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Kaydon (NYSE:KDN)

Q1 2013 Earnings Call

May 09, 2013 11:00 am ET

Executives

Rick Mosteller - Assistant Corporate Controller

James O'Leary - Executive Chairman, Chief Executive Officer and President

Timothy J. Heasley - Chief Financial Officer and Senior Vice President

Analysts

Edward Marshall - Sidoti & Company, LLC

Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division

Eli S. Lustgarten - Longbow Research LLC

Rick Mosteller

Welcome to the Kaydon Corporation First Quarter 2013 Earnings Conference Call.

Before the conference begins, the company would like to make the legal disclaimer that certain information in this formal discussion and that may be included in the question-and-answer session is forward-looking within the meaning of the federal securities laws. These forward-looking statements are only predictions based on the company's current expectations about future events. While the company believes that any forward-looking statements made are reasonable, actual results could differ materially since the statements are based on the company's current expectations and are subject to risks and uncertainties beyond the control of the company.

Listeners are cautioned to refer to the company's 2012 Form 10-K for a list of risk factors that could cause its results to differ from those anticipated in any forward-looking statement. The company does not undertake and expressly disclaims any obligation to update or alter its forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law.

During this conference call, Kaydon spokespersons will refer to certain non-GAAP measures, including adjusted net income, adjusted earnings per share, adjusted EBITDA and free cash flow. To assist you in understanding these non-GAAP measures, as well as to comply with SEC requirements, the company has included in its press release a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures.

Participating in today's call are Mr. Jim O'Leary, Chairman and Chief Executive Officer of Kaydon Corporation; Tim Heasley our Chief Financial Officer; Laura Kowalchik, our Chief Accounting Officer; and Therese Houlahan, our Treasurer. Today's conference is being recorded.

Now I'd like to turn the call over to Jim O'Leary, Chairman and Chief Executive Officer. Jim, please go ahead

James O'Leary

Okay. Thank you, Rick, and thank you, all, for joining us this morning. And before we get into what will be certainly, in the last 6 years and as long as I can remember, going back about 10 years with Kaydon, probably the shortest press release, the shortest traditional prepared remarks, which I'm tempted to not go into at all, but to keep the ceremony going, we will. And I would say the word solid is how we categorize the quarter in the press release. It's the way, I think, we'll categorize most of the items in the prepared remarks and qualitatively, across all the businesses.

It was a really solid quarter, and it was mercifully and welcomely uneventful. And if you go back for, again, the 6 years I've been the CEO, the 8 years I've been on the board and looking back, really, to almost 9 or 10 years, this is the first quarter it hasn't been categorized by big, chunky ups whether it was wind, capacity build for wind, the great benefit we enjoyed from the war efforts in the Middle East and then you had a couple of years of horrifically, hopefully, once-in-a-lifetime bad recession and the actions taken then and then the debt, the downside of wind and military with the drawdown and some of the restructuring activities we took last year. This was a refreshingly and very welcomely uneventful quarter.

I'd say almost everything came out about as we expected. We can talk about it in Q&A. But when I look at the expectations some of you have out there, some of the models out there, while we don't give guidance, we should comment on some of the categories. Revenue is pretty much exactly as we would have suggested and pretty much spot on with the qualitative guidance we gave. Gross margins, a little bit better. It's flatter by mix. I wouldn't say better a surprise to myself because, as we've said many, many times and the proof is in the pudding. I almost said unfortunately, but I can understand or respect why you guys need to see it first. But the base business and the activities we've taken outside of wind over the years to consolidate a few factories, pare costs in certain area, add resources to sales and marketing and other. They're pretty much bare and crude, and they're pretty much doing exactly what we expected. So I'm almost reluctant to call it a recovery in margins. It's a restoration to what has been hidden by the big ups and downs on wind and military.

And the revenue environment, we -- because some of our markets are a little bit unique to us, we're a leader in some niche markets, which may or may not be impacted by the general macroeconomic uncertainty. Medical did a little bit better this quarter, surprisingly; military, spot on, with the orders pretty good; wind, exactly as we expected, but I think there's more of a positive bias for wind, maybe not as we enter -- excuse me, maybe not as we exit this year, maybe as we enter next year or so. There's a little bit of a nuance to everything and overall though, very solid.

The things we can control, we did a great job on. I'd say the cash flow, in particular, really better than we expected and I think better than most because we are drawing down the working capital. The impact of wind, which is a much more working-capital-intensive business, are all showing the positive things that we expected maybe a little bit sooner. So cash flow will be the -- only one thing I'd say is significantly better than expected, and part of that is probably just timing and getting the working capital reductions we expected a bit sooner.

With that, I'm going to go really quickly through the prepared remarks, Tim as well. And then, we'll turn it over to Q&A. I will confess, this quarter was so uneventful, I was tempted to cancel the call. But I think the panic that would have ensued and probably the eventual firing of me for doing that would have been unpleasant and unnecessary. So we'll go through the call and, hopefully, a relatively short painless Q&A, where we can respond to questions on the macro environment, our perspective on it and probably more important to everybody, our views on the wanted second half recovery, which is much talked about in the industrial sector.

All right. We're pleased with, I'll use that word, a very solid first quarter of 2013, which show expanding operating margins, strong free cash flow and improved orders. We clearly experienced the benefits of the actions taken last year to restructure our wind and military businesses and refocus our organization on opportunities outside of those end markets. The progress this quarter reflects those efforts and should continue going forward, particularly in an improving economy.

Like most of the industrial sector, we expect gradual improvement in business conditions as we enter the second half of 2013. However, we are managing our businesses very judiciously in the event that a broader, still fragile economic environment fails to cooperate. We remain focused in on managing the things within our control, principally driving improved operating margins, free cash flow and accelerating organic growth within our portfolio of leadership companies. This quarter illustrated our success in driving these key areas of focus, and as the year develops, any acceleration of business conditions will amplify the impact of steps taken. Again, as we've talked about in previous quarters, much of the thrust of the restructuring was to restore the operating leverage this company historically had, and this quarter, to a small extent, demonstrates that both directionally and in terms of magnitude.

Sales in the first quarter of 2013 were $110.7 million compared to sales of $116.5 million in the first quarter of last year. The change in the first quarter was attributable to a $14.6 million decrease in wind, which have been fully anticipated. Adjusting for certain discrete items outlined in our press release, adjusted operating income was $17.5 million in the first quarter of 2013 compared to $19.8 million in the same quarter of last year. Adjusted net income was $11.9 million compared to $14.1 million in the first quarter of 2012, and adjusted EPS was $0.37 on a diluted basis compared to $0.44 in the same quarter of last year.

Adjusted EBITDA was $23.1 million in the first quarter of 2013, and that compares to $26.8 million in the same quarter of last year. Gross margin improved to 38.6% compared to 36.8% in the fourth quarter of 2012 and 36.4% in the first quarter of 2012 -- in the first quarter of last year, excuse me, as the current period benefited from increased operating leverage, resulting from the restructuring activities we took in the last quarter -- or the last half of last year. As the general economic activity improves later in the year and manufacturing activity increases commensurately, we expect further benefit from the actions taken to reduce capacity in 2012, and gross margin should continue to improve.

Free cash flow in the first quarter was $24.3 million compared to $4.4 million in the first quarter of 2012. Orders improved both sequentially and year-over-year with orders of $119.4 million in the first quarter of 2013 compared to $109.8 million in the first quarter of 2012 and $102.6 million in the fourth quarter of 2012. This quarter reflected a book-to-bill ratio of 108% -- 1.08 or 108%. Backlog at March 30 was $152.2 million compared to $174.9 million, and we're trying to get away from some of the with and without wind, as its importance diminishes. Here, it's probably worth pointing out that excluding wind, backlog was $136.3 million compared to $124.1 million. And as the organic comparisons become more apples and apples as the year progresses, a lot of these with and withouts will become less necessary.

Now I'll turn it over to Tim for some of the financial remarks

Timothy J. Heasley

Thanks, Jim, and good morning, everyone. Capital expenditures for the first quarter were $2 million compared to $3.3 million in the prior year first quarter. For the full year, we expect capital expenditures to still be in the $15 million to $20 million range. As Jim mentioned, we had another strong cash flow quarter. Free cash flow was $24.3 million or 22% of revenues compared to $4.4 million or 4% of revenues in the prior year first quarter.

During the quarter, we paid cash dividends totaling $6.4 million. Cash and cash equivalents totaled $65.6 million at the end of the first quarter compared to $53.6 million at the end of the fourth quarter of 2012. During the quarter, we paid down $3.9 million of debt. At quarter end, we had $30 million of borrowings under -- outstanding under our revolving credit facility and $142.5 million outstanding under our term loan facility. Net debt was $106.9 million. As of quarter end, we had $217 million of unused credit under our revolving credit facility.

Working capital management continues to be a focus. Inventory turns for the quarter were 2.8 versus 2.6 turns in the prior year first quarter, with net inventory down $18 million from a year ago. On the receivable side, day sales outstanding for the quarter was 59 days compared to 69 days in the prior year first quarter. The effective tax rate for the first quarter was 28.4% compared to 29% for the first quarter of 2012. For the full year 2013, we expect our effective tax rate to be approximately 29%.

Now I'd like to turn the call back over to Jim.

James O'Leary

Thanks, Tim. As I said, we are pleased with the very solid first quarter of 2013 in a still very uncertain and somewhat difficult economic environment. Like others in the industrial space, we remain cautious as we continue 2013 as concerns about global growth continue to be prevalent in many of our end markets. We do continue to take steps to improve our results and position ourselves for the long term.

With the strength of our balance sheet and leadership positions in sound end markets, we're well positioned to take advantage of opportunities to further build out the foundation in place. Our ability to consistently generate strong levels of free cash flow, as demonstrated this quarter, while providing meaningful cash returns to our shareholders in a still volatile investing environment are hallmarks of Kaydon. As a testament to that, our board declared a quarterly dividend of $0.20 per share in the quarter, as also announced this morning.

I'd like to thank all of our employees for their efforts this quarter and thank them in advance for their efforts in the balance of the year. And with that, Jamie, we'd be glad to take any questions that are out there.

Question-and-Answer Session

Operator

[Operator Instructions] And we'll take our first question from Edward Marshall with Sidoti & Company.

Edward Marshall - Sidoti & Company, LLC

Just to get your idea, the strengths and weaknesses on the orders geographically and maybe look at the drivers for the second half '13, let's call it, modest recovery for now.

James O'Leary

Yes. Geographically, North America is still the strongest of the geographical end markets. Europe was not -- our experience in Europe this quarter was not as terrible as some commentary out there. That could partially be timing on some blanket orders in Europe. But Europe, both anecdotally and in some of the things we see that aren't export out of Europe into China, is still pretty weak. But as we've said now for many quarters, it's very weak, not getting better, bouncing around the bottom but no signs of another real step down. Most of our business in Asia is enjoyed through export partners, and that seemed okay with one exception. And okay, I'd say good, not great. The one exception is from -- in sales of certain of our bearing products, particularly heavy equipment or heavy-industry related. The mining sector is pretty tough. So heavy equipment, anything that's directly or tangentially related to mining had a challenged quarter, so turntable bearings, split roller bearings. Both orders and shipments of those products, which are heavily influenced by mining and I guess, directly or indirectly, Chinese demand, was a bit on the softer side. So geographically, those are end markets. If you want to parse it a different way, heavy equipment, heavy industry, not great; medical, very good. Part of that was timing. Some orders came in a little bit sooner. Some shipments came a little bit sooner than expected, but medical should have a good year. Okay, probably a little bit of that demand moved into the first quarter, so before you guys run out and start adjusting models for the second and third quarter, I think we still have to see the "wanted second half recovery" to firm up a bit. But medical, really good. Semiconductor, okay but with some signs of strength going forward. Industrial machinery, good. And again nothing that tells us there's another plunge coming, but we're still holding our breath for improved activity in the back half of the year, and not surprisingly, a little bit of it was timing. But military, exactly as we've told you guys, as we started to work through the drawdown in both the war efforts, but the drawdown particularly in military vehicles. The shipments were flat, which is a positive. We really weren't impacted heavily by concerns about sequestration. It's more the drawdown that was and should have been expected for a long time. Orders were pretty good in the quarter. A fair amount of the year-over-year and the sequential improvement was military orders, which is a bit of timing, but it's good validation. And again, our thesis, the diversity of the program, the spread of our programs and kind of the niche elements of a lot of the things we do would protect us even in -- certainly not from the worst case sequestration, but it absolutely has protected us in the drawdown of war efforts.

Edward Marshall - Sidoti & Company, LLC

Now historically, heavy equipment mining is roughly, what, 8% to 10%, but you had some acquisitions in there. How does that scope look now? Has it dropped at all? Or is it about in the same range?

James O'Leary

It's about the same range.

Edward Marshall - Sidoti & Company, LLC

Okay. SG&A. When I look at that, it did tick up a little bit, and I'm curious as to what's happening on that line. Just, I mean, you still had good operating margins, but is there something going that's specific there? Or were there any -- I noticed in the press release, there were no due diligence expense, so just curious.

James O'Leary

There's at least one guy -- and I didn't think it was you, but I don't remember you and I talking on the last call. A couple of you guys can either get Tim or I after this call. But the gross margins were a little bit better. It's heavily influenced by mix, but there's a little bit of a reclassification issue with Fabreeka, which is more of a -- there's a little bit more of a sales-heavy mix of expenses relative to cost of materials, heavy expenses. There's a mix element that perpetually, with the same mix of companies we have, will be higher because of Fabreeka, and that's just the way it is. What I view as a real positive, but it's higher cost. What we're tracking to now -- what flows through there as incentive compensation for anyone that is not directly employed by one of the divisions, so incentive compensation puts that back to levels you would have seen 2 or 3 years ago, but you hadn't seen in the last year or so because, with the wind restructuring, we had no discretionary bonuses. We just philosophically don't subscribe to that, so compensation took a pretty big hit in the last couple of years. So the 2 elements, incentive comp, which we'd be tracking to now and the mix of Fabreeka. And you have Velocity Controls, which has a more SG&A-heavy mix than materials-heavy mix. As that continues about the same proportion, you'll see SG&A roughly at the level you do now. It's not a real increase other than the incentive comp, which goes back to 2-, 3-year-ago levels and more mix with the Velocity Controls businesses.

Edward Marshall - Sidoti & Company, LLC

Okay. And then finally just on...

James O'Leary

When the call is through, I would gladly take some time with you as well offline.

Edward Marshall - Sidoti & Company, LLC

Yes, that works. And just finally, when I look at the cash in the quarter and the generation there, I would have thought -- and maybe it's just a timing thing or maybe you had acquisitions in mind, but I would have thought that you would have paid a little bit more down on your debt, and that's just being nitpicky. But I'm curious, are you still, in your mind, looking that you're going to be reducing the debt balances brought on?

James O'Leary

x acquisition, absolutely, x acquisition. We still -- not to be neglected -- not to neglect an important component of the value creation in a really tepid growth environment, we're still finding a dividend that's about 3.5%. It's -- but everything will be a lot faster if we didn't still think that was a very important component of returns to the shareholders.

Operator

And we'll take our next question from Peter Lisnic with Robert W. Baird.

Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division

This is Josh Chan filling in for Pete. I was wondering, Jim, if you could talk about kind of any monthly variability in order rates that you saw in the quarter. I guess, I'm mainly interested if you kind of exited the quarter at a different run rate than you started the quarter perhaps. Or was it pretty steady?

James O'Leary

I think we called out in our last quarter -- in the last press release, it started off a little bit stronger than it finished. We still finished up, and April still starts out up. There's some ins and outs between military, wind and basic industrial that may not even be worth calling out by the time the quarter closes. So it started and things -- I wouldn't say slowed down, but as people got a little bit more cautious, not just on placing orders, maybe [ph] on accepting delivery a little bit, and I think it's reflective of what someone called a CNBC effect. Someone just talked about the overall handwringing about the uncertainty of the back half of the year. And in some of our markets, because they're so niche-orientated and so specific to ourselves, I'd say with wind and military kind of a little bit further in the rearview mirror, we may be a little bit less impacted by the broader economic issues than others. If we have a great quarter in semiconductor, a great quarter in medical, that makes a more meaningful impact today. But you can't ignore comments by a much broader, a much deeper, a much bigger industrial company like Emerson yesterday and not say that sentiment and that concern absolutely impacted us a little bit as the quarter goes on. And I think just general uncertainty meant we left a little bit weaker than we started and not weak but a little bit weaker than the start.

Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division

Okay, great. I don't think...

James O'Leary

That all make sense?

Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division

Yes, it does. Just wanted to close the loop on that. Thanks for the color there. So as we look forward to the sort of second half gradual improvement, I mean, you're not the only one that's calling for that. But I guess, as we sit here in May, we're pretty close to the second half of the year, so what in your mind is going to cause that improvement, if you will? Are there certain markets that you're looking for to improve or geographies that cause the second half to be better than the first half?

James O'Leary

Right now, and this is a compare and contrast that you guys are better qualified to do than I, with the comparisons that we know are going to be challenging because of military and wind, we were probably a little bit more conservative on how we saw the year unfolding. So while some are already concerned about the back half of the year recovering, I'm not quite concerned yet. By the time June and July rolls around, that may be a different story. And I think most of you guys have -- and again, I wouldn't change anything you guys have in your models because it's pretty much spot on, and it's really only until you get to 3 and 4 that you have to see a more sustained improvement both in shipments and orders. If things have stayed the way they were, it would be a gradual, really, I'd say, tepid, maybe 2% to 3% type growth economy. For things to get better, people have to start spending. I think a lot of it has to do with industrial companies concerned about inventory levels, concerned about taking orders on capital equipment. At the end of the day, we're a very capital-equipment-sensitive company. And if our customers and their end users are concerned about the economy and they're not placing orders for capital equipment, it will eventually back up into our results, so [indiscernible] that are going to sustain more aggressive orders, particularly on the CapEx side. An improvement in mining on the margin would impact a lot of the business we talked about earlier, when Ed Marshall was on the call, about mining and CapEx. So those things have to fall into place. And for it to be a lot better, not just residential construction, commercial construction CapEx across probably some factory spending has to pick up, and that's the element where I think people are still kind of holding their fire because of the lack of confidence.

Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division

Right, yes. That sort of makes sense. And I guess, the last question is on the working capital reduction, so strong free cash flow this quarter. How much is the -- and I guess, working capital is due to lower working capital in wind? And how much is it? Is it just because your production levels were flat and you might have to reinvest back later in the year?

Timothy J. Heasley

Well, I think you have a combination of the 2 things going on. There's certainly wind with a little bit more working capital intensive than some of our other business segments. So we certainly got some business -- some benefit from that. But in addition to that, we're trying to improve our working capital metrics rather than absolute dollars. So we're trying to improve our working capital turns, reduce our DSOs and increase our days payable so that kind of the combination there is our focus going forward. And during the quarter, the first quarter production levels were roughly about the same as shipment levels. So you didn't see much of a change in the first quarter in inventory, but certainly, as the year progresses, we would be expecting to see improvements in inventory turns as we move forward.

James O'Leary

Josh, we would be very hopeful to be reinvesting a little bit more in working capital because growth is meaningfully higher than the forecasted that was kind of outlined. So it would a positive. We're building some inventory for some of our traditional customers in industrial machinery and other end markets. We view that as a positive. But in this environment, we should continue to work down inventory, principally wind, and be hopeful that there's a reason to reinvest more on the balance sheet going forward.

Operator

[Operator Instructions] And we'll go next to Eli Lustgarten with Longbow Securities.

Eli S. Lustgarten - Longbow Research LLC

Question, let me -- first, I hate to talk about wind first and stuff, but it looked like there was a spike in orders in the quarter. If I did -- if we did the math correctly, the orders are like $11 million from wind in the quarter.

James O'Leary

No. It was more like $8 million, and the year-over-year comparison is pretty much -- it was $8 million compared to $8 million. We had roughly the same amount of orders last year. Your math is going to be a little bit harder to do without help over the year because, remember, cancellations. We did have some cancellations. We have backlog adjustments because of price or other customer-specific changes. That makes it a lot harder to do, particularly as we go forward. So cancellations will make orders going forward, if we maintain the same level, look a little bit better than they are. But the comparisons were $8 million compared to $8 million, give or take a couple of hundred thousand.

Eli S. Lustgarten - Longbow Research LLC

Yes. So at this point that you're expecting shipments to be very similar to the $3-plus million in the quarter, $3 million, $4 million in the quarter. That's sort of the run rate for the year at this point?

James O'Leary

I think we're -- it will be a little bit better than that if the year picks up. And so used to being -- having a safe dropdown by head by wind, so I'm reluctant to say that. But the indications are things should be a little bit more positive in the back half of the year. I think 20 would be an aspirational goal for wind, but I wouldn't commit to that today. And I think we leave this year as we talked about last quarter when we first undertook the restructuring. In 2014, this should be a business that's in the 20s. It's an option on the business that I do think is going to have some beneficial pickups more cyclically driven and secularly driven as the years go on. But this year, an aspirational number will be somewhere between 15 and 20 going forward. That should be the run rate. And people have smashed it down so badly, and while there are a number of European guys that are not our customers yet but we have done prototypes and have great relationships with them, a couple of them had better results in the last couple of days. The largest or second largest German manufacturer in the world yesterday had a much more positive outlook on things and better results than was anticipated. So after things get hammered down so badly, there's really nowhere to go but up. And we may be there, and we may be there now.

Eli S. Lustgarten - Longbow Research LLC

Hopefully, with PTC, if you started building this year, you get the credit. Even if you finish it next year, it would help.

James O'Leary

Yes. I'm kind of looking at the PTC as a positive, and anything other than I think it really is just moving demand around a little bit. There needs to be a more sustainable decade-to-decade rather than year-to-year economic policy that's not tax-driven. But unquestionably, it will be something we talk about. If it makes 1 quarter better than the next, we owe it to you guys to point that out.

Eli S. Lustgarten - Longbow Research LLC

And if you take out the 8 of wind, I guess, you had a slightly positive book to bill, a couple of percent quarter-to-quarter. Can you talk a bit about the trends of orders during the quarter? I mean, the thing that far scared everybody on Tuesday was, as you said, there's a turndown in February and then went down in March, in April also. I mean, as far, it wasn't great, even though most companies told us that orders were really choppy over the quarter. Did you see the same thing? Or were there some stabilization and improvement in orders as you went through the quarter?

James O'Leary

I'd say it was stable except for spikes that were a little bit more Kaydon-specific. As I said to Josh a couple of minutes ago, it absolutely left the quarter at a lower trend than we entered the quarter. But we had a great-looking quarter for military, which part of that was the draw-ins from -- that might have come in, whether it's in April or May. We had a pretty good booking order in terms of medical. Our markets are so niche-orientated, large for us, small for some of the bigger industrial companies out there. And doing $3 million or $4 million does have an impact on us, and would have a pronounced impact on both book to bill and the year-over-year order rates that I wouldn't draw much from my comments. We started out stronger, left a little bit weaker. April's off to an okay start, but I don't think we're representative of anything other than our respective end markets. I would say I don't see anything that tells you there's a big plunge coming, there's no scenario in the coal mine there. But I don't feel like things are sufficiently warming up to say it's going to get a lot hotter as the year progresses yet. I think it's still a little bit too early. Now if we had talked about the back half being dependent on business really picking up in the second quarter, I'd be more concerned. But we continue to be a little bit more back-half-related, and again, our markets are very specific to ourselves. So I don't know if I would draw anything from our results into others other than guys who directly -- direct comps of ours.

Eli S. Lustgarten - Longbow Research LLC

And as we look at -- I guess, you have about 1 quarter visibility in the second quarter. Is it still fair to expect the second quarter to be somewhat better than the first quarter, both revenues and earnings and probably maybe not quite up to last year's 2Q but sort of closer to that level in the first quarter?

James O'Leary

That would be the right way to categorize it. It will be a little better, not a lot better. I would be cautious to infer this quarter's performance goes right through when you have that level of improvement, partially -- relative to expectations, partially because mix drives so much of particularly the gross margin performance, and there were some timing issues. Again, as I pointed out, great booking quarter for our military, but part of that could easily have fallen into April and May, and it would be -- it would look a little bit more level, still improved but a little bit more level.

Operator

And at this time, we appear to have no further questions. I'd like to turn the call back to you, Mr. O'Leary, for any additional or closing remarks.

James O'Leary

Well, I'm going to infer that's because we did a great job and you guys all agree with me, that this was a mercifully and very welcome, uneventful quarter. So Jamie, thank you. And for everyone who participated, thank you, and I will be remiss in not saying thank you for your patience over the last couple of quarters. The first quarter we haven't almost killed the accounting department in a very long period of time with analysis of ins and outs and with wind, without wind. And I appreciate the fact that, that's challenging to some of you, too, doing your analysis. So we appreciate your patience and your continued interest. And we look forward to talking to you next quarter. Thank you, Jamie.

Operator

That does conclude today's conference, and we do appreciate everyone's participation.

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