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Kennametal Inc. (KMT)

Q4 2014 Earnings Call· Thu, Jul 31, 2014

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Transcript

Operator

Operator

Good morning, I would like to welcome everyone to Kennametal's Fourth Quarter Fiscal Year 2014 Earnings Call [Operator Instructions] Please note that this event is being recorded. I would now like to turn the conference over to Quynh McGuire, Director of Investor Relations.

Quynh McGuire

Analyst

Thank you, Denise. Welcome, everyone. Thank you for joining us to review Kennametal's fourth quarter and fiscal year 2014 results. We issued our quarterly earnings press release earlier today. You may access this announcement via our website at www.kennametal.com. Consistent with our practice in prior quarterly conference calls, we've invited various members of the media to listen to this call. It's also being broadcast live on our website and a recording of this call will be available on our site for replay through September 2, 2014. I'm Quynh McGuire, Director of Investor Relations for Kennametal. Joining me for our call today are Chairman, President and Chief Executive Officer, Carlos Cardoso; Vice President, and Chief Financial Officer, Frank Simpkins; and Vice President, Finance and Corporate Controller, Marty Fusco. Carlos and Frank will provide further explanation on the quarter's financial performance. After the remarks, we'll be happy to answer your questions. At this time, I'd like to direct your attention to our forward-looking disclosure statement. The discussion we'll have today contains comments that may constitute forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve a number of assumptions, risks and uncertainties that could cause the company's actual results, performance or achievements to differ materially from those expressed in or implied by such forward-looking statements. Additional information regarding these risk factors and uncertainties is detailed in Kennametal's filings with the Securities and Exchange Commission. In addition, Kennametal has provided the SEC with a Form 8-K, a copy which is currently available on our website. And this enables us to discuss non-GAAP financial measures during this call in accordance with SEC Regulation G. This 8-K presents GAAP financial measures that we believe are most directly comparable to the non-GAAP measures, and it provides a reconciliation of those measures as well. I'll now turn the call over to Carlos.

Carlos M. Cardoso

Analyst

Thank you, Quynh. Hello, everyone. Thank you for joining us today. During the June quarter, we saw accelerated growth and ongoing strength in our served industrial markets, however, certain sectors remained challenging. While transportation and general engineering benefited from higher volumes in both direct and distribution channels, underground mining activity declined further as additional U.S. mines closed. Road construction projects also got a slow start this season with the weather conditions, but have increased in recent months. On a more encouraging note relative to our infrastructure business, the energy sector showed further improvement in demand. Our June quarter sales for the total company increased 15% from prior year, with organic growth of 5%. By comparison, when IHS adjusts its estimate to the weighted average specific to Kennametal's market and geographic mix, it shows relatively little growth from the prior year. This points to mixed conditions in our infrastructure markets with further weakening in underground mining, but improving demand trends in road construction and energy. On an overall basis, that indicates our business outpaced IPI, validating Kennametal's ability to deliver growth at 2 to 3x the IPI over the economic cycle. From a macro perspective, IHS estimates that global IPI increased by 3.6% for the June quarter. Our Industrial segment, which typically has a strong correlation with the index, reported total sales increase of 15% year-over-year, with an 8% organic growth in the quarter. So our Industrial business outperformed the index as well by more than 2x. We expect to build on that trend as the demand cycle improves. In addition, we continue to leverage our indirect channel strategy through both Kennametal and WIDIA brands. This strength is reflected in our distribution sales growth of 9% for the June quarter and 8% for fiscal 2014. Clearly, we are increasing our presence…

Frank P. Simpkins

Analyst

All right. Thank you, Carlos. As with prior discussions, some of my comments are related to non-GAAP measures. So let me start by saying that the June quarter did not turn out as we had anticipated. There are a number of factors that led to the difference in our results versus our previous guidance, and I'd like to discuss those items before we go into greater details of the quarter. But first, on the positive side, we saw strong organic growth as expected in our Industrial business, and that was driven by increased demand in transportation and general engineering. Also, the indirect channel continues to show high levels of activity, and we delivered 3 consecutive quarters of solid growth in the Industrial segment. The 2 acquisitions we made in fiscal '14 are on track to deliver significant savings over the next couple of years. For the June quarter, the TMB acquisition that we started last year contributed earnings of $0.03 per share. Also, we accelerated restructuring actions and divested a non-core business for $10 million in net proceeds. This reduced our manufacturing footprint by another location. Our Infrastructure business, as Carlos mentioned, continue to be challenging, primarily due to lower-than-expected growth in the mining sector. Slowing conditions globally and additional U.S. mine closures resulted in further declines from the prior year, as well as sequentially from the March quarter. The visibility on cluster demand going forward remains limited. In road construction, activity in the U.S. trended below our forecast due to a later start in availability of funding from certain states. However, there was a sequential pickup from the March quarter. Therefore, lower sales volumes and related product mix in the Infrastructure segment had an unfavorable impact on the segment margin compared to our expectations. In addition, we felt it…

Carlos M. Cardoso

Analyst

Thank you, Frank. As we go forward, we'll continue to leverage digital technology such as our NOVO platform to better serve customers and drive growth. We will execute strategies that are consistent with our long-term growth goals, while maintaining a sharp focus on profitability. We will seek to maximize growth in top line, earnings and cash flows. At the same time, we will further balance our global presence to generate revenues in equal terms from North America, Western Europe and rest of the world regions. We will also diversify our served end markets and business mix to lessen volatility throughout the economic cycle. As always, we will seek to protect our profitability and elevate our base performance. In addition, we'll streamline our cost structure and balance our global manufacturing footprint to better serve shifting demand patterns. Along those lines, we will continue to integrate the Tungsten Materials business and implement restructuring initiatives to deliver promised cost savings. We'll continue to manage our business and control what factors we can. As we enter fiscal 2015, we believe that Kennametal is well positioned, and we are cautiously optimistic that the global economy will continue to improve. In the meantime, Kennametal has an excellent business model and a management team that is committed to disciplined operating principles. Thank you for your continued support. We'll now take questions. Thank you.

Operator

Operator

[Operator Instructions] And our first question will come from Samuel Eisner of Goldman Sachs.

Samuel H. Eisner - Goldman Sachs Group Inc., Research Division

Analyst

So maybe you can talk a little bit about the cadence of particularly industrial growth throughout the quarter. Curious how that moved particularly in June? And then also, what are the early looks that you're seeing on July?

Carlos M. Cardoso

Analyst

Well, let me start and Frank will pipe in. I mean, I think, as we said earlier, we are being consistent growing 2 to 3x the IPI. The IPI, when we look at the IPI forecasted is consistent. And again, the thing that makes us excited about the industrial growth is the fact that we see some really positive numbers out of the distribution, which is typically a leading indicator for us. So it really is showing us that the industrial -- the strength is going to continue forward.

Frank P. Simpkins

Analyst

Yes, Sam, I'll add. I think it got progressively better throughout the quarter, April, May and June. June, obviously, is a key month for us, and that came out as expected. I think there's 2 factors. I think there was probably some pent-up demand from the prior quarter, but our own internal initiatives by focusing on the fill rates and, as Carlos mentioned, on the indirect channel. Indirect channel was up 9% again, which is very strong. And I think there's a nice correlation now in the industrial side with the fill rates for our high movers, the As, the Bs and the first choice program that I think our distributor and our customers are more comfortable now. So we like that trend. And I think on the industrial side, that's carrying through into July.

Samuel H. Eisner - Goldman Sachs Group Inc., Research Division

Analyst

Understood. And then you mentioned that, I guess, you guys did your own kind of destocking this quarter. I guess what were production rates on the infrastructure side throughout the course of the quarter? And how do you see that playing out through both the first and second half of next year?

Frank P. Simpkins

Analyst

If I had a -- looks like a tale of 2 segments, right, where we have probably high-70s, close to 80 on the industrial with much lower ones on the infrastructure side. We took $10 million of finished goods out, as well as some raw materials and that had about a couple million dollar impact just on the reduction of inventory in Q4.

Samuel H. Eisner - Goldman Sachs Group Inc., Research Division

Analyst

And then just lastly, in terms of restructuring, I believe if you're going to spend about $50 million in total. I believe you're about $30 million remaining through fiscal '16. Is that all expected to go in '15? How do you see that playing out over the next few years?

Frank P. Simpkins

Analyst

I would say, Sam, what we're trying to do here, we're going to try to front load and get this thing done. I probably would say 2/3 of the cost will happen in the first half, with 1/3 in the second half. And I would say, we'd be about 95% done. There could be a small spillover the way we have it laid out now. But obviously, we're going to try to get it all wrapped up, the cost in this year as much as we can. So small carryover potentially into the following year.

Operator

Operator

The next question will come from Julian Mitchell of Crédit Suisse. Jonathan Shaffer - Crédit Suisse AG, Research Division: This is Jon Shaffer for Julian. I was just wondering if you could talk a little just kind of longer term as to when the balance sheet moves into a position where you begin to consider more buyback or acquisition. And if there is some kind of internal target, debt-to-cap at 30% or 35% that you guys are looking at.

Frank P. Simpkins

Analyst

I think our long-term goal is always to maintain. We go back to our capital structure principles, where we want to be maintaining our investment-grade rating. And that 30% to 35% is kind of probably in the sweet spot. And at times like we're at right now, we'll go a little bit higher. And as we continue to generate cash, we'll pay down debt. I think the near-term focus is on debt reduction. I think that needs to be front and center. And then as that comes back in line, we'll look at the performance, and then we'll evaluate the other options available to us from a balance sheet perspective. But that's the main focus right now is debt reduction, and then we'll evaluate as we continue to try to increase our cash flow to see what other opportunities we can do. Jonathan Shaffer - Crédit Suisse AG, Research Division: Sure. And then just as a quick follow-up. Kind of as cash flow come back up and the debt goes down, are there any -- if you were to pursue acquisitions as opposed to kind of buyback or increasing the dividend, are there any particular areas that you think you would continue to focus on?

Carlos M. Cardoso

Analyst

Yes, I mean, our focus continues to be on the components business, investment castings and bolt-ons just like TMB, if we have an opportunity to get more. So the strategy is consistent to the strategy that we've been executing. And in the industrial space, there was a lot less available than -- there's been a lot of consolidation in the past decade in the industrial space. So the opportunities really lie more in the infrastructure side of the business at this point.

Operator

Operator

The next question will come from Eli Lustgarten of Longbow Securities.

Eli S. Lustgarten - Longbow Research LLC

Analyst

Can we talk a little bit about the 2 sectors separately as far as '14 and how you're looking at them in '15. In both cases, it looks like the contribution from TMB was less than I had expected versus that -- with 70 to 70 -- what $72 million, I guess, little lighter than I would [ph] expect. When we talk in the industrial sector what's going on and with a 3% to 5% organic growth rate for '15, I assume that the industrial sector you're projecting is in the 7% or 8% or some number like that for 2015? And will margins be similar in 2015 to '14? Or you're expecting an improvement in profitability in the industrial sector?

Frank P. Simpkins

Analyst

We're definitely expecting improvement in both businesses. And then, Eli, to the organic, yes, you're right. I mean, directionally, we expect industrial to be quicker and grow stronger based upon what we've seen. And then we expect the infrastructure to continue to lag given the underground mining application. And we're trying to make sure that we leverage the business in the surface opportunities in our international markets because we expect the U.S. to be flat for a while to down, and then eventually the international markets picking up a little bit, but offsetting other parts of the business. So without getting into the specific numbers, we expect industrial to be stronger than infrastructure. We expect profitability to be up. And I'm sure there was some impact on the TMB from a sales perspective. As far as we know, nothing unusual. The profitability of that base business, which is in the -- if you take out the D&A, has about 11.8% profitability. And as we continue to get some additional synergies related to the restructuring activities, we divest that underperforming business, we like the direction for the industrial business.

Carlos M. Cardoso

Analyst

Eli, I would tell you that this is consistent with historical parts of the company. Our industrial business has high highs and low lows. And our infrastructure business doesn't moderate at high highs and low lows. So what we're seeing right now is very consistent -- the industrials come from a very low base and is going to grow and accelerate faster than the infrastructure.

Eli S. Lustgarten - Longbow Research LLC

Analyst

Are you expecting positive organic growth in infrastructure in '15?

Frank P. Simpkins

Analyst

Yes, slightly.

Eli S. Lustgarten - Longbow Research LLC

Analyst

Great, slightly. And so most of the growth is coming from industrial. You had respectable margins in industry, so you're doing better. Do think there will be enough positive trends to give you modestly better margins in infrastructure in the second half in 2015 or are we talking about very similar profitability? And will the volatility be more level or is it going to be all over the place again?

Frank P. Simpkins

Analyst

Again, that's tough to answer, all over the place. I mean the stuff that -- I think it's definitely going to be modestly better than what we have this year.

Eli S. Lustgarten - Longbow Research LLC

Analyst

And what, I guess, the 12-month number for TMB was what, about 2 -- a little under $200 million? So I think that's what the 12 months, the numbers look like. I mean, how much do we expect to get for -- what kind of growth do you expect out of TMB for 2015 versus '14?

Frank P. Simpkins

Analyst

Yes, the number, I think, was 186-ish which was in there. It's tough. As I said in the update, we've integrated these 2 pieces into the respective business. So it's going to get tough to track and say, "Hey, we know that TMB sales were this." So if we're selling to Baker Hughes, was it a legacy Kennametal sale or was it a TMB sale? So it's going to be challenging. That's why we try to give it to you both organically. We're going to provide the synergies going forward. But when you're integrating the business, it becomes too hard to pull it out.

Carlos M. Cardoso

Analyst

I think it's going to be consistent with the Kennametal base business.

Frank P. Simpkins

Analyst

Yes. I mean, this is a mini Kennametal when you really think of it.

Carlos M. Cardoso

Analyst

Yes.

Operator

Operator

The next question will come from Adam Uhlman of Cleveland Research.

Adam William Uhlman - Cleveland Research Company

Analyst

Could you talk to your price realization expectations, as well as material cost expectations for this coming year?

Frank P. Simpkins

Analyst

Yes, if we bifurcate the number, I would say in total, they'll be slightly positive with maybe around 1% in industrial and slightly negative in infrastructure. So I think that's the way it's playing out right now. And then as far as, I'll call it, raw materials, with with the biggest being the tungsten, that's been relatively stable to down slightly. So there could be, if it stays this way, maybe a little bit out -- a little bit of favorability potentially with some raw materials. But right now, it's looking like pretty good shape.

Carlos M. Cardoso

Analyst

Yes, the raw materials will be consistent with the level of growth. If we grow at -- if the economy is going to grow at the projected rates that we have, we'll probably stay the same and/or slightly better. If all of a sudden, we see a higher demand, then that will change a little bit.

Adam William Uhlman - Cleveland Research Company

Analyst

Okay. Got you. And then I was wondering if we could dig into the Industrial segment performance in Asia, like 15% growth is pretty strong. I'm wondering what your conviction is in maintaining, I guess, a decent level of growth going forward. Many markets in China starting to weaken quite a bit, maybe you could discuss that a bit.

Carlos M. Cardoso

Analyst

Yes, I mean, I think if you go back 1 year, 1.5 years ago, the strength was coming from the infrastructure. In other words, the Chinese government was building out infrastructure because the rest of the world's industrial markets were weak. And they were trying to get more of a domestic consumption going. And I would anticipate that the infrastructure-related businesses will not -- will be -- the growth will not be as higher. However, the industrial, the manufacturing sector is going to grow. It looks it's going to grow in the double-digits area going forward.

Operator

Operator

The next question will come from Andy Casey of Wells Fargo Securities.

Andrew M. Casey - Wells Fargo Securities, LLC, Research Division

Analyst

On the fiscal 2015 outlook, could you repeat, I couldn't scribble down fast enough. Is the $20 million restructuring, is that a cost headwind or is savings?

Frank P. Simpkins

Analyst

Savings. The restructuring benefits I said for the combined, those were approximately $20 million in our '15.

Andrew M. Casey - Wells Fargo Securities, LLC, Research Division

Analyst

Okay. So when we look at 2015, that is largely being offset by higher incentive comp. And then outside of that, what are you including for TMB accretion?

Frank P. Simpkins

Analyst

You can obviously look to the fourth quarter and try to get a run rate off of that. As I said earlier, Andy, it's kind of integrated into both businesses, but we expect it to be pretty much in line with kind of our overall margin contribution for the total the company, so similar.

Andrew M. Casey - Wells Fargo Securities, LLC, Research Division

Analyst

Okay. And then on the infrastructure, first, on the flattish outlook. You kind of mentioned some concern about road building, continued mining weakness. What are you kind of looking for in the other pieces of that business?

Frank P. Simpkins

Analyst

Well, we have surface mining, foundational trenching work and a couple of other areas. The construction business, the highway construction was up. It grew sequentially nice. It was down a little bit. But that should pick up here into the September quarter than we had in the prior. So that will offset, I think, a little bit of it. And then it's us really looking at other areas within the underground mining area, not just focused on underground mining, but getting it to more wear applications and coatings and a couple of other areas in the Stellite materials to help us offset some of that weakness.

Andrew M. Casey - Wells Fargo Securities, LLC, Research Division

Analyst

Okay. And then if we can dig into the quarter a little bit, the infrastructure margin performance. Last quarter, you had what appeared to be a positive mix shift from energy. I'm wondering why that didn't carry through with the 10% that growth that you saw in Q4. And I think you mentioned the $10 million inventory reduction, was that revenue or EBIT? And was most of that in infrastructure or was it kind of equally split?

Frank P. Simpkins

Analyst

Yes, I mean, the $10 million, that was the finished goods inventory reduction that I talked about with about a $2 million impact. So again, I don't know the exact percent, but it's close to be 50-50 for that perspective. But the last quarter, to your point, the oil and gas was up double-digits. It was quite nice. We didn't see the same level of growth. I think Stellite had a great quarter last time on the top line. They grew as well this quarter, but not as much and there was some relatively easier comps on a year-over-year in the third quarter. And then we had some incentive comp and some investments that we made early to -- kind of cut across both businesses.

Andrew M. Casey - Wells Fargo Securities, LLC, Research Division

Analyst

Okay. And then you mentioned a LIFO charge in the quarter. How much was that?

Frank P. Simpkins

Analyst

The LIFO was combined. We call it LIFO and E&O combined. It was a little less than $3 million. Now from a year-over-year basis, it's in there, but we did not anticipate that when we provided our prior outlook. So that was kind of -- I don't want to call it a nonrecurring. You typically do LIFO at the end of the year, and that kind of just -- there's a little bit of a surprise on that one.

Andrew M. Casey - Wells Fargo Securities, LLC, Research Division

Analyst

Okay. And then lastly, the customer-facing headwinds year-over-year because of the investments. Is it fair to assume that's going to dissipate beginning fiscal Q2 or is it more a second half dissipation?

Carlos M. Cardoso

Analyst

No, we don't have -- the cost is over, so there's no cost in 2015 so.

Andrew M. Casey - Wells Fargo Securities, LLC, Research Division

Analyst

No, no, what I mean, Carlos, is the year-over-year headwind.

Frank P. Simpkins

Analyst

Okay. I think your latter comment is right, Andy.

Operator

Operator

The next question will come from Joel Tiss of BMO Capital Markets.

Joel Gifford Tiss - BMO Capital Markets U.S.

Analyst

We've been hearing from a bunch of other companies that mining kind of flattening out and they're getting optimistic about the future. And I just wondered if you could give us a little sort of comparative about what you're hearing from the customers?

Carlos M. Cardoso

Analyst

Right now, I mean, as we said earlier, I think that the Appalachian region is going to continue to decline in 2015. I think that when you look from a global perspective, the overall mining may be flattish to slightly down. I think that's -- and we're looking at it from a production point of view, Joel. So I think that we have to distinguish between production and equipment manufacturing. The equipment manufacturers may be thinking or seeing some growth in their area that eventually is a leading indicator for us that we can grow further down.

Frank P. Simpkins

Analyst

Joel, it wasn't like an accelerating decline like in '13 versus '14. So it's trying to find a base here. It's maybe a decelerating decline versus an accelerating decline, but at a relatively somewhat stable basis now.

Joel Gifford Tiss - BMO Capital Markets U.S.

Analyst

And then is there any way for you to kind of clear away some of the noise for us and give us the core incremental margins for '14 and what you guys are thinking for 2015?

Frank P. Simpkins

Analyst

Say that again, Joel?

Joel Gifford Tiss - BMO Capital Markets U.S.

Analyst

Just to clear away, like you take out the noise from the inventory reductions and the cost savings and you mentioned something about SAP also, just to give us what you think the core incremental margins were in the fourth quarter and what's implied for 2015? Are you still kind of on track? It seems a little bit light, that's all. That's why I'm asking.

Frank P. Simpkins

Analyst

Yes, it was a little bit light definitely in the fourth quarter, but I think it would have been double-digits if you adjust for those, not quite the 30% that we had in the past. But depending, we think the restructuring benefits and kind of the mix we've got going into the '15 plan that we think the all-in independent of that number, it should be in that 30% to 35% range going forward, depending on what you're starting in on. I'm using a base of -- the $2.50 and the $0.03 accretion. So from a $2.53 basis to kind of the -- in the midpoint, you're in the 30% incremental margins as we get into fiscal '15.

Carlos M. Cardoso

Analyst

So Joel, it's consistent. The '15 is consistent with past experience and with the expectations.

Operator

Operator

The next question will come from Walter Liptak of Global Hunter.

Walter S. Liptak - Global Hunter Securities, LLC, Research Division

Analyst

I wanted to ask about the SAP and if you've been able to quantify either any of the organic volume opportunities or the cost out related to SAP because we should be pretty close to getting those benefits.

Frank P. Simpkins

Analyst

Yes, I think that's the synergies. We talked about the $35 million to $45 million. And the first wave basically in May that we did. You'll start seeing a step up in the first quarter as far as the restructuring. I think I said in the prepared remarks about 40% of the benefits will happen from the synergies in the first half and 60%. And it will continue to accelerate from where we finished for Q4. It will step up nicely. We are wrapping up, as we said, I think in the last call the closure of the Gland facility, where I believe with said that, that would be done by August. That's the biggest project. That's a combination of both facilities, as well as a lot of back-office. So we expect to have a lot of the back-office stuff completed hopefully by the end of the first quarter, maybe some of that spilling into the second half -- second quarter, sorry.

Walter S. Liptak - Global Hunter Securities, LLC, Research Division

Analyst

Okay. Great. And I wanted to ask about the annual -- is there an annualized incremental employment cost number? How much have we invested in new employees? And I guess the question is, why aren't we expecting that in 2015 we're going to get more organic growth out of those employees?

Frank P. Simpkins

Analyst

As far as a certain number, I think last year we said the investment that we were going to make was about $10 million. But we'll start seeing, as Carlos said, the benefits from the adds that we had, and then when we talked with Andy earlier. And then we should start to see -- we should start to get the productivity from the NOVO application for our sales force. So that should give them an added benefit or capacity to sell further. But given the visibility that we have in the marketplace, we feel that, yes, could we do better if the market gets a little bit stronger? Absolutely. But where we're at this time given the visibility in some of the mining side, this is kind of where we landed for the guidance.

Carlos M. Cardoso

Analyst

Yes, and Walt, the current guidance, the sales guidance is consistent with historicals of us growing 2x the market. So as Frank said, to the extent that the market gets better, then we can do better. But at this point, I think our growth is where it should be. I mean, we've listened to some of our peers and what they are projecting for growth is very consistent.

Operator

Operator

The next question and final question will come from Steve Volkmann of Jefferies.

Chirag Patel - Jefferies LLC, Research Division

Analyst

It's Chirag Patel stepping in for Steve here for a moment. Just wanted to kind of circle back to, I think, it was Andy's question. Frank, you were talking about the highway construction picking up into the September period. I just kind of wanted to get a sense if you're assuming something for the highway bill being approved or similar to that or could that potentially add a little upside as we look into fiscal '15?

Frank P. Simpkins

Analyst

I say that, that could add upside. We felt that there was some delays, weather-related and some seasonality factors that probably didn't get implemented or reflected in the June quarter. And I would agree, there could be a little bit upside into the next quarter and depending on how long the season goes relative to that bill.

Carlos M. Cardoso

Analyst

And we did see an uptick in this quarter in the road construction.

Operator

Operator

And ladies and gentlemen, this will conclude the question-and-answer session. I would like to hand the conference back over to Quynh McGuire for closing remarks.

Quynh McGuire

Analyst

This concludes our discussion today. Please contact me, Quynh McGuire, at (724) 539-6559 if you have follow-up questions. Thank you for joining us.

Operator

Operator

A replay of this event will be available approximately 1 hour after its conclusion. To access the replay, you may dial toll-free in the United States (877) 344-7529. Outside of the United States, you may dial (412) 317-0088. You will be prompted to enter the conference ID, 10042423. Then the pound or hash symbol. You will be asked to record your name and company. The replay will be available until September 3, 2014. The conference has now concluded. We thank you for attending today's presentation. You may now disconnect your lines.