Good evening, ladies and gentlemen, and welcome to your A. O. Smith Corporation Fourth Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. At this time, I would like to hand the conference over to Ms. Patricia Ackerman, Vice President, Investor Relations and Treasurer. Ma'am, you may begin.

Thank you. Good morning, ladies and gentlemen, and thank you for joining us on our fourth quarter and full year 2013 conference call. With me participating in the call are Ajita Rajendra, Chief Executive Officer; and John Kita, Chief Financial Officer. Before we begin with Ajita's remarks, I would like to remind you that some of the comments that will be made during this conference call, including answers to your questions, will constitute forward-looking statements. These forward-looking statements are subject to risks that could cause actual results to be materially different. Those risks include, among others, matters that we have described in this morning's press release. In order to provide improved transparency into the operating results of our business, we are providing non-GAAP measures, which include -- which are adjusted earnings, adjusted EPS and adjusted segment operating earnings that exclude certain items, as well as nonoperating pension costs consisting of interest costs, expected return on plan assets, amortization of actuarial gains and losses and curtailments. Prior year results are provided on a comparable basis. Ajita, I will now turn the call over to you.

Thank you, Pat, and good morning, ladies and gentlemen. 2013 was an excellent year for A. O. Smith. We continue to see the benefits in our performance from the housing recovery in the U.S. and our expanding consumer business in China, an outstanding execution by our operations worldwide. Here are a few highlights. Our organic growth drove sales 11% higher to a record $2.2 billion. Sales of A. O. Smith-branded products in China exceeded our expectations and increased 26% compared with 2012. Our adjusted earnings from continuing operations of $2.06 per share set a record and were 32% higher than the $1.56 per share recorded last year. Incremental margins associated with higher volumes of water heaters and boilers drove earnings higher. We celebrated the grand opening of our second water heater factory in China. This factory will increase capacity in the region by 50% when it is fully utilized. We moved production of our fast-growing gas tankless products and added an electric water heater production line to the new factory late in the third quarter. In April, we announced a 20% dividend increase and a 2-for-1 stock split. In addition, this morning, we announced a 25% dividend increase, and this reflects our confidence in our business. John will now describe our results in more detail.

Thank you, Ajita. Sales for the full year of $2.2 billion were 11% higher than the previous year, driven by higher volumes of water heaters and boilers in the U.S. and higher sales of A. O. Smith-branded products in China. Adjusted earnings from continuing operations of $191.2 million improved 32% from 2012. In 2013, we transferred our residential water heater production from our Fergus, Ontario plant to other North American facilities. As a result of the capacity rationalization, we incurred a pretax restructuring and impairment charge of $22 million in 2013. Adjusted earnings from continuing operations in 2013 excluded after-tax nonoperating pension costs of $11.9 million, an after-tax gain of $6.8 million related to a settlement with a supplier and an after-tax restructuring and impairment expenses of $16.4 million. Adjusted earnings from continuing operations in 2012 excluded after-tax pension costs of $4.2 million, an after-tax gain of $16.8 million on the sale of Regal Beloit stock acquired as a result of selling our water business, an after-tax gain of $2.9 million related to a settlement with a supplier and an after-tax gain of approximately $2 million related to an earnout associated with an acquisition. Adjusted earnings of $2.06 per share improved 32% compared with $1.56 per share last year. A reconciliation from GAAP EPS to adjusted EPS is included at the end of this presentation and covers the previously discussed adjustments. Sales in our North America segment of $1.5 billion increased 6% over last year, driven by higher sales of residential and commercial water heaters and boilers in the U.S. Rest of World segment sales of $668 million increased 23% compared with last year, driven by increased demand for water heaters and water treatment products in China and market acceptance of our newer, higher-value A.O. Smith-branded products in China. We…

Thank you, John. This year, we celebrate our 140th anniversary. We think our founder, C. J. Smith, will be very proud of the people, values and performance that embody our company today. Our outlook for 2014 includes the following assumptions. First, we see strong growth in China, which is expected to increase at a rate of 2x that country's GDP. The team continues to serve our customers and introduce products that enhance our premium brand. In 2013, we consolidated the management of water heating and water treatment in China under one management team. We made significant progress in sales growth as the team achieved over $65 million of sales of water treatment products in 2013 compared with approximately $40 million in 2012. The business achieved breakeven in 2013, excluding acquisition-related amortization costs. Going forward, we will no longer separately call out A. O. Smith-branded product sales from our non-branded products in China. Second, we expect our Lochinvar brand to continue to benefit from the transition from lower-efficiency non-condensing boilers to higher-efficiency condensing boilers, as well as strong market acceptance of new products like our Lochinvar CREST condensing boiler product line. Lochinvar-branded condensing boilers continue to offer a compelling payback in the form of energy savings, and we have built a reputation for innovation, outstanding product quality and support. As a result, we expect Lochinvar-branded sales to grow approximately 10% in 2014, well ahead of GDP growth in the U.S. Third, we are cautiously optimistic about the developing recovery in U.S. housing. After a strong industry growth in 2013, helped by improved levels of home completions and significant expansion of the replacement market, we expect residential water heater volumes in the U.S. to be up slightly to be between 8.8 million and 8.9 million units, including tankless units. We expect commercial…

[Operator Instructions] Our first question comes from Charley Brady from BMO Capital Markets.

So I just want to talk about the Rest of World margin, in particular China, it was down this quarter and the aspirations to get it to 13%. Was it impacted this quarter, I guess -- or to what degree was it impacted by the promo spending and some inefficiencies in starting up that new plant? And do those -- you kind of get rid of those inefficiencies and the promo spending as we move to '14 to help the margin up.

Well, yes, you hit on a couple of the items. One was certainly the advertising. We mentioned in the third quarter that it was artificially low because we were transferring ad agencies for our national television advertising. So that moved approximately $1.5 million to $2 million. The fourth quarter was overstated compared to -- because it was up $3 million to $4 million compared to the third quarter. The second is the plant. I mean, we've consistently said that it will have an impact, and we've said it will be less than 1% of EBIT and that's in the $5 million to $6 million range, and we still expect that to be the case. A little higher in the fourth quarter mainly because of what you alluded to, some startup, et cetera. So it was a little less than $2 million was the effect on the quarter. And then there was also some onetime items associated with adjustments for warranty, et cetera. So we're very comfortable with what China's margins were for the quarter and, certainly, for the year, they were up significantly for the year. And the only impact we see going forward is the plant. But I mean, as we've talked about, if we hadn't built that plant in the fourth quarter we couldn't have produced -- because of the significant increase in demand we experienced this year. So long term, it was clearly the right decision, and short term, it will have some impact.

Okay. Just so I'm clear, the fourth quarter impact on the plant of a little less than $2 million, that is -- that is not repeated going forward, it is just a fourth quarter hit, is that correct?

No, well, it won't be that high going forward, but on an ongoing basis, that will be $5 million to $6 million a year. So about $1 million to $1.5 million a quarter. And that's primarily just higher depreciation and some overhead. If we look into 2014, I think Rest of World margins were a little over 13%, they'll probably be a little under 13% in 2014.

And our next question comes from Matt Summerville from KeyBanc.

This is Joe Radigan on for Matt. Shifting to North America incremental margins, they've been better than expected all year. Obviously, the mix of the strong commercial units you've seen, as well as Lochinvar a factor there, but generally, how should we think about the right operating leverage on revenue growth going forward considering some of the improvements that you made in the factories?

Well, without a doubt, what's helped us significantly in 2013 is increased volume. The residential industry, we're guessing, was up almost 600,000 units. The commercial industry, we're guessing, was up 9,000 to 10,000 units. And we said all along that when we get that incremental volume, it's going to certainly benefit us. When we look into 2014, we said we would expect to see some improvements from the restructuring. We kind of said about $5 million. We got about $5 million in 2013. We said the total will be about $10 million. So incremental, we'll get about $5 million. We certainly -- as we look into 2014, we'll have incremental volume, which, again, will contribute nicely but it will be offset partially by the higher FAT [ph] costs. In addition, when we look at steel costs, when we look at the average of the current price of the index compared to the average of the index in 2013, steel costs are up about 8%. And so that will have an impact. So all in all, we wouldn't expect much difference in the operating margin of North America year-over-year when all is said and done. I should mention Lochinvar grew over 10% and had a very nice margin increase and it's doing extremely well.

Okay. And then you said industry-wide, residential units were up about 600,000 in your estimation. So I mean, that's significantly more than the delta in housing completions this year, so obviously -- and you've talked about the residential replacement market growing. When you look at your guidance for 2014, what is the home completion number you're using? I guess, what I'm getting at, are you factoring in continued growth in that replacement market, or is it based just on what you think new housing is going to do in 2014?

It's basically the latter. You're right, the 600,000 was much higher than what we expected. And that comes up with about a 400,000-plus growth in the replacement market in 2013. We've talked about the possibility, as you've alluded to, that happening because if you look at our industry in the late '90s to 2000, it grew significantly with the new housing build, and an average water heater lasts 12 years. So we have said that was a possibility. I don't know if that's the biggest impact this year, but obviously, we were surprised by the growth. So we're guessing the industry was about 8.7 million units for 2013. We're forecasting 8.8 million to 8.9 million, which would represent that the replacement business stays strong but doesn't grow, and that completions are in that 150,000 rate.

Okay. And then if I could just get one more in on China. Revenue was up almost 20% in Q4 despite the tough comp. I think you benefited last year from -- at least from somewhat of a pre-buy ahead of volume-related incentives, I think. Was there anything in there this quarter that pulled demand forward? Or just maybe a little color, because I think that was stronger meaning it increased the -- I think it was stronger than what you were looking for out of China, just maybe some color on what you're seeing there demand-wise.

It definitely was. I mean, we had a stronger quarter revenue-wise than we thought. When we look at our major customers' inventory, they aren't up significantly compared to what they have been. I think it just attributes to what they've accomplished with the new products they brought out. And we alluded to in the script, we had 3 significant new product introductions that we got a full year benefit in 2014 and -- in 2013, and all of them were very successful.

And our next question comes from William Bremer from Maxim Group.

Ajita, John, Pat, can we -- so let me understand the operating margins in the Rest of World. Again, so we get a $2 million hit from the new factory roughly, and that's going to be going forward, about $5 million to $6 million throughout '14. When do you expect that to cease?

Well, I mean, I think as you get more volume in it, so it will gradually go down as we progress over the next 2 to 3 years, but clearly, you're starting up a new plant with $5 million or so incremental depreciation just by itself that now has to be absorbed.

And how's pricing there? How's pricing in China?

Pricing has held up very well in China. We had announced increases in 2011 and 2012. And then I think what we've been able to accomplish is bring out higher-value products with a higher price point, which gives a higher average price. So again, to repeat myself, we are very comfortable with the mid-teen margin that we're experiencing in China. For the year, they're up year-over-year, and they had extremely good year.

I think just to add to that. This is Ajita. The whole formula in -- and business strategy in China just continues to work very well. There's a combination of things that help us there, we have a strong management team, we have a very strong brand and we continue to invest behind the brand. And that's why you saw the added SG&A expenses in the fourth quarter because we were a little light in the third quarter. You saw the margins higher in the third quarter because of that. And we went back and invested heavily in the fourth quarter because we really believe that the continued investment behind the brand is an essential ingredient in the success that we have in China, and we will continue to do that. The new products have been -- as John mentioned, have been very successful, and we have a tremendous pipeline of new products that we've been bringing out, and that has really helped us continue to grow our market share. And we grew our market share in both the water heating business and the water treatment business in China. And it's all of these things together that have helped us considerably outgrow the market in China. And what we did with the new factory is, in anticipation of continued growth, the new factory increases our capacity by -- our capability and capacity by about 50%. And obviously, it won't be full day 1, but we do have the full load of depreciation day 1. And as we fill that factory, we are going to be absorbing those costs, and it's going to become a non-factor as we go along. The lines that we moved in there, some of the lines, the electric line, for example, has also shown considerable productivity improvements because we've been able to lay it out efficiently. The tankless line is about the same because that's essentially an assembly operation, so there isn't quite the opportunity for productivity improvement. So the new factory gives us productivity improvement and additional capacity for growth in the future. So all of it put together is what helps us grow at 20-plus percent -- helped us grow at 20-plus percent last year.

Okay. Let's switch to Lochinvar here. Nice quarter. Can you speak a little bit about the aftermarket there and how that's increased? John mentioned margins up materially year-over-year. And have we rolled it out abroad, or are we making introductions there? What's the status there?

Well, the aftermarket, I don't have the specific numbers, but clearly, the fourth quarter is traditionally their strongest in the aftermarket, so I would expect that's the case. Their margins, as I said, year-over-year, we published last year, we separated out Lochinvar, I think their operating margins were about 23% last year. Those improved nicely in 2013, so they're doing extremely well. The rollout in China is taking longer than expected. And the primary factor there is getting the approvals, et cetera. We will be introducing the residential side, I think, late this -- I mean, early this year. But the real benefit ultimately will probably on the commercial side, which is taking longer than expected.

And why is that?

The primary reason is just getting the licenses, and the licenses required have some requirements to suppliers, et cetera, that we're not able to get at this time.

And our next question comes from Scott Graham from Jefferies.

So I would like to get underneath 2 things: the North American resi water volume assumption and the M&A outlook. On the water heater market, is it fair to state that tankless is still about 4% to 5%, which kind of represents, I guess, 480...

That's roughly 400,000 units.

Right. How many, 400,000?

400,000 units, yes.

Right. So that would suggest that your -- if we would take that number out of your assumption here, that you're expecting the storage market itself to increase essentially 2.5%.

The midpoint would be about 150,000 to 175,000 units, but that's if complete.

Right. Whereas residential construction spending is running double-digit and is now apparently starting to move into kitchen and bath areas. I'm just trying to get to -- there's this piece that we've always talked about, there's the replacement market, there's the new and then there's the discretionary, and it seems as if within this assumption, the discretionary has been kind of assumed to be 0.

Well, what we don't know, Scott -- you're right, I mean, all we're building in is completions. But what we don't know is the replacement/discretionary, whatever you want to call it, grew over 400,000 units in 2013. And what we're assuming is that's going to stay the same, that, that's going to hold and stay the same. We could be surprised on the upside, I mean, if there's that continued growth. But that was a significant increase year-over-year that -- and we've talked about it that we expect to have some growth in the replacement because of what I alluded to earlier. But they grew by 450,000 units probably in 2013. So we're assuming that's going to hold. Now upside would be that grows.

Okay. Is there any reason why you think that your competitors last week at the HRI show were both saying 5% or better? Do you think that they think that they're going to take share? Or, again, are you -- is it just that you're not considering the discretionary?

I would say it's the latter. No, all we can be pretty comfortable with is the completions are going to continue to grow, and that's what we built in to our estimate.

Fair enough. On the M&A side, obviously, it's been quite some time and we've passed on a number of transactions, which I would probably have a chorus of agreement that, that's a good thing. At the same time, you guys have been hitting the pavement now for a while. Just can you kind of size in any way you can what you're comfortable with? The funnel, is it we're looking at several large, multiple small? Because I guess I would have thought at least a couple of smaller ones would've closed by now, or are you not looking at smaller ones? Can you maybe size that for us?

Scott, this is Ajita. Let me put it this way. We are satisfied with what we have in terms of the opportunities we're looking at. The -- whether large or small don't really matter as long as it's strategically relevant and strategically fits. And like I consistently said, we are going to be very disciplined about this process. And we want to make sure that we are in that small minority of acquisitions that actually add value to the buyer in addition to adding value to the seller. So we are being disciplined about our process, happy with the opportunities ahead of us, and nothing has really hit. Like we've said, we've gone to the due diligence stage a number of times but pulled back because it didn't quite fit or we found something. Due diligence did its job, and we found things that we were not -- that we didn't like and we were not happy with.

The only additional comment I'd make, Scott, is to your size of it. I think we have passed on some smaller ones that just won't have an impact. Because in a lot of ways it's as time-consuming to integrate a small one as a big one. And so we're not actively looking at $10 million to $15 million ones, I'll say, that doesn't mean we won't do it. I think the only other comment I want to make is a good example is India. We talked about our entry into water treatment there. We had looked seriously at opportunities there. And we were just very uncomfortable with the valuations that would have had to have been paid. So at least, starting out, greenfield may have more of a hit to the P&L than if we had made an acquisition. But we think long term, it's going to provide rewards for our shareholders because the all-in costs will be less. So I mean, when we look at acquisitions, we're looking at it compared to greenfield all the time.

Understood. I guess I'm a little bit surprised to hear your comment that you're really not looking at smaller ones. Now I don't know what you mean by smaller, but I guess that surprises me a little bit because it would kind of give a deployment of capital into bringing some balance sheet earnings onto the P&L, so to speak.

But the example I used was $10 million to $15 million.

Okay, fair. Here's my last question on this. At what point does the lack of acquisitions start to have the company rethink a little bit more aggressively share repurchasing? And I don't say that in a vacuum. You guys, the balance sheet is so liquid. It doesn't have to be all or none. It can be a balance. When would you expect to maybe rethink where you are on share repurchases, not just what you have on the current authorization remaining, but perhaps something a little bit more balanced with what's been a little bit of a shortfall in M&A activity?

Well, I think we clearly have thought about it. We purchased back stock of $75 million worth in 2013. We purchased stock back in 2012. So I mean, we've said there's 4 capital allocation options for us. One is organic growth. We're investing in India. We're investing in China. We're investing domestically. The second is M&A, which we actively look at. The third and fourth are returning cash to shareholders. We've had our third consecutive 20-plus percent increase in dividend, and we bought back stock. And I think buying back stock will still be 1 of the 4 that we'll certainly continue to look at.

And our next question comes from Samuel Eisner from Goldman Sachs.

When you look at the 26% growth rate in China for this year, can you maybe talk about how that compares to last year and in particular maybe breaking out the difference between pricing and volume or maybe price mix and volume? Just want to understand the components of the growth that you're expecting for '14 and how that performed in '13 as well.

I don't have the data. I mean, I can make some general statements. Clearly, market share helped. And it was the super quiet growth in the instantaneous market, that helped. That was a contributor. The average selling price of the super quiet is higher, so we got some average selling price benefit there. The electric model we talked about, the increase in price was 4% to 5%. When we brought out that new series 8, that was a benefit because it had value-added features. But that contributed to a higher average selling price and quite frankly, the water treatment grew, as Ajita alluded to, the A. O. Smith-branded more than doubled. So it was a combination of higher price, higher unit sales and higher-watt ancillary businesses like water treatment, combi boilers, et cetera, all of those contributed to the growth. And we also had a distribution growth. We probably went from 5,500 units to about 5,900 units. Now when we turn to 2014, when we talk about the 15%, we won't have those year-over-year benefits for those 3 major product launches that we talked about because we have a full year benefit in 2013. Now what we will have is we expect to still gain market share in both water treatment and the instantaneous. We'll probably grow our distribution outlets some. And more importantly, we'll grow them larger and close some of the non-efficient ones, so the net growth may not be significant but the ultimate growth will benefit. And we expect to still have unit growth because the replacement upgrade market that's happening in China we think will continue to happen. So as we've said, we've grown a lot of different ways in China, and we think that will continue.

When you think about the cadence at 2014, maybe going through the different quarters here, obviously, you have some very tough comps in the middle part of the year where you're comping against 35% growth rates. Can you maybe just talk a little bit about how you think the year will play out, do you think that 15% is pretty constant throughout the year? Or do you think, obviously, with those tough comps, it's going to be much weaker during the middle part of the year?

I guess -- I would guess -- I mean, if you look at China and you look how it proceeds during the year, the first quarter is always the weakest quarter because of the spring holiday, spring festival. So that is always the weakest quarter. When we look out throughout the year, so we would kind of still expect the 15% growth, plus or minus a little bit, being pretty consistent across the quarter.

Great. And then on the new ERP system, I think you called out $10 million or so in the press release but $15 million on the slides, so I'm just trying to understand the difference in the 2 numbers. And then also, in terms of the payback, I mean what specifically are the investments that you're making in the ERP system, and when do you expect to receive the payback and the timing for that? Just trying to get some more information behind the ERP system.

To answer the first one is the total cost in 2014 will be $15 million, but we had about $5 million of expense in 2013. So the incremental is about $10 million year-over-year. When we look at payback, this is going to be an ERP system we're putting initially through North America, completely through North America, and as we look at the paybacks, the installments will start kind of third quarter this year and carry into 2015. And we've done internal IRRs, and we expect to pay back this investment, but it really won't start paying back until late 2015 and going forward because that's when the full install will be done.

Great. And then just lastly, on water treatment, particularly in China. The expectation, obviously, you broke even this year, but is the expectation that you'll be profitable next year in that segment? Just want to understand the year-on-year difference.

Yes. We had, as we mentioned, we were breakeven before amortization, and amortization was about $3 million. So it lost a little less than $3 million on an operating basis. We would expect that to be total breakeven, i.e. an improvement of $3-plus million. We continue to invest significantly on the SG&A side. There were -- we're in about 2,900 stores for water treatment in China. We expect that to grow by 600 or 700 stores. So we're in that period of rapid growth, but we're reinvesting from an SG&A standpoint. But as an entity, we expect it to be above breakeven even including the amortization next year.

And Sam, I think that, that last point is a key point because what we are driving the water treatment business in China is not to get to profitability as quickly as possible but to make sure that we're making the right investments behind the brand and also, making the promotions and advertising to make sure that the Chinese consumer knows that we are in this new category. And that's -- all of that is what helped us grow market share. But those investments are continuing. And it's all included in the numbers that you're seeing in terms of the profitability of the business. We've been planning to invest for the long term in that business.

And are you expecting another 50% to 60% growth rate in that business from a revenue standpoint?

If we have a business of $65 million of which we said about $45 million is non-branded and say $20 million is the legacy, we would expect that non-branded to grow by 50% or so, yes. So the $65 million should grow to $85 million or so next year.

And our next question comes from Michael Molnar from Lorem Ipsum.

My question is around the growth of gas heating in China over the next couple of years. And specifically, China is on the cusp of a massive migration from centralized coal heating in many parts of the country to gas heating, given some of the air pollution. About 90% of heating in China is coal-based, and gas heating is only about 3%, most other economies, it's 50% to 70% gas. And my questions to you are the following: Number one, do you see this transition occurring from coal to gas heating in China? And if so, how is AOS positioned to benefit and, specifically, do you have products -- or what is the product plan to take part in this transition? And then number two, can you help quantify the market size and potential growth? I've seen numbers as much as 1.6 million gas-fired wall-hanging furnaces sold in 2013 projected to double by 2016, and will be interested in your view.

We have -- I don't have data on the space heating market. I'll say we do have products. We have combi boiler products which hit both space heating and potable hot water. It's a relatively small business but it basically doubled last year to over $10 million. So we have that product for the residential side. The products we're talking about for Lochinvar would be residential and commercial boilers for space heating purposes. So we have the products there. And then I think where we very possibly could see some benefits moving off of space heating is we are the market share leader in gas tankless water heating. And as the country moves more to gas, we think we're very well positioned from a tankless product standpoint. So I don't have any of the data on the market size. As we've talked, China has some big migrations. They're going to a consumer driven economy, which will certainly help us as they go to gas. We certainly think we're positioned from a product line. So I think those are some of the benefits we think that are going to help us continue to grow nicely in China.

Our next question comes from Ted Wheeler from Buckingham Research.

I wanted to, I guess, probe a little bit on the aspirational margin in Rest of World. I guess I'm hearing progress in India, losses improving at water treatment. You've got a big plant where absorption should be rising, I mean, these are things that normally drive margins quite a bit higher. And I don't quite get how we get -- essentially, I guess the guidance is flat margins through '15. I wonder if you could just fill me in on maybe some other aspects.

Well, I think I alluded to a little bit earlier, I think Rest of World margin was a little over 13% in 2013. We expect that they'll probably be a little under 13% for 2014, and that's going to be driven primarily by the new plant. We don't expect to see improvement in India because of the investment we're making in the water treatment will offset the investment that we're seeing -- the improvement we're seeing in water heaters. So -- and as Ajita has said before, we're going to continue to invest in the business, and that investment is in the form of promotion and...

I guess I was thinking in '15, though, these issues, I just -- I guess I would think that the impact of the issues and the improvement in the areas that are dragging the company by '15 should give you some margin lift. And I'm wondering why you're sticking with that 13% margin for '15.

Well, as we go under 13%, the margin assumption or aspiration assumes we will get back to 13% or above. And so, we'll start seeing some improvement in India, although India water treatment will continue to be an investment we're going to make for the long term, and it's an advertising-driven type business, so we'll continue to invest in SG&A. So that's why we say we'll be below 13% next year and we expect to be 13% or above the following year.

And I guess, maybe Lochinvar, there might be some margin headwinds as you enter China, is that also part of it?

Yes.

And I'm showing no further questions in queue at this time.

Okay. Thank you very much, and you all have a great day. And if you have follow-up questions, you know how to get a hold of us. Thank you.