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Tower International Inc (NYSE:TOWR)

Q2 2013 Earnings Call

July 22, 2013 4:00 pm ET

Executives

Derek Fiebig - Executive Director of Investor and External Relations

Mark Malcolm - Chief Executive Officer, President and Director

James C. Gouin - Chief Financial Officer and Executive Vice President

Analysts

Itay Michaeli - Citigroup Inc, Research Division

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Ryan Brinkman - JP Morgan Chase & Co, Research Division

Richard Michael Kwas - Wells Fargo Securities, LLC, Research Division

Operator

Good afternoon. My name is Brandy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Tower International Second Quarter 2013 Earnings Call. [Operator Instructions] Mr. Derek Fiebig, Head of Investor Relations, you may begin your conference, sir.

Derek Fiebig

Thanks, Brandy, and good afternoon, everyone. I'd like to welcome you to Tower International Second Quarter 2013 Earnings Call. Materials for today's presentation were posted to our website this morning.

Throughout today's presentation, we will reference the non-GAAP financial measures of adjusted earnings per share, adjusted EBITDA and free cash flow. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures are calculated in accordance with GAAP and included in the appendix of this presentation.

As a reminder, today's presentation contains statements, which constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements relating to revenue, adjusted earnings per share, adjusted EBITDA, free cash flow, trends in our operations and expected future contracts.

Forward-looking statements are made as of today's presentation and are based upon management's current expectations and beliefs concerning future developments and their potential effects on us. Such forward-looking statements are not guarantees of future performance, and we do not assume any obligation to update or revise the forward-looking statements. Additional information and risk factors are available on today's materials and on our regular filings with the SEC.

Presenting on today's call are Mark Malcolm, our President and Chief Executive Officer; and Jim Gouin, Executive Vice President and Chief Financial Officer. Also joining us in the room is Jeff Kersten, Senior Vice President and Corporate Controller. Following our formal remarks, we will open up the phone lines for questions and answers.

Now with that, I'll turn the call over to Mark.

Mark Malcolm

Thanks, Derek, and good afternoon. As you know, in addition to releasing our second quarter results today, we also announced the commencement of a proposed secondary public offering of shares owned by Cerberus. For the purpose of providing some clarity, that offering does not affect the company's balance sheet, earnings, number of shares outstanding, earnings per share or cash flow. This is a proposed transaction between Cerberus and potential investors.

While the proposed offering does not affect the company's financial results, I believe it can be another positive step for Tower and its shareholders, including useful, additional trading liquidity. Please be aware, however, that, by rule, we are not allowed to address any questions about the secondary offering on this call, which will focus on our second quarter results and the updated 2013 financial outlook.

So let's start on Slide 3 with the intended key takeaways. Second quarter financial results were solid. It's not to say that everything is smooth sailing across the globe, it isn't. Civil unrest in Brazil is having some negative near-term effects on business. A key customer of ours in China is having a slow launch this year on a key new vehicle for Tower, and the European economy and industry is muddling along, which, in my mind, makes the strength and consistency of Tower's global results all the more encouraging and confidence building, aided of course by a strong North American market, which I'm confident will continue for at least the next couple of years.

The second takeaway on this slide refers to 2 second quarter actions: the sale of Tower Defense & Aerospace; and the de-consolidation of a minor joint venture in China, that together increased Tower's enterprise value by about $1 a share.

And looking forward to the balance of 2013, we feel able to increase our outlook for adjusted earnings per share by 15% versus our guidance in last quarter's call.

Now I'll turn it over to Jim to provide some details on these 3 positive takeaways.

James C. Gouin

Thanks, Mark. Slide 4 summarizes the second quarter financials compared with a year ago. As you can see, revenue, adjusted EBITDA and adjusted EBITDA margin were all essentially unchanged from last year. That includes the good total company margin of 11.2% in this seasonally strong quarter. Although adjusted EBITDA was flat, adjusted earnings per share were up significantly, increasing 29%. This largely reflected lower interest expense.

Slide 5 provides the adjusted EBITDA bridge from second quarter 2012 to second quarter 2013. Volume and mix was net unfavorable by $6 million. Our business wins were more than offset by the combination of the previously announced discontinued vehicle in China, less favorable mix and capacity-related fixed costs. Favorable net cost performance offset the adverse volume mix, mainly reflecting lower launch cost and productivity that, again, exceeded customer price reductions and labor and overhead economics.

Slide 6 details free cash flow of negative $5 million in the second quarter, which was $5 million better than our guidance. As a reminder, working capital and other is often quite negative in this quarter, reflecting the payment of annual incentive compensation payments from prior-year performance, as well as other normal seasonality in net trade receipts.

Quarter end net debt, leverage and liquidity are covered on Slide 7. Net debt leverage was 2.2x with continued good liquidity of $216 million. All of these June 30 data are pretty close to the March 31 pro forma figures on our first quarter review that included the effects of the buyback of the prior senior secured bonds and the issuance of our new term loan.

As you may be aware, we're in the process of investigating possible repricing of the term loan, which could potentially further reduce the effective interest rate. We're not predicting the outcome, which will likely be known later this week. If successful, we would be required to pay a 1% premium or roughly $4 million in return for the new lower rate.

For information regarding the financial sensitivity for a successful repricing, each 50 basis points of rate reduction would improve ongoing annual free cash flow by about $2 million and annual earnings per share by about $0.10.

Slide 8 summarizes the outcome of the 2 second quarter actions that Mark mentioned. The left-hand panel shows the immediate financial impacts of our decision to change from controlling partner to a minority partner in a minor JV in Ningbo, China. This JV plans to eventually supply Geely, though the plan has been progressing slowly and no revenue is projected to occur this year. At March 31, our balance sheet included a net liability of $6 million for this JV. We now have a net asset of $8 million in the form of equity in the unconsolidated subsidiary. As shown in the green highlight, that is a net improvement of $14 million for Tower shareholders, equal to about $0.65 per share.

The right-hand panel covers the sale of Tower Defense & Aerospace or TDA. Last quarter, we announced our intention to sell TDA, and that has been accomplished.

As shown in the green, the cash sale price was $9 million, equal to about $0.45 per share. The asset impairment charge recorded in the second quarter was $8 million or somewhat better than our prior estimate of up to $12 million. This one-time noncash impairment charge was excluded from second quarter adjusted EBITDA and adjusted EPS.

Our financial outlook for the third quarter and full year 2013 is summarized on Slide 9, our focus on the outlook for the full year and the changes since last quarter's guidance. Revenue is now projected at $2.115 billion. That's down $10 million from the prior outlook because of currency translation, mainly the recent significant devaluation of the Brazilian real.

The outlook for adjusted EBITDA is now $210 million, which is the top end of the prior range.

The main change in our financial outlook is a 15% increase in adjusted earnings per share, which is an upward revision of $0.25 to $1.90 per share. The improvement in outlook for adjusted EPS in part reflects favorable geographic mix from better North American earnings, which have high bottom line leverage for Tower because we are not presently subject to U.S. income tax.

Projected free cash flow for full year 2013 was increased to a range of $25 million to $30 million. And on that net positive note, I'll conclude our presentation, and let's open it up to Qs and As.

Derek Fiebig

Thanks. Brandy, if you could please remind the people on the call on how to get in queue for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Itay Michaeli.

Itay Michaeli - Citigroup Inc, Research Division

Just the first question, just generally on the quarter. You came in quite a bit above your initial guidance for the second quarter. Can you talk about just what drove that? Was that just mostly upside to European production? Or was there also just better internal performance that drove that upside?

Mark Malcolm

It was a combination. Europe was certainly part of that and performance was part of that. It's a nice trend to have. I wish I could say we'll count on it all the time, but it's 2 quarters in a row. We've been -- have directionally had the same positive thing happen.

Itay Michaeli - Citigroup Inc, Research Division

Absolutely. And then any way to maybe quantify how we should think about the tax rate going forward, maybe even into 2014, directionally, just given the movement in this quarter?

Mark Malcolm

Yes. I know it's a difficult thing for you guys to deal with, and really, not much has changed overall for us. We're still a noncash taxpayer here in the U.S., and you could see the impact of that on EPS. It's flowing through the numbers here. So you still have to look at it that way, going forward, for the next year or so. And in the rest of the regions, I really -- I'd still look at it as sort of the tax rates within the given region, because we are cash taxpayers in most of the other areas.

Itay Michaeli - Citigroup Inc, Research Division

Sure, that's helpful. And just jumping around -- on the pension, clearly, to keep -- your underfunding goes maybe around $100 million at the end of last year. What we're seeing rates move up. Presumably, returns look pretty good. I think you're still funding about $15 million this year. Can you give us an update on kind of how things will look if you are maybe to mark-to-market today? I know it's still early in the year. And also whether the presumably favorable moves might affect your pension funding requirements over the next year or 2?

Mark Malcolm

There won't be much change in terms of pension funding requirements, and we're doing about 15 this year. It's going to be something like that or close to that next year. On the balance sheet, at the end of the quarter, there's a $93 million liability. And I guess, from a sensitivity standpoint, I would say that for every 0.25% point moved in the discount rate, that's about $8 million off of our obligational draw. So I think if you look at where the discount rate is today at roughly, I don't know, 4.4% or so. That's about 75 basis points better than where we're at today. So if it were a hold, you could see $24 million or so of improvement, but we'll see what the market does.

James C. Gouin

And of course, our asset return assumption is a little over 7%. That will depend on how the year plays out as well.

Itay Michaeli - Citigroup Inc, Research Division

Sure. That's very helpful. That helps us a lot. And then just lastly, I guess, bigger picture question around the new business booking environment, how you're feeling about the new business previously communicated for next year, and then just how you're balancing some of your balance sheet goals with some of the new business opportunities that might be out there for you over the next couple of years? That's it for me.

Mark Malcolm

Yes, the -- and there's no substantive change in terms of 2014. The actual volumes, if they come out, will make the biggest difference next year. So plus or minus $100 million for 2014, still appropriate. We hold off as we're going through the year typically and we'll continue to do that before we start talking about 2015, because it depends on the pace of the quotes that come in. Now frankly, in terms of how we balance that with the balance sheet, we'll pay attention. We'll try to balance both as we've gone. Leverage continues to be important, and I think an upside opportunity, frankly, for equity holders as we create opportunities with their free cash flow. So we'll balance growth with prudent actions in terms of the balance sheet to bring that to the bottom line. You shouldn't expect any major changes from us in terms of how we will fund. We have said our directional ongoing CapEx is 4% to 5% of revenue, and that's the right type of planning horizon for people to use.

Operator

Your next question comes from the line of Patrick Archambault of Goldman Sachs.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Just wanted to see if we could maybe disaggregate the revenue outlook a little bit. This is -- you were flat this year -- this quarter, excuse me, and the outlook has been taken down. Can you give us a sense of what's the order of magnitude within that of what you're seeing in Brazil, and I guess, the discontinued customer vehicle in China and other impacts? Because it does seem like there are still some positives like the $100 million backlog, which is positive volume, certainly, in North America and China, which are good and Europe, which is getting better, so maybe if we could flesh those out a little bit.

Mark Malcolm

Certainly. This is Mark. Let me just talk directionally. Because probably the one piece -- I think you have all the pieces in there, Patrick, except when we talked about heading into the year, it's an item that's always out there for us, is mix. Big part of the mix being, for example, framed vehicles in North America, which aren't keeping up directionally, right, with the overall industry in North America. It becomes less and less of an impact for us over a period of time, but it does impact, depending -- versus a straight pull through. North America is doing well. It was up. Europe is, at best, flat. And I actually see this is a positive. I hope we really are seeing bottom. And I know people are trying them -- people make calls have a lot of confidence in Europe, more confident that things aren't going to get materially worse. But at least, at Tower, we're going to wait before we declare any victory on big improvements in Europe. Brazil is -- the comparisons are tougher in Brazil seasonally.

Last year, if you'll recall, the government put incentives in place that have not been on in the first half of the year, put them on in the second half of the year. And last year's first half was not so good, and the second half was gangbuster. Well, guess what? We add incentives in the first half of the year, I guess, is an easy comparison, and it's not the case next year. Add in that -- none of us knows exactly in the near-term, and although over this time horizon, when you define it as the balance of this year, what is this kind of, I've referred to it as civil unrest, certainly is having some impact. And we're seeing, at least one of our big OEM customers pull out Saturday production right now out of their schedules as far as our eye can see.

So it's not terrible, but it's not quite as good. China, that impact of that product that went away didn't hit us much in Q1. It hit us full force in Q2. And that was, and I'm look at Jim, $70 million, $75 million annual revenue products. So it hit us to the tune of roughly $20 million in the second quarter alone. And that will continue to be an adverse in the back half of the year that we talked about.

So Brazil, I think comparisons will be tough. Europe is sideways, probably. North America is very good. China is down for us. So within that, you really see in that kind of pull-through of the new business. That's holding us in as we go through this period right now. North America, look forward, feels good to me. I don't know with your view. It's going to continue to be okay over the next couple of years. And directionally, directionally, Europe should be improving. I don't know how much in '14, but if I could look out to '15, that where I'd be the most optimistic that we could have Europe materially better than where we are today. Our China, for us, in terms of getting up the launch curve on our particular big customer, who happens to be Fiat, who's launching over there, should be much better. And Brazil, we still feel very good about in the long-term, although maybe a little bit choppy in the back half of the year.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Okay, that's a very helpful overview. One of the revenue-related question -- now that you've officially exited the Defense business, is this kind of putting an official end to the appetite for non-automotive opportunities? Or is that still something that you're kind of looking at selectively?

Mark Malcolm

We've pointed strictly at Automotive. I mean, we called out the 2 that we had looked at, both in terms of solar, which we're doing some business with, it's not just material enough to matter in our existing factories. And Defense & Aerospace, they fit for reasons in terms of our overlap with our core skills. They didn't turn out, so we didn't hold on to the dream there. We're pointing straight at Automotive and are -- making our headway there.

Patrick Archambault - Goldman Sachs Group Inc., Research Division

Okay. And last one for me. As sort of piggybacking off of the first question where you pointed to sort of a medium-term outlook, which still looks quite good from a revenue point of view. What kind of utilization are you running at now and sort of how do you perceive the leverage opportunity as we look out to maybe like a '14 and '15 time horizon?

Mark Malcolm

And it's probably the same. I'm going to default to an answer that says, on the average, it's about -- it's fully accounted. Because where the growth will be happening, be it in China, for example, we had to put a factory up for Fiat to have that happening. And while that is not yet because their volumes have come up to be contributing, when they come we have to put all that cost in place. It is more of a fully accounted return there.

In North America, where the volumes have been very good, we've not put up any additional factories. We won't be quick to do that. We squeeze it as we can between shifts and incrementally getting some investment where the customer needs some capacity. Again, we get capacity-related fixed costs where the volumes have to come rolling. It's more of a fully accounted. The place where it's probably best, could convert would be now in Europe. But again, that's one that from a planning horizon, I'm not planning on it right now. But that one also goes cuff on the downside, right, because it's harder to shed realigned fixed costs, if you will, because of the social costs involved with the people.

So we did about 8% margin in Europe last year or in that same general neighborhood. This year, while the volumes aren't very good, which I think is pretty decent given the type of economy we're seeing over there, that's a place where it could convert the best, but I wouldn't count on it right now. When it comes, it will be a nice upside, plus.

Operator

Your next question comes from the line of Ryan Brinkman with JP Morgan.

Ryan Brinkman - JP Morgan Chase & Co, Research Division

So just thinking about the sharply better results relative to expectation. I think that revenue came in at something like $16 million stronger than guidance and yet the EBITDA was about $6 million stronger. So kind of more than 35% incremental margin on the stronger revenue, which is maybe a bit more than I would've ordinarily expected. So while production was clearly better in 2Q, was there something else's that signifying that broke better during the quarter, whether on the pricing or cost side of the equation?

Mark Malcolm

Maybe to the cost side, for sure, and it's the performance. Jim mentioned it, and we can get now 2 quarters in a row, call out that it was meaningful and on the year-over-year as our productivity exceeded customer price downs and labor and overhead economics, that isn't something that happens every quarter and the magnitude of that, and both of the first 2 quarters, I think, bodes well that operation-wise, things have been going very well.

Believe me, it's not the customers didn't send us any money back. We had to earn it largely through the productivity, and that's that plus side. I know you look at it in terms of that math, in terms on the 6 on 16, take a look at it more like a couple spread over the whole $500 million worth of revenue or cost. It's closer to how we take a look at it. But you have the right conclusion. A little bit of it was revenue and a little bit of it was our overall performance and 11% margins, seasonally strong, but it's, I think, strong nonetheless.

Ryan Brinkman - JP Morgan Chase & Co, Research Division

Okay. Great. That's good to hear. And then maybe can you just kind of help us bridge or understand the $6 million EBITDA variance relative to volume and mix, given that revenues were roughly flat year-over-year. So those -- that kind of imply that volumes were roughly flat, but mix, negative. And if so, is that correct, and what would be driving that?

James C. Gouin

As Mark, I think, mentioned overall that mix is a bit of a problem, in it's primarily in North America. But we also have fixed costs coming in. I think we mentioned that it was roughly about -- I think we've guided to about $15 million worth of fixed cost coming in through the year, through the course of the year. And you're seeing a piece of that come through in the quarter as well. So the combination of those things really makes up that -- the majority of that hit to the volume.

Mark Malcolm

Yes. So I mean the volume overall, take out particularly the hit we had in terms of the vehicle in China, and it was positive overall, right, because of the new business that we pulled through in the quarter.

Ryan Brinkman - JP Morgan Chase & Co, Research Division

Okay, great. And then I think just sort of prove what you were saying earlier, that all other bucket in the walk that would be negative pricing more than offset by positive productivity. Is there anything else in there that we should know about or think about?

Mark Malcolm

There are some favorable launch in there. I mean, it picks up everything. But the biggest pieces we're talk about is really the efficiencies, owing through the manufacturing efficiencies within the plant, and that really offsetting any impacts of any economic increases.

Ryan Brinkman - JP Morgan Chase & Co, Research Division

Okay, then. And then just definitely last question, just free cash flow, big part of the story. It looks like you update kind of $0 to $5 million more. But you're looking for $25 million to $30 million this year. Can you just kind of bridge, and I know you don't provide really guidance beyond this year. But what would be the biggest drivers for free cash flow improvement then in the outyears? Is it sort of non-repeat of investments? Is it leverage on the higher volume? Is it rebound in mix? Or what's the biggest opportunity beyond '13?

Mark Malcolm

'

So I'll give you the 2 -- I'll give you 2 steps here. One is already done, and that is the refinancing that we've talked about in our last quarter's call. It actually happened in the second quarter. As you recall, because of the timing of the payments, we really didn't pick up free cash flow this year, but we picked up $14 million interest from the change, from the old debt to the new debt, it's $14 million, other things equal on top of this year. So that's a big step up. And that gets us to roughly 2% of revenue, which is what we have guided to and have said is kind of a demonstrated capability. And now, you could just see how we demonstrated it this year, plus that interest of full year effect.

The other item we've talked about was that is out by -- and we've said, roughly 2015, is a pickup of about 1 point of revenue in what we call margin less CapEx. And what do we need for that to happen? Certainly, Europe doing a bit better would be helpful and, getting our customer in China up the volume curves. So hopefully getting a pull-through for that investment helps.

Brazil, in terms of just stabilizing the volumes that -- within that, having us improve our operating performance. So I would call it, one point is already -- or one piece of it's already done in the interest. The other piece, though, depends on your outlook or Europe being better than it is now and the investments that we've made in China and Brazil kind of being behind us and generating the returns we expect to get.

Operator

[Operator Instructions] The next question comes from the line of Rich Kwas with Wells Fargo securities.

Richard Michael Kwas - Wells Fargo Securities, LLC, Research Division

Two questions. CapEx for the year. You say that $30 million in the first half hitting the prior guidance is $85 million to $90 million? And I apologized if I missed it, but did you update that?

James C. Gouin

No, we didn't update that. So that's still the best, kind of rough guidance that we have.

Richard Michael Kwas - Wells Fargo Securities, LLC, Research Division

Okay. And then Mark, on the Europe commentary. So far, it's early in earnings season. I know this is kind of earlier than you normally report for this quarter. But you've had a couple of suppliers pouring [ph] in. You've had -- most of them seem to be okay with Europe here in the near-term, in the third quarter, with how schedules are playing out, but what are you seeing out there? Do you have any cause for concern about inventory correction that could crop up? And anything that causes you any concern, looking out the next 6, 8, 10 weeks on production schedules over there?

Mark Malcolm

Yes, Richard. It's nothing that I wouldn't say that I would put under the term concern. I think, maybe, it's just how we characterize it. It's hardly what I'd call a big turnaround in Europe. I think I called it in my introductory comments today that it's muddling along, which is better than muddling down, by the way. But that's what it is. It's muddling along. Yes, I think there are inventory items that will hit for select of the OEs, for select of the vehicles, and it's just a little bit harder to see in Europe because of the reporting there versus over here. So it's going largely sideways. I hope that means it's bottom. I think -- it's doing a bit better than I anticipated up until now. I'm more optimistic than I was starting the year, but I'm not calling a turn on it. I think we will wait to see the actual turn show up in the results. And if it does, there's nobody going to be unhappy. But if you start it with, I have a concern about doing a big dip down from here, we don't see over this next quarter to cause any undue alarm in that regard.

Operator

Your next question is David Leiker with Baird.

Unknown Analyst

This is Joe on the line for David. Just want to circle back on the topic of customer price reductions and the ability to more than offset them. Because there was a positive this quarter, it seems like it's becoming almost a routine positive. Assume that you view your execution here as sustainable, maybe just wondering if you could size what runway is left and maybe framing it in terms of manufacturing actions, footprint, restructuring, whatever it may be to keep this dynamic going?

Mark Malcolm

Well, this stuff is -- it comes out as we can execute it. And we plan for it. We try and do the best we can. And it can be lumpy, so it's not a guarantee. But I would just look at it in terms of, if you talk about what runway is remaining. That runway is based in the guidance that we've put forth for the full year. So I think we're relatively confident in that, and that's where I would leave that at.

Mark Malcolm

Yes, Joe. This is Mark. If I can, and my tongue isn't too far on my cheek on this one. It's anything but routine for what we have to do out here. You're absolutely right. It's shown up now twice in a row. And the numbers, those are the kind of surprises that we like. It's a combination of 2 things. It is a good execution by the team. The nature of our product is that occasionally, things break and you get downtime, et cetera, that we factor in kind of a normal rate there. And knock on wood, we've had a pretty good run in that regard. Now again, I give the team a lot of credit in terms of what they do to keep the machinery and equipment running well. We're getting it up quickly. But that kind of execution, yes, it gives me a lot of confidence. I hope it gives you confidence. But I hope you understand, we just -- I don't want to assume every time that we're going to have something that isn't that easy to do. And the fact that it's happened twice in a row -- I guess, I'm not embarrassed. I feel kind of proud about it, but I'm just not going to say, we'll just do it routinely because it's not routine.

Unknown Analyst

Yes. Routine is probably a gross oversimplification of what you're doing. Maybe if I take a little longer-term view of Tower's margin profile. So if I look back in the '90s, Tower tended to generate a mid double-digit gross profit margin. I understand you had cyclical recoveries, utilization was high, your mix was favorable. But if I just compare that business to where you are today, it's doing around 11% to 12%. Do you have any long-term views on profitability, given how the end markets seem to be trending, your capacity and footprint actions and then maybe some expectations for mix?

James C. Gouin

Yes. I think when you're doing -- and if you talk about it globally and have guided to 10% to 11%, it's kind of where steel is now, because steel prices are, by the way, are higher than back then as well, and they go in to the denominator, but they passed through without margins. So just kind of a mass dampening effect. I mean, you can see it in the Americas. We're doing better than that now for some of the reasons that you mentioned in terms of utilization. But it's been a long time since we've had every region in the world hitting at the same time. But can we do better than 10 to 11? Yes, we can. The economies sync up, which I think can happen. I hate to keep saying 2015, but it's -- that could be about when it will happen. In the meantime, getting and approximating in and around double digits for -- with really 3 out of the 4 regions, not anywhere near their peak type of earnings power, is not so bad. I think we're in a range here that's comfortable, but 10%, 11%, it can go higher than that. But it's -- given the value add, given the competitiveness, given wanting to balance the growth along with the spending that's required for it, 10% to 11% is kind of a trend planning horizon globally.

Operator

And there are no additional questions at this time.

Mark Malcolm

Okay. Well, thank you for joining us on such short notice for the call today. Have a good rest of the day and a great week. Thanks.

Operator

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

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