Hubbell Incorporated (HUBB) Q1 2015 Earnings Report, Transcript and Summary

Good morning, my name is Chris and I'll be your conference operator today. At this time I would like to welcome everyone to the Hubbell Incorporated First Quarter Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session. [Operator Instructions]. Thank you. Maria Lee, you may begin your conference.

Thanks Chris. Good morning everyone, and thank you for joining us. I am joined today by our President and Chief Executive Officer, Dave Nord; and our Chief Financial Officer, Bill Sperry. Hubbell announced its first quarter results for 2015 this morning. The press release and earnings slide materials have been posted to the Investors section of our Web site at www.hubbell.com. Please note that our comments this morning may include statements related to the expected future results of our Company and are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Therefore, please note the discussion of forward-looking statements in our press release and consider it incorporated by reference into this call. In addition, comments may also include non-GAAP financial measures. Those measures are reconciled to the comparable GAAP measures and are included in the press release and the earnings slide materials. Now let me turn the call over to Dave.

Good morning thanks, Maria. Let me start with little housekeeping first. You obviously have heard a new voice on the call this morning in Maria Lee. Most of you are probably aware but if not Jim Farrell has been a long time involved in our Investor Relations function is moving on to a significant finance role in the operations. I've worked with Jim, as long as I've been with Hubble and I have seen him, as he's progressed through his career and he's been an integral part of the evolution that I hope you've all experienced in not just the performance of Hubble but specifically around our Investor Relations agenda and above the quantity and hopefully quantity and transparency of that communication, more to be done, we'll leave that up to Maria, but I just want to acknowledge Jim, Jim is thankful that he's part of our transition, he's sitting in the room today, so feel free to ask him any of the tough questions that you might have to Maria. We are fortunate to have someone like Maria Lee to join the team certainly someone who is very familiar and comfortable around the industrial space and specifically known to some or many of you. So we are confident in what Maria brings to the team and will add as we continue to advance our shareholder communication agenda, so thanks Jim, welcome Maria. Now on to the business of the call, the first quarter results I am obviously pleased to report a very solid start to the year in the first quarter, 7% sales growth with a nice balance between organic and acquisitions with offset by little bit of foreign currency headwind. The end markets performed largely as we expected, notably some good strength in the non-residential construction partially offset by the weakness that we expect and maybe coming a little sooner on the energy related business. I won't still boast on there but a particular note for me is it’s the good performance on our lighting business with our core business within lighting both commercial industrial as well as residential reporting double-digit sales growth. Our industrial business is up slightly, little bit of weakness that we're seeing now, we'll talk more about that later. And as you saw the power business up very nicely in the first quarter. One negative is around Harsh & Hazardous is particular we knew that was going to be a challenge going in into the year and that certainly is turning out to be the case. But all that considered 7% sales growth is very good from my standpoint as a start to the year. Our margins are 13%, again nice performance certainly we would have in a normal environment expected that to be closer to 14% with the incremental volume but that 13% on a reported basis does includes a half a point of restructuring related costs as some of the unfavorable mix particularly associated with the Harsh & Hazardous decline and some of the acquisition dilution as we have talked about in the past. So while that's giving us diluted earnings per share of $1.07 or a $1.12 which exclude the restructuring and related costs. On the restructuring front, as noted we have $0.05 of impact on our earnings per share, I think we're proceeding nicely with gross reduction efforts and that include facility rationalization, managing our personnel cost as well as streamlining some of our back office operation and we're continuing to focus on identifying and executing opportunities as they come up and we'll talk more about that as the call goes on. On the capital deployment side, I'm also pleased that we had a lot of activity in the first quarter. We have mentioned the acquisitions that we closed early in the quarter. Acme Electric, a business that supplies dry-type transformers and that's in our commercial construction business. Turner Electric transmission substations switching in our power business and electric controller and manufacturing, providing DC contactors and crane controls in our industrial business. Combine that we invested a 126 million in those three acquisitions in the first quarter. In addition, we return to 109 million to shareholders, the above share repurchase 76 million of share repurchase; and then our ongoing dividend program close to $33 million, so all-in-all a very good start to the year. Let me turn it over to Bill at this point and maybe he can go through some of the details of the operations and specifically the segments and then I'll come back and talk about our outlook for the rest of the year. Bill?

Thanks Dave, good morning everybody, I know what a busy morning it is here with lot of [indiscernible]. So I appreciate you joining us. I am going to use the slides that I hope you found and I need to echo Dave's comment and thank Jim, he's been a great partner of mine for last seven years and I'm really looking forward to working with him and his restructuring work that he is doing going forward in and also very excited to be working with Maria, so welcome, Maria. So Dave will walk us through Page 3 of those slides, so I'll start on Page 4, where we're focused on the sales story. So you see the $110 million of sales there, growth of 7%, we break that down into end markets here in terms of the organic story and you really are seeing some bifurcation here in our end markets. The non-res market showing some descent strength both in new construction as well as renovation that appears to us will be reasonably broad based and touches several of our business units. When we get to the discussion of our electrical segment, I'll describe a little more detail but that feels like reasonably good news to us on the non-res front. On the industrial side, you see a different story, you see the appreciate that Dave described as being down. You see the general manufacturing in industrial production providing just very modest growth, so big difference between those two markets and utility market growing but also quite modestly. That's really the state of our end-markets have become a residential side, feels to us like it's growing, we have some differences between orders and shipments based on some of the big-box activity that can be a little bit lumpy on the national account side, but it feels healthy. I know some of the data comes across a little bit mix some of the builders' sentiment, though, is reasonably using our color vernacular here is reasonably green, I would say. So, good story on the organic side, I think as Dave highlighted and I think from the acquisition side, 4% growth very nice balance, I think, complementing that organic growth. The fact that there are seven deals that are contributing to that, I think is a good sign of business development program success, we got three new deals as Dave described from '15 and four that are ramping around from last year that are contributing incrementally. Those seven deals are spread around across the lighting power and electrical systems segment, so quite a broad based success there and something I think worthy of note. On Page 5, we're really breaking a little bit here from our traditional convention and we're using adjusted measures for these next several pages, we believe that that's a more helpful way to describe the comparability year-over-year of the actual performance of the business and so what we've done is we've taken that $0.05 for $4.4 million of restructuring and related expense and pulled it out, as Dave commented earlier. The lion share of that spending is at the gross margin level rather than the S&A, so the bulk of the adjustment affects there but I'm going to be speaking about adjusted measures as we go over these next several pages. So you see gross margin declining 60 basis points from 32.3% to 31.7% and you really have mixed drivers on three levels. You've got product mix which really describes within a business, the less profitable products within the business you've got that different market growth that I was describing which has been a trend of ours for the last few quarters where you've got higher non-res growth, where we got some of our lower margin and businesses than lower industrial growth where we've got some of our margin and that creates this mix headwind. And then with acquisitions being half the growth those as you all know coming in their first year at lower margins and all three of those things combined to create those mix headwinds. On the selling and administrative side you see an improvement of 30 basis points from 18.5% down to 18.2% and I think it's noteworthy to realize that, that dollar growth is largely driven by the three new acquisitions that Dave highlighted. So again it often takes time to get those integrated and get the S&A on the new acquisitions functioning at the most efficient level. And so good sign to see good leverage there in S&A I think. Page 6, we’re switching to operating profit and again we’re adjusting out the restructuring related expenses. You see the 30 basis point drop on adjusted basis from 13.8 to 13.5, 4% growth in dollars and again the drivers are the mix and the volume leverage on the S&A side. On Page 7, we've got our non-operating expense and you will see significant growth there but obviously small dollar amounts and basically last year's first quarter was essentially our net interest expense while this year had some foreign exchange losses and that’s why you see that growth there. I am going to pause and just give you a little bit of color on FX in general. It affected us to the tune of about a nickel for the quarter that includes the translation of sales NOP that includes the transactions of purchases made in foreign currencies and includes this non-OP impact of our monitory accounts. It does not try to quantify any impact on the competitiveness of some businesses that might be selling in revenues in one currency with the COGS in another most notable example for us might be something like our high voltage test equipment business which would be selling in dollars or euros and have lot of COGS in Swiss francs and that can have an impact that doesn't quantified in that nickel. But that’s about the magnitude of the headwind we faced in the quarter. Moving now on to taxes, you will see about a point pickup there in the tax rate and that’s because last year's period had a favorable discrete item which was settlement of the service and truly the mix of earnings towards higher tax geographies which is mainly the more domestic that’s driving that up a little bit. Both periods just for clarity had similar treatment to the R&D tax credit namely not included. Page 8, the outcome of all those drivers is adjusted net income 64 million up 2% and you see our adjusted diluted earnings per share up 4% at $1.12 that improvement of 4% versus income growth that too driven by the fact that we purchased about $76 million for the shares in the first quarter. So just to update you on our share repurchase program during all of last year we bought back about 105 million of shares in the fourth quarter though after we were reauthorized with $300 million authorization we purchased about 70 million plus this 76 gets us close to having utilized about half of that authorization. Switching now to our segment discussion on Page 9. You will see 6% sales growth to 570 million, again that balance of acquisitions with four points and organic was four points. And again here you are seeing that bifurcation we talked about on the end market page where the non-res is showing us some strength, we see that in areas like core C&I part of our lighting business which was up mid double-digits mid-teens and double-digits strong growth there, see similarly strong growth in areas like our rough-in electrical and some of the other non-res facing businesses, versus on the industrial side we saw Harsh & Hazardous down about 10% and that’s consistent with how we described the year expecting to be down where the first quarter would be down less than the rest of the year. So we see an accelerating decline and we can talk more about that when we get to outlook. But the remainder of the industrial businesses that face off against general manufacturing were quite modest in the growth. So that’s dampening by Harsh & Hazardous and the price of oil was quite significant. On the performance side, you see a decline in adjusted OP margins of 90 basis points to 11.7. They had that mix headwind that we've discussed. They had price cost productivity headwinds which included a discrete charge that we took in the first quarter around a commercial issue that was just less than a point. So price cost productivity except discrete item was little bit better. I know you all watch how material costs are unfolding in productivity. But that proves to be unfavorable with that discrete item and the volume obviously brings incremental profit with it. Page 10, has the power segment and very strong performance in the first quarter by our utility team. You see there 240 million of sales, 9% growth rate, 5% of that growth coming from acquisitions. That’s a very strong level of activity by them. And again a good pay-off comes from business development activity that we invested there. And the organic of 4% we feel is outperforming the end market there. So nice organic growth as well. The drop through on operating profit you see an increase of OP margins to 17.8% or $43 million. That represents in the low 30s of incremental drop-through, I would argue that’s little bit better than we would expect typically, you see those acquisitions had some headwind impact on the margin, but price cost productivity for power was favorable. And again you saw some material cost benefit that was driving that equation. We find those variables tend to even themselves out over time. So that favorability that doesn't feel like it's sustainable all the time for us, that's very strong quarter for the power team. Page 11, is cash flow, and you will see a comparable amount of net income, higher level of D&A as a result of our acquisition activity, slightly more efficient on the working capital side and the other is driven by some pension funding that we did in January as a result I think we've talked about that at year-end where we had mortality tables and lower interest rates necessitated and un-required but optional funding that we did there. And on the CapEx side we see good pickup there being driven in large part by some of the productivity projects that are typical but also some of the restructuring activity that Dave highlighted earlier. So first quarter is always our lowest cash flow year -- sorry lowest cash flow period of the year, but I think those drivers originally as expected. Page 12, we've got our capital structure. You will see a comparable amounts of debt but the change that you'll notice is little bit less cash, we had significant amount of deployment in the quarter, the 126 of acquisitions that Dave mentioned the dividends, the CapEx and the share repurchases driving deployment of some of the free cash that we had on the balance sheet. So, still very opportunistic balance sheet in terms of being ready to invest with net-debt-to-cap of 5% and debt-to-cap of 24%. So that concludes my comments on the quarter, and I will switch it back to Dave to discuss our outlook in the balance of the year.

Thanks Bill. Page 13, our pie chart with our end market outlook. Let me start with the positives first, so upper right-hand side on the utility market. We continue to think that, that will be growing at a modest 1% to 2% consistent with where we saw as we started the year, certainly our performance in the first quarter would indicate that it could be a little bit better but that on we will stay with our 1% to 2% for now that’s our best outlook. On the residential side similarly no change there at our 6% to 8%. There is certainly been volatility as the over the last few months in some of the data points as well as some of the builder indicators and builder optimism I think that more recent view is more positive, but nothing that would be outside of this 6 to 8 on either end. So we’re comfortable with 6 to 8. The non-residential equally consistent with how we started the year at 5 to 6. I think our results in the first quarter might suggest that, that could be stronger. I think some of the indicators might suggest it's going to be stronger. I know the latest ABI was up, and there is a view but that is a positive. Although I think as I look at it I look back at the -- recognize that has a 6 to 9 month lag associated with it. And I think it peaked 6 to 9 months ago we’re just being very cautious about how that plays out. I think the other part of it is within our business we see two different dynamics one certainly as we've seen on the lighting side, the lighting element of non-residential is stronger but the flip side is that those businesses within non-residential construction that are more geographically aligned with some of the oil and gas markets Texas, Oklahoma, North Dakota even in Pennsylvania. Some of our businesses have seen some pockets of weakness there as collateral impact from the oil and gas markets. So five to six still holding there, the industrial side a little weakness that we've experienced so we're looking at that market being a little bit weaker taking that down to two to four from three to five previously. The big item is on the Harsh & Hazardous market, recall last quarter we sized that as being down 15% to 20% and we weren't seeing the declines early on and so the expectation was in order to even do 15% to 20%, it was going to really decline rapidly as the year progress. We started to see more declines earlier that business has actually finished down for the quarter. So as we look out we think that's got more weakness, hope 20% to 25% is a good number at least for this year but had that's the ones place that we see more softness in our outlook. So as a result when you put that together the composite is more on the low end of the range before we had one to two we still think we could see two with some of the strength that we've seen in other businesses but at the same time if that doesn't continue and Harsh & Hazardous plays out as expected or worse you could be on the low end right now. So, I turn to how does that play up for the segments on the power side on Page 14, that business is expected to be up on the sales reported basis of 5% to 6% with the growth in the market as well as with the acquisition impact up mid-single digits. On the electrical side people expect that to still be up 6% to 7% with solid growth continued to be expected in the construction markets general industrial modest growth up Harsh & Hazardous being a dampening item, of course we have acquisitions contemplated in that growth as well, largely acquisitions that have already been completed but there is some element of assets is around the acquisitions that we are anticipating and certainly attempting to bring home this year, that's always a point of uncertainty because they're not close until they are absolutely in the house and very often happens that you can get it right to the finish line and something comes up. We think we've got enough in the pipeline that we're working on and it'll be just a question of timing. So all of that turning to the outlook page as I said gives us a sales increase of 5% to 7% with our end market growth of zero to two. Organic growth expected to outperform the market particularly with some of the new product introductions that I think both are benefitting us and then the acquisitions contributing mid single-digits. That still contributing to our outlook for the year of earnings per diluted share of 535 to 555, that still includes $0.25 of restructuring and related costs and the savings in next year being at the same level of the cost this year, that's the plan. I would tell you that have 535 to 555 is certainly more challenging three months from one week we first established it as you look at particularly the impact on the Harsh & Hazardous, but the trade off is some of the strength that we've seen in the other parts of our business particularly the great performance that we're seeing improvement from the lighting side as well as some of our other businesses and utility being an example. So I would tell you are more cautious about that outlook when I was three months ago, but we also have gotten a lot of focus and attention around our cost reduction actions lot of possibilities but a very -- trying to maintain a very disciplined approach to returns and successful execution. And again the last piece on the outlook and the free cash flow continuing to target to be at 90% of net income. I think the other point that I would make is as we look at the year and certainly the bigger risks are in the second half of the year depending on how the Harsh & Hazardous plays out, there is any other softness. I think our normal calendarization might be a little different this year as we are particularly if you think about the challenges that we faced in the third quarter and fourth quarter of last year and the improvements in lighting that's going to continue throughout the year. So I think there is a little bit more of a bias towards the third quarter from the second quarter as well I think there is a some of our restructuring actions have some other implications one in particular will be on our tax rate, some of the things will result in as we’re currently anticipating a little higher tax rate in the second quarter than normal. Don't think it’s going to affect the full year because there is other actions that will come out in the second half. But just to provide some color on that on different balance. So all-in-all we’re still working, lot of year still to go, lot of opportunity to continue to address some of the market challenges that we face, but at the same time some optimism around at least our performance in some of the markets that can continue would be well on our way to maintain this. So with that, Maria I'll turn it back to you and if you want to see for questions.

Sure, so Chris I think we can open it up for questions.

[Operator Instructions]. And your first quarter question is from Rich Kwas with Wells Fargo Securities. Your line is open.

On the restructuring, so the $0.25 and now that we’re three months into the year, what are your thoughts around having to do incremental restructuring and now that you have more visibility on the state of the business. And is there more to do as we think about next year you typically do little bit restructuring every year but just trying get a sense for '16 it's going to get back to a normalized rate in '16 or if there is number that’s probably maybe above that.

Rich I would say, it's just only April and you want '16 guidance, already, really pushing. But on the restructuring I understand and I would say that as we’re -- as the organization has been much more proactive in identifying, evaluating and stressing potential opportunities, I would say that there is more opportunities that we’re identifying and that would likely be could be a little bit more of this year although again I have got to remind our team that we got to make sure that whatever we decide to do we’re going to deliver the savings, and we can execute successfully. But I think there are some things that we will certainly move into, if not start it by the end of this year, move into '16. And so the level of spending should not be higher than this year, but it would more likely than not be higher than our normal historical run rate. So there is a still little bit catch up going into the next year.

And then Bill on the buyback, so pretty meaningful relative to trends for the quarter 76 million. What are your thoughts about, is this going to be -- do you think this is going to be more consistent approach to returning capital. I know you're focused on M&A and keeping powder-dry but there is an argument to be made that act now and then you have to take on some leverage later in the year, next year for a bigger acquisition that would create more shareholder value. So just wanted to get your updated thoughts there?

I would say Rich that the $100 million a year, I think is more likely the new-new than $76 million a quarter I would say. So I think a higher level of activity but this we sort of got an early I would describe it get an early jump on it this year rather than just spreading it equally throughout the quarters.

And then Harsh & Hazardous, so based on what you are seeing right now there is incremental pressure, I guess just taking a temperature 20 to 25. Dave what's your level of confidence at this point and I realize it's a fluid market but with your customers what you're hearing and seeing out there from them, how would you characterize confidence level in that number at this point?

I think that’s from my standpoint our best estimate from what we’re seeing and hearing. I mean certainly we’re cautious because there are some indicators you look at rig count down to 50% and that would drive a more dramatic impact. We have heard and we’re starting to hear a little bit about some pushups into '16, not in a large way but when you first hear about them there is a potential for more. And then not surprisingly as a result of the magnitude to get into little more pricing pressure out there. So I would say from the volume standpoint I feel pretty good about the 20 to 25, I think what remains to be seen is that the margin impact become greater. I think certainly that magnitude of volume change causes us at least another nickel of headwind at least and that’s assuming that there isn't a dramatic in pricing. So we’re very focused on that, but it's a little too early make a absolutely firm call as you know our business a lot of business is driven in the second quarter into the early in the third. So we are monitoring this closely and to extent we see something different and were also listening very carefully to what other people are experiencing as well. And as a long way to answer to hope you are getting through it I'm confident at this number today but we're monitoring it on a daily basis.

Your next question is from Christopher Glynn with Oppenheimer. Your line is open.

So, it seems like you're one of the few companies where the quarter actually went as expected, at least on the surface. I'm just wondering if there was anything strange about the linearity in general or in specific businesses, kind of the March versus January look and maybe a comment on April.

Yes. I would say Chris your word linearity I think is a great word because I would love to have in it and we really don't try it, so for example I would say March started reasonably choppy and ended strong and so there is not a tonne of linearity within a month even that alone from month to month. And so there were interesting things in the quarter like businesses where we do a lot of grounding that are the weather sensitive stuff was a little softer than we had hoped and then as Dave said some of that other non-res was reasonably okay. So it's difficult to get to linearity and therefore your second question about April, were 21 shipping days -- sorry 15 I think shipping days into the months and there is nothing unusual in that pattern given that we've had ups and down. So the order pattern was in April I'd say is consistent with the way Dave was describing our outlook but it is not a nice smooth consistent linear set of data with which to make our forecast.

But the year-over-years didn't really diverge comparing say January and March.

Yes I would say -- no I think between those months you just saw choppiness within the months now you didn't see a big intra-quarter like backend loading our anything like that.

And then, Dave, did you say that you have your traditional seasonal peak into the third quarter, you said that would likely be accentuated this year?

No more on the -- I was talking more about the earning side in our profitability and the balance and profitability I think the seasonality of our volume in the third quarter is the point of caution because I expect that to be the same. And so much is dependent on that when I look at the full year outlook it clearly as dependent on the third quarter playing out as would be normal from a volume standpoint.

And if we look at the roughly $0.20 remaining in restructuring to get to the $0.25 for the year. Could you just comment generally how we would spread that out? And also, any kind of early information you could give on expected timing and amounts of savings from this year's restructuring?

I think that it'll be restructuring let's not take the timing of the cost first certainly we're getting more traction were initiating more actions and I would expect the second quarter to be at least that twice the level of the first quarter. Could be a little bit more but that it's around the executability and the action items. From a savings standpoint actually to the extent that they are staffing related actions in the first half, you'll start to see some of those benefits in the second half but on the facility side by comparison those benefits don't start to get realized until late in a year or early next year because it's more of the tail on that. So we're expecting that to currently looking for some min single-digit savings as we exit the year something in not that order magnitude curve.

Mid single-digit out millions?

Million yes.

And then when all grossed up and you're at the full run rates, would it be comparable for the spend?

Yes.

Your next question is from Mike Wood with Macquarie. Your line is open.

It seems like non-res seems to be one of the bright spots by end market. You gave the lighting growth, but I'm curious if the first quarter organic growth for non-res in total is tracking in line or above your full year forecast. And if you just give what kind of trends you are seeing there in terms of if you're expecting that to slow down or if recent trends have been more robust and could exceed your expectations?

I think Mike what you are seeing is our used to that description that we think that we outperformed the end market a little bit. So you are right to point out that both C&I lighting and some of the non-res businesses grew higher than that end market outlook of the 6% that Dave described, but that’s what we think that was. So we’re not expecting market deceleration if that was your question.

But just in terms of the non-res overall growth, do you have that number just relative to where it was in the first quarter to that end market?

We think that end market is consistent with our 5% to 6% outlook. I don't think there is a lot of choppiness there.

And then in terms of utilities, I know you are expecting a lot of the growth from transmission rather than distribution. What do you think prevents that distribution market from just getting to a more typical GP type growth rate?

I think we need to see housing expansion continue and to get the construction to continue to the point where that all that last mile hookup is needed. I also think is got on the MRO side. So really that D is driven by MRO, and we need utilities to have some good financial quarters where they feel like they have got, because that MRO spend as you know comes out of their operating budget not their capital budget. And so we need them to feel comfortable spending on the operating side that’s based on the amount of revenue they can generate which would be helpful if they had some support from their local commissions on pricing and things like that. But it's I think they got some interesting challenges and fuel price changeovers and where they are putting their attention and their dollars right now. So there is a lot of competition for those dollars. But I agree with you it will be -- it should be in that nice normal GDP level typically.

Your next question is from the Noelle Dilts with Stifel. Your line is open.

Noel we can't hear you, if you're on mute maybe.

It looks like he's dropped from the queue. So we'll take the next question which is from Brent Thielman with D.A. Davidson. Your line is open.

In terms of the Harsh & Hazardous outlook a little worse than maybe previously thought. Is there a competitive factor built in there as well? Are you starting to see the pricing pressure in that business for the nice margins you tend to how they are holding up?

Brent I would say that the outlook that Dave described has kind of this U shape to it, right? Where the first quarter though down dramatically is not down as bad as we expect year and then it will hang down there I think for a while. And so the pricing the days where we’re seeing kind of the more normal pricing dynamic against that lower volume haven't happened yet. So I think that’s all still in front of us and to extent that competitive reaction is strong there. That’s still I think a little bit ahead of us. So what we’re describing in our outlook is still ahead of us not something that is based off of run rates that we’re experiencing right now.

And then Bill you mentioned that the deals you done coming in at lower margin this year, is those anniversarying and moving to next year most or all those become margin accretive to have those consolidated or all of equal in terms of your mix?

Yes, I would say that in general that’s a reasonable assumption I think this batch is maybe going to take a couple of years to get to that point but your mindset is right that our expectation is to be able to take something and improve upon where it was and make it more like incremental to our fixed cost and therefore contribute that incremental accretive contribution.

And we've no further questions in the queue at this time. I will turn the call back over to Ms. Lee for any closing remarks.

Well we know it's a busy day so thanks for taking the time to join us this morning. I will be available throughout the day for questions, and feel free to call if you have any follow-up. Thank you.

Ladies and gentlemen this concludes today's conference call. You may now disconnect.