Good morning, ladies and gentlemen, and welcome to the Third Quarter 2012 Simpson Manufacturing Co., Inc. Earnings Conference Call. In this conference call, the company may discuss forward-looking statements, such as future plans and events. Forward-looking statements, like any prediction of future events, are subject to factors, which may vary, and actual results might differ materially from these statements. Some of such factors and cautionary statements are discussed in the company's public filings and reports. Those reports are available on the SEC's or the company's website. Please note today's call may be recorded. Now I would like to turn the conference over to Tom Fitzmyers, the company's Chairman. Please proceed, sir.

Thanks, everyone. Good morning, and welcome to Simpson Manufacturing Co., Inc.'s third quarter 2012 earnings call. Our earnings press release was issued yesterday. It's available on our website at simpsonmfg.com. Today's call is also being webcast, and that webcast will be available on our website, as will a replay of the call. Joining me in Pleasanton for today's call are Karen Colonias, Simpson's Chief Executive Officer; and Brian Magstadt, Simpson's Chief Financial Officer. I'll lead off, followed by Karen and Brian and then we'll be delighted to take your questions. We had a decent quarter, considering the state of the world economies, specifically Europe, and our continued investment in our newly acquired operations that support our strategy of being less dependent on U.S. housing and more diversified geographically, with good gross margin businesses. We want to emphasize that we've expanded our operations and product footprint and markets. Sales increased slightly, due primarily to new acquisitions, which contributed $8.8 million in sales for the quarter. We are a long-range company and are committed to investing in our businesses. We aggressively continue to support our shareholders, our customers and our employees. And we continue to have a very strong financial position. Our net income for the quarter was disappointing, but we are working diligently to improve it. As you can see in the press release, total company sales increased 6%. Sales for the quarter were up 7% in North America; Europe was flat; Asia-Pacific was up 20%. Within the North American region, the U.S. is up 7%; Canada was up 6%. Sales in most countries in the European region are down, specifically France was down 14%; the Nordic region down 18%. Our new acquisition, S&P, offset the region's sales declines with $4.9 million in sales. As a percent of sales, Q3 international…

Thank you, Tom. In September, we announced to our employees and customers of the European-based Liebig heavy-duty mechanical anchors that we are looking to exit this business. Annual operating losses have been less than $5 million. We have determined that this product line is not core to our European operations. We are trying to sell the assets or close the operations by the end of this year or early next year. We will no longer have operating losses related to this business. For the last year or so, we have discussed our long-term strategy, which is to strength in our core wood products and expand our global footprint to be less dependent on U.S. housing markets. Our recent acquisitions have begun that process. To repeat from a prior call, we manage our businesses from a geographic segment perspective, and you've seen that in our recent 10-Qs and 10-Ks. Within those regions, we have 2 broad product categories: wood construction products and concrete construction products. Wood products are comprised of connectors, fasteners, shear walls and truss plates; concrete products: adhesives, mechanical anchors, specialty chemicals and other repair and strengthening products, such as our latest FRP acquisitions. Automatic Stamping would fall into the wood trust business, while Fox, CarbonWrap and S&P are categorized as concrete construction. For Simpson, these new lines are essential to help us diversify our product offering. The new acquisitions bring products that are highly specified, have worldwide applications and will increase our margins in the concrete construction area. These acquisitions include their management teams, and we are excited about the market knowledge and product expertise they bring. As always, we are dedicated to our core products, and we work very hard every day to ensure that we continue to meet our customer needs for service, support and product availability. We continue to invest in our truss software development, adding features and improvements requested by the industry. We remain excited about the prospects of the plated truss industry, and while impacting income for a while, we will continue to devote resources to this opportunity. We have received very positive feedback from the industry about our entry into this market space. We are spending considerable time and resources to integrate all these operations. This process is never easy, but we believe these additions will add long-term value to the company and help us meet our strategic objectives. We are 9 months into multiple integration efforts that are expected to take a total of 12 to 18 months, and we are on track with our plans. As Tom mentioned earlier, our recent acquisitions contributed $8.8 million in sales this quarter, but generated an operating loss of $2.9 million. I'd now like to turn this over to Brian, who will share us some of the quarter's financial information.

So Q3 2012 gross margin was 44.0% compared to 46.5% in Q3 of last year. Our variable production costs, labor and material were higher and were partly offset by lower factory spending. This trend is continued from Q2. Our product mix also affected gross margins. The relative sales mix of the 2 product groups affected gross margins, and that we sold more lower margin concrete products relative to the total, 15% this quarter compared to last Q3, at 11%. Compare that to the higher-margin wood construction products, which went to 85% of the total this quarter as compared to 89% last Q3. The margin differential of wood to concrete products is 14% this quarter, compared to 13% last year, both of which were down due in part to a product mix. We are seeing an increase in revenues in concrete products as we are adding specified and engineered products with better gross margins, primarily from the acquisitions. As Tom and Karen both mentioned, we're looking at strategic options for our heavy-duty mechanical production facility in Ireland, the Liebig operation, either selling or closing. And we recorded statutory severance of $1 million as atypical charges in this quarter. We are negotiating with several unions and we'll have additional charges in the fourth quarter, but it's too early to give an amount. We continue to invest in our new acquisitions, and that is evident in the R&D engineering spending, with $1.5 million of that going toward developing the truss software offering, consistent with what we mentioned last quarter, as the expected the run rate going forward. Without expenses related to acquisitions, our SG&A would have been a couple of points lower. Stock compensation, which includes stock options and restricted stock, was $2.1 million in the quarter versus $1.4 million last year. The…

[Operator Instructions] We'll first go to the site of Trey Grooms with Stephens.

Looking at the Lowe's business, what would impact did that -- losing that business have on the quarter?

About $4 million.

About $4 million. Okay, and you've mentioned pricing, I guess, increased pricing pressure. Is that playing a role with you guys kind of having to take a look at what business you want to walk away from or anything like that? I mean, do you think that, that could continue to play a role on kind of your decision, whether or not to stay with some of these bigger box or some of these retail shops, or is it an issue where you're having to walk away, I guess, is the question.

This is Karen. We certainly, and we've mentioned this several times that we're definitely under some increased pressure from our competitors, and we're doing a lot of different things with our customers to deserve their business every day. One of those certainly is our delivery of products. I mean, we mentioned we have over 99% fill rate. So that's certainly a key element in us being able to maintain and keep our customer business and also help us deserve a little bit of differentiation from the standpoint of where our price points are. We never really want to walk away from business. It takes a long time to earn and deserve business. And so we are certainly looking with all of our customers on whatever we can do to work with them jointly as we -- in a pretty tough business time here, working with them jointly to be sure that we can meet their needs and our needs. So we work with each of our customers on a daily basis. That's one of the key elements of our branches and our salespeople. And we use every tool that we have to help us both be profitable in this industry.

Okay. And then, Karen, on the last call, I think you mentioned that gross margins could come in around the low- to mid-40s range this year. Is that still kind of your expectation?

That's correct.

Okay. And then on selling and R&D expenses, is this kind of -- I know you mentioned you've got a time range here for these acquisitions hitting full stride. Would you expect to see selling and R&D expenses remain kind of at this level, kind of going forward? Or would -- as those acquisitions kind of hit their stride, would you see -- expect to see some pullback in either one of those line items?

This is Karen. We would expect the R&D to be pretty consistent as what you see now. We are investing in the software necessary for the truss business, and certainly, we will continue to invest in that endeavor.

And we will next go to the site of Garik Shmois with Longbow Research.

I just have a follow-up question to Trey's question on Lowe's. Just one, a little bit more clarification, is the $4 million number, is that profit or revenue in the quarter?

Revenue.

Revenue, okay. And then you mentioned that Liebig was losing $5 million annually. Could you provide the revenue contributions for Liebig?

Hold on just a second. Actually, I don't have that number in front me, I'm sorry.

Okay, that's okay. I guess just switching to the mix of business between wood and concrete. A couple of questions on this, I guess the first one would be, if you think about the business longer-term, is there a percentage of sales that you'd ultimately like to -- the business to be that's focused on concrete versus wood, given that you're looking to diversify away from U.S. housing? And I guess, what does that mean and how big of a component could concrete end up being over the next several years?

Yes, certainly the concrete market and the highly-specified products that we're looking to get into and enhance and improve in that concrete market, as we mentioned previously, worldwide, that's about a $3 billion market size. So certainly a large market that we're entering. As we try and spread our geographic footprint, these concrete products will really help us throughout Europe and Asia, as they're typically building products with concrete and not wood. We have not looked at a specific percentage breakdown that we would like to be, but ideally, we would like to have our revenue a little bit more diversified from what we have in the North America market. And so when we get to that point, that will typically be with those concrete-type of products. We'd like to see, right now, our International business, as Tom mentioned, is 28%. We would like to see that being maybe closer to a 60%/40%, 45%/55% sort of range between North America and the rest of the world.

Okay. I guess, as we look out over the next couple of years on margins, as the U.S. residential recovery starts to ramp up, that will be a net positive for your wood construction product line this is higher margin than concrete obviously. I mean, is it fair to assume that margins should stabilize as wood demand increases? Or should we think that gross margins could structurally be under pressure longer-term as you undergo this mix change to concrete?

Well, one of the things that we're trying to do, this is Brian, is on the businesses that we're adding in the concrete side are higher margin than what we've had as a group in general. So I don't know that the shift from wood to concrete as a percent of total is going to have that significant of an impact on gross margin. I mean, we certainly expect the new businesses to contribute. And the reason we got into those businesses was because we felt they did have good margins. But ultimately, if the connector -- if the wood side has margin pressure, we would ideally like to be able to offset that by the added concrete business with the higher margins. To specifically answer your question, I'm not sure that we have a good answer for that right now.

Yes. I think we're just trying to figure out just structurally, should we expect over the next several years, potential gross margin pressure as you move towards concrete, and a little bit away from wood, what could we expect to see some, actually gross margin stabilization, if not improvement as the residential recovery ramps up, intuitively, we would expect greater operating leverage out of the -- your facilities and in turn drive higher margins on the residential products.

I would just add one thing that we, obviously, constantly are looking at our gross margins, and we're looking at what we can do every day from our manufacturing standpoint and how we purchase to be able to improve those. We look at that from not only the wood connector side and the wood products, but certainly also from the concrete products. So it's certainly something that our manufacturing groups are looking at constantly, and our buying groups on how we're buying our raw materials to try and maintain those gross margins.

Okay, and then I guess it takes me just to the last question on purchasing. You've mentioned in the release that you would expect steel pricing to go up in 2013. Are you planning for that at this point in time by prebuying raw material inventory? And are you planning for a price increase in early next year to offset?

We do have a very good person in the company that looks at our steel purchases and certainly keeps us in tune with what's going on with the industry there. We are looking to do a steel buy to help us out this year. And I'm sorry, I forgot. What was the second part of the question?

The second part of the question is, are you planning on a price increase in early '13 to offset?

Yes -- no. We certainly are not planning any price increases at this time.

And we will next go to the site of Arne Ursaner with CJS Securities.

My first question and I think you covered this, but I want to double-check. The employee severance obligation related to Liebig, which line item was that in?

So, it was $1 million, and about 85% of that was in cost of sales. The rest was spread out through SG&A.

Okay. And then more broadly on Liebig. Obviously, it's been a challenge or problem for you since you guys acquired it. It sounds like you're increasingly moving towards a discontinued op. How should we think about the annual losses you've taken from Liebig? And would there be lingering expenses post this year if you did have those discontinued?

Well, we hope to have the operation, either sold or shut down by the end of this year or very early next year. And so ongoing losses beyond that, we would not expect. And as Karen mentioned, it's been $5 million or less over the last few years. So we anticipate that those losses would no longer be there post-close or sale.

Okay. And how should we think about your margin in concrete, which is where that business would have been, I assume? How would the margins have been were it not for Liebig depressing them?

That's a great question. I don't have...

They would be better.

They would be a little bit better, but to be honest, I don't have the specifics on the actual percent or margin differential.

Okay. My final question. You obviously are investing, as is the Simpson way, in growing your business and doing it the Simpson way, the right way, making sure you do the right things for your customers. And you have invested quite a bit in software and other development expenses this year. If we were to look out when do you see those start and you have, for example, very significant software R&D expense, would -- you're beginning to roll these products out, how should we think about when that starts to slow down? And on the sales force side, what are the permanent increases you're likely to keep?

So, Arnie, this is Karen. When we look at software, I don't think it's ever finished being developed. So especially as we look at our entry into the truss market, we can expect to see the continued expenses for that software development. In order to really provide what our customers are looking for and meet their needs, there is always continued improvement. I would also mention, as we look at software, we have put a lot of things in place this year from a software standpoint to really help our customers and, once again, try and differentiate us from our competitors. And those would be things that would help, from a customer trying to figure out where our products might be located; a location finder for our distributors; some calculators, which would tell them how much material they need to use for some of our products. So we put several apps out, which have been helpful to both the buildings officials, as well as the specifying community to really help promote our products. But the main cost of the expenses there in R&D are the truss software, and that is something that we will continually be improving year-after-year.

And we'll now go to the site of Steve Chercover with Davidson.

It's Steve. Since you were just on trusses, could you please tell us how big the North American truss plate market is?

It's in the 3 -- the way we calculate it, which is probably somewhat conservative, it's in the $300 million range in North America.

Okay, and if I'm not mistaken, MiTek is the market leader. Do you happen to know what their share is and how much of the market you think you can ultimately attain?

Well, as far as the way the market is split out today, the majority of it is MiTek and you could say that's maybe 70%. ICW has maybe 25%, and the rest, we have a small portion of, and a couple of other small companies. In the long run, we would like to think that we would substantially improve our market share there, and one of the reasons for that is that we are already selling that customer. And most of those sales that we would generate would be through relationships we already have with various kinds of dealers and truss yards that are already buying some of our products. So we're pretty excited about the prospects for us there, and we think that we'll do well over time, market-share wise.

I mean, would it be safe to say that you're as big a threat to MiTek in truss plates as they are to you in structural connectors, or even a bigger threat?

I don't think we look at it like threats. We look at it at like opportunities that we think we can take advantage of in the marketplace if we do a really good job. And the corollary there is, as Karen has mentioned, doing a very good job with our current customer base in the connector side. We faced the competition for many years. This same relative price differential in these tougher times, it's been more pointed. And also our customers have, in many cases, struggled along. And so we are very mindful of that, too. So it's -- overall, we think it's a good opportunity. We think we're doing a good job helping our existing customers, and we look forward to increasing our market share substantially over the years.

That's a great segue to my next question. With respect to increased competition, what you're seeing now, is this typical in a sluggish environment? Or have the other guys kind of amped up their game?

The price differential hasn't really changed very much over the years. I think that with Mitek purchasing USP, USP has more credibility than they had before, which I think would be a natural outcome of that transaction. But the price differential has been the same. It's pretty interesting, but we have formal relationships with 18 of the 20 largest builders in the country. And we continue to maintain that in the face of considerable efforts by different levels of competition to take that away from us. So -- but that's been historic. We've had to scrap for every piece of business and, as Terry Kingsfather, who runs our strong-tie operations, says we just constantly are turning over rocks, looking for new pieces of business. And we get them in dibs and dabs, and we work really hard to protect our existing customer base. But that has been ongoing for as long as I can remember, which is a long time.

Yes. I mean, do you feel that you're getting your pro rata share of the recovery in housing?

Maybe Karen has spent some time working with us. And she might be better able to answer that question.

I would say that certainly our branches, again, work very, very hard and diligently every single day to gain any business that we can, and certainly to maintain that business that we currently have. And that has many aspects. And as we mentioned, it's providing the service and the technical support and the information they need to be able to not only maintain that business, but then to get new business. So, again, that is their main focus, and they work very, very hard at that every day.

Okay. And final question, with respect to new business, or specifically acquisitions, are you still in the market? And if not, should you revisit your capital allocation and perhaps return more to shareholders?

Yes. We are still actively looking for acquisitions that can help us grow in the building industries. Again, our strategy is to diversify a little bit from this North America footprint that we currently have. We certainly would like to add more concrete -- highly specified concrete products to that concrete side of our business. And we are definitely actively still looking to see if there's opportunities in the market.

And we'll now go to the site of Peter Lisnic with Robert W. Baird.

First question, I just want to make sure I'm clear. Is the Liebig sale or closure, is that the entire business?

That's the -- what the heavy-duty mechanical anchor business in Europe. So we still have mechanical anchors and other anchor-type products in Europe. But those are specifically the heavy-duty mechanical anchor business. And it would be the entire line.

Okay, got it. Okay. So we should expect to see that piece of the business in discontinued operations in the fourth quarter, correct?

As we work through the accounting on that, it may not technically be a disc op presentation, because it's, again, a piece of a product line. It's not an entire business, per se.

Got it. Okay, all right. And then, I thought I heard a 14% margin difference between wood and concrete. Can you just clarify that one for me?

So that's the differential. So the wood products have a 14% better gross margin than the concrete products.

Okay. So it's gross margin. Would the operating margin structure be the same for those, though? Or what would the differential be on the operating margin line?

We don't track the operating margin by product down to that level. So I don't have that for you.

Okay, all right. And then you mentioned the valuation allowance that you booked for Germany in the third quarter. Any -- can you give us a little color on how much that was in the provision?

About $1 million. Let me confirm that. About $900,000.

Okay, all right. And then on the truss opportunity, I know you've gotten a few questions on it, but I just -- I'm trying to get a better feel for whether you've got any visibility on growth potential in that business. Have you seen anything kind of hit the books yet? Or are you getting good customer inquiries or order flow? Can you give us a feel for kind of how that business is progressing?

This is Karen. We just attended the BCMC show, which is the largest trade show annually that's held for this industry. We have gotten very good response from people who are in the truss industry, as far as being interested in us stepping into this market space. We have spent, again, as part of our integrations, we certainly want to be sure we have software out and truss plates available for those customers. And so we have spent time getting our business plan together, training our salespeople and really looking forward to really pushing this business out a little bit faster in next year. We have gotten some business. Tom mentioned to you, we've got maybe 2% to 3% market share in this business right now. But most of that came with the acquisitions, that was the business that they had. So we're certainly working on all the things that Simpson does when we introduce a product and we put our brand on it. Mike Bugby is heading this up for us, and he is very well-known in this truss industry. He's been active in the industry for over 30 years. And so, he is definitely doing a fantastic job of making sure that we are ready with our sales force, our training materials, our inside sales, our marketing, our production, all the pieces that we need to be sure we're comfortable branding the Simpson product.

Okay, and is there, you may not want to give this, but is there an internal target that you might be shooting for in terms of revenue growth or percentage market share over the next 3 or 5 years that you can give us a little anchor for?

I think as Tom mentioned, we certainly got into this business to be able to grow this market. I think it's a little early for looking at those sorts of targets right now.

Okay? That's fine. And then Just switching gears, last question, can you give us a little flavor for what the alliance with Bosch might mean for the concrete business?

Sure. We are very excited about this. It's really a strategic sales and marketing alliance that we have with Bosch. Bosch is one of the #1 in the industry, I think, as far as tools for concrete type of construction. It's a nice partnership because they've got some great tools that can help the contractor do a faster installation with a combination of Bosch tools and Simpson adhesives and mechanical anchors. We are doing some cross-training with each other, so that our salespeople are familiar with their product, their salespeople are familiar with our product. We'll be doing some work at trade shows, and you'll see us in this together, but it's really a joint sales and marketing effort so that we can provide a system solution to the contractors.

And is there any -- are there any development or marketing costs that you might be incurring now or over the next 6 to 12 months that we should think about that could be reflected in that SG&A line?

No. Obviously, there's some marketing work we're good with Bosch, but it's from a cost standpoint, pretty minimal.

And we'll next go to the site of Barry Vogel with Barry Vogel and Associates.

Going back to the acquisitions for a moment, you said that in the third quarter, sales from acquisitions were $8.8 million. The operating loss from acquisitions, all in, was $2.9 million. Brian, could you give us the numbers for the first 9 months. I want to make sure that I got it right in the last call. And what would be your expectation for the fourth quarter loss?

Okay. So year-to-date, sales, $23.5 million. Operating loss, $10.5 million.

$10.5 million?

Correct.

And what would be your best guess for the fourth quarter?

So on the operating loss side, we've been seeing the last couple of quarters $2.5 million, in that range. So I would anticipate probably another $2 million to $2.5 million on the operating loss side.

All right. So if -- let's assume your numbers are pretty accurate, you're looking really at a $13 million operating loss from the acquisitions this year?

Correct.

Now, looking into the following year and, again, I don't know all the details about what's in those numbers. And I don't know if you're including acquisition-related expenses, direct acquisitions related expenses, like -- and accounting measures like step ups and all that stuff.

Those actually are in there. Correct.

So it includes step-ups and acquisition expenses?

It included -- we paid a finder's fee at the beginning of the year. It also includes about 1/2 -- well, maybe a little less than 1/2 that number is in the software development effort.

Okay. So $5 million is the software development?

$5 million to $6 million, probably closer to $6 million for software development.

Okay. So if we go to next year, looking at that as a base of $13 million operating loss. You seem to intimate that software development is going to continue, so that $6 million and so -- let's round numbers, let's call it $6 million in software expenses included in that $13 million. What would you expect software development expenses to be next year, approximately? That's number one, and number two, with the balance of the loss, which would be $7 million, if we deduct $6 million software from the $13 million loss, do you think that would go away next year?

Well, it's, right now it's -- so to answer your first question, so the softer development ought to be similar, as Karen mentioned. We're going to continue to invest in the development and improvement of that software. One of the things that we're seeing there is we are integrating the sales effort. So today, we are investing in the businesses. So the expense side, other than maybe, some sales direct sales, cost-related revenue, the operating expenses ought to be pretty similar. We ought to see some improvement in revenue to offset those costs. So today, as we invest in those businesses, we wouldn't see an expense -- I would expect the expenses to be pretty similar, but revenue should be up.

All right. So if we look at these numbers, if you had, excluding software, a $7 million operating loss from acquisitions this year, you expect some improvement off of that $7 million. So you expect the $7 million to be lower?

Correct.

Okay, that's good. And I have another question. I point to Karen about the $4 million revenue loss from losing business with Lowe's. Was there any pickup in business that you couldn't get before because of your relationship with Lowe's to offset that $4 million loss in revenues?

Karen and I are both trying to decide. Actually, how to answer that. Barry, I think Lowe's, if you're just looking at Lowe's itself, Lowe's did not -- the relationship we had with Lowe's didn't prevent us from looking at other businesses that we could develop. So I'm not sure that's your specific enough answer, but it was not an impediment to us doing business with other people.

Okay. And it's -- Brian, going back to Ireland. At the end of September, what was the book value of the assets that you're going to dispose of?

They were in the -- above $4 million range.

Okay. And as far as losses affecting your P&L from Liebig this year, what were the losses for the first 9 months?

They were tracking for the -- so annualized, excluding severance, $3 million to $4 million. I don't have the specific number in front of me, but it was a little less from the $5 million that Karen had mentioned for what we've seen over the last few years.

Okay. In the fourth quarter, you would have those losses in your P&L?

Correct.

So would you say the losses for the year would be around the $5 million?

For this year, I think that's pretty accurate, yes.

All right. And that will be in your P&L?

Correct.

Okay, so basically between the -- and, again, these things are very complicated. It's hard for us to know for your long-term growth -- all these investments affecting the P&L negatively. That's what I'm trying to get at here. So there's a good chance that you'll have a $5 million savings because of the Liebig being gone, or the heavy-duty anchoring business for Liebig being gone. And the $7 million loss, excluding the software expenses, could help you gain more profits by having a lower loss next year in the acquisitions?

The acquisitions, as sales ramp -- continue to ramp up, that $7 million excluding software cost should be lower.

Okay. And one other question. Your stock buyback program, is that still in effect?

It's an annual program. Yes, it's in effect through the end of the year.

And how much is left on your authorization?

$50 million.

Which was the total authorization. So none of it has been used.

Right. What's the attitude of the company towards your stock-buying program?

They were opportunistic. In the past, we have bought stock back, except for one occasion, which was prior year. We issued shares relative to making our goals, and we were offsetting the dilution associated with that historically, except for the prior year, where we did buyback, I think, over $50 million worth of stock. This year, we've bought none back because we didn't feel the price of the stock was at a point where that made sense for us to do it. But we look at it all the time. And as Brian said, we have the authorization by the Board to do so, and it's something that we consider frequently.

Okay. And Brian, I have one more question. Your comment about the SG&A effect by -- because of acquisition expenses, you said, and I just want to clarify it, that it raised SG&A by 2%?

So in the quarter, that's correct.

All right. So the SG&A would have been 2%, which points lower if you didn't make those acquisitions?

Correct.

And as far as amortization expenses, you said they were up $700,000 in the third quarter, and that's, I guess, because of the acquisitions?

That's correct, yes.

Is that the same thing as the SG&A expenses? Or is that a separate item?

That's in the SG&A expenses of those acquisitions.

Okay. So it's included in that 2% figure?

Correct.

[Operator Instructions] We'll now go to the site of Robert Kelly with Sidoti.

A question on the competitive price conditions. Is it, as of year, in wood, structural connectors as it is on the concrete mechanical anchor side?

Well, certainly, from -- we have a couple of different competitors in those areas, but with things being very tight in the industry, there's always going to be some competitive issues. And so, it is in both areas where we're seeing some pricing concerns.

Okay, great. As far as the comment wood structural connectors, margins are 14 basis points higher. Is it 140 basis points higher or 14% on the gross margin?

The absolute value, the 14 -- 14 points.

14 percentage points.

Right.

And just as far as the Liebig, you talked about $5 million annual losses. It's on track to lose about $4 millionx severance in 2012? Was that right?

That's right.

And then with the closure of the facility, assuming you get that wrapped up by the end of the year, do you project the entire losses close -- I mean, should we just assume that $4 million or $5 million annual loss disappears by 2013? Is that the way to think about next year?

We would hope that, that would be gone earlier in the year in 2013. So we have -- we're looking to sell the assets there, and depending on how things are going in that regards, the timing, we're hoping to get that done soon. But we have committed to the customers that we basically said if you place orders up through a certain point of the year, we're going to commit to fulfilling those orders to those customers. So we've given some lead time to be able to transition that if they need to. So there may be some order fulfillment that happens very late in the year or early next year. And then once that's done, if we're successful in selling the business, then we're able to transition that over to a buyer, then we deal with selling the real estate, and we move on from there. I wouldn't anticipate too much. I guess, it's too early to tell on what we might see as far as value of the real estate and property once we actually look to try to sell that. But as far as the operations go, we hope that's transitioned out by Q1 at the latest.

Okay, great. And then just one final one. As far as the other acquisitions you've done over the past 5 or 6 years, any -- besides Liebig, I mean, are they all contributing profits at this point?

Yes. I think we've probably done over 20 acquisitions in the last 15 years. And certainly, all of them are contributing very nicely to our overall business.

So Ahorn and Aginco, they're all profitable, at current?

They -- we are -- we're still working on Ahorn, to get that profitability, but Aginco, yes.

[Operator Instructions] At this time, there are no additional questions.

Great. Thank you.

Thanks very much, goodbye.

This does conclude today's program. You may disconnect at any time.