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Commercial Vehicle Group, Inc. (NASDAQ:CVGI)

Citi 2013 North American Credit Conference Call

November 6, 2013 2:45 PM ET

Executives

Rich Lavin – President and CEO

Tim Trenary – EVP and CFO

Analysts

Manish Somaiya – Citgroup

Manish Somaiya – Citgroup

Okay, thanks everyone. Our next presenter is CVG. And from the company to my immediate left, we have Rich Laien, President and CEO and we are also glad to have the company’s new CFO, I think he is making his debut appearance at the Citi Credit Conference and we are pretty excited about that. We have Tim Trenary, who recently joined CVG and maybe he can also give some background at some point. So, with Rich, if you want to get started.

Rich Lavin

Good afternoon. It’s good to be with you. As Manish mentioned we are here from Commercial Vehicle Group and we got my handful of slides that I will run through, but interested really in taking your questions. So we can complete the presentation.

This is what’s our product line up, the breakdown between seating wire harnesses trim cab structures and controls. These are the revenue breakup based on 2012 revenues, 2013 breakup is very similar. But the point of the chart is that, CVG is really the global leader. We’ve got a global footprint. We are competing globally, serving customers globally. And it goes in our truck or on the outside of a truck, outside of the cab of the truck, CVG supplies it.

This is a look at our manufacturing footprint. As you can see, we’ve got a heavy concentration on manufacturing assembly in North America and Mexico. We also have facilities in Europe, in England, the Czech Republic and the Ukraine, and also facilities in Asia, Beijing, Shanghai and Pune, India.

So we do have a global reach to our business. We’ve got manufacturing assembly located in the three tri-spheres and you can also see that we’ve got a heavy concentration of manufacturing assets in North America which does presented opportunity which we’ll speak to in a couple of minutes to consolidate our manufacturing footprint. That’s something we’ve been starting over in the past couple of months and we are going to move forward with a plan in the fourth quarter of this year.

Well, just a quick update on the company. I just finished my fifth month with CVG as President and CEO; Tim just joined us about a month ago. I’ll show you an organization chart in a minute which really captures; I think the degree of change at the top of the organization as a part of the global executive team that we’ve put in place over the past couple of months.

We’ve also been involved in a – and really a deep dive, a deeper view of key aspects of our business, when I first came to CVG five months ago, I had a short agenda it was really profit optimization for 2013, but then moving on to the long-term strategy planning. I think when I got there, I found that there were opportunities really to dig into areas of the company that I would say, needed to be chimed up and presented real short-term and long-term opportunities.

Things like our plan to grow organically in China. China presents a tremendous opportunity as I’ll show in a minute, but it really does take in-depth planning from a product and a go to market standpoint to take advantage of those opportunities. So, we step back and really did a deeper view of the company and focused on the areas where we saw both short-term and long-term opportunities.

This is a look at the organization. The operations under the business is on the left hand side of the chart. The services side of the business on the right hand side of the chart. I really do think that with the organization we’ve put in place with a leadership team we have an exceptional team positioned to lead global growth in CVG. We now have global division presence leading truck and bus, construction, Ag and military Aftermarket structures and global purchasing that Kevin Frailey, Pat Miller and Timo Haatanen. Geoff Perich is our Managing Director for China, Southeast Asia and India. Geoff joined us from Caterpillar where had responsibilities in product and marketing. He had based for about years in Beijing and of course, Tim heads up the finance end of the organization as a part of the service side of the CVG executive team.

Our focus is really in a couple of areas. It’s best people and culture. I spoke to the executive level of the organization. We put in place a couple of months ago. I have real confidence in that organization and the people leading those parts of the organization to drive our global business.

We’ve also got a values based culture which is extremely important. In my mind, values based culture is really a performance multiplier for an organization. We’ve got a strong foundation in CVG and we are going to build on that in the coming years. At the end of the day, CVG is a product-based company and we’ve got to have products that create real differentiation versus competition as we go to market and meet our customers’ expectations for value.

That process is operational excellence, you saw our manufacturing footprint, we have, I would say desperate operations practice right now, good productivity, good efficiency but as we standardize the way we do the work at our manufacturing facilities, I think we have a great opportunity to really drive higher productivity, higher efficiency, lower cost to manufacture.

Go to market is going to be key for us. Understanding our customers, what they value, what the buying criteria are, especially in those markets that for us right now are really to develop and present great opportunities. China and Southeast Asia are at the top of the list.

I’ve got a couple of charts here that really call out I think the opportunity that we have in construction and Ag, truck, and also the aftermarket in China. But this chart shows the build rate for North American construction in 2013, forecast for 2014 to 2015 compared with China.

The point of the chart is, that in 2013, the build loan for construction equipment in China was nearly 2X – I’m sorry, 4X what it was in North America. And even if you assume that only one half of the China market is addressable for CVG, that’s still is a market opportunity which is 2X the North American opportunity.

We’ve got a great start in China. We’ve got an R&D center in Shanghai our manufacturing assembly facility located in Beijing while putting a go to market team in place under Geoff Perich to support the global division presidents. But this is where the real opportunity for organic growth is for CVG not just China. I mean, the same sort of chart can be drawn up for India and other parts of Southeast Asia and also Eastern Europe.

We’ve been a very North American focused company in the past, we’ve been a very much a truck heavy company in the past, but opportunities outside of the U.S. are significant and we are putting an organization and a plan in place to take advantage of it. So just a quick wrap up chart before I turn it over to Tim, we do have a strong North American truck position. We are going to build on going forward, organic growth is going to be key for us. We are going to be an M&A player. We are going to be interested. But we think we have significantly opportunities to drive growth organically by focusing on customers, products and markets.

Process excellence is going to be key. I spoke about product and also plans to operations and go to market, but at the end of the day we want to hire, develop and promote best of the best people and put them to work in a culture that really enables and empowers them. So, with that, I will turn it over to Tim. I look forward to taking your questions.

Tim Trenary

Thank you. As Manish mentioned, I just joined the company about four weeks ago. So, while I might characterize myself as a new kid on the block at Commercial Vehicle Group. As you can see from Rich’s organization chart, there is a lot of new kids on Rich’s block.

So that’s not getting me very far. So, having said that, I have over the last four weeks and over a series of conversations obviously with Rich before I joined the company established some impressions of the company and its opportunity to drive its financial performance and I’ll share that with you today in these brief comments.

Okay, so, on the chart here, last seven quarters, the orange or the brownish bars are the sales and superimposed on those bars the operating income margin for this period of time.

As I’m sure you are aware, about 50% of the company’s business or top-line is derived from the heavy truck industry here in North America. So, as that industry goes, so does our top-line in many respects.

So, over the last three or four quarters as that industry has been off a little bit and to a lesser extent the construction equipment industry which is directionally 20% of our top-line has also been down a little bit. The company’s revenues had come off a bit year-over-year.

That obviously has a consequent impact on the operating income margin which is also somewhat depressed from the prior year. I call your attention please to the last two quarters, the second and third quarter off to the right-hand side of the screen here, the second quarter of 2013 and the third quarter of 2013 some comments.

In the earnings release, with respect to the last quarter, the second quarter, you might recall, that $2.5 million of charges in that second quarter impacted the operating income and in this quarter the third quarter of 2013, that we just released our earnings yesterday.

And that operating income was impacted by about $2.8 million and charges associated with some outside consulting services. $1.8 million, most of which was associated with separation charges for a reduction in force that the company undertook.

And then finally, $2.7 million in impairment charges. We are one to basically show this operating income margin before giving effect to those charges, those dots on those bars would drift up to a level around 2% or 3%, which is better but not adequate.

And so, I’ll comment to that in a few moments. As I mentioned in the course of my discussions with Rich sort of the profile, sort that develop in my mind about CVG and the opportunities here financially and at the very highest level as I thought about this company and the financial opportunity.

I think of it in terms of scalability or ability to grow the top-line, not necessarily through acquisitions, but really a more focused organic growth play. And then an opportunity with respect to margins, whether it be gross profit margin, EBITDA margin and therefore operating income margin, some the ability to enhance the business there.

And then finally, I do believe that there is an opportunity to take the edge off of the cyclicality in our financial results as it relates to the truck business. I’ll develop that just a little bit more in a few moments. So back to this in just a minute, before we do that, some comments on the company’s capital structure and our liquidity position we do have $250 million of notes outstanding.

Those notes expire or term out in 2019. They first become callable next year, April of 2019 and we have a $40 million commitment from the financial institution for our asset-based loan. If you sort of take those two elements of our capital structure together, they would represent what I would characterize as a covenant light debt structure.

The company’s liquidity at the end of the third quarter at the end of September, $75 million in cash and an undrawn ABL with $27 million availability today. So if you think of the company’s covenant light debt structure and liquidity.

If you think of those two things collectively, I think it puts us in a very good position quite a bit of flexibility affords us a lot of flexibility to exercise some of the opportunities and initiatives that we are about to undertake that Rich just described to drive the financial performance of the company going forward.

These are just, four points, here a subset if you will of some comments that Rich made, manufacturing capacity rationalization, operational excellence, go to market and diversification. The subset of some of his comments and I want to go back now to my observations and sort of weave in a little bit how I see these favorably impacting our financial performance in the future.

With respect to margins, gross profit margin, EBITDA margin, et cetera, the manufacturing capacity utilization or footprint rationalization is very far along. We expect to conclude that work as Rich indicated in the very, very near future and as a consequence of that, I would expect that there would be some opportunities to improve the capacity of the facilities that we clearly operated and therefore to improve the gross profit margins.

Operational excellence is a journey. Any company that really undertakes this has undertaken a journey over a long period of time. We are in the early stages of developing this, but again, over a period of time starting with next year 2014 as we start to drive this into certain of our facilities. That coupled with the manufacturing capacity rationalization that I think will occur here in the very near future will I think have a very real impact on the company’s margin.

And then if you think about the organization structure that Rich has set up and it’s a global organization structure now as a sort of geographic structure that used to exist here before sort of geographic pads if you will across the globe. It’s very global now and it’s very much focused on the end-markets globally.

And coupling that with the go to market work that we are doing, we are early on this, but I think it will come together relatively quickly. That and the diversification that Rich mentioned and he spoke of just one element of that with respect to China for example. But there is a lot of opportunity I think in the company to diversify our products, our customers and our end-markets.

And if you think of the impact of go to market strategy and just diversification on a truly global enterprise, I think it delivers a lot of opportunity to drive that top-line as I mentioned earlier from an organic point of view. And then finally, if you can sort of envision that top-line of ours about 50% of which is derived in the North American truck industry here in North America, as important as that is to us and it’s delighted as we are to have a very large share of, extremely large share of that market.

To the extent we can through, for example the go to market strategies and diversification grow that top-line organically, the importance of that North American truck market in North America will be somewhat diminished in the context of the entire organization. And so, as that occurs, the cyclicality associated with that piece of our top-line will be somewhat mitigated and therefore cyclicality of the impact in our financial performance will be somewhat mitigated.

So, that’s sort of how I see what Rich talked about getting into our financial performance and really driving our financial performance in the future. What I’ve described is a journey. There is a new management team here. It’s really come together well. But we have some heavy lifting and we are ready for that, but it’s going to take some time, a meaningful amount of time but having experienced those in the past, it should bear and I think it will bear a meaningful amount of fruit for the company. So stay tuned, more to come in. Thanks very much for listening.

Question-and-Answer Session

Manish Somaiya – Citgroup

So let me kick it off with you Rich, we just got the preliminary commercial truck order last night for Class-8 numbers were quite strong. There was a bit of excitement this morning among some of the investors. How do you look at those numbers? Do you say wow, on the cycles back and then going back to the point about rationalizing manufacturing capacity, do you feel that if customer demands pickup that could be an issue?

Rich Lavin

Well, we did see the order number this morning, Manish and they are very strong. One month is not a trend may, right, but it is cause I think for optimism for 2014. We are assuming a slightly higher truck market in North America and our planning for 2014 and but if the run rate, if some updated run rate comes in anywhere near the numbers that we saw this morning we actually just are thinking. But it’s cause for optimism, it hasn’t adjusted our thinking right now regarding our planning.

As far as capacity is concerned, I mean, our utilization right now is about 50% and what’s happened in CVG over time is that the company has grown by acquisition and so some of the manufacturing integration work that needs to be done and we are undertaking right now.

I don’t think frankly, the stronger North American truck market in 2013 would affect our thinking about what we should get done with the rationalization. It depends on how strong, how much stronger the market is in 2014 obviously, but I don’t think we are going to back off from our plans at this stage.

Manish Somaiya – Citgroup

Question for you, Tim, since you touched on the balance sheet, looking at the balance sheet, how comfortable do you feel with the leverage that you have and then maybe, this is a question for both of you, as you talk about growing organically, could that be a bit of a challenge?

Tim Trenary

So, if you sort of look at the company’s leverage, its net debt-to-EBITDA, not much used the 2012 numbers, that was at that time about three times, it’s come up this year, because our financial performance has fallen off a little bit. So, having been here in the short period of timing growing the custom to the company I am still sort of getting my head around what the right profile is with respect to that leverage.

I would say that, where we sit today with our current financial performance, we intend to drive that leverage down through improved financial performance next year, improve the EBITDA to a level that would be close to where we’ve been in the last year or so.

With respect to the capital structure where we are in our maturation process with this new organization in this new plan, I think it’s in the best interest to have a covenant light capital structure. Having said that, these notes, as I mentioned do become callable next year and we’ll sort of look at the various options we might have to address that.

Manish Somaiya – Citgroup

I think in the past, we’ve heard that CVGI has a goal of getting to $1.6 billion in revenues by 2016. Is that still the goal? And in terms of diversifying the business, where do you see the opportunities at the end-markets that you talked about, the geographic market that you talked about in terms of getting you there?

Rich Lavin

Yes, I think the revenues – the growth target for 2016 was a result of some long-term plan that the company undertook that ended in December 2012 it was announced at the end of last year. That’s not a number that I and my leadership team have led to. I think that we certainly see opportunities to grow.

But I don’t want to suggest today that our plan is to grow from $750 million we are going to end the year probably in the year – in 2015 to $1.6 billion at the end of 2016. We will grow, we will grow profitably and I think our leadership team is going to be much more sharply focused on net earnings while we are growing the top-line and shareholder value.

So, we will grow. I am not prepared at this point to lay out a target. As I mentioned, we are going to turn our attention to longer-term planning as we end 2013 and move into 2014. So I’ll have more to talk about, I think Manish on that point next year.

As far as organic growth is concerned, we’ve got a very comprehensive product line right now and it’s truly a question they are being able to adapt that product line to opportunities in different segments, in North America and also in different segments, different industries outside of North America.

To give you an example, the construction business in China, I talked about the build rates for China versus North America is about 4x in China versus North America. But within that build rate, you’ve got a number of different customers, you’ve got the multinationals like Cat, Deere, Komatsu, Volvo. You’ve got other Japanese, you’ve got Koreans, you’ve got Europeans like Le Belier.

So you’ve got the multinational competitors and there is a value proposition in China which is very similar to the value proposition in other parts of the world. You’ve got the next tier players which are the best-in-class Chinese, like Sany, Lugong, Lingong which is the Volvo JV in China.

And their value proposition is close to world-class and their price point is really creeping up toward world-class. So, again, if we can come up with a multi-tiered product strategy to enable us to address more of the available market in China, I think the upside for us through organic growth in that market is significant.

And we are looking at the same types of – I would say, customer and market dynamics in other markets like India. So, it’s going to take some time and they could build up the product line in the organization that will enable us to access that opportunity effectively, but we know the opportunity is there and we are planning to go after it.

Manish Somaiya – Citgroup

And I think, Rich you mentioned, making opportunistic acquisitions, what do you mean by that?

Rich Lavin

Well, if you think about, Manish, the – I mean the overall strategy which is diversification, right, diversification of our customer base, diversification of our product line and diversification of the geographies we are competing in. If there is an acquisition that enables us to serve one or more of those strategies, we’ll certainly take a hard look at it. My own view is that, there continue to be good acquisition opportunities in China. So, even though we are talking about organic growth in China, planning for organic growth we are still open I think to acquisitions that might present themselves in China.

Unidentified Participant

(Inaudible)

Rich Lavin

Well, that depends, I think, you mean in terms of revenues that we would add?

Unidentified Participant

(Inaudible)

Rich Lavin

Total purchase price? I would say $25 million to $50 million might be a range.

Tim Trenary

Yes, I haven’t given it a lot of thought, but, let me put it this way. The company as I said a moment ago is in a very good position in my opinion with respect to its liquidity. So we would want to – in the course of looking at an acquisition and gauging the size that we would do, we would want to take into consideration our additional goal, to Manish’s point a little bit of making sure that leveraging the company, spacing the right spot. So, it will – in part be a function of liquidity going forward at the size of an acquisition that we might undertake.

Rich Lavin

But it also has to do I think with what we would add, I mean, if we have an acquisition within that range of perhaps a little bit higher, and we are going to be adding customers very good manufacturing operations, product technology, I mean, that all will resume into mix I think of what we think might be affordable.

Unidentified Participant

(Inaudible)

Rich Lavin

Sure. Yes, as we worked with an outside consultant, we identified seven or eight areas where we were really going to go deep short-term and identify opportunities. So they were – North American truck, as I mentioned, we’ve got a very strong position in North American truck, but we need to find other ways to service that client base. And so, that was the focus in the North American initiative.

China, China is, we are not ignoring other opportunities outside of the U.S., but China is a significant opportunity for us, not just in construction, but also in Ag, and also in truck. And we are looking at global construction and Ag. We’ve been a heavily focused truck player over the years.

Construction today represents maybe 20% of our total revenues. We think, we can add profitably with the top-line by focusing on construction and Ag. We also talked a lot about, our product development in introduction processes. At the end of the day, we need to be marshalling and focusing our R&D resources in areas that give us the greatest opportunity for profitable growth.

And so we took a look at how we were developing product programs, how we were driving our resources in the direction of the most profitable programs and we really modified the new product development introduction process to ensure that we are getting the biggest bank for our buck with our new product initiatives. We also took a very hard look at design to value.

At the end of the day, if you are designing products, you’ve got to understand the customers’ voice and so being very clear in the early stages of product design about what the customer is telling is regarding where they see value and incorporating that into your design processes that was a major focus for us.

And finally, we did a comprehensive spans and layers analysis of the organization. As you would appreciate over time, a company becomes rather narrow in terms of its leadership scope. And so, in looking at spans and layers of leadership, we are able to identify opportunities to reduce headcount throughout the organization and that resulted in fairly significant cost reduction initially and it’s given us – I would say a filter to continue to look at the organization longer-term.

Unidentified Participant

(Inaudible)

Rich Lavin

We were very clear with the consulting group that, we want to identify value propositions for each of these initiatives. So whether it’s incremental revenue, whether it’s cost reduction product enhancements, we have value proposition associated with each of the projects that we are going to be tracking through to our income statement over time. So, yes, it’s not fourth quarter impact, it’s going to be impact over a period of time. But there is clarity in the organization regarding what we expect to get out of the investment on the value side.

Manish Somaiya – Citgroup

How should we – or maybe it’s too early, how should we be thinking about cost associated with all these optimization programs? And then secondly, as you think about growing in China and other growth markets, how should we handicap CapEx and other investments that might be required?

Rich Lavin

The consulting cost, this was in our release, we spent $2.8 million in the quarter with the consulting group to help us with the optimization initiatives. The value proposition that I mentioned is a multiple, of course of what we spent with the consultant. So, we think, we are going to see good return over time as we are focused on execution of these initiatives.

As far as organic growth is concerned, we haven’t played that out yet into capital investment, frankly with our manufacturing footprint as it exists today. We think we are good shape with rationalization in terms of manufacturing capacity. I really think that, in the early days, we are going to see results from our organic growth focus by simply redirecting some of the resources we currently have in the organization.

In China, Geoff Perich is now heading our China and Southeast Asia has rearranged some of the resources in his organization to focus more on the sales of go to market side much more on the customer development side. So, I don’t think we are looking at significant cost, Manish, in order to take advantage of what we see as really tremendous organic growth for the company.

Manish Somaiya – Citgroup

Low raw material prices, how much of a benefit have they been to CVG this year and I guess how should we think about that going into 2014?

Rich Lavin

Well, we’ve seen some benefits from lower material cost in 2013. One of the change we made to the organization was to put a global purchasing organization in place. A couple of years ago, we dismantled a global purchasing organization and sent that purchasing resources out into the plants.

And I think we’ve done a very good job of managing material requirements at the plant level, but frankly we left some of the – we’ve lost some of the leverage – inevitable to get through a global purchasing organization. So, Timo Haatanen is going to head Global Purchasing.

Timo has a deep background with purchasing with Packard. He joined CVG about a year and a half ago. So, he is setting up aftermarket and structures and also global purchasing and we think that by bringing that group back together, we are going to get additional volume leverage.

Manish Somaiya – Citgroup

And when you look at lot of your end-markets they are very cyclical. Obviously, you can diversify across geographic footprints. But, if you can just sort of comment on opportunities to perhaps provide more stability to a cycle, and then, more importantly, are there any opportunities on the aftermarket side that you could tap into?

Rich Lavin

Well, the aftermarket is a non-insignificant part of our total business as you know. But I do think there are great opportunities for us in the short-term term in the aftermarket and that’s really what Timo has been challenged to develop. We’ve got a good sales force that’s driving aftermarket sales today, but we are looking everybody beefing up their part of their business to develop more in that space.

As far as cyclicality is concerned, I mean, when you are serving principally truck construction and Ag, you are going to be subject to the cycles in those businesses. I mean that’s where our customers are at.

But we think that by broadening our product line and really doing more with those customers or in those segments outside of the U.S. that does create a bit of counter cyclicality in our business. Because even though construction and Ag in China is cyclical, it tends not necessarily you run on top of the same cycle in North America. So, as we expand our business in China, we think there will be a bit of a counter cyclical impact there.

Manish Somaiya – Citgroup

Anyone else from the audience?

Unidentified Participant

(Inaudible)

Rich Lavin

I’ve been here for five months. So I’ve – we’ve got a little bit of timeframe to come in on. But based on what I’ve seen and based on what I’ve discussed with my leadership team, overall, it’s been a fairly rational market for us. We haven’t seen irrational pricing behavior on the part of competitors. So it’s been a fairly rational response to the change.

Manish Somaiya – Citgroup

Rich, you talked about lot of new management that have joined in the past few months. How has that gone with the employees? How have you communicated the shift in leadership shift, perhaps in strategy and outlook for the business?

Rich Lavin

Yes, they’ve – as you gathered from the presentations, I mean, there has been a good way of change throughout the organization. But I think in managing that, you just need to overcommunicate and so, we shared with the organization changes in personnel as it occurred.

I personally shared with the organization changes in leadership and why they are occurring, what we are trying to drive with a more global focus in the organization. So I think the short answer Manish, is that you simply got to try to overcommunicate and then simply management by walking around, getting out and talking with people, making sure we are getting the facilities on a regular basis.

To ensure they understand what we are doing, why we are doing what we are doing and how we think the business is going to be impacted favorably by the changes that are being introduced.

Unidentified Participant

(Inaudible)

Rich Lavin

Yes, that’s a good question. We haven’t seen people leaving the sales force. There have been a few people frankly in the organization have seen the changes and decided that this is not just for them.

But as we are talking about organic growth, I’ve got to see the sales people are pretty excited. Because we are looking to them really to help us drive – profitably drive the top-line over the next several years. And so, they understand where our focus is going to be and they also understand where the support is going to come from. So I would say, overall, they are encouraged by the change.

Unidentified Participant

(Inaudible)

Rich Lavin

Yes, John, correct me if I’m wrong. I think, we’ve got one unionized facility in North America. So we got a single union facility and we got a good relationship with the union representing those employees. So, we’ve got opportunities to flex our workforce at the plant level. We’ve done that over the past couple of months. Overall, I think the operations people understand that we’ve got too much capacity and we got to find a way to rationalize our footprint and we are doing the best of course to make sure that we explain that clearly to them as we move forward.

Manish Somaiya – Citgroup

Rich, Tim, do you have any closing comments, any?

Tim Trenary

Yes, I mean, I’ve been here for four weeks. I’ve worked pretty closely with Rich over this four week period and there is – lot of my experience, Manish is in private equity. Okay, and as you can appreciate that sort of culture is by and larger performance-oriented culture.

And so that’s what I come from and that’s convenient, because that’s what my boss, sort of – that’s his orientation. So, what is going to be interesting here is, as we start down this path, the path that we described today, it will be fun to see how this – the organization and the culture, the mindset changes along with us to more of I think, I can already see in the mean, there is more of a thinking about performance and how can we achieve the next level.

So that I think is going to be sort of interesting to watch and especially when you think of it in a context of all of this change, it will be – and so I said, stay tuned more to come. We’ll see where this journey goes, but I think it would be fun.

Rich Lavin

Manish, the only thing I’d add, the addition of Tim, I think we really do have an exceptional leadership team and everybody is really on the same page regarding the direction that we are going short-term and what the opportunities are longer-term. So, we are confident. I think we are encouraged by some of the changes we are seeing in key markets and we look forward to showing our results with you in future meetings.

Manish Somaiya – Citgroup

We wish you the best of luck.

Tim Trenary

Thank you.

Rich Lavin

Thank you, yes.

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