is just more of given what continues to be a struggle in the part of the world, how much is the company exposed there?

Ryan F. McKendrick

I guess off-the-cuff here, I'd say about 40% of our Construction Technologies business and very little of our Energy, probably less than 5%. And then within the Performance Materials area, my best guess, I'd say 10%. Is that right, Don?

Donald W. Pearson

Yes, it's really principally the fabric care.

Ryan F. McKendrick

Right.

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

It's somewhere -- if I net all that down company-wide, it's low teens, 10%, 12%?

Ryan F. McKendrick

Right.

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

All right. And then second part, obviously with a lot of the businesses, some of them restructuring, where do you feel you're at in terms of opportunities or the need to revise or restructure businesses versus maintain and frankly invest to grow the businesses?

Ryan F. McKendrick

I think we're in pretty good shape as I see it. We've done a lot of work on restructuring directed at putting these business processes into a more cohesive sort of a package to service the entire company rather than having separate individual units provide everything from logistics to purchasing to supply chain to HR. So from that perspective, I think we're in pretty good shape. The other thing that I think has been very positive is that we've taken a lot of the product lines and kind of grouped them into groupings, if you will, where we have, for instance, in our bio-ag product grouping we've got 3 distinct product offerings within that grouping. So it's kind of a new launch for us. It involves ENERSOL, which is for crop yield improvement. It involves Bleaching Earth, which is used for refining edible oils, and mycotoxin binders, which are clay-based additives for animal feeds. We kind of grouped them all to one product grouping with some really focused management to take these groups and move them forward. I think before, we weren't structured in such a way that we could really devote the kind of focus to these groupings that we can now. So I think we're investing and kind of grouping the product areas appropriately for growth and we've taken a very sort of detached analytical look at some of the businesses that we've been in. And we've made some significant cuts. I mean, we got out of the paper business. We got out of contracting business. We're closing all these offices in Europe. Those things are not easy when you're emotionally attached to them. But I think we've been doing a pretty good job in addressing those kinds of issues.

Albert Leo Kaschalk - Wedbush Securities Inc., Research Division

And if I -- appreciate the color. The restructuring is $1 million a quarter or cost -- excuse me, the cost savings from the restructuring actions are going to benefit you $1 million a quarter on the SG&A line starting in Q2 of '13, primarily in the Construction Technologies segment?

Ryan F. McKendrick

That's correct. We may have some additional restructuring costs that hit us -- we will have some additional restructuring costs that will hit us in Q2, but you'll see that run rate in Q3 and Q4 be somewhere in that low $12 million range -- $12 million per quarter as opposed to it was about $13.5 million or something like that last year.

Operator

There are no more questions registered at this time. I would like to return the meeting to Mr. McKendrick.

Ryan F. McKendrick

Thank you, Wayne, and thanks to everybody for participating in the call today, and look forward to speaking to you next quarter. Thanks. Bye.

Operator

Thank you. That concludes today's conference call. Please disconnect your lines at this time, and we thank you for your participation.

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