American Electric Technologies' (AETI) CEO Charles Dauber on Q4 2015 Results - Earnings Call Transcript

| About: American Electric (AETI)

American Electric Technologies Inc (NASDAQ:AETI)

Q4 2015 Earnings Conference Call

March 30, 2016, 10:00 AM ET

Executives

Charles Dauber - President and Chief Executive Officer

William Brod - Senior Vice President and Chief Financial Officer

Analysts

William Dezellem - Tieton Capital Management

Greg Eisen - Singular Research, LLC

George Berman - IFS Securities, Raymond James & Associates, Inc.

Operator

Good day and welcome to the American Electric Technologies’ Q4 and Fiscal Year 2015 Earnings Conference Call. Today's conference is being recorded.

The information provided today contains forward-looking statements, as defined in Section 27A of the Securities Exchange Act of 1934, concerning anticipated future, domestic and international demand for our products, expected improvement and profitability and other future plans and objectives.

While the Company believes that such forward-looking statements are based on reasonable assumptions, there can be no assurance that such future revenues, profits, plans and objectives will be achieved on the schedule or in the amounts indicated. Investors are cautioned that these forward-looking statements are not guarantees of future performance.

Actual events or results may differ from the Company’s expectations, and are subject to various risks and uncertainties, including those listed in Item 1A of the Form 10-K filed with the Securities and Exchange Commission on March 30, 2016. The Company assumes no obligation to publicly update or revise its forward-looking statements, even if experience or future events make it clear that any of the projected results expressed or implied herein will not be realized.

At this time, I would like to turn the conference over to Mr. Charles Dauber, President and CEO. Please go ahead, sir.

Charles Dauber

Thank you, [Priscilla]. Good morning, everyone. I'd like to welcome you all to the American Electric Technologies' fourth quarter and fiscal year 2015 earnings call. Joining me today is our Senior Vice President and Chief Financial Officer, Bill Brod.

For our call today, I'm going to start with a review of our fourth quarter financial results and Bill will walk you through some additional financial details and then later in the call I'll come back and share my thoughts with you on our markets and where we are so far in 2016. We’ll then move to a question-and-answer session coordinated by the moderator.

As you all saw from our announcement this morning, the Company reported consolidated revenues for Q4 of $7.7 million, down from $13.7 million in the third quarter and down from $13.7 million in the fourth quarter of last year. For the full-year, the Company reported revenues of $49.1 million, down 14% from the $57.3 million in 2014.

If you remember from last quarter’s earnings call, we announced a significantly reduced backlog level heading into Q4 of only $8.8 million. That reduced backlog was down from the $16.5 million backlog at the end of Q2 due to the cancellation of the $4 million oilfield related project with a major oil company and general reduced demand from our oil and gas markets.

The reduced backlog heading into Q4 was the prime driver of our reduced revenue level in Q4, which then rippled through the rest of our financials. Due to the reduced revenue levels, although the Company performed well on the projects in-house and reduced its fixed indirect costs from the quarter, the Company's gross margin decreased from 19% in Q3 to negative 4% in Q4. This effectively reduced operating profits by $1.8 million in the quarter.

In addition, the Company also recorded a number of non-cash expenses which negatively impacted income in Q4 of approximately $1.5 million. When you add those two together that resulted in a loss in Q4 of $3.7 million. This Q4 loss unfortunately raised our Q1, Q2, and Q3 profitability resulting in $2.9 million net loss for 2015 and an EBITDA loss for the year of $1.1 million. That EBITDA loss was actually a slight improvement over 2014’s EBITDA loss, but regardless was obviously a very disappointing end to 2015.

On the positive side, we were encouraged by the increase in bookings in Q4 that resulted in a large increase in backlog exiting the quarter. We ended the year with our highest quarter-end backlog since Q4 2014 with the total backlog of $19 million. The primary driver of this backlog increase came from several orders in the power generation and distribution market sector, which represented $10.7 million or 56% of total backlog, but we also booked business throughout the oil and gas sector.

I’ll come back and I’ll discuss the power generation sector and our other sectors in a few minutes. But for now, I will turn the call over to Bill Brod for more financial details.

William Brod

Thanks Charles. As Charles mentioned, the Company recorded several non-cash items in the quarter including a $460,000 inventory write-down and a $509,000 adjustment related to the company’s accounting for deferred taxes on its joint-venture operations in Asia. AETI reported that fully diluted earnings per share for Q4 was a loss of $0.45 per common share compared to a $0.01 per share profit in Q3 of this year and a loss of $0.26 per share in Q4 of 2014.

Earnings per share for the year was a loss of $0.36 compared with a loss of $0.62 per share in 2014. Our EBITDA, a non-GAAP measure for the quarter was negative $2.8 million which was down from positive $400,000 in the third quarter and down from the negative $2 million in the fourth quarter of last year. EBITDA for the year was negative $1.1 million, a slight improvement to the negative $1.5 million EBITDA reported in 2014.

Moving to the balance sheet. We ended the year with a strong cash position of $8 million in relation to the $5.5 million of total debt. The Company continued to effectively manage its cash for the year. Working capital as of year-end was $10.9 million, which was comparable in comparison to the $11.3 million reported at the end of 2014.

As a result of lower revenue levels and the timing of certain payment milestones from our customers, our working capital needs decreased year-over-year. As a result of the reduced working capital requirements and strong collection activity, the net cash generated from operating activities during the year was approximately $2.4 million.

On December 29, we announced that we had entered into a new loan agreement with Frost Bank. The loan agreement provides two separate revolving credit facilities to the Company. The first provides a $4 million revolving line of credit with a two-year term and subject to a maximum loan amount or borrowing base formula.

The Company borrowed $1 million upon initiation of the loan agreement, and at year-end we had $2.5 million of additional borrowing capacity. The second credit facility provided the Company with a $4.5 million declining revolving line of credit, which was fully advanced at closing to pay off the remaining balance on the credit facility from JPMorgan Chase. We believe our year-end working capital position of $11 million coupled with its new line of credit gave us sufficient liquidity going into 2016.

With that, I will turn it back over to Charles for some additional commentary and outlook on the business.

Charles Dauber

Thanks Bill. I’d like to now share with you all more about what’s happening in our market so far in 2016. I’m going to shift gears for this call and I will start with the power generation and distribution sector since that’s the largest component of our backlog. As you heard me discuss for several calls, we believe the power generation and distribution sector holds strong promise for the Company in 2016 and beyond.

There is significant market drivers underpinning this potential including the need for further power generation capacity in the United States and desire to move away from coal for base load power generation for environmental purposes. The need for the U.S. to upgrade its ageing power distribution infrastructure and more, all of the systems and infrastructure we built over the last two years and the alignment of the sales team has all been about not only the midstream and downstream oil and gas markets, but for the power generation market as well.

As we’ve experienced, this sector can be quite lumpy for us in terms of bookings, which we demonstrated by our results in Q4 where we reported sector revenues of $315,000, but bookings that resulted in an additional $10.7 million in backlog. Those power generation orders booked were for baseload PowerPoint [ph] project where our scope includes the supply of the full power distribution systems for the plant including switchgear deployed in power distribution centers.

We also received order for several natural gas turbine power generation projects with a major turbine OEM customer of ours. All of those power gen projects are expected to ship in the second half of this year. We really see an increase in opportunities for natural gas-based power generation projects and although we expect continued lumpiness relative to bookings and revenue, we are quite positive on growth in this sector in 2016 and 2017.

I’ll now move to oil and gas market sector, where we operate as a reminder in the Upstream, Midstream, and Downstream segments. The majority of the backlog reduction I mentioned earlier that the Company face heading into Q4 came from the oil and gas sector. That backlog declined revenue in the oil and gas sector in Q4 to $6.3 million which was down 45% versus Q3 and down 29% versus Q4 last year.

However, the Company actually did book business in the oil and gas sector in Q4, which increased our oil and gas related backlog for the quarter by 35% to $6.9 million up from the $5.1 million at the end of Q3. So far in 2016, the market for upstream oil and gas remains very subdued. We know and actually is to recover for the upstream which is the land and offshore drilling market sector until next year at best.

The midstream part of the market which is the pipelines and the fractionation plants that we’ve sold to recently is also softening. We still see opportunities for natural gas infrastructure and pipeline projects and we will continue to chase those opportunities. We are also pursuing opportunities in the natural gas and oil storage and terminal market which we think are promising this year as well.

On the downstream side of the oil and gas market, the refining and chemical markets continue to look strong into 2016, utilizing either low-cost oil or low-cost natural gas. We see good opportunities for the downstream oil and gas market and are relying on our sales teams selling our new IntelliSafe Medium Voltage Arc-resistant switchgear introduced last year to lead the life.

Moving to our international operations which are primarily oil and gas related M&I Electric Brazil is focused on providing electrical services to the Brazilian electrical power distribution markets, which still need services even with the drop on oil prices. This focus means that although the Brazil macroeconomic environment is challenging we remain positive on our outlook for continued growth for M&I Brazil in 2016.

M&I Electric Brazil saw revenues of $637,000 in the quarter which was down 19% from Q3 partially due to exchange rate fluctuations and delays in a couple of service projects. For the full first year of operations M&I Electric Brazil was profitable and revenues of $3.2 million for the Company. We remain positive about Brazil long-term as the team continues to increase the penetration in Brazilian non-drilling markets and continues to progress with projects directly with Petrobras and the land-based downstream operations.

Turning to our international joint ventures, the equity income from our joint ventures net of the related expenses was about 32,000 in the quarter. The BOMAY joint venture in China actually had a good quarter with revenues of $11.6 million, which was down from Q3, but up significantly from the $5.9 million in Q4 of last year. We recognized our 40% share of BOMAY’s profits as net equity income, which was $216,000 for the quarter.

For the year, BOMAY made $2.4 million on total revenues of $47.3 million and we recognized $973,000 of equity income throughout the year. As you all are aware the Chinese economy remains down, but we expect to see BOMAY remain at approximately this level in 2016.

Our joint venture MIEFE in Singapore lost money in Q4 on revenues of about $1 million, and our share of the loss netted out at a $100,000. Since the end of the year, we’ve made the decision to shutdown the manufacturing operation in Singapore and we’ll share more details about any potential financial impact on the Company in our next earnings call. I would point out that our carrying value at MIEFE in our balance sheet at this point is only $5,000. So the only real potential financial impact would come from severance costs et cetera.

Moving into our non-energy related marine and industrial sector, Q4 revenues were $1.1 million, down from the $1.6 million in Q3 and down from $1.5 million in Q4 of last year [will be the] large chemical plant project that was not oil and gas based. Backlog for this sector was up $400,000 to the $1.4 million and just like the refining and petrochem markets, we think that we are going to see opportunities in the non-oil and gas chemical market throughout the year especially as we penetrate the large EPC customers who focus on these large chemical projects.

Adding the backlog together, total backlog for the Company was $19 million, up over 100% from $8.8 million exiting Q3. Although backlog is way up heading into 2016, we recognize that the significant portion of that backlog that we realized in the second half of the year. Based on this, the Company has implemented several strategic initiatives to manage through this market environment.

We’ve already focused on improving our operations to make sure we continue to adhere to tight margins and projects schedules, so we can maintain our high level of customer satisfaction. We believe we’ve adjusted our pricing to aggressively maintain appropriate business levels and say we are well positioned to win orders in this tough market.

In addition to the focus on operational improvement and strategic sales and marketing initiatives, we are also focused on aggressively managing costs and cash. We’ve taken actions including spending cuts and several reductions in force and we’ll continue to evaluate our cost structure and make further adjustments as required. We’ve improved our working capital position through active management of our balance sheet and the new Frost Bank relationship to maximize our financial position and feel confident about our cash position moving forward.

To summarize my thoughts, the Company successfully built backlog in non-oil and gas related sectors including power gen and downstream and chemical markets, which are expected to maintain their strength this year. We continue to differentiate in the market with our ability to be the turnkey supplier for power delivery projects for our customers where we offer custom design, solutions, turnkey, power distribution and automation systems and E&I services for our customers.

We believe the IntelliSafe Arc-resistant switchgear gives us a critical element for the competitive advantage that combined with our solutions enabled us to build market share in this challenging market. We recognized that 2016 will be a challenging market for us and we will have our ups and downs with our team, the cost management we've implemented and our new relationship with Frost, we feel well-positioned to execute our strategy and we positioned the Company well the market success going forward.

Before we proceed with the Q&A session, I’d like to conclude the prepared portion of my comments by thanking our employees for their hard work and thanking our customers and shareholders for their support.

This concludes the prepared portion of my comments and I’ll turn the call over now to Priscilla for the Q&A section of the call. Priscilla?

Question-and-Answer Session

Operator

Thank you. [Operator Instructions] We’ll take our first question from Bill Dezellem from Tieton Capital. Your line is open.

William Dezellem

Thank you and good morning. Do we understand correctly that if we look at the backlog, at the end of the second quarter you are at $16.5 million, at the end of the third quarter you are $8.8 million, at the end of the fourth quarter you are $19 million?

Charles Dauber

Right.

William Dezellem

And the backlog today is what?

William Brod

The backlog at the end of Q4 was $19 million.

William Dezellem

No, I understand, but since we're basically a day off at the end of Q1 roughly where we are at today?

William Brod

So, we don’t do forward guidance, so we’ll be reporting that backlog at the end of Q1, which will be in the Q1 earnings call which should be sometime in May.

William Dezellem

Okay. So let me take a slightly different tack to the same question which is as you think about or as you look at the business as it has developed over this March quarter, directionally are you seeing the trends from the fourth quarter continuing into the first quarter?

William Brod

I would say the things that I said about the market in terms of the oil and gas market, the midstream market is – there is still opportunities there, but it’s challenging to go with the business. I would say the power generation business is lumpy and that’s absolutely true. So all the things that I think I talked about in the market really relates to 2016 including what we’ve seen so far in Q1, right.

So, Q4 had a lumpy power generation project, right, and so we’re going to announce those projects as soon as we are able to, right, but that’s going to be lumpy and that will be lumpy throughout the whole year, right. So, I’m trying to give you as much data as I can about the market, and sort of where we’re seeing in the quarter and sort of that’s how I describe that.

William Dezellem

Hey, Charles as you look at the backlog and the solid trends that you are experiencing so far. How do you anticipate that developing in terms of revenues in 2016, not specifically but qualitatively does it appears though directionally Q1 goes up and then you grow from there or are you anticipating more of an immediate impact or is it really a back half sort of phenomenon?

Charles Dauber

That’s a good question. So the thing about our business as we’ve gone after these – as we’ve positioned ourselves for these larger projects, the duration of those projects tends to stretch out, so where in the past, we will have – most of our projects were three to six months in duration, so between bookings and recognition of revenue that was a one or two quarter.

Now most of the projects we’re doing when we get a big order, it’s a little bit in the first quarter but most of the revenues actually recognized 100% [ph] complete in the second quarter, in the third quarter, and we shift sometime in that third quarter, right. And so the duration of the projects that we would have, the big orders we booked in Q4 as I said earlier those will mostly be realized in the second half of this year from a total revenue impact perspective, some in Q2, but mostly in Q3 and Q4.

William Dezellem

Great. Thank you.

Charles Dauber

You bet.

Operator

[Operator Instructions] We’ll go next to Greg Eisen from Singular Research. Your line is open.

Greg Eisen

Thanks, good morning.

Charles Dauber

Hi, Greg.

Greg Eisen

Hi. Going back to that I guess the backlog issue, can you describe the size factor of the backlog within itself relative to the past, it’s another way of saying you’ve tried to focus on getting larger contracts, because [of the] greater capacity. And I'm just wondering if the backlog is composed of bigger lumps of larger projects compared to say a year ago or 18 months ago. Is that a fair statement that it is?

Charles Dauber

Greg, here’s what we think about it, which is that we actually pursue projects of all sizes, so there is no change there – we like the $1 million projects, we like the $3 million projects, we like the $6 million projects, we like them all, right. And so there’s no change there. The difference is that now there's getting to be some of these larger projects and that dynamic started a couple of years ago and we had some larger midstream projects, we were getting the $4 million and $5 million midstream projects with that large offshore drilling project a couple of years ago and now we’ve got our largest power gen project, right.

And so I think that from what we’re seeing is that the composition is there is a similar profile of the backlog composition in terms of the $1 million, $3 million projects, but then there's also a couple of larger projects, and we expect that to continue going up over time. So, it’s not necessarily a focus on the big ones, it’s more an augmentation of the existing with some big ones as well.

Greg Eisen

Okay. I get that. Regarding gross margin, it was obviously a tough volume quarter and you’re hurt by overhead absorption and factors such as that. Yet nevertheless I guess its revenues are roughly half of what they were in the same quarter last year, but the size of the negative gross profit number, negative $298,000 is not that far off from the $37,000 reported in the Q4 of last year given that sales were I guess half of the size that they were the year before. So kind of what factors drove the change in gross profit and gross margin versus last year given that sales are half of what they were the year before. And could you tell us what one-time items were included in cost of sales to get you to that number?

William Brod

Couple of different things and let me just make sure I come back. So the dynamic of this Q4 and last Q4 are totally different. Last Q4, 2014 if you remember we were just coming out of those operational challenges and literally the projects themselves we’d those three large projects that we’re having trouble with which were announced in Q3 and that had a push through in Q4 and that’s what drove the gross margin issues on that.

This year totally different dynamic, this year as the projects themselves are doing fine. We have no challenges on the day-to-day execution of the project. This is purely a volume issue in Q4 and with a relatively fixed indirect costs and less revenue the indirect cost eat up all the direct margin on the projects which results in a terrible gross margin percentage, okay. So that the numbers may have ended up getting to be in sort of a similar spot, but the issues we had in terms of operations last year just don’t exist anymore in the Company.

Charles Dauber

I think that’s really the prime driver for this in addition, yes there were some non-cash items that hit the cost of goods sold or hit the gross margin numbers, but those will be sort of the two main components of that.

Greg Eisen

But those would be what?

Charles Dauber

That those are the two main drivers of that – primarily this is a volume based things and that’s drove the gross margins down and then there was yes, there were some non-cash items that had cost of goods sold in there.

Greg Eisen

Are those non-cash items specified out in the 10-K?

William Brod

Not specifically we talked about in previously – this is Bill. But we did have an inventory write-down that I had mentioned, we also made an adjustment to our bad debt reserve, but both of those are non-cash items that have an impact on gross margin.

Greg Eisen

Okay. Moving on to the current bidding environment, obviously it’s a stress hold time for everyone exposed to the oil and gas industry and everyone is fighting over I guess a smaller pie, what could you say about the bidding environment now and have you seen any change over the last quarter really six months since it’s been really – since right at the end of March as Bill pointed out?

William Brod

If I think about bidding I have to take it sort of sector over the time so land drilling there is no bidding, almost none of that. Although, we did actually book a land drilling project in Q4 and international land drilling project, but bidding for North America project for land drilling is basically that’s does not happening right now for newbuilds. The midstream market, which is a lot of our business – it’s still bidding projects, we still got lots of bidding happening probably down from last year. I don’t have the percentage, but not sort of this much as last year.

So there is still projects out there. They are quite competitive, right, because they are just generally slightly lesser than the total, but there are still opportunities there and we’re aggressively pursuing those. The downstream side of the market, we think is actually still good and we have increased our focus on the downstream market over the last six months, 12 months or so.

We have always been in it, but most of our business focus on the midstream that’s where we are spending our time with the introduction of the IntelliSafe Arc-resistant switchgear that let’s us go after the downstream markets harder and so we started that six months ago when we were introducing IntelliSafe. And I think bid activity is going up in the downstream market, certainly the opportunity. The opportunities in the pipeline are going up.

And I would include that in the chemical market as well I put the downstream which is refining and chemicals. And then power gen activity bidding its way up, we’re struggling to keep up with the power gen bidding opportunities at this point, but as we said earlier that’s a lumpy business, those are big projects, but from a bidding activity the power gen stuff is way up.

Greg Eisen

Okay. If I could turn to the Brazil, obviously what’s going on down in Brazil is front-page news, it seems like everyday given the potential collapse of the government right now and then they’re going to run their current leader out of town. And a lot of the problems with the government are related to Petrobras, who is the dominant player in the industry yet, you’ve said before that that's under the surface they are still operating and they still need maintenance type work and as the bulk of what you're doing. Is that still the case and you’re still kind of operating under the radar there so to speak?

Charles Dauber

I mean remember we’re at essentially a start up. We redid the joint venture in Brazil about a year-ago and which is our first full-year of operating. And as you correctly identified a very complicated market environment, but the reality is that whether it’s the offshore drilling market or the refineries or whatever is in Brazil even the industrial – they still need maintenance, they still got to maintain their infrastructure that they’ve got. These offshore drilling platforms that still have work that needs to be done, there is emergency services and repairs and testing and maintenance and all that.

And so we’ve built a profitable nice little business down there and we – the exchange rates now not in the Brazil team's favor right now, but on a Real basis they are growing very, very nicely. So that team continues to increase market share and we expect an overall U.S. dollar growth program in 2016 and continued profitability, they are doing great.

Greg Eisen

Okay. And then of course the numbers you report are in U.S. dollars, but you're recognizing in country using the Brazilian Real.

Charles Dauber

That’s right.

William Brod

So they maybe growing, but if the exchange rates working against them, the U.S. dollar may look flat, but that’s not actually what’s happening in the market.

Greg Eisen

Right. Well, just like everyone else out there eventually the dollar stops appreciating sooner or later?

William Brod

Our team is doing well.

Greg Eisen

Okay. Turning to China, it sounds like from what you’ve commented on it China will be relatively flat in terms of revenue or profit contribution this year your 40%, is that correct – fair statement?

Charles Dauber

I think China is going to end up being consistent this year versus last year that would be sort of my view at this situation. I don’t think the markets getting any worse. I think they’ve got some good diversification of the business between the domestic and international markets they focus on. And I think China is actually going to be okay this year. They are down 2015 versus 2014, but that's still – we’re profitable for the year and I expect them to continue to do that in 2016 as well.

Greg Eisen

Okay. And turning to the Singapore joint venture. I guess last quarter you said the sales manager you hired two quarters ago, sorry to bring this in business and that was not offshore related more downstream and chemical and then power gen. Are you seeing traction from their activity?

Charles Dauber

No, and in fact what I said a minute ago earlier in the call was we’ve actually – since the end of Q4, in Q1 we actually made decision to shutdown the manufacturing operation in Singapore. And so we are now evaluating the continuation of the Singapore as a sales and service arm or just that should be all the way up exiting of that market at this time.

Greg Eisen

Okay. So the entire Singapore market is being reevaluated by you?

Charles Dauber

Yes. The Southeast Asia market is really around offshore drilling as the primary driver that most of that business in Southeast Asia and we don't anticipate any offshore drilling newbuilds to happen through the rest of 2016 and in 2017, right.

Greg Eisen

Okay. That was it from my prepared questions right now. I’ll let someone else go, thanks.

William Brod

Okay. Thank you, Greg.

Operator

Thank you. [Operator Instructions] We’ll go next to George Berman from IFS Securities, Raymond James. Your line is open.

George Berman

Good morning, gentlemen. Thanks for taking my call.

Charles Dauber

Hi, George.

George Berman

It looks like in the difficult environment you’ve managed the Company's financials quite well. I’ve got a quick question, obviously the stock price currently doesn't bode well for possible acquisitions, but in this difficult environment are there any opportunities to pick up some revenues through some tuck-in acquisitions maybe even utilizing some of your strong cash position?

William Brod

It’s a good question George. So here is what I would say as is that – look our number one driver for our cash is our working capital and our liquidity. That being said, we do think that there's interesting opportunities for tuck-in acquisitions that won’t cost us any cash upfront and can be structured in a way that are accretive and very, very strong value and can sort of come into our platform and give us incremental revenue and generate incremental EBITDA in a synergistic way.

So we are not – again number one priority, our own liquidity. But that being said, yes, there are certainly things that are out there that we can structure the right deal for the right company and we would go add that to the platform and go from there.

George Berman

Okay. And would you be able to give us your estimates what you would think your run rate in revenues for the Company could be throughout the year 2016, you ended 2015 at about $49 million, say $50 million. Remember a few years back you were pushing almost $1 in earnings and almost $70 million in the revenues. Would you anticipate being high owned revenues in 2016 than in 2015 or still even or a little bit lower?

Charles Dauber

We don’t give forward-looking guidance in terms of [indiscernible], but what I would tell you is sort of I would think about that number or I think about that as it relates to the markets, right and so what I’ve said is that look the drilling market is going to be poor this year, it will be flat versus last year at a very down level.

I’d say the midstream market has gone down slightly versus 2015 and I’d say our opportunities in the refining, petrochem, and power gen market are actually up. And so what I can tell you is the timing of all of this and how it’s going to all flush out and when we book orders and when revenues going to be recognized and just the whole thing.

So we think the Company is in a strong financial position and we think all the investments we’ve made in the last several years in terms of systems and the people are right to get us through this time, but I think we are just going to see some swings throughout this year related to the timing of these orders in these particular markets and that’s all I think about it.

George Berman

Okay, fair enough. Thank you.

Charles Dauber

Okay. Thanks, George.

End of Q&A

Operator

Thank you. And it appears we have no further questions today. We would like to thank everyone for your participation and this does conclude today's program. You may disconnect at any time.

Charles Dauber

Thank you.

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