Stanley Black & Decker's Management Presents at Morgan Stanley Industrials & Autos Conference (Transcript)

Sep.18.13 | About: Stanley Black (SWK)

Stanley Black & Decker, Inc. (NYSE:SWK)

Morgan Stanley Industrials & Autos Conference

September 18, 2013 12:45 PM ET

Executives

Donald Allen, Jr. - SVP, CFO

Analysts

Nigel Coe - Morgan Stanley

Nigel Coe - Morgan Stanley

Keep it moving with Stanley Black & Decker. And CFO, Don Allen, welcome to the conference. Good to see you.

Don Allen, Jr.

Good seeing you, Nigel.

Nigel Coe - Morgan Stanley

And so Don, I think you are going to do a quick presentation and then we will move into the interrogation.

Don Allen, Jr.

Great. Good morning everybody. Feels like good afternoon to me, I just got here but good morning. And I would like to spend as Nigel said about 20 minutes going through a brief presentation about Stanley Black & Decker. Some of it is few pages that we presented earlier in the year at our Investor Day and then a little more enhancement on some of the pieces of our portfolio.

The first thing, I would like to start with, just a summary of what we really think we are as a company and an entity. And we believe that we are really building a world-class global set of franchises in our company. And it’s a three-prong view at this stage. The first is, we believe we are number one in the tools and storage space and the franchise that we have created has significant brand power, innovation and world-class manufacturing capabilities as well.

The second pillar would be our commercial electronic security business. We believe we are number two in that space behind Tyco Commercial Security and we continue to focus on building a franchise that’s able to differentiate itself in that marketplace through bundled solutions attacking the verticals within the industry in different ways et cetera.

And then the third area is Engineered Fastening where we believe we are number two in that marketplace and the acquisition of Infastech has really helped us enhance our position within the Engineered Fastening part of our portfolio. And its really a very much a what I call application engineering business, where you are really able to drive productivity into your customers and ultimately drive value to our customers and enhance your own profitability.

The one thing that you will see as we go through the presentation that we didn’t feel was a strong performance within our company over the last five years is organic growth. So we embarked on a set of initiatives that were -- I would say corporate driven but really embraced and taken over by the businesses over the last year to enhance our organic growth profile going forward in the mid-term and the long-term.

The other thing is our Stanley Fulfillment System is an area that we think really differentiates ourselves as a company. We has had some of the best working capital turns, performances in the history of the company and in many cases significantly outpaced our peers over the last three and five years.

And then the last thing, I would say is innovation, innovation continues to be an important hallmark to our strategy as a company in all different portions of our portfolio making sure that we are bringing innovative solutions and products to the marketplace and in some cases really, what I will say game breaking type of innovations as needed. The mission of our company is to really create these world-class branded global franchises that ultimately allow us to differentiate ourselves from the competition.

So what we are today is a diversified company pretty much made up of three external segments. Our CDIY, construction and do-it-yourself tool business is about half the company and as for the power tools are – the hand tools that are really used by the professional construction worker all over the world. And then the other half of the company is split between a set of Industrial businesses and our Security business. The revenue of the company is just over $10 billion last year and approaching $11 billion this year and - we’re exceeding $11 billion this year, and the market cap presently is over $14 billion. And the cash dividend yield is about 2.3%.

Let’s get a little bit into those three segments. I won’t spend a lot of time in this but just a little flavor on our three different segments of our company. CDIY which is really the part of our company that most people know us for which is the power tools, the hand tools et cetera, storage cabinets and the various brands are listed on the page.

The power brands are clearly Stanley and DeWalt. But also a power brand which is less -- on the professional side is the Black & Decker brand. It has a very strong consumer presence here in the United States and a very strong tradesman presence outside the United States. It’s a business that had really benefited from the merger of the two companies three plus years ago putting Stanley and Black & Decker together, a great deal of synergies, we drove $500 million of cost synergies in that merger and a large part of those synergies came in this particular sector of our company where we had overlap of our distribution channels, our commercial organization, our back offices but fortunately very different products, power tools versus hand tools which allowed us to leverage that opportunity.

The Industrial businesses is made up, or segment is made up of three different businesses. Our Engineered Fastening business that I touched on briefly a few minutes ago where the engineered, or the Emhart Technologies business which was Legacy Black & Decker and then a recent acquisition earlier this year called Infastech. By putting those two companies together, we’ve created a business that now penetrates significantly in two different vertical of their industries.

First, the Emhart Technology business penetrates in a significant way auto production and provides engineered solutions as well as engineering products to that particular space. Infastech was more heavily weighted towards electronic manufacturing providing the same types of solutions and products in that space.

The deal was not really highly synergistic from a cost perspective, but it puts together a business that is a very similar business model, very similar strategy and is allowing us hopefully to leverage some nice revenue opportunities going forward and it’s a highly profitable business as well over 15% operating margin in both cases.

The industrial & automotive repair tool business which is really a counterpart of our construction tool business on the hand tool side of really mechanical tools that are used in both auto repair as well as mechanical repair in certain industrial settings. And many brands that you would be familiar with Mac Tools, Proto, Vidmar, Facom, very powerful brands in some cases, in many of those cases number one in their marketplace.

And then infrastructure which is an area that we’ve slowly been penetrating over the last couple of years. We did an acquisition about almost three years ago now with CRC-Evans which got us into oil and gas pipeline construction, so, providing welding tools, bending machines and other types of services, the process of basically constructing an oil or a gas pipeline. A very attractive set of brands and attractive set of opportunities and we believe it’s a portfolio that’s now starting to demonstrate a more significant set of organic growth opportunities going forward.

And then Stanley Securities, certainly not last in the pecking order but last in the slide show and so we look at this business as another platform that really allows us to think about how we can further enhance our organic growth going forward. The business is pretty much being created from a bunch of acquisitions over the last eight years, probably about 60 to 70 acquisitions have occurred that created this business.

And it’s putting together an electronic security business and the mechanical security business and a small healthcare security and storage business. And what it does is it really -- we believe it provides the broadest offering of products and services in security in this particular security space today. So we can go to many of our larger customers and even mid-size customers with a bundled set of solutions saying we can provide you electronic security; we can provide you mechanical locking security; we can provide you automatic doors. In the case of healthcare, we can provide you patient security products et cetera. And we believe within the marketplace we have the broadest offering to provide those types of solutions to our major customers and potentially new customers.

It’s about half geographically, it’s about half North America based and half European based and then the small portion of the business less than 10% that’s in emerging markets.

This particular segment continues to evolve, it’s been a highly profitable business for a long-time. We are trying to accelerate a growth engine in this particular area making certain investments, changing a few of the business models. And in the first six months of this year we put some pressure on the profitability because of that. But as we go into the back half of the year and we end the year, you will start to see this business get back to more historical profitable levels.

All of this is underneath our strategic framework as a company for those of you familiar with us, has seen this before and our kind of our vision of moving forward and continue to diversify our portfolio. So we are not just impacted by one particular seasonal cycle i.e., the construction industry. That we are more diversified and we are moving ourselves into hopefully higher growth profile industry, in some cases our industrial businesses that I went through in particular our security platform that I described a few seconds ago.

We continue to be focused on where are the opportunities for us to differentiate ourselves, is it through the innovation, is it through world-class manufacturing, what are the things that allow us to build that type of differentiation that’s a big part of our strategy going forward.

And then the last thing, the Stanley Fulfillment System really underlies all of this, which is helping us focus on a lean manufacturing environment, a lean supply chain, a lean back office. And then now as it evolves in our company and we get more and more focus on organic growth, how does it help us really accelerate organic growth across the entire portfolio of businesses.

Along with that we had long-term financial objectives and metrics. And you can see them here, sales growth objectives of 4% to 6% organic growth over the long-term, 10% to 12% in total growth, EPS growth double-digit, cash flow in excess of 100% of net income conversions. Working capital turns continue to accelerate, we want to be able to provide a healthy return and dividend to our shareholders and continue to accelerate that over the long-term. And then maintain a healthy credit rating as well, which allows us to access the certain liquidity as needed two different cycles, economic cycles in the U.S. and globally.

How have we done against those metrics? Well, we have done pretty well actually from 2009 through 2012, for 2013 estimates this year. We pretty much hit our objectives overall expect for one and I touched on that briefly. And it wasn’t like we missed it dramatically its just our organic growth was a little below our expectation of 4% to 6% and maybe that was due to the fact that we were doing a lot of acquisitions and focused on building platforms that would drive value and differentiates themselves in the marketplace. But, now that we have done that in several of these businesses specifically security in a couple of our industrial businesses, it’s an opportunity for us to take a lot of those assets that we acquired and begin to accelerate organic growth. At the same time, we have an opportunity to accelerate organic growth in our CDIY segment as we continue to see the benefits of the merger and putting the two businesses together, we continue to see, the U.S. housing market recover and improve as we go by each month here in 2013 and really beginning to enhance our position in that particular piece of our company.

So what do we do, its easier to point out that maybe organic growth wasn’t as great as we wanted it to be, we just had to really rev it up and get focused on more activity. And the biggest thing we are going after is emerging markets. Now a lot of company say that, a lot of company say we are going to penetrate emerging markets. But I actually think in our case we – both we Legacy Stanley and we Legacy Black & Decker had under whelm the emerging market opportunity over the years. And it was very much an incremental approach, every year put a little more investment in, get a little more growth and continue to improve that performance versus in our case when we put the companies together, you can actually start to really accelerate it by enhancing some of those investments.

And then the other thing is that we have been very focused on selling premium products in emerging markets and for those of you are familiar with our business of tools in emerging markets, the biggest part of the market is actually what is called mid-price point product. And those are high quality products but they don’t have certain enhancements or bells and whistles that you would see in a premium product because the marketplace doesn’t really want it.

They are now looking for certain productivity enhancements to a power tool that construction workers in the U.S. and Europe want or demand. And so as a result, you need to provide a different type of product and many of the companies providing those products today are local companies in those emerging markets, so local Chinese companies, local Indian companies et cetera.

So our opportunity, how do we penetrate that market in a much more significant way. And we believe, we can do that both organically or through a greenfield approach as well as some small acquisition in the key emerging markets.

And then I would say the next three or four are really trying to take what we created through a lot of these acquisitions and some of the assets that we have acquired and trying to accelerate that through some channels where they haven’t been significantly penetrated.

A good example of that would be the advance industrial solutions that would be taking some acquisitions we did such CribMaster and AeroScout, which provide technology to monitor certain assets or control certain assets and in primarily a healthcare setting. But they can also be used in an industrial setting.

So if you want to control certain things occurring in a manufacturing plant, whether that certain levels of inventory, whether that certain types of equipment, whether the certain types of tools that are utilized in the manufacturing environment, we have products and services that allow you to do that through these acquisitions.

So we are really trying to penetrate into something that we haven’t done before. And in the last, we continuing to accelerate the Stanley Black & Decker revenue synergies. We started that back three years ago $300 million to $400 million of revenue synergy opportunities; we are well in our way to achieving that but we still have a little more work to do in 2013 to get to that objective as you can see here on the page. The end result as we think this drives $850 million of additional revenue over three years and $200 million of incremental operating margins.

I mentioned SFS in our working capital performance, you can see here how well we performed over the last three years and outpaced all of our industrial and security peers on an average basis and we continue to be focused on that and we believe that will end the year this year over 8 working capital turns which would be an improvement versus 7.5 at the end of 2012.

Acquisitions will continue to be an important part of our strategy. So the methods that we’re sending about organic growth is strong, we want to continue to make sure that people understand that but we will continue to be focused on acquisitions that’s still a key part of the strategy that I touched on in a few pages ago. And it’s in these areas that you see here tool consolidation opportunities where they make sense and they are highly synergistic, continuing to build the global security platform, it has a broadest offering and the best bundled solutions and vertical solutions in the marketplace.

Engineered Fastening looking at how we enhance that business, we penetrated two significant industries in auto production and electronic production. There is other areas such as aerospace production and certain another industrial production that we can also bring that type of model too and then acquisition maybe the best way to do that.

Infrastructure continue to enhance our oil and gas, infrastructure platform over the mid-term and long-term and then of course emerging markets there will be opportunities there although relatively small to accelerate a lot of the growth initiatives that I was touching on a few minutes ago.

So our vision provide 2016 and 2017 is to become a business that’s $15 billion revenue business that exceeds 15% operating margin that is 10 working capital turns and is 12% to 15% cash flow return on investment. And very importantly as there are emerging market base as a percentage of total revenue was greater than 20%, today it’s about 16%. In many large industrial today I see the percentage of their revenue coming from emerging markets anywhere from 20% to 25% and some cases 30%. We think with what we’re doing, we can definitely make a shift in our geographic perspective of our view as we continue to focus on those organic growth initiatives as well as acquisitions.

And then you can see a little bit to make up of what the three segments would look like as well. But it still is focused on powerful brands, innovative products or differentiated solutions that allow us to take things to the market that are either different or differentiate ourselves from our competitors, which ultimately we think creates and drives significant shareholder value. Thank you. That concludes the presentation portion of the session.

Question-and-Answer Session

Nigel Coe - Morgan Stanley

Don, sounds great. So, obviously people are talking about 2014 right now, looking ahead and if I said to you the next year is going to be sort of 7% organic growth kind of environment for Stanley, what can you do to kind of fulfill that sort of growth rates, I mean do you need to add employee capacity, CapEx or can you just run us through the existing infrastructure?

Don Allen, Jr.

Yes. I think for the next three years, I feel that what we’re doing with these organic growth initiatives, will allow us to achieve an organic growth of somewhere between 4% to 6%. And so what we’re doing is and I listed the page that I showed earlier listed about five things in addition to Stanley, Black & Decker revenue synergies.

We’re making about $100 million of operating expense investment, so we’re adding people. We’re adding sales leaders and salesmen and individuals on the street. We’re adding engineers to help us design certain products such as the mid-price point products I was describing for emerging markets. And we will have a little bit of expansion as well in our manufacturing supply chain and distribution supply chain as well that would be part of that.

And then it would be about CapEx investment in addition to that about $50 million over that horizon. I think that allows us to drive that type of organic growth of 4% to 6% over the next few years and with any additional tailwind from the market here in the U.S. or globally it could actually be even better than that.

Nigel Coe - Morgan Stanley

So if I then said to you that next year is going to be below 4% to 6%, let’s say 2% to 3%, what would you do? Do you take out more cost, do you rationalize headcount, how do you respond to that?

Don Allen, Jr.

If it’s going to be, say that again?

Nigel Coe - Morgan Stanley

Let’s say 2%, 3% next year below that 4% to 6%.

Don Allen, Jr.

So it doesn’t happen?

Nigel Coe - Morgan Stanley

Yes.

Don Allen, Jr.

Yes. I think for those of us who follow this, we are very active in how we manage the cost in our company and we want the balance of achieving top-line growth and bottom-line growth and you saw that in our long-term financial objective. So if for some reason, the environment over the next two years was sluggish or retracting to some extent but our growth initiatives were driving volume activity just not to the level of 4% to 6% we would be proactive in managing our cost and trying to find - to be as lean and as efficient as possible.

Nigel Coe - Morgan Stanley

So based on what you see in [competition or] [ph] customers et cetera, do you think the most likely scenario is accelerating growth or do you think it’s going to be continued sluggish conditions?

Don Allen, Jr.

I think it varies. I think when we look at our company, I think in the U.S. things in our CDIY business are going to continue to improve. We are seeing as each quarter goes by a little more strength in that particular part of our portfolio and what we call the point of sale information that we get from our customers on a regular basis continues to show healthy improvement as time goes on and we are also seeing that in the performance of the particular business in the first two quarters of this year especially in the second quarter where it grew 6%.

And we expect to see that type of performance in the back half of the year because of these improving conditions, so it’s different for that business and when you look at the European market. I think it’s kind of sluggish. Now when you talk to folks about Europe they actually feel better about it now than they did six months ago. So it’s – whether it’s a question it’s at the bottom or whether it’s getting better is still debatable. But in our case in Europe, our CDIY business has been performing relatively well because of market share gains, modest growth or occasionally a flat performance.

Some of our industrial businesses has been retracting and then some of our industrial businesses has been growing because one of them is tied to auto production in Europe, primarily German auto production. So it’s a bit of a mix story of results, but I think our general view overall across the globe that will continue to see kind of modest growth in improving circumstances in different geographies. But the one area that we’ll still see volatility will be emerging market.

Nigel Coe - Morgan Stanley

Right. Right. Security margins, you mentioned that you have taken initiatives to improve the growth profile of that business and there has been some impact on margins in first half of the year, you are expecting that to get much better in the second half of the year. So maybe just go through why security margins have been so depressed in the first half and what’s going to cause them to spring back in the second half?

Don Allen, Jr.

I would say that when I think about the security business in the first half, there were two things that we were doing that were very conscious or we are focused to plan on doing that. The first was in our mechanical -- commercial mechanical business we basically were doing a model shift of going from a direct selling model to a distributor selling model. And the reason we did that is the direct selling model really was constricting us to a very small part of the marketplace. And we had gotten into the mode of really more farming the business versus doing the farming of the existing business but also hunting for new business.

By going to a more focused distributor model in this particular case we are actually getting into broader part of the industry where mechanical locks are sold. The second thing is that we weren’t necessarily bringing a full set of product portfolio to that space we’re just focused on the premium products. So what we’ve done now is we’re providing both premium products and mid-price point products. And that transition is occurring this year, we expect the margins to be depressed in the first half and improve in the back half. So that’s really going as planned.

The second thing I’d say is we planned on making growth investments in our Electronic Security business and really trying to penetrate the verticals in the different industry. So in the case, we have a healthcare vertical, a financial services vertical, retail et cetera and we’ve basically have been making investments and how we better penetrate those particular verticals, we’d bundled solutions and our bundled offering. And it’s taking as I was describing earlier, a lot of the products across electronic, mechanical and in the case of healthcare, healthcare security and bundling our solutions to some of our major customers or some of the major companies that are not our customer. And enhancing the offering in that particular space which allows us to continue to further penetrate that.

Those things were planned but they were depressing the margins. What happened that was a bit of a surprise to us in the first half was, we had some inefficiency in our field organization. So the organization in the field are the ones that do the installation work, they do the service and we were in the middle of doing a conversion of from temporary labor to permanent labor with that workforce for a large portion of it. That didn’t go as well as we expected. And so we had some inefficiencies with bringing on the new permanent employees, some of the training aspects that we had.

And we’re working through that right now but the reason we think the back half is going to get better is the first two things that we’re planning, we expect those to start bearing some fruit in the back half as planned. And in the third area a lot of those inefficiencies we continue to work on that and we’re seeing improvements and we expect that to get better as well.

Nigel Coe - Morgan Stanley

Okay. I thought you might have talked about Niscayah as well because you’ve seen a lot of cost reduction in Niscayah and that’s been one of the facts as well. So maybe just describe how that process is going?

Don Allen, Jr.

Yes, it’s a good point. Niscayah actually was a little bit of a depressed portion of the story in the first half too because we saw a little bit of a mix shift in that particular business. And so at the end of last year, we’re right on track with our expectations of integrating that company, we achieved our cost synergies, the operating margins were at double-digit -- low double-digit levels. In the first half of this year they’ve gone back to high single – high to mid single-digits. And it’s really due to this mix shift that I described.

And so, what I mean by that is in the case of Electronic Security, the larger jobs where you have multi-site locations tend to be slightly less profitable than some of the mid-size and small types installation jobs.

And so, as we took on some bigger jobs in the European marketplace, we saw a bit of a mix shift that came on to us relatively quickly that’s starting to regulate itself, we’ve also accelerated some cost synergies in Europe. So by the end of this year we actually believe we’ll be very close to being back on track related to that integration.

Nigel Coe - Morgan Stanley

And so, we’re looking at an outlook for mid-teens will better in the second half of the year for securities margins?

Don Allen, Jr.

Yes.

Nigel Coe - Morgan Stanley

Right. Good, good. You’ve been pretty vocal Don about the fact that you got this cash flow, imbalance is the wrong word but obviously your free cash flow overseas and --

Don Allen, Jr.

Yes.

Nigel Coe - Morgan Stanley

When you are a much more acquisitive growth company, that’s probably not certainly wasn’t a bad thing because you’ve done overseas transactions. And I’m just wondering the new Stanley which is much more organically focused. Is there enough opportunities are there opportunities overseas to absorb that overseas free cash flow? Or do you have o think about other things other solutions?

Don Allen, Jr.

I do think there is enough opportunities overseas for us to utilize the cash flow. It’s a challenge, the challenge we have is similar to other multinationals but I have been more vocal about it maybe because we’ve been vocal about it in DC about the desire to change some of our tax laws in this particular area. I do think that we as a company, it’s not a major financial restriction or issue for us to execute on what we want to do at least for the next five years, who knows after that.

But, there is enough opportunities as I mentioned in the presentation, we are organically focused but we do expect to still be a very acquisitive company as well. And that would say okay as Nigel is pointing out, if you’re generating 75%, 80% of your cash overseas, what is that mean, can you do those types of acquisitions.

We do think there is plenty of opportunities overseas. In the next few years we probably will be focused on a lot of emerging markets acquisitions because of the penetration we’re trying to do there. And then when you look at our Security business it’s a very strong business in North America and Europe but not a lot outside of those geographies. So there is opportunities to penetrate emerging markets for them as well.

And then last thing, I’d say is when you look at potential bolt-on tool acquisitions, lot of those are probably going to be outside of the United States. And so, when you kind of go through the list of potential things, you find that maybe 80% of them are actually outside of the U.S.

Nigel Coe - Morgan Stanley

Okay. Switching to the organic initiatives – you’ve listed six buckets. And which -- which one or two do you think okay that’s going to be a lay up, you can’t do better than that (shaping) us. Which one or two would you say wow okay that’s a better sales target?

Don Allen, Jr.

I actually think -- I think the emerging market, I’m not sure the emerging market leaders in our company would agree with this statement. But I think the emerging market one is actually a bit of lay up. I think there is a lot of work that goes with it. I think there is a great deal of activity that goes with it. And if there is an area that we could potentially outperform, that would be the area.

The other ones that you go through the list, we have a U.S. government initiative going on, I think that’s going to be challenging until things shift dramatically within the United States government. And then the other ones, I feel pretty good about it, I think I wouldn’t call them lay ups but I think they’re very interesting opportunities, in some cases they’re penetrating new channels and marketplaces for us. And the worst thing that could happen is maybe the timings are little slower than we expected but I still think the end goal is achievable.

Nigel Coe - Morgan Stanley

Okay. And let’s squeeze one more. And we’re out of time but one topic we kind of had fair amount is competition in tools, power and hand tools. And did you feel obviously much more established position than we are. Do you feel that’s kind of a topic that’s people does played out of proportion? Do we see competition picking up in the next two or three years in tools?

Don Allen, Jr.

I think the competition in tools has been incredibly intense for the last -- I’ve been with the company for 15 years, that’s been that way for 15 years and I think it’s going to be that way for the next whatever number of years. I just think it’s a very competitive environment, I think it’s different when you talk power tools versus hand tools. Power tools is very intense competition, you had some really good companies that we compete against. And ultimately it’s really about bringing innovation to that marketplace that the customer or the end user wants.

And so, we’ve been very focused on that and frankly we’ve been very fortunate to bring forth some products that have been in some ways leading edge in the power tool world that allowed us to differentiate ourselves. Hand tools is a little different the competition is there but I wouldn’t say it’s quite intense but probably the broader or the bigger competition in hand tools is private label.

Nigel Coe - Morgan Stanley

Yes.

Don Allen, Jr.

And so I think that continues to be a challenge. I don't think that’s going to change but it’s the same innovation game there. You need to be bringing innovative products and the hand tool space is a little different, you can’t bring as much innovation to a hand tool as you can to a power tool but you can’t bring innovation to that.

Nigel Coe - Morgan Stanley

Right. Okay, finally those GAAP, the headline earnings reconciliation 6 am in the morning, is a bit of a headache, does that get a little easier in 2014?

Don Allen, Jr.

The modeling getting hurt, it is yes.

Nigel Coe - Morgan Stanley

Go on.

Don Allen, Jr.

Yes, I actually think that it just much of a frustration internally as it is externally. So it was very necessary because we put together two very large companies. We had a lot of cost synergies. We had a lot of one-time cost. But as we go into next year, we’ll go back to what we traditionally used to do which is providing guidance that’s on a GAAP basis and there will be some charges in those numbers but it will be embedded in the guidance that we provide and well understand.

Nigel Coe - Morgan Stanley

Excellent, Don, thanks a lot. That was great.

Don Allen, Jr.

You bet, Nigel. Thanks.

Nigel Coe - Morgan Stanley

That’s great.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!