PGT's CEO Discusses Q4 2011 Results - Earnings Call Transcript

| About: PGT, Inc. (PGTI)


Q4 2011 Earnings Call

February 24, 2012 10:30 am ET


Brad West - Corporate Controller

Rod Hershberger - President and CEO

Jeff Jackson - EVP and CFO


Rob Hansen - Deutsche Bank

Sam Darkatsh - Raymond James

Saquib Toor - Knighthead Capital


Good day, ladies and gentlemen, and welcome to the PGT Incorporated fourth quarter 2011 earnings conference call. (Operator Instructions) I would now like to introduce your host for the conference, Mr. Brad West.

Brad West

Thank you. Good morning and thank you for joining us for PGT's fourth quarter 2011 conference call. I am Brad West, Corporate Controller, and I am joined today by Rod Hershberger, President and CEO; and Jeff Jackson, Executive Vice President and CFO. Rod and Jeff will represent PGT in this morning's call.

Before we begin, let me remind everyone that today's conference call may contain statements concerning the company's future prospects, business strategies, and industry trends. Such statements are considered to be forward-looking statements under the Private Securities Litigation Reform Act of 1995. These statements are based on our current expectations and are subject to risk and uncertainty.

Actual results may vary materially from those contained in the forward-looking statements. Please refer to the February 23 press release, our most recent Form 10-K, and other documents filed with the SEC. We undertake no obligation to publicly update or revise any forward-looking statements.

A copy of our press release is posted on the Investor Relations section of our corporate website at Included in the press releases are the unaudited consolidated balance sheets and statements of operations prepared in accordance with GAAP and adjusted information, which was quantitatively reconciled to GAAP. Our company uses non-GAAP measurements as key metrics to evaluate performance internally.

A detailed explanation of these non-GAAP measurements can be found in our Form 8-K filed February 23, 2012 with the SEC. These non-GAAP measurements are not intended to replace the presentation of financial results in accordance with GAAP. Rather, we believe these non-GAAP measurements provide additional information for investors to facilitate the comparison of past and present performance.

For today's call, Rod will provide an overview of our performance for the fourth quarter. Then Jeff will discuss our results in more detail. After their prepared remarks, they will take the questions.

With that, let me turn the call over to Rod Hershberger.

Rod Hershberger

Thanks Brad. Good morning everyone. 2011 will be remembered as the year of transition. We started and completed the consolidation of our North Carolina facility into our Florida operations. This required moving a 347,000 square foot facility, generating $42 million of sales into our existing Florida facility.

In addition, we hired and trained over 500 new employees. We accomplished all this during a year, where we refocused our sale strategy back to our core market at Florida and shored up our international sales force, while working in an industry that from a residential point of view may have been the most difficult since the recession began.

Annually, single-family home starts were the lowest in recent history. As a reminder, these do not include multi-family, town homes, condo's et cetera. Through this recession, new construction in our core market fell 90%. An analogy would be slowing from 50 miles per hour to 5 miles per hour. Even if it were to double 10 miles per hour, it still feels really slow.

The uncertainly in the economy, lack of home equity and high-end employment affected Q3 and Q4 sales. However, December's numbers showed a rebound in their slight optimism heading into 2012. The window industry expects a relatively flat year in 2012 with certain MSA seeing slight to moderate improvement, while others struggle with foreclosures and short sales.

Continued industry consolidation, either in plant closings or companies merging will take supply out of the market, and companies that manage cash well and have positive EBITDA like PGT are poised to benefit from the gradually improving economy.

Sales in the fourth quarter decreased $3.3 million or 8.5% from a year ago due mainly to decreased sales in out of state markets, where sales decreased $2.2 million or 37.9%. This decrease is due mainly to our previously announced reduction of out of state efforts. Additionally, Architectural Systems products decreased $900,000 or 60%.

In addition to the decreased sales in our out of state market, Florida sales, which represent 85% of total sales compare to 81% a year ago, decreased $1.3 million or 4.1%. However, $900,000 of the decrease was in the Architectural Systems product. Our international sales increased $200,000 or 13.3%, mainly driven by our impact products.

By product line, our impact products decreased $700,000 or 2.7% to $25.6 million, included in our impact line as Architectural Systems, which decreased $900,000 and Vinyl WinGuard whose sales decreased $800,000. Offsetting these decreases on our impact line are Aluminum WinGuard products, which increased $300,000 and our PremierVue products, which increased to $800,000 when compared to prior year.

We launched two consecutive Crystal Award winning sliding glass doors in the past two years. The most current launch was the Vinyl sliding glass door, launched in the beginning of 2011, which contributed $1 million in additional revenue in the fourth quarter.

Our non-impact products decreased $2.6 million or 20.4% to $10.1 million. This decrease is driven entirely by a decrease in our Vinyl non-impact products, which decreased $2 million in our out of state markets.

Our decline in overall sales compared to last year occurred in R&R, down 6.4%; and new construction, down 13.4%. As a percentage of total sales for the fourth quarter of 2011, R&R sales accounted for 75% and new construction sales accounted for 25% of sale.

Comparing our fourth quarter to the prior year fourth quarter, our adjusted net loss was $3.6 million compared to a net loss of $4.6 million in 2010. Our gross margin was 25.1% versus an adjusted gross margin of 25.7% in 2010. The adjusted gross margin decreased mainly due to temporarily higher than anticipated material usage mainly in our glass operations.

We also experienced an increase in the cost of materials including an increase in our average cost of aluminum and glass, which both increased 5% over the prior year. The cost increases have been somewhat offset by a price increase announced in the first quarter of 2011.

Also offsetting some of these cost increases is the benefit of lower spending in the overhead area as a result of the consolidation. SG&A cost adjusted for the 2011 consolidation charges decreased $1.8 million, partly driven by cost savings also from the consolidation. In total, the consolidation savings for fourth quarter were $1.5 million and these savings will continue.

Adjusted EBITDA was 631,000 in the fourth quarter of 2011, which was up from $228,000 in the prior year. The increase in adjusted EBITDA with lower sales was driven by the savings generated from consolidation.

Total housing starts were up 22% for the quarter. Multi-family starts were up 95%, single-family starts increased 8% compared to a year ago. Although starts have increased, they remain below 10,300 for the quarter. And we believe this increase is in the entry level housing market, a market PGT does not actively participate in.

With that, I will turn the call over to Jeff, who will review the results for the quarter in greater detail.

Jeff Jackson

Thanks Rod. Let me give you more detail regarding our fourth quarter. We reported net sales of $35.7 million, a decrease of 8.5% from prior year's fourth quarter.

Sales into the R&R market represented 75% of our total sales and were down 7%, mainly from the WinGuard product line. In total, our WinGuard products, both Aluminum and Vinyl continue to lead our sales, representing approximately 65% of sales in the fourth quarter of 2011 compared to 61% of sales in the fourth quarter of 2010.

Total impact product sales, which include WinGuard, PremierVue and Architectural Systems product lines represented 72% of our sales in the fourth quarter of 2011 as compared to approximately 67% in the fourth quarter of 2010.

Florida sales were 85% of total sales in the fourth quarter compared to 81% of sales in the fourth quarter of 2010. Florida sales decreased $1.3 million in the quarter, driven by decrease in Architectural System sales of $900,000; a $700,000 decrease in Vinyl non-impact sales; and $300,000 decrease in WinGuard sales offset somewhat by $700,000 increase in PremierVue sales.

Breaking down our sales by product line for the fourth quarter compared to 2010's fourth quarter, we have PremierVue sales of $1.7 million versus $1 million, up 70%. Eze-Breeze sales were $2.6 million versus $2.5 million, up 4%. WinGuard sales were $23.3 million versus $23.5 million, essentially flat. Aluminum non-impact product sales were $4.4 million versus $4.6 million, down 2%. Vinyl non-impact and other product sales were $2.7 million versus $5.5 million, down 51%. Architectural Systems sales were $600,000 versus $1.5 million, down 60%.

Our adjusted gross margin for the fourth quarter was 25.1% versus 25.7% in the prior year. Our decreasing gross margin percentage of 16 basis points was driven by temporary high-than-expected material usage mainly in our glass operations, reducing margins by 150 basis points. An increase in the cost of material including aluminum reduced margin by 170 basis points. Lower absorption consistent with lower sales reduced margin by 160 basis points.

This was offset somewhat by the impact of our price increase announced in the first quarter which increased margins by 230 basis points and a reduction in overhead spending due mainly to consolidation efforts which increased margins by 190 basis points.

In regard to our glass operation, I'm pleased to report that our December results show glass usage back to normal levels. This trend has continued into our preliminary January and February operating results.

Our average cost of aluminum was approximately $2,262 per metric ton during the fourth quarter, comprised of spot purchases averaging $2,134 per metric ton for approximately 42% of our needs and hedge purchases averaging $2,354 per metric ton for 58% of our needs. This compares to fourth quarter 2010's average cost of $2,158 per metric ton. As of today, we've hedged approximately 57% of our estimated needs through 2012 at an average of $2,078 per metric ton.

Our adjusted selling, general and administrative expenses were $11.6 million, down $1.8 million compared to the fourth quarter of 2010. Driving this decrease was consolidation savings of $700,000, lower bad debt expense of $300,000, lower bonus and stock compensation related accruals of $1.5 million offset by an increase in advertising expense of $400,000 and an increase of $300,000 in warranty-related costs. Adjusted for consolidation charges and non-cash stock compensation expense, SG&A as a percent of sales decreased 31.6% of sales compared to 32.8% of sales in 2010.

During the fourth quarter, we performed our annual assessment of our trade names and determined that based on a decline in the estimated fair value of those trade names, a non-cash impairment charge of $6 million was required.

Interest expense was $900,000 compared to $1.2 million in the fourth quarter of 2010. Interest expense was lower about $300,000 due mainly to lower debt levels outstanding during the quarter and the effect of our lower interest rates.

Other income includes $900,000 for the gain on the sale of two non-essential assets using our former North Carolina operations. During the fourth quarter of 2011, we recorded a deferred tax benefit of $2.3 million related to the impairment charge on our trade names. Outside of the benefit, we have an effective tax rate of 0% due to the full valuation allowance that we apply to our deferred tax assets. As we become more profitable, we'll be in a good position to utilize these deferred tax assets by offsetting future income.

We had net loss in the fourth quarter of $6.3 million versus net loss of $12.2 million in the fourth quarter of our prior year. The net loss in the fourth quarter of 2011 includes $6 million in non-cash impairment charges as well as $2.3 million tax benefit related to that charge. The net loss in the fourth quarter of 2010 includes $2.1 million in consolidation charges and $5.6 million in non-cash impairment charges. Adjusting for these charges, our net loss was $3.6 million in the fourth quarter of 2011 or $0.07 per diluted share.

Adjusted EBITDA was $631,000 for the fourth quarter versus adjusted EBITDA of $228,000 for the fourth quarter of 2010. The 2011 EBITDA was adjusted for the $6 million non-cash impairment charge and $900,000 for income on the sale of the North Carolina assets. The 2010 EBITDA was adjusted for consolidation charges of $2.1 million and $5.6 million in non-cash asset impairment charges.

The increase in EBITDA of approximately $400,000 is due mainly to the impact of our consolidation and savings in spinning categories previously mentioned, offset by a decrease in our sales volume and investments in marketing.

As additional information, our fourth quarter depreciation and amortization totaled $3.3 million. A reconciliation of the net income and EBIDTA is included in our earnings release for your reference.

Turning to our balance sheet, at quarter end, DSOs decreased to 39.2 days. In reviewing free cash flow for the quarter, we had adjusted bank EBIDTA of $1 million; capital additions of $800,000; cash paid for interest of $700,000; proceeds from the sale of assets of $1 million; and we received $2.6 million in working capital.

These items help drive our cash on hand to $10.9 million at the end of the fourth quarter compared to our subsequent quarter cash balance of $7.9 million. Our net debt and corresponding leverage ratio at the end of the fourth quarter of 2011 was approximately $34.6 million and 3.1 times.

The housing industry continues to suffer from the negative economic factors. Both new construction and remodeling remained weak. And we believe will do so through the first half of 2012. While we have seen indicators suggesting the industry is ready for steady improvement, our continued sluggish economy and high unemployment in our core market of Florida constantly remind us that the timetable for true sustainable growth remains uncertain at best.

However, we have many opportunities available to us, such as seeking additional market share in the southern Florida markets, where we are successfully leading the market shift towards energy mining products, and investing in advertising to promote our brands, continuing post consolidation improvements in our transportation area, our glass material usage and labor efficiencies, and lastly capitalizing on our value proposition that has defined us for over 30 years.

Our value proposition to our customers is that we will deliver exceptional customer service before, during and after the sale, give piece of mind to our customers and consumers to innovation and remained steadfast in our commitments to be the best.

With that, let me turn the call over to Rod. Rodney?

Rod Hershberger

Thanks Jeffrey. The Florida market continues to present challenges. However, PGT is poised to meet those challenges. With the completion of the consolidation in Florida, we have now refocused on our core market.

We are confident that the high standards maintained by our people and our excellent products will be the catalyst for PGT to remain the industry leader in impact-resistant windows and doors. Once again, I'd like to recognize our employees for their amazing effort in successfully combining our facilities and proving our cost savings.

With that, I'll conclude. And Jeff and I will be happy to answer your questions.

Question-and-Answer Session


(Operator Instructions) Our first question comes from Rob Hansen with Deutsche Bank.

Rob Hansen - Deutsche Bank

I just had a question. You guys mentioned that the entry level segment has been driving permits and starts a little bit higher in Florida lately. And if this trend were to continue, would you ever consider offering a product in for that type of buyer? And I realize this is probably a little bit lower margin business. But it's seems like you have your G&A cost at a good place where you could drive some significant leverage for that. So I just wanted to get your thoughts about that?

Rod Hershberger

Rob, this is kind of a forward-looking statement. But it's a topic of discussion that we've had a number of times. And if you remember back four, five years ago, I'm not sure the exact timeframe. We had a series of product that was really targeted towards that entry-level home.

And that was when things were really like really going fast. And it didn't serve our market well, because of the service and the additional benefits that we brought, the service before, during and after the sale, a lot of engineering support and field support. We still have that product line.

So it's something that we've talked about. If we take a little bit of floor space and we look at our existing product line, and we talk a lot to the builders that are building those types of homes. They know us pretty well here in Florida. We're a name that's recognized very well.

So it's a market that we will watch very closely. See if that's what the typical market will be as things start recovering. And if it looks like it's going to be the typical market, it's a market that we'll probably try to play in. I don't know that we'll play in it real well, but we'll try to play in that market.

Jeff Jackson

One of the areas, Rob, just as I pointed to is our Southeast market, mainly (mining-dead) area, we continue to get low-cost cheap windows into that market and pressure it on price. So we internally are doing is aggressively attacking that market. And that could come through an innovation through product. It could come through a multiple of ways. But that is a market we intend on maintaining a dominant presence in and combating whole heartedly.

Rob Hansen - Deutsche Bank

And just, you mentioned that December was pretty good. I just want to see if you had any thoughts in terms of why December was just a lot better than October, November?

Rod Hershberger

I think in talking to the industry, I think all of it's almost speculation. But in talking to the industry and the other companies that are serving the same industry, we all saw a really painful fall, where things really dropped-off. And we all as we're talking, it's like what happened in December. We don't know if it was holiday buying and people felt a little bit more at ease, the things on picked up a little bit. Don't know that any of us can really put our finger on it and say why December was somewhat better than October, November.

Optimism is a little stronger there. We've seeing more stuff than we did, not all of that stuff is turning into jobs. But there seems to be a more positive attitude and here in Florida there is some national builders that have done a pretty good job of making sure they have kept our land cost down low or they're sitting on land that's a little bit lower.

And they sold a couple of spec homes and they're talking about building a few more. So we're seeing those pockets of activity. And as we start getting positive news in the media, and people could start getting money out again. Things will start picking up. It's kind of hard to put your finger on exactly what drove December and what that means for 2012. But it was a nice recovery from a pretty difficult year.

Rob Hansen - Deutsche Bank

Just one last quick question, what was WinGuard gross margin for the last two quarters?

Jeff Jackson

Two quarters?

Rob Hansen - Deutsche Bank


Jeff Jackson

Gross margins were in the fourth quarter for WinGuard was 37% and in the third quarter it was 39%.


Our next question comes from Sam Darkatsh with Raymond James.

Sam Darkatsh - Raymond James

Just ongoing half way through the calls, I apologies if this was covered and if it was, please answer me real briefly. Right now, what's your utilization rate? How many ships you're running in Florida and then once you start getting the peak, your expected peak, seasonally this summer where you expect to be from a shift standpoint?

Rod Hershberger

On the shift standpoint from the glass side, we have booked the glass production in IG side of our business. We're running two full shifts in those areas with this I'd say it a partial third. On the production side, we're running one full shift, in some lines house a second shift doing the Vinyl lines. The Vinyl lines have two shifts going.

Peak we'd like to see that second shift pretty much full. We don't see a need right at this point for a third shift. Because of some of the internal moves we're making in terms of equipment and we designing some lines and adding some capacity. But we'd love to see it, peak here in second quarter of instance, when our sales typically increase we expect to be running two full shifts in the production side.

And the other thing that's happened to, if you look at running a shift or shift in a half right now, we could kind of double it. So that wouldn't be too difficult. But we really embrace us training with our employees especially in the manufacturing floor and the ability to move employees around so that we can flux them into the areas that are little bit busier and maintain our labor hours and our labor cost. We've been very successful at doing that. We think we'll be much better at it as we go through this year.

Sam Darkatsh - Raymond James

Second question, I know you have hedges in place I think you went it through some of those numbers Jeff earlier, but Aluminum generally speaking at them pretty flat, at least of late. I know the industry had some price increases last year when aluminum was moving considerably higher. But now that it's flattened out. Are you seeing price degradation or folks that are saw suffering some financial dire straights really been aggressive one price, now that they don't have to offset that or just describe the pricing environment if you could?

Rod Hershberger

I think it's almost two different subjects that you're talking about. The Aluminum side, pricing has been relatively stable. It dropped a little bit towards the end of the year and we got some hedges in place, it's bounced up a little bit. And it's kind of held at that upper level. So if you grow out pretty far you can't do a lot. We've talked to a number of financial experts that know a lot more about the world economy than we do. And I've heard number, and say that if China was to have a really slow year this year, would only be about 8% growth.

So you look at the number of cars being sold, the amount of infrastructure going in. there is still a pretty good global demand for aluminum. So we don't think that price is going to drop periodically. But maybe it won't go up as much as some people have predicted. So we're actually at a pretty good spot as we're underway where the market is right now.

As far as pricing pressure, there is definitely pricing pressure and pricing pressure in markets that are doing pretty well from an Aluminum point of view. The Vinyl side of the market is a little bit more stable. I think everyone out there right now it's getting a little bit desperate, it flaunt some really good prices out to try to hang on for a little while. And we see a number of window companies just recently, found bankruptcy and going to reorganization of these sold.

So when we look at that South Florida, Jeff talked a little bit about the South Florida market. The Southeast Florida market, there is a lot of small manufacturers that manufacture maybe one product to two products. They don't have a complete product line. They have very little lower head and self based on price. And so there is some pricing pressure in that market.

Sam Darkatsh - Raymond James

Last question then, the architectural systems being off. I obviously can recognize the fact that the multi family activity is coming at the low end here in the state, ultimately are there cost associated with that line just making those products aren't necessarily meaning it's a factory source. You only get the absorption rates. How important is it for you to be ultimately in that Architectural Systems business, if this is the new normal and you're not looking at a whole a lot of growth conceivably from here on now in that end-market?

Rod Hershberger

That line right now doesn't take hardly any space up in our factory. I mean, the space that we use to manufacture that product can be utilized to manufacture some of the other products that we make also. So we utilize that equipment pretty well. But it's exactly what we look at it.

The Architectural line doesn't really serve the multi-family market. And multi-family market serves more by our stronger WinGuard products. And it serves even a higher market than just that multi-family. Unless you start getting into that 15 story, 20 story type buildings, then it serves the market very well.

So there is a little bit more activity in that as we go through this year. So we'll watch it and we'll see what it does. And we'll look at floor spaces and it kind of ties back into the first question that you ask about utilization of the facility.

Once we hit two full shifts, we'll have to take a close look at that line and see what's driving those two full shifts. And see if that's the product line that does it or if we could better utilize that floor space. But we're a year or more away from that.

Jeff Jackson

Yes, and I'd just add to that, Sam. I think to really be competitive in that market, successful in that market, we probably have to expand our product line somewhat. We can go into that market with PremierVue. You know Vinyl is not big in that arena. We think it has a future, given the thermal and the pressures we can get now from that line. And we're probably going there.

We're currently actively looking for more what's called an architect kind of rep. Someone that will go out and call on architects and try to get PGT specced on jobs as opposed to coming in and just bidding for another company that has been specced. It's a different model going out in the industry.


(Operator Instructions) Our next question comes from Saquib Toor with Knighthead Capital.

Saquib Toor - Knighthead Capital

I had a few questions. I guess the first one was, the commentary you gave on the trends in December, has that continued into January and February?

Rod Hershberger

What we've seen in January and February is pretty active bidding activity on the parts of our customers. And what we're seeing as we talk to most of them is, in the past where they've had one or two bids, now people are walking in and saying, I am getting this bid, but I am going to get five more bids. I am going to get six more bids. And so the bidding activity has picked up significantly quite a bit. The closing hasn't really picked up highly. So kind of torn with what that means for the market.

I think long-term that's a good thing, because people are actively out there. Bidding means they're interested in buying product. They are interested in doing projects. Projects are getting funded again. The new normal is a little different than it was back in the day, a lot more bidding activity, and a lot more people bidding it. So you've got to sharpen the pencil a little bit.

When we look at our market down here, we have such a dominant share. We look at and say give us a chance as long as we can bid the project. We think we got a pretty good shot of getting it when it finally gets done.

So I wish I could tell you that December and January bidding activity is turning into quick sales. I think what it means is that six months and 12 months as these projects come out of the ground, maybe we see that happening. But I think when you look back at the end of last year, that's a little bit of what happened in October and November. That was a result of the middle of the summer not being too strong and December being stronger. It could have been bidding activity that happened before that.

Tracking that, we used to have a really good tracking what you bid at. It gets led out. And three months later, you're actually producing product for that project. Now, the lag between bidding and the project doesn't seem to have a timeline that you can associate with it. Sometimes it's three months. Sometimes it's a year.

Saquib Toor - Knighthead Capital

When you see competitors in the South Florida market, are you seeing competitors with similar type of products like its Hurricane-resistant type products, or is it more like traditional double-pane or single-pane windows that they're just trying to sell into your market?

Rod Hershberger

If we talk about the Southeast Florida market, almost everything that gets sold in that market, they have had an impact for a long-time. In our opinion, they're moving a little bit away from shutters, because it's active. You got to put them up and take them down.

So the competitors we're taking about are the small manufacturers that they might manufacture a single-hung window and a fix light, but they don't have any doors; or they might manufacture a door and they don't have any windows. But you have a piece of equipment you can manufacture something and I think I go through the entire approval process. But with it being in place now for almost 17 years, it's giving people a chance to ramp up their manufacturing.

So there are a little bit more of a competitive market in that area. And again to go back to the pricing where customers before would not bid, would not use two or three or four different manufacturers to do a project, some of them now are well.

Saquib Toor - Knighthead Capital

And in terms of manufacturing, just thinking about like fixed cost absorption, are there are other products you could potentially either get into or expand into that would allow you to better absorbing of fixed cost in those sold in Florida?

Jeff Jackson

I think right now that's probably not what we're looking at as much as we moved to North Carolina facility. We consolidated into one. That we eliminated $

370,000 worth of overhead cost there brought that $42 million in sales here. We've got 75 to 80 different product lines, with little tweaks and stuff that we manufacture out of this, so from a window and door point of view, we pretty much have complete product lines across the board for the areas we serve.

Jeff mentioned the architectural systems, might get short on that one. So we could add on there, but I think it's really having the complete product lines, utilizing our fore space pretty well here, I mean it's pretty full. And then it's just a matter of driving some more sales.

Saquib Toor - Knighthead Capital

The last question, just thinking about EBITDA, in the last year, the company has done around $12 to $13 million, and with the closure of the North Carolina probably we should see, I think in your last call you talked about $6 to $7 million annualized benefit. It that the right way to make it things or kind of flat from 2011, 2012. Is it the right way for me to think about EBITDA going forward, as basically EBITDA this year plus the $6 million to $7 million of savings or are there other things that are moving around that could impact?

Rod Hershberger

We saw a little bit of the effect from the consolidation at the end of last year. So the $12 million or $13 million, while there were some consolidation cost involved there. There were some costs savings. So about $3 million of that $6 million to $7 million was in last years numbers and so we'll see the additional savings this year. With everything being stabilized we'll perform at little bit better level than we did last year also, so the number that you'll have figure out.

Jeff Jackson

I guess my commentary would be that performance we saw for the past three months, December was a good performer as January. From operation standpoint it was good. And so for the February we're performing two or better than consolidation plan.

Saquib Toor - Knighthead Capital

And I guess from a pricing perspective if that shouldn't be a big drag going 2012?

Jeff Jackson

I don't think so. I think it will be very competitive in the market and we'll ran some initiatives, and we'll ran some programs out there but we'll talk about those in all of our calls and let you know exactly what it does. We'll play around that market but I don't think it should be a big drag.


I'm not showing any further questions at this time, I'd like to turn the call back over to Jeff for closing comments.

Jeff Jackson

Thank you for joining us for today's call. We will look forward to speaking with you again next quarter. If you have any more questions, please feel free to call me and have a good day. Thank you.


Ladies and gentlemen, that concludes today's presentation. You may now disconnect and have a wonderful day.

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