Lamar Advertising Co., Q2 2008 Earnings Call Transcript

| About: Lamar Advertising (LAMR)

Lamar Advertising Co. (NASDAQ:LAMR)

Q2 2008 Earnings Call Transcript

August 06, 2008 11:00 am ET

Executives

Kevin Reilly - CEO

Sean Reilly - COO

Keith Istre - CFO

Analysts

Jason Helfstein - Oppenheimer and Company

Marci Ryvicker - Wachovia Securities

Mark Wienkes - Goldman Sachs

Jim Boyle - C.L. King

James Farrant - Morgan Stanley

Katrina Garnett - Citi

Kit Spring - Stifel Nicolaus

Bishop Sheen - Wachovia

Operator

Hello, excuse me, everyone. We now have Kevin Reilly, Sean Reilly, and Keith Istre in conference. Please be aware that each of your lines is in a listen-only mode. At the conclusion of the Company's presentation we will open the floor for questions. (Operator Instructions).

In the course of this discussion Lamar may make forward-looking statements regarding the Company including statements about its future financial performance, strategic goals and plans. Lamar has identified important factors that could cause actual results to differ materially from those discussed in this call and on the Company's report on Form 10-K and 10-Q and the registration statements that Lamar files with the SEC from time-to-time. Lamar refers you to those documents. Lamar second quarter and 2008 earnings release which contains the information required by Regulation G was furnished to the SEC on a Form 8-K this morning and is available on Lamar's website on www.lamar.com.

It is now my pleasure to turn this conference over to Kevin Reilly. Mr. Reilly you may begin.

Kevin Reilly

[Chantal], thank you. I want to welcome all to our Q2 call, as it is our custom, I'll make a few brief remarks and then turn the call over to Keith and Sean for the financial and operational highlights. I thought, I would address how we plan to manage in this downturn broadly.

First, let me say that we've been down five points before for a quarter, and we are going to manage this downturn just like we have in others over line on price and occupancy drift down, and we'll aggressively manage expenses. The only difference that I see here versus '01 is that we've been extremely successful in our digital deployment and that leaves me to believe that when we start coming out of this thing, that we will come out very quickly and very aggressively. We have got enough confidence in our digital experience so far that in spite of a possible sagging of the entire flat perform in '09, we plan to deploy as many or more units as we will deploy in '08.

With that I'd like to go ahead and turn the call over to Keith Istre for the financials.

Keith Istre

Okay. Good morning, everybody. Just a couple of quick highlights, a little color on the quarter. Just to remind everybody, we have guided the pro forma revenue growth without twist in the second quarter between 0 and 1% up. We came in at 0.3% positive for the quarter. On the direct and G&A operating expenses in the field we were up 3.7%. That actually was slightly below our run-rate, our pro forma expense run-rate between 4% and 6% and as we look out into the third and fourth quarter, we don't see that changing very much. So, if you are updating your models on the expense side, you should be seeing growth in that range for the back half of the year.

On corporate overhead you might have noticed that spiked in the quarter. There were two extraordinary items that occurred to that affected corporate overhead expense. One was a jury verdict regarding a tree cutting incident in Ohio several years ago and the other was a settlement of the certain employee with employment related claims as a result of net additional expense to corporate overhead for the quarter was approximately $2 million.

Guidance for Q3, as you saw was down 5 on a pro forma basis for revenue. That does include Vista, and as Kevin mentioned we've been there before. If you go back to 2001, the first and second quarter of that year, we were in positive growth territory as far as our pro forma revenue.

In the third and fourth quarter, we were in negative growth for our pro forma revenue, and we ended up the year at down 2%. So, this is not uncharacteristic the way that '08 is unfolding. We've been there before, and we've dealt with it then.

Sean with that I guess you are up.

Sean Reilly

Sure, thanks Keith. Let me go through some of the key operating stats that we typically go through and give a little color, but the headline statistics is what is going on with national sales.

As we've spoken to on the last couple of quarterly calls, originally this downturn was driven by softness in local sales and national seem to be strong. In fact, our Q2 national book was up 11%. However, as we look forward, that's changed and so I guess if there's the other shoe that drops, national sales is that other shoe. And you've heard that from other platforms, other media companies, and we are certainly not immune.

As we look forward Q3 national is flat, and Q4 looks slightly down. So that is the headline statistics. This downturn has now beginning to affect national sales broadly. With a little bit of regional color, this shouldn't be a shock to anybody given our comments and some of the comments you are hearing from others, but regionally the western region, Southern California, Las Vegas, continues to struggle. Southeast, Florida and central Michigan, Minnesota and the like continue to be parts of the country that struggled the most. In fact year-to-date, our western region is down 8%. And so that gives you little flavor for how tough things are out there.

Occupancy and rate stats, as Kevin mentioned we managed through these downturns by holding the line on rate, and that's what the statistics are showing, and allowing occupancy to struggle a little bit.

On rate, quarter-over-quarter posters are up slightly on rate. Q2 '08 over Q2 '07 $452 average rate compared to $451 average rate last year. Bulletins up on rate 1% Q2 '08 over Q2 '07 or $1198 average rate compared to $1182 average rate Q2 '07.

Occupancy is where the story is. Flat occupancy on posters. 73% Q2 '08, 73% Q2 '07, but Bulletin is where we’re seeing it, Q2 '08 Bulletin occupancy 76%, Q2 '07, 80%. And that behavior is in the bulletin occupancy is consistent with what we saw in 2001.

On the digital front, I'll give it to you quarter-by-quarter and call over call in terms of additional digital units in the air. We ended the first quarter with 719 units in the air and we ended the second quarter with 842 units in the air for increase of 123 unit.

Call over call, last call, we were at 774 and as of today we are at 899 an increase of 125 units. We've stated our goal to have something in excess of 450 units up by the end of the year and we are pacing to get there, in terms of net ads in '08.

Acquisitions, we've done a total of 45 transactions year-to-date. Total purchase price of $194 million. That of course includes $100 million for Vista. We continue to be pleasantly surprised at the performance of the Vista asset particularly in New York, doing extremely well, as well as in Los Angeles. So, we are happy with that.

Categories of business, I'm going to give you to you slightly a different way this call just because I think it's a little bit illuminating on what's happened to certain of our customers that were particularly affected by this downturn.

Of our top 20 category of business, we usually give it you top 10 but of our top 20 categories of business only four are down year-to-date, and those four again won't come as a huge surprise. Real estate financials and other local media, and I think that this particular downturn is disproportionately hitting those categories of business. Probably when we get our brain down call with our regional managers and got a sense of the tone of business, the one that is creeping up on though is that financial category. We are beginning to see some real struggles with local and regional banks. So that's the color on category of business.

And with that, I'm happy to open it up for questions. [Chantal].

Question-and-Answer Session

Operator

Thank you. (Operator Instructions) Our first question will come from Jason Helfstein, Oppenheimer and Company.

Jason Helfstein - Oppenheimer and Company

Thanks. A few questions. So, with respect to the digital and the guidance, just a few things. First, tell us, how much digital added this quarter to revenue? And then in the 5% fall off how much part of that is digital and how much part of that is price? Because, if I recall kind of the way the last cycle typically market as occupancy fall offs, then eventually pricing falls off that kind market to bottom then occupancy comes back and pricing comes back. So, I just want to get a sense of kind of where we are in there? And then, additionally, in the last downturn, you said this time 4 out of the 10 categories are off, in the last downturn how many of the top categories fell off, give us a sense of how much further we have to go? Thanks.

Keith Istre

Thanks, Jason. First on the contribution from digital, if you look back Q2, essentially digital was a net contributor to our organic growth to about 2.1%, and static of course was down about an equivalent amount and so that was your flatness.

Looking forward, we are seeing that digital is going to be marginally up in the third quarter in terms of contribution to our organic growth probably to the tune of 1% to 1.5%. So, your static is looking downish in the 6ish range, and that's where you get to the net down 5 on organic growth.

Comparing the impact of different categories of this recession versus the last one, I think if you look at ‘01 and when we reflect on our book that one probably hit hotel/motel harder just because of the nature of what happened post 9/11, immediately post 9/11. And so, kind of I don’t have any of the statistics right in front of me, but just recalling which category that particular downturn seemed to have affected the most. This downturn has hotel/motel flat to slightly up as well as restaurant. So, it is hitting different categories in a different fashion. And I don’t know what you are hearing from other media companies, but that seems to be how it’s affecting our book.

Jason Helfstein - Oppenheimer and Company

Can I follow up on again within the static guidance, are you seeing a fall off in poster occupancy in the third quarter? And then what about kind of price in both media or are they still being occupancy driven?

Sean Reilly

Yes, I think you are going to see it primarily occupancy driven if we manage correctly. I think you are going to see poster occupancy really be the primary culprit in the third, that’s my guess. Part of that’s driven by the fact that we are concluding the real nice buy with McDonald’s and it was a primarily a poster buy. It was a national poster buy and that’s going to roll off at the end of this month. And so, I think you are going to see occupancy dip in posters. You should see. Again, if we manage correctly, you shouldn’t see too much erosion in price.

Jason Helfstein - Oppenheimer and Company

Okay. Thank you very much.

Operator

Thank you. Our next question will come from Marci Ryvicker from Wachovia Securities.

Marci Ryvicker - Wachovia Securities

Hi. I have a couple of questions. I think what is surprising is the deceleration between what you reported in Q2 and what you are guiding for Q3 given that you have long-term contract. So, Sean you had said that you’re up in national 11% in Q2, I think something about flat in Q3. What about the local business and have you seen cancellations? That’s the first question. And then Kevin, you said that you’ve been down 5% in a quarter before. It doesn’t sound like Q3 is just a one quarter issue. Can you kind of talk a little bit longer term and give us some color about that?

Kevin Reilly

I’ll take that one Sean and let you take to the first question. Well we only give guidance for the quarter-to-quarter, so you can pretty much see how we are going to end up for the year. I don’t see this as a longer-term issue. I’m not so sure what you mean by longer term. I certainly think that ‘09 is going to be tough for ad spend. And I think what I said is what it is so we were ahead of 5% down quarter before, and I don’t want to give our caller the idea that we are in some sort of [guess] this feels a lot like ‘01. And I would discourage people from trying to come up with a sequential decline conclusion because of the 5% down guidance. Sean?

Sean Reilly

Yes. Our contracts, they expire ratably through the year Marci. And so, while we do typically have fairly decent forward looking at our bookings, we can pretty much have a pretty good glimpse of the year. It’s not perfect. It’s not a perfect crystal ball because our contracts renew ratably radically.

On the cancellation question, it’s not material I don’t think to the guidance. We’ve had a few cancellations, for example, Ford cancelled their entire outdoor buy across of the whole medium. It affected us marginally. It’s not really a question of cancellations it’s more a question of renewals, and business confidence amongst our customers. People are pretty scared out there in certain businesses, and they are buying, but they are buying fewer unit and they are buying shorter.

So there is a reluctance to go long. We have talked about that before. But again, understanding the dynamics of our contracts while they are of longer duration than your typical media company, they do expire ratably. So, we have to renew them ratably throughout the year every month.

Marci Ryvicker - Wachovia Securities

Okay. And I have one follow up. What is your normalized occupancy levels for both bulletins and posters?

Sean Reilly

We typically in talking about this and helping people understand how our books react throughout different cycles, we are typically quoting posters in sort of low-70% occupancy and in downturns going to mid-60% occupancies. And bulletins, low-80s, going to mid-to high-70s occupancies as you go through a cycle.

We have to be a little bit careful as we do that. Our business mix looks a little bit different than it did in the mid-90s when we kind of first came public and we’re helping people understand how we operate through a cycle. We now have fewer posters and far more bulletins, and we also have a higher percentage of competitive bulletin market. But anyway, I anticipate that it should still hold up in that range.

Marci Ryvicker - Wachovia Securities

Great. Thank you.

Sean Reilly

Yes.

Operator

Thank you. Our next question will come from Mark Wienkes, Goldman Sachs.

Mark Wienkes - Goldman Sachs

Thank you. Good morning. I was wondering on the capital management side, did anything change or has anything with respect to your position on share repurchases, since the last call? And then are there any constraints leverage or otherwise that might limit your digital rollout versus the current plan? And then, just modeling detail cash taxes or benefit in the quarter I assume that Vista related to that last all year?

Kevin Reilly

Keith, I’ll let you do the cash – the last question and I’ll just take the, how the company sets its priority. Regarding digital and the impact on leverage, we can do everything. digital is number one, M&A and easement purchases out of the company’s free cash flow. Regarding share buy backs, that does require additional leverage. And Keith can let you know what we did last quarter regarding our share buy-back program plan. Going forward, we are going to be very circumspect in that area, because we are going to be watching our leverage as we watch the economic events unfold.

Mark Wienkes - Goldman Sachs

Just for a quick on that, any interest on the LA billboard assets being offered?

Kevin Reilly

We generally don’t comment on M&A activity, especially things of that size.

Mark Wienkes - Goldman Sachs

Okay.

Keith Istre

Mark, this is Keith. Could you repeat the question again about the taxes?

Mark Wienkes - Goldman Sachs

Your cash taxes were only about a million or so versus book of 10, is that related to Vista and how long does that last?

Keith Istre

We didn’t have any cash taxes.

Mark Wienkes - Goldman Sachs

Current taxes $1.8 million on your free cash definition, your calculation?

Keith Istre

Let me see something. Let me get my free current taxes against – okay, $1.8. Let me answer all, it’s $2.4 million for the year, $1.8 million for the quarter. So, I mean that’s all just state and foreign taxes counted in Puerto Rico. I mean, for the year we are expecting about $5 million in total cash taxes. We will not be a federal tax payer this year.

Mark Wienkes - Goldman Sachs

Okay. That’s great, thank you.

Keith Istre

Or probably next year.

Operator

Thank you. Our next question will come from Jim Boyle C.L. King.

Jim Boyle - C.L. King

Good morning. Historically in a downturn, how far would your rates drop down even with those lower levels of normalized occupancy? And second, given digital is relatively a bright spot still, what do you think your digital pace in ‘09 will be versus ‘08? Will it be more or will it be a lot more, especially given taxes and some other regulatory [dollar mix] have opened up?

Sean Reilly

Sure Jim. And you know as Kevin mentioned on the digital front, it’s our best business judgment that we should continue to spend that dollar to build out our digital platform. And so, I think that assuming we get our stated goal of something north of 450 up this year that would be our goal next year as well.

One thing of note, the mix of units is shifting towards posters and away from bulletin, or at least that’s the way it’s been in near term this year. So for modeling purposes, you might want to plug in slightly more poster units and slightly fewer bulletin units going forward. The mix might end up being maybe 60% poster unit and 40% bulletin unit.

Jim Boyle - C.L. King

What was it before?

Sean Reilly

It was flipped. It was 60% bulletins and 4% posters. We are aggressively building our poster networks in a lot of our markets. So, going forward, I’d model it at 60% posters and 40% bulletin.

Jim Boyle - C.L. King

And if you could only do about 450 or so next year, is that mainly a constraint due to just physical limitations and regulatory limitations or is it something else?

Sean Reilly

It’s primarily physical and regulatory. Each one of these things as we described before is an individual little construction project and everything has to come in to place at the right moment in time; the permit, the unit, the upgrading of the structure, the broadband connectivity, the electrical, all that stuff has to fall into place.

Now look, there is no question about that we are rolling out this new product which dramatically adds capacity at a moment in time where the economic headwinds are in our face, we have to be cognizant of that. But right now our best business judgment tells us that we need to continue to be aggressive on digital.

Jim Boyle - C.L. King

And advertising rates in the downturn?

Sean Reilly

On the rate side, traditionally it goes flat, Jim. So, traditionally through the cycle you will not see a material erosion. I mean, there might be a couple of little nits down. But in essence if you are modeling, again if our management team does what we expect of them, we’ll be flat on rate, materially flat.

Jim Boyle - C.L. King

Finally, Kevin what could go wrong in the second half of the year at this point?

Kevin Reilly

In the second half of this year?

Jim Boyle - C.L. King

Yes.

Kevin Reilly

I don’t think anything is going to go wrong. I just think revenues are going to sag. We are going to manage our expenses, and we are going to keep pushing the digital. The only thing that we could do wrong would be to overpay for something or put a lot of unproductive debt on the balance sheet. Operationally everyone is focused. Managements, they are not going to have a big year, personally and economically, but they are looking forward to ‘09 and ‘010. And I think everybody is going to keep their heads down and work through this and do what they have to do.

Jim Boyle - C.L. King

Thank you.

Operator

Thank you. Our next question will come from James Farrant.

James Farrant - Morgan Stanley

Hi, thanks for taking the question, just on the digital contribution, I mean obviously given the cyclical headwinds, the kind of sequential decline and the impact of digital mix quarter so to make sense, but is it primarily price driven in specific markets like Vegas or are you selling out a little bit less of those units than you have before? And given the national has been a big contributor for the incremental growth this year, is it national dollars that has been or is that incrementally weakening on digital or local?

Kevin Reilly

Well, on the national versus local on our digital platform, the news there is pretty good. We are up 100% on national ad spend on our digital platform. Last year we did $6 million and this year we got about $12 million on the book. So, we know we are building something that is attractive to the national advertiser. There are a couple of data points that are probably relevant.

I mentioned that since we are incrementally adding capacity on the poster side, if you do the arithmetic, the bump isn't as dramatic as when we were adding capacity on the bulletin side. And then if you look at same board digital performance and this is probably a useful data point, it's essentially behaving like the rest of our book in the third quarter. Got on the poster side, it's down about 4%. So, I'm talking now about same boards that have been up for three year, so that we can compare on a same board basis.

Poster’s down about 4. And then on the bulletin side, we have a particular problem in Vegas. We have got a tremendous amount of capacity there both ours and others, and you got a truly distressed local economy. If you strip out Vegas, bulletin same boards are also down mid single 5% or 6%. So, that tells us that in a tough environment, it's still a product and a business model that works, and again our best business judgment is to keep investing on the digital side.

James Farrant - Morgan Stanley

Okay. Thanks. And can you just remind us again on the -- you've typically have given us monthly digital billing on each of that 14 by 40s and can I have 36s in the 1021s, what was the latest month tracking at?

Kevin Reilly

What did we do in July?

Keith Istre

7.9.

Kevin Reilly

Yeah, basically in July we did about $8 million in digital billing. If that’s what you were looking for. I don't have it broken down by structure.

James Farrant - Morgan Stanley

Okay. I think last quarter you gave us a monthly digital billing in 1440s were about 18,000 and 11,000 --

Keith Istre

I got you. When we did that, we didn't do that in a given month. We kind of gave you that as a sort of modeling tool.

James Farrant - Morgan Stanley

Right.

Keith Istre

And I would probably say that with Vegas included, which is mostly 1448, you are probably down from that 18,000. You are probably pretty close on the mid range bulletins, and you might be slightly down on the posters. But again when we gave that information out, that was really aggregate modeling information. It wasn’t pegged to a specific month.

James Farrant - Morgan Stanley

Right, okay. Thanks.

Operator

Thank you. Our next question will come from [Katrina Garnett], Citi.

Katrina Garnett - Citi

Thank you so much for taking the question. Can you give us an update on the CapEx per poster versus bulletin? And because you are moving towards more posters, does that change your CapEx expectation for the year?

Kevin Reilly

In the aggregate, I think we had a target number of about $100 million and that’s about where we are going to come in. We knew we were going to be skewing towards posters when we gave you that number. We probably didn't get as granular with you and tell you why, but at the end of the day we are going to come in at about $100 million. Posters are costing us just under $100,000 from the manufacturer and you add about 15% by the time you get it all put together. The installation cost is going up faster than the other.

Katrina Garnett - Citi

And then on the bulletin CapEx average on the bulletin?

Kevin Reilly

On the bulletin it's around 275, and again that's from the manufacturer. We've got some stuff we have to do on the side that adds about 15%.

Katrina Garnett - Citi

Okay, great. And then what are some of the cost levers that you can pull? We know that fuel prices have been going up. What was your fuel prices have been going up. What was your fuel cost in the quarter and what are some of the other cost levers that you are looking at controlling over the course of the year?

Kevin Reilly

Well, our business model is pretty tight. We have the right number of people. Whether times are good or whether times are bad. In the field, on the people side, there's really no cost lever there. You just manage and help people to pull the line. Our other biggest expense of course is lease cost and fix and all of the other costs are almost immaterial to the business model. As Keith said, traditionally year in and year out we operate in a band of expense growth between 4% and 6%, and we should be at the lower end of that band in the third and fourth quarter.

Katrina Garnett - Citi

And has there been a change -- I've heard different ranges in kind of the revenue multiple on shifting of board from static to digital. Could you give us kind of the current revenue multiples for poster and a bulletin?

Kevin Reilly

The multiple depends on first off what you are taking down and what you are putting up. So, on a bulletin and again this is not market specific, it's kind of for modeling purposes across the platform. Typically, you are taking down something that does about $2500 to $3,000 a month, and you are going to get something between $15,000 and $18,000 a month. And again that is sort of a modeling number, it depends on what market you are in and what the economic climate is. For posters, you are taking down something that averages about 450 to 500 bucks a month and you are getting something when you convert to digital you are getting 5,000 to 6,000 a month. So hopefully that is helpful to you.

Katrina Garnett - Citi

Yes. Great. And can you just give us an update is there any change on the maintenance CapEx expectation for the year?

Kevin Reilly

No. That should be about the same, and if we manage correctly, it will be at the lower end.

Katrina Garnett - Citi

Okay. Thank you very much.

Operator

Thank you. Our next question will come from Kit Spring, Stifel

Kit Spring - Stifel Nicolaus

Can you talk about whether there's been a back lash from your advertisers regarding the impact of driving habit people are driving less? Was there some kind of see change with the $4 gas that woke up advertisers to freak out about that? And then could you talk about what the useful life of your digital boards is or what you think it is? Thank you.

Kevin Reilly

Sure. On the driving side and driving behavior, we haven't had anybody come up to us and say you are getting fewer eyeballs. We can make the argument if people are carpooling we actually have a more attentive eyeballs. More people are taking mass transit. More people are carpooling and I don't think there's a net erosion in eyeballs going by outdoor. Certainly, we haven't heard that from our customers. What we have heard from our customers is that because of $4 gas, they are hurting. And that's the real story here is went up -- worry about the impact on our customers, not the impact on drivers and the number of eyeballs we get. And I think at the end of the day people are going to move about -- what was the other question?

Kit Spring - Stifel Nicolaus

The other question is what do you think the useful life of these digital boards or how long are they going to last?

Kevin Reilly

That is an extremely important question, and it's a very important for your modeling and it's very important for our view of the digital business potential. The short answer is we don't know yet. The longer answer is we are modeling seven years. We are giving a useful life expectation from our manufacturing partners of 11 years. We are working with them to develop a way of upgrading a unit without having to replace the whole thing. So when you start trying to think about depreciation, number one, we are too early in the game to really know. And number two, I fully expect that working with [Datronic at Escrow]. We are going to come up with ways to replace [buyers] without having to replace the whole unit. What that number is, again we don't know yet.

Kit Spring - Stifel Nicolaus

Thank you so much.

Operator

Thank you. Our final question will come from Bishop Sheen of Wachovia.

Bishop Sheen - Wachovia

Thanks for taking the question. You guys are probably or more trackable than many other companies through cyclical downturns in the early 90s, early part of that decade. Do you think -- the one thing that is changed is digital from your -- from other cyclical locations. Do you think that digital will make a difference in the way business comes back, the speed and the volume, compared to other dislocations? And if so, how?

Kevin Reilly

Let me fill that one Sean then you can add some color. Pretty simple, Bishop, we are taking our best locations and expanding the capacity by six. So, on an annual basis -- actually it's about five because you have to subtract the face. So, we will be adding a couple of thousand units, and these spots that we will be selling are suitable not only for our existing customers but for a new customer universe, and these are the short cycle called to action customers that want to run up campaign on Thursday, Friday and Saturday. And the space that this excess capacity that we are adding is extremely profitable. So, that's why I am fairly confident that when we do come back, we are going to come back quickly and more aggressively than we have in the past.

Bishop Sheen - Wachovia

And in the past, were there any key indicators that you saw first precursors to the slope of recovery?

Kevin Reilly

Yes. But I don't know that we can count on it this time around because it's usually the leading indicator going in as well and that's posters. Posters usually go in first and they come out first because of the length of the contract. They are a 30-day contract. But don't know that that's going to be the case this time around because of some national business and some other factors. Posters were not the leading indicators for us this time. It was our bulletin platform.

Bishop Sheen - Wachovia

But you are going to have more censors out there by the time recovery comes if you are waiting on posters and you build that?

Kevin Reilly

Well, we shouldn't use the word poster and bulletin for digital. That’s just a definition of size. We are building digital units of varying sizes and we are trying to network those units. So we are selling the time. However, the customer wants to buy it two days, one month, one year. So just because that's where we came from that is why we call them posters and bulletins but that is not what digital is. It's a network of units with different aspect ratios. That's what it is.

Sean Reilly

Just to put what Kevin was referring to is our traditional analog poster has typically let us in and let us out of these cyclical downturns and this one is a little different. So it's hard to tell what is going to be the first sign that things are getting better.

Bishop Sheen - Wachovia

That's helpful and understood. Thanks for the clarification.

Kevin Reilly

Thank you, Bishop, and I want to thank everyone for listening in and we look forward to our Q3 call. [Chantal]?

Operator

Thank you. This call is now concluded. You may disconnect at this time and have a wonderful day.

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