Helen Oster - Corporate Secretary and Director of IR
Karl Puehringer - President and CEO
John Jordan - VP and CFO
Juan Noble - Taglich Brothers
Baldwin Technology Co. Inc. (BLD) F4Q09 (Qtr End 06/30/09) Earnings Call August 20, 2009 11:00 AM ET
Welcome to the Baldwin Technology Company Year-End Conference Call. (Operator Instructions). As a reminder, this conference is being recorded Thursday, August 20, 2009.
I would now like to turn the conference over to Ms. Helen Oster, Corporate Secretary of Baldwin Technology. Please go ahead Ma'am.
I am Helen Oster Corporate Secretary and Director of Investor Relations for Baldwin Technology Company. With us on the call today are Karl Puehringer, President and Chief Executive Officer, and John Jordan, Vice President and Chief Financial Officer of the company.
I would like to remind participants that this call is being recorded, and audio replay of the call will be available for one-week. The telephone numbers are provided in the earnings release. An archived webcast will also be available for 90 days through a link on our Investor Relations section of our website at www.baldwintech.com.
Now before we begin, I will read our cautionary statement. During this presentation, representatives from the company may make statements or present information regarding expected future order and sales rates, operating margins and profitability or other items, which may constitute forward-looking information as that term is defined in the Private Securities Litigation Reform Act of 1995, or by the Securities and Exchange Commission in its rules, regulations and releases.
Listeners are cautioned that any such forward-looking statements are not guarantees of future performance, and we urge you to read item 1A risk factors in the company's report on Form 10-K for the year ended June 30, 2008, the Form 10-Q for the quarter ended March 31, 2009 and the cautionary statement in the earnings release, for some of the factors that could cause actual results to differ materially from estimates contained in any of the company's forward-looking statements made during this presentation.
We would also like to mention that while we report our financial results as required in accordance with GAAP, management will also discussion some of our results on an as adjusted or non-GAAP measure to enhance investors overall understanding of the company's financial performance.
Let me now introduce our President and Chief Executive Officer, Karl Puehringer for comments regarding Baldwin's performance. Karl?
Good morning and welcome to our fourth quarter and yearend fiscal 2009 Earnings Call. I am pleased to report that we are successfully navigating our way through, what has certainly been one of the most challenging periods in our company’s long and distinguished history.
Our company is financially healthy and cash flow positive. In the fourth quarter, which ended June 30th, we recorded net income of US $377,000, or $0.02 basic and diluted share, which clearly reflected the results of the aggressive measures we have taken to protect our financial well being. We reported during the fourth quarter net sales of $39.5 million, representing a solid 10% improvement in sequential revenue over the third quarter.
For the full year, our adjusted non-GAAP net income per share was $0.07 and the reported loss of $0.74 per share including the one-time effect of restructuring, inventory reserve and goodwill write-offs.
Our total cash flow from operations for the fiscal year 2009 was $2.6 million, reflecting our successful efforts to manage our working capital in proactive reaction to declining revenues during the past fiscal year.
Our reported results would not have been possible without the aggressive actions we began taking early in this fiscal year, when it was clear that the global economy and more specifically the global printing industry was in what felt like a free fall.
The leading OEM press manufacturer suffered significant declines in new orders, and printers and publishers sold their business fall off, as advertising contracted. This in turn adversely affected our own order book and global revenue.
Our decisive actions in anticipation of the global recession resided in a reduction of our workforce by 18% and eliminated sufficient cost to position Baldwin to be profitability and cash flow positive during the economic contraction.
Our restructuring and cost reductions over a number of months, ultimately resided in eliminating annualized cost of over $24 million going forward. Those actions included consolidating of our operations in Germany, closing of our web cleaning operations in Switzerland, closing of our sales and service office in Italy and consolidating some of its functions at our France sales and service office along with major capacity adjustments in the US, in Germany, Sweden, Japan, and in the UK.
We continue to manage our global capacities by utilizing short-term work weeks and selected furloughs, where necessary. We also continue with the elimination of overtime, then voluntary salary reductions of senior executives, senior managers, and the company's Board of Directors, and the elimination of merit increases for all non-unionized employees globally.
I want to mention how pleased I am with the support from our global workforce and the determination of our management team to navigate our group through those rough times, as a result of the overall economic situation and its impact on our industry.
As I said earlier, our fourth quarter profitability is direct reflection of the results of these actions. Also we recorded a net loss for the year, when adjusted for non-recurring charges we generated a net profit of $1 million, or $0.07 per share.
Given this economic circumstances, we face during this past year, I consider those results a great achievement and strong testament of our ability to manage our business and execute well even on the very adverse circumstances.
As the economy improve the leverage created by our reduced cost structure will help us to achieve improved profitability. This leverage will be amplified through the resources we have invested in our facilities in India and in China.
We also will continue to benefit from the fact that close to 50% of our sales is from recurring revenues, such as consumable product, spare parts, services and from our US-based food blends operation.
This has provided us with strong continuous revenue base, which is a core strengths of our company. Other core strength that have helped us through this crisis are Baldwin's global print recognition and its global infrastructure, which after restructuring is now more efficient than ever.
We also has been able to entering to agreements with several new marketing alliance partners including Tolerans a Swedish-based world leader of in-line stitching, Q.I. Press Controls, a Dutch-based world leader in automated press control systems for newspapers and Betz, a German-based global leader for ink supply equipment.
Our ability to offer these additional products has further strengthened our global position as a leader and full solution provider for process automation and compliments well, our existing range of products and services.
This results in a winning proposition for our customers, our alliance partners, as well as, for Baldwin, as we are able to leverage existing customer facing resources and interfaces. We believe this is exactly the right answer to current industry dynamics, vis-à-vis our own position and strength in the market for process automation for print.
We intend to increase these sort of alliance relationships and initiatives and to take advantage of numerous growth opportunities, so we look forward, as we look forward to fiscal year 2010 and beyond.
We see significant opportunities not only through expanding our alliances, but also through growth in emerging markets, opportunities in the US food blends market and additional business from OEM price manufacturers. We expect that these opportunities will amount in the next three to five years to up $210 million in additional annual revenue for Baldwin.
Our order backlog of $40.1 million on June 30, 2009 was basically flat compared to $39.8 million on March 31, 2009. However, since then, as a result of solid order intake during the beginning of our fiscal year 2010, we have been able to increase our backlog as of last week by 11% to $44.6 million.
Strategically, Baldwin is very well positioned.
Our cost structure has been adjusted in a very timely and proactive session to reflect the market reality. We managed and controlled our inventory and account receivable levels very well. We have successfully completed an amendment with our lenders and we are actively leveraging our core assets through our activities in the emerging countries and through our alliance partner arrangements.
Additionally, effective with the beginning of this new fiscal year 2010, we have also implemented a more functional oriented organizational structure to ensure appropriate resource allocation and effective implementation of our initiatives, within global marketing sales and service, under the leadership of Peter Hultberg, and within global operations, under the leadership of Dr. Steffen Weisser.
We believe that the global printing business represents great opportunities for our company in the years ahead and that we are well positioned to take advantage of those opportunities. A continued drive within our industry for improved quality imprint, increases in productivity and more demanding environmental regulations are dynamic that are favorable for our products and for our services.
This concludes my remarks. I really appreciate the opportunity to sharing this update on Baldwin with you, and I will now ask John Jordan to review for you the company's financial performance. John?
Thank you, Karl. Good morning, everyone. Thank you for participating in the Baldwin Technology fiscal year 2009 earnings release conference call. Sales in fourth quarter 2009 were $39.5 million compared to fourth quarter 2008 sales of $65.3 million, a decrease of $25.8 million or 39%, 5% or $3.2 million attributable to negative currency effects.
However, the fourth quarter registered a sequential sales increase of 10% over the third quarter. This indicates that third quarter 2009 revenues, which included the negative effects from inventory reductions throughout the supply chain, may have established a potential bottom plateau to the downward sequential trend of the previous two quarters.
Our expectation is that we will see continued favorable order and sales trend based on our initiatives with alliances, emerging markets, and continued business expansion with existing customers. Sales for the 2009 fiscal year were $177.8 million, a decrease of $58.5 million from fiscal year 2008 sales of $236.3 million.
Currency effects accounted for $6.5 million of that decrease or three percentage points. In the 2008-2009 fiscal year the sales decrease of only 25% was partially due to our high proportion of recurring revenues, consumables parts, service, and the food blends operation.
At close to 50% of total revenues, the uniformity of the recurring revenue stream helped soften the recession and capital equipment cycles negative effect on total revenues. Equipment revenues for the year were significantly best than 2008 in nominal terms, versus a much smaller percentage reduction for recurring revenue product lines.
Our focus on building those recurring revenue sources to strengthen the uniformity of overall revenues is powered by the superior operating performance and environmental benefit from our patented PREPAC consumable product, and the trend of OEMs defining that product as standard on several lines and presses.
In addition, the food blends operation upgrades in a $1 billion domestic market and has maintained strong sales with healthy profitability. We are also investing more resources in reinforcing our strong OEM and printer and publisher relationships, as we expand our new and retrofit equipment sales efforts.
Fourth quarter gross margin although reduced from the 2008 margin of 32.1%, recovered to 29.7% from the third quarter adjusted margin of 28.5%. Third quarter margin adjusted for the recorded $4.2 million inventory write-down. As we discussed during this call last quarter, the third quarter and to a lesser extent fourth quarter were transition quarters and did not yet reflect full benefit of the restructuring and cost reduction initiatives that we have implemented.
Full year margin of 30.2% in 2009 versus 31.7% in 2008 is an achievement in the context of the significantly lower sales in very challenging market over the last several quarters. We acted preemptively in anticipation of the recession driven sales reduction and eliminated costs quickly to mitigate the margin effect as sales and orders declines. The margin reduction that we did have, resulted primarily from unabsorbed overhead as a function of lower sales and the transition time to the lower cost structure.
In addition to the cost reduction actions discussed restructurings in second and third quarter salary freezes and salary reductions, reduction of 401-k and medical benefits, furloughs and short-time work week, as Karl mentioned, we have institute a new organization structure, with a position responsible for global marketing and sales, and a position responsible for global operations.
The Vice President of Operations is engaged in specific initiatives to increase margin by standardizing products and components, increased use of China manufacturing and sourcing and more active, more centralized raw materials and component sourcing. We expect those actions to contribute to increase margins in future periods.
Operating expenses for the current quarter of $11 million were $6.3 million, or 37% lower than the $17.3 million for the same quarter last year. Currency was approximately $1 million of the reduction or six percentage points.
Operating expenses for the year of $50.5 million were $12.3 million or 20% less than the fiscal 2008 operating expenses of $62.8 million. Currency accounted for $1.8 million of the reduction or three percentage points.
The significantly reduced absolute amount of OpEx for the quarter and year is a result of the reductions in force from restructurings and cost reduction initiatives discussed above and the company's ongoing cost containment efforts.
Headcount at June 30 was 540 compared to 655 at June 30 last year, a reduction of 18%. The combination of sustained gross margin and reduced operating expense enabled us to report an operating income for the quarter of $800,000 after a $300,000 negative currency effect.
Although reduced from the $3.7 million operating income of fourth quarter 2008, the fourth quarter’s income results from the early preventive actions in second and third quarters to mitigate the effect of the recession and contractions in the capital equipment sector.
The cost reduction and restructuring actions in second and third quarter also enabled us to report a full year operating income of $3.2 million, net of a negative currency impact of $800,000. After adjusting for the non-cash non-recurring cost of $15.1 million related to goodwill impairment $5.7 million, restructuring $4.7 million, inventory write-down $4.2 million, and bad debt write-off related to a customer that filed for bankruptcy protection $0.5 million.
Interest expense for the quarter and year of $600,000 and $2.3 million respectively, were $100,000 and $600,000 lower than last year's fourth quarter expenses $700,000 and full year expense of $2.9 million, attributable to lower average debt balances and lower interest rates for the quarter and year.
Full year tax provision was a benefit of $1.9 million, or 14% of the unadjusted pretax loss. The unusually low rate was due to the non-deductibility of some of the non-recurring cost recorded during third quarter. The tax provision for fourth quarter is the amount required to true up the amount of provision recorded year-to-date to the full year amount.
Additionally, as we have pointed out previously due to tax loss carry forwards in several locations, and the pretax losses reported, we have paid $900,000 cash taxes for the fiscal year. The ongoing cash tax rate is less than 20%.
As set forth in the non-GAAP supplement to the press release, we reported net income for the year of $1 million, or $0.07 per diluted share, which adjust the as reported net loss of $11.4 million for the $12.4 million after tax effect of the second and third quarter non-recurring adjustments discussed previously. The comparable EPS from fourth quarter 2008 was $0.45 per diluted share.
We are very pleased that we completed the amendment to our credit agreement with Bank of America, Citizens Bank and Webster Bank on July 31, 2009 with Bank of America as the lead bank. The amendment establishes covenant targets based on the company's forecast of sales, earnings and cash flow for the fiscal year and provides a liquidity we need to carry out our operating plan.
The credit agreement expires in November 2011. Changes in balance sheet accounts since June 30, 2008 are as follows. Although, total debt increased by $2.8 million early in the year, $3.8 million of the effective currency is eliminated. With $4.5 million increase in cash, net debt as reported decreased $1.7 million or $400,000 after eliminating the currency effect.
The reduction in net debt is result of cash generated from operations, due to the reductions in accounts receivable and inventory, driven by the continued success of our working capital management processes. We reduced accounts receivable by $15.3 million from $42.3 million at the end of 2008 to $27 million on June 30, 2009.
On a constant currency basis, accounts receivable would be $29 million at June 30, 2009, a decrease of $13.3 million. Reduced sales in the fourth quarter was a factor in the decrease accounts receivable that close monitoring and management successfully held DSO at 62.
We reduced inventories by $11 million from the $32.8 million at June 30, 2008 to $21.8 million at June 30, 2009. Removing the effective currency and the $4.2 additional provision for obsolescence of US inventories, inventories decreased $4.7 million with inventory days of 71 at June 30.
These accomplishments in working capital management derived from the exceptional efforts of the business managers and controllers around the world and their staffs. With their help we will continue these successful processes with the expectation of continue reduction of the investment in working capital.
Other factors affecting cash flow for the quarter and year were depreciation and amortization of $557,000 for the quarter, $2.8 million for the year, non-cash stock compensation $183,000 for the quarter and $1.1 million for the year and cash taxes paid for the year were $900,000.
In previous calls we noted that the company's market capitalization was below the accelerated filer threshold on December 31, 2008. The last measurement date and as a result, the company is not required to obtain auditor attestation to the effectiveness of its controls for this fiscal year, but the company is required to comply with management attestation provisions for regardless of accelerated filer status and performs the reviews and testing required to assess the effectiveness of its controls.
However under the regulations currently stated all publicly traded companies will be required to obtain auditor attestation for the fiscal year ended June 30, 2010, and the company is prepared and on schedule to meet the requirements. The company plans to file Form 10-K with the Securities and Exchange Commission, as required by September 28th.
I will now return the call to Helen Oster.
This concludes the management’s presentation. We will now be pleased to take your questions. So, I will hand the call back to the operator to explain the Q&A process again. While we are waiting for the first question, Karl will make a few comments about Baldwin's participation in printing exhibition in Chicago next month.
I want to draw your attention to a very important trade show coming up in September here in the US. Print 09 will be held at McCormick Place in Chicago from September 11 through September 16. So, if you are interested in a comprehensive overview of players and dynamics in our industry, I really highly recommend to you to visit us at this show.
North America is an important market for Baldwin, as printers are looking to reduce their costs and improve the quality associated with printing, and this is exactly what Baldwin systems are designed to achieve. At Print 09, Baldwin will introduce its new Protech PCS flexo plate cleaning system, a very interesting application of our offset cleaning know-how in the flexo printing segment.
We will also introduce our new FusionFLEX blanket cleaning, and LithoSpray Cobra spray dampening system. In addition, with our alliance partners Betz and Tolerans, we will showcase the ColorPump for UV inks and the S60 Speedliner ribbon and cylinder stitchers. New performance-optimizing PREPAC blanket cleaning consumables and Oxy-Dry anti-offset powders will also be released for the first time at Print 09.
Susan, let's hear the first question.
(Operator Instructions). Our first question comes from the line of Juan Noble. Please proceed with your question.
Juan Noble - Taglich Brothers
Just a question, I am just keying in on the comment that you made about the possibility that your sales on the downside may have [slight] sold during the fourth quarter. I know you don't give out detailed or quantitative guidance. But could you just give us some sense of what you feel that the rate of recovery will be to let's say revenues that you generated in fiscal '08? What the velocity will be over what timeline it might unfold?
Let me give you some information as it relates to how brief you the future and the current situation of our market. Several data points, first of all, if you read the recent price releases from the OEM price manufacturers, they have started to report stabilization in new price activity, and even with first signs of a revival, especially in the sheetfed segment.
When you look at our revenues and the exposure with OEM price manufacturers being the sales related with new price activities, I am looking back into '05 it was more than 50% then. In the meanwhile, in '09, it was closer to 40%. That is because of the strength of our recurring revenues and also our active sales on retrofits.
We believe that as I mentioned, that we have seen a low point for our business related with new price activity in the third quarter of this past fiscal year, A, because of those recent releases from price manufacturer and B, in that third quarter, we have also faced the additional effect from reduction of inventory levels throughout the supply chain and that has impacted us, especially in the third quarter.
Some encouraging signs that we're currently seeing I mean, we have started our '09 fiscal year with a backlog of $48 million, that backlog has then been reduced and has remained during the third and fourth quarter somewhere in the range between $37 million to $40 million. We have ended this fiscal year at $40 million and in the meanwhile, with the order activity in fiscal year '10, we have been able to increase that steadily to $44.6 million, as of last week.
Second encouraging sign, when we are looking at our historically revenue distribution, approximately in Q1, we report 23% of our annual revenues, in Q2 and Q3, approximately 25% in each of those two quarters and in Q4, 27%.
Historically, Q1 is always somewhat lower than the other quarters, mainly driven because of vacation seasons of mainly the European based customers. When we are extrapolating our last two quarters, Q3 and Q4, again, it appears that we have bottomed out in Q3 and we have now started to see in a recovery in Q4.
The third encouraging sign is again, recurring revenues have been only slightly down during '09, our consumables are in demand, they clean better, they are in full compliance with environmental regulations and they will be in compliance with future environmental demands, and they are also very effective and actually a cheaper way of cleaning for printers and that's why we see us gaining market share with our consumables.
Alliance products, I mean we have put in, I think it is now 12 alliances in total over the last years. That pace has picked up. We signed four alliances now only during the first half year of calendar 2009. We are really getting close with those partners. We become more consequential to our customers, and they can leverage through our infrastructure. Again, we expect to see benefit from that going forward.
Then last, but not least of course, all our retrofit initiative. So, with all those data points, Juan it was maybe a little bit of a longer answer than you expected. We look optimistic into our future and especially based on what we have been able to establish as a position for Baldwin in this marketplace.
Juan Noble - Taglich Brothers
Thank you, Karl. That's very clear and very helpful. Good luck to you.
Our next question comes from the line of Mark (inaudible). Please proceed with your questions.
Question on the backlog, your revenues sequentially were up 10% from the March quarter. But refresh my memory I think that from the time the quarter ended in March to the time of the conference call, the backlog actually deteriorated a little bit. Am I correct on that?
Yes. We ended the March quarter at around $40 million, and yes, I believe you are correct. We then went slightly below $40 million in the $37 million range, which then came up back to $40 at the end of June.
So you are really seeing a nice improvement and I am assuming that the bulk of it must have come in June?
It was in June partially, but as I reported now, really that the growth in backlog happened in July and through mid of August. Now we went from $40 million to $44.8 I think it was $44.8 or $44.6 and that really now happened during the month of July and through mid of August.
As the company regardless of the rate that the revenues improve, there is still another variable in your operating expenses, and that salesmen's commission and things like that, is that's where that's expensed, correct?
Our sales costs don't have a very large variable component. Some of the sales people in the US have a variable component. But those in other countries are paid primarily salary and bonus. So the variable component is limited for sales.
Mark, more than 80% of our revenues are going through our own key account channels and are going through our own sales and service offices, less than 20% goes through dealers.
So, then as revenues improve, and we'll just assume that the margins stay roughly where they are I think from what you said here and you are actually looking for a little improvement there. But just to be on the conservative side then the bulk of that gross margin should drops to the bottom line?
Well, if you are talking about related to volume, the bulk of whatever margin we have would go to the bottom line, but we are talking about margin improvements just based on cost reductions.
In the manufacturing process?
That's right and those manufacturing and sourcing initiatives, and those would drop to the bottom line.
Can you give me some color on, are we looking for one point improvement or multiples of that.
Based on our plans, it’s unacceptable for us to be below 30%. We want to be north of 30% in fiscal year '10 and we are looking at the 32% target during this fiscal year '10, based on the initiatives that Dr. Steffen Weisser and his team are currently working on.
It's really just to give you some information, its standardization of product lines, its pooling of volumes with certain suppliers, and on specific product lines, its also transferring of production from US and Europe into our operations in China and into our operations in India.
Got it, okay. So, then, so the company really doesn't have to get anywhere near its historic peak revenues of $240 million to be making the money that it was making, when it was at that level of revenues, I’m playing around here and I think about the mid-point between the 160 where you are now, and the 240 peak, and you would easily be back to your peak earnings?
That is correct, Mark.
Very good, and Karl, just because I got interrupted, earlier in your remarks, you made a comment about growth opportunities in the future that if you're successful could bring $100 million to $110 million in revenues, did you say 3 to 5 years? I just didn't get what you said?
Yes. We expect in three to five years that represents a total of $110 million annually, of that approximately 50% is growth in emerging countries and growth through our initiatives with our alliance partners, and the other 50% comes from our food blends operation expansion with OEM press manufacturers, applying our technology in new market segments such as flexography and digital printing as well as the organic growth opportunities of our consumables.
Great, okay and last question, I'll get off. The lawsuit that I know you were successful in a few months ago, when I realized there is more steps that you have to go through before you actually collect any money, but can you give us a little bit of an update on that?
Yes. We had a significant milestone in April 2009 that is when the Supreme Court, the German Supreme Court ruled on the invalidity action that was filed by our competitor and they ruled in our favor. So, they upheld our patent and that was really the key milestone in that process.
You are right, there are two other cases in parallel ongoing. One is the patent infringement per case, where the Dusseldorf Higher Regional Court announced its judgment in our favor in the November 2002. That was appeal by our competitor. It is so called non-admittance action. We expect to receive a favorable ruling on that from the Supreme Court during calendar 2010, and then the proceedings go back to the damage claim and this is now the third component.
Again, we have calculated the damages to be €32.7 million that’s almost US$50 million at current exchange rate and once we have the favorable ruling from the Supreme Court in Karlsruhe then it goes back to Dusseldorf Regional Court, as it relates to our claim of the damages.
Our next question comes from the line of [Michael Coney]. Please proceed with your question.
Hi, I was also looking at the legal case, and that seems like a huge number, $50 million compared to your market capital share and most of what you just explained to the other guy, that covers what I was asking, but are your lawyers, are they working on a contingency basis or are you paying as you go and what exactly does that patent cover? I would assume there would also be an appeal and if so, what would that timeframe be?
Yes. Our lawyers are being paid as they go. The benefit is that we are talking German lawyers, and my estimate that the cost differential between German cases and US based cases is almost 1 to 10. So, in that regard it is not that a significant amount. The cost incurred related to that to-date.
There is also, a difference in Germany versus the US, whenever there is a final decision then the loser pays the court fees as well as the attorney fees of both sides. So, whenever we have a final decision, and as I mentioned in one of those cases, we had a final decision. When there is a final decision, and let's say that was in the case of invalidity then the loser has to pay all fees. Sorry, there was some other component in your question. What was it, Michael?
Then appeal, they would probably appeal I'm sure with that kind of number of dollars at stake, and that would add another year maybe to the…
Yeah, I think you are referring to the damages claim.
When the Regional Court of Dusseldorf decides on an amount in our favor, then yes, our competitor would have the possibility to appeal that. However, they would need to pay that amount against a bank security that we would need to issue. So, once there is a decision on damages from the regional court our competitor is obligated to pay the amount against a bank security that Baldwin would need to issue.
What exactly does the patent cover or what's generally I should say does the patent cover?
The patent is related to our product, its called circulators and it refers to a cooling on the printing press, where basically the idea is to use only one heat exchanger circuit for cooling, both the fountain solution, as well as, cooling the ink roller temperature.
Are there other infringes on that patent?
That's actually an interesting question. We think actually there is another German supplier in Germany infringing on the same patent. But they have much smaller volumes. So we have at least we have not pursued. At the moment, we are focused on this one case against this one major competitor in Germany.
There is no more questions at this time. I will now turn the call back to you. Please continue with your presentation or closing remarks.
Thank you, Susan. Since there are no more questions, let me wrap up today's earnings conference call. We thank you all for your participation. We appreciate your taking the time to hear about Baldwin's latest news and developments. We look forward to having you on our next call in November. Good bye.
Ladies and gentlemen, that does conclude the conference call for today. We thank you for your participation and ask that you please disconnect your lines.
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