Good morning, ladies and gentlemen, and welcome to the Third Quarter 2013 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 these factors and cautionary statement 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 go ahead, sir.

Thanks, everyone. Good morning, and welcome to the Simpson Manufacturing's Third Quarter 2013 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 a replay of that webcast will be available on our website. As usual, joining me in Pleasanton today are Karen Colonias, Simpson's CEO; and Brian Magstadt, Simpson's CFO. I will start, followed by Karen and Bryan, and then we will be delighted to take your questions. As you see in the press release, we have again included information about segment sales and profits, which we have previously discussed on the earnings call and they are now part of our quarterly and annual report filings that follow. Housing starts were up compared to last year, and we are continuing to benefit from that increase. But unlike lumber or other products that have a more direct correlation to starts, our products are used to a greater extent in coat-based areas subjected to natural forces such as seismic or wind events, and are subject to sequential construction processes like the foundation, the walls and the roof systems. Sales revenue is 15% in North America for the quarter due to increased home building despite price reductions that we took in the latter half of 2012. As we've mentioned in the past, only 50% to 60% of our wood product sales are dependent on starts. In Q3, the home centers were down 8% for the quarter. The Home Depot was down 5%. Despite the uncertainty in Europe, revenues there were up 6%. The heavy-duty mechanical anchor business in Europe contributed to approximately 850,000 sales in last year's Q3, which we did not have this year although profits there benefited from that exit. North American operating profits were up 5 -- $6.5 million to higher gross profits, primarily from increased sales volumes offset by price decreases and increases in operating expense. Europe's operating profits increased $2.5 million due to increased gross profits, partially offset by higher operating costs and a loss on the sale and buildings in Ireland. With that real estate sale, we are out of Ireland. The majority of that increase was the result of not having a heavy-duty anchor business this year. But Asia Pac operating loss narrowed as a result of higher gross profits, partially offset by the increased selling expenses. We continue to have a very strong financial position with over $200 million in cash, very little debt and an unused $300 million line of credit. This gives us lots of flexibility and the capability of continuing to invest in our long-run strategic plan. I'll turn the call over to Karen now.

Thank you, Tom. As Tom mentioned, we are benefiting from increased housing starts in North America and at the same time, we are continuing to invest in new initiatives to strengthen our market positions in both wood and concrete products portions of our business. We continue to see substantial opportunity in our trust business, and we've accelerated our software development effort related to rolling out some of the features we displayed at the recent BCMC show in October, and to meet our customer needs in the wood product segment. Europe's operating profits are up this quarter, and we are positioning ourselves in the region for additional improvements. Our Asia market segment is seeing increased revenue with the introduction of our repair and strengthening products for the concrete construction. We continue to look for strategic acquisitions, whether to expand our product offering or to strengthen our position in different geographic regions. We will continue to monitor our operations around the world to strive for long-run returns that is satisfactory to us and our shareholders. We manage our business from a geographic segment perspective that you've seen in our 10-Qs and 10-Ks. Within those regions, we have 2 broad product categories with construction products and concrete construction products. As always, we are dedicated to our entire product line and we work very hard every day to ensure that we continue to meet our customers' needs for service, support and product availability. I'd now like to turn this over to Brian for some additional financial information.

Thanks, Karen. As noted in the earnings release, Q3 2013 gross margin was 46.0% compared to 44.0% in Q3 last year. Sales of concrete products as a percentage of the total increased as did the margin on those products, benefiting the total company gross margin. The improved, but still lower margin concrete products relative to the total sales was 15% this quarter versus last Q3 of 14%, while the wood products was 85% of the total versus 86% last Q3. The margin differential of wood to concrete products is 13% this quarter compared to 14% last Q3. The wood product margin was affected more by the price decrease than was the concrete products. We have also seen some improvements in the concrete construction product costs, particularly with the absence of the heavy-duty anchors in Europe. The estimated gross margin for 2013, we believe, will be in the 43% to 44% range, an improvement over our estimate from last quarter, due primarily to better results in Q3. Operating expenses as a percent of sales was down slightly in the quarter compared to last year, although certain compensation expenses, such as commissions, cash profit sharing and stock compensation, increased $4.2 million in the quarter or 2.2% of net revenues. We did capitalize some software development costs this quarter and we'll continue to do so going forward based on the activities of the development teams. Those costs will amortize back through the P&L over the next 3 years. Regarding taxes, we had better foreign operating results this quarter and that affected the tax rate positively. We believe our annual estimated tax rate for 2013 to be 38% to 40%, down from our last estimate of the annual rate. And just to note, our last estimate was in the 40% to 42% range for the year. 2013 CapEx is looking to be around $22 million to $24 million, which is less than what we mentioned last quarter due to some projects being pushed to the future. Q3 2013 CapEx spending was $4.9 million, primarily for manufacturing equipment in the U.S. For 2013, total depreciation and amortization expense is expected to be $27 million to $28 million, of which $21 million to $22 million is depreciation only. Intangible amortization expense in the quarter decreased by 0.5 million, compared to the prior year, all in admin expense, due to primarily to purchase price adjustments of recent acquisitions. Before we turn it over to questions, I'd like to remind you that if you'd like further information, please contact Tom at the phone number listed on the press release. Also look for our quarterly report on Form 10-Q to be filed in the next couple of weeks. We'd like to now open it up to your questions.

[Operator Instructions] And we'll take our first question from Garik Shmois with Longbow Research.

First question would be on Europe. I was wondering if you could break out the impact of currency specifically? And then if you could provide a little bit more color on the organic growth in Europe, what geographies you're seeing it in. What end markets you're seeing it in and maybe how sustainable the growth you think is?

So I'll take the currency. So on revenue, it was less than $1 million. And for net income or operating income, it was negligible. They are both positive, but not much.

This is Karen. From the growth standpoint in Europe, we're certainly seeing some good opportunities from our recent acquisition, and that's really in the concrete restoration and repair market. We are also being very aggressive, trying to get more of the wood construction connector business within the European market. There's certainly opportunities for us to grow there.

Okay. And with respect to the home centers in the -- in North America being down in the quarter, and Home Depot in particular, do you attribute that to things that are happening organically in the market? Or did you see some inventory destocking in the quarter and you would expect that potentially to reverse in Q4 and going -- looking forward?

Yes, Garik, this is Karen again. As we look at that home center, Home Depot being down, again, we noted in the second quarter they were significantly up, I believe, almost 10% up. So it's really a function of how Home Depot wants to control their inventory levels.

And then my last question is on your intended use of cash and if you could talk a little bit about what opportunities you see for that. And specifically, on M&A, what the pipeline is looking like right now?

This is Tom. We particularly look at our dividends on a quarterly basis and we recently announced that we're going to pay our regular dividend rate. As far as acquisitions go, I think Karen had mentioned that we are interested in acquisitions that complement our current activities or give us opportunities to expand market share. We have nothing in the queue of any substance at this time. And then another place that we try to really effectively use our cash is in CapEx. And as Brian mentioned, this last quarter, most of our investment was in equipment. And that, typically, helps us from a manufacturing standpoint, both with availability of product and also improvement of our profitability in particular lines.

And we'll take our next question from Arnie Ursaner with CJS Securities.

On your gross profit progress, you've mentioned that European gross margin on concrete construction product was 49%? However, in including wood construction products, which are usually higher gross margin, overall, it was 40.6%. Can you explain the difference between those two?

Arnie, it's Brian. The primary difference there is that there is -- although higher margin on the concrete products, there's, from a dollar perspective, more sales of the wood products in Europe and that's what's taking that margin to where you see it there in the press release. So -- and there was also the, obviously, no drag in the European concrete product market with the heavy-duty mechanical anchors no longer being there. So we're seeing the improvement there too. But I think it's really more of a function of the relative value of the sales of wood to concrete.

Okay. My other question relates to your gross margin comment for the year. To be in line with your guidance for the full year, the Q4 gross margin would have to be lower than any adjusted quarter in the last several years. Why would it be down that much?

I think primarily due to seasonality. And as we indicated, we do expect the full year to be up compared to what we had comment -- commented on last quarter. But again, primarily a function of that fourth quarter and not knowing with full certainty where -- how we are going to do weather-wise and with the different regions. So that's where that range came from.

Okay. Again, the seasonality though it would be lower than any quarter you had in several years. Final question for me, just as a follow-up on your use of cash. There was a really small decline in your share count. Did you actually repurchase any shares in the quarter?

Not in Q3. We had done the repurchase earlier in the year. No activity on the share repurchase in the quarter.

And we'll take our next question from Evan Wingren with D.A. Davidson. Evan Wingren - D.A. Davidson & Co., Research Division: Just to kind of follow-up a little bit on the Depot comments. You mentioned the inventory issue there. I mean, is it your sense that there also may be some competitive pressures there. I mean, competitors undercutting you on price a little bit. Or is it solely attributable to this inventory timing, do you think?

This is Karen. We certainly see a lot of our customers have variations on how they control their inventory. If we look at Home Depot 2013 versus 2012 year-to-date, their sales are basically in line with where they were in 2012. So we really see it as a inventory. Again, their method on how they want to control that inventory level. Evan Wingren - D.A. Davidson & Co., Research Division: And then can we get an update sort of on the trust software that you rolled out? Maybe just -- what was the reception on that and how do you see that impacting your results moving forward?

Sure. As we mentioned there's a, what's called, the BCMC show, which is a Building Components Manufacturing Conference. That's the once-a-year large show for trust manufacturers and building component manufacturers. We showed some updates on our software, which was very well-received. And we're looking forward to continuing to increase those service levels and be able to provide those features and benefits that those trust customers are looking for. So we're very happy with our progress on how we're going with the software. I would also add however, that software's a never ending endeavor. There's always improvements and enhancements, and those are the things that are definitely necessary to keep you in the game and to keep your customers happy with the performance of the software. So we are continuing to work on that. We do feel that the steps we have taken so far will help us be able to get a larger portion of that trust market share, but we are still a ways away from having a complete offering that's going to resolve all the needs and issues of those -- of that particular customer group. Evan Wingren - D.A. Davidson & Co., Research Division: And looking to China. Margins were a bit better this quarter. After -- historically, you got a promising start and then there was a bit of a rough patch. I mean, do you think that, that portion of your business is stabilizing? Or in sort of what do you think the prospects are for that or -- near term and maybe over the longer term?

Well, I think we finally have a good group of product offerings for China. It is a very much a concrete market. We saw very little wood connectors in the China market. So now that we've made some acquisitions in this concrete repairing strengthening, we have a product portfolio that allows us to be much more aggressive as we look at some of the opportunities in China. So I feel pretty confident that we'll see some better results in that market area. We have a good team in place. We've a good leadership group there. And we now have a product line that allows them to focus on specific customer bases, so I think we'll continue to see improvements in the China market. Evan Wingren - D.A. Davidson & Co., Research Division: And then just one more. You delved into a little bit on your acquisition strategy. Some of the deals, 4 or 5 years ago, were a little bit longer time horizon deals, I guess is the best way to put it. Are you looking for deals that might be more accretive in the near term? Maybe just discuss that a little deeper, long-term versus sort of near-term market opportunities.

Well, we would always like to find a acquisition that's accretive immediately. Our strategy, and by the way, we do have someone who focuses on M&A for us. So even though we haven't had an acquisition lately, we are always searching. We are looking for things that are meeting our strategy. So it could be a geographic expansion, it could be something that is a product line addition, it could be something that helps us in this new endeavor run with the concrete restoration repair. So we have specific things that we're looking for and those are really based to expand our product offering and give us a larger footprint or to expand our geographic footprint. We never know obviously, when opportunities are going to arise, and that's why we have someone who this is their full-time job, to look to see what's available for us in the market.

And we'll go next to Peter Lisnic with Baird. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: This is Josh Chan filling in for Pete. If I look at your North American gross margin prior to this quarter, it's actually been down versus the prior year for a number of quarters because of what you described as competitive pressures. But this quarter, you were able to grow your gross margin in North America despite the lower prices. So I guess my question is, how would you describe the competitive situation you're seeing in North America? And do you see it stabilizing somewhat?

Hi Josh, this is Karen. I think certainly, we always have competitive issues and competitive pressures. We can handle that in many ways. The first would be by the products and the service that we provide. And I think what we're seeing is as housing starts are starting to increase, the service levels and the product availability that we provide has really helped us to be able to fend off some of that competitive pressure. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Okay, that makes sense. And if I look at gross margin sort of into 2014 for the company as a whole, could you talk about some of the major moving parts, such as raw material costs and the competitive landscape, and how do you think each of those would impact you at this point?

Josh, it's Brian. I think from looking at 2014, I would expect that we would experience some of the similar pressures that we are seeing today going forward. I'm not sure that there would be any significant changes there. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Okay, when you say pressures, do you mean competitive pressures or other pressures in other areas?

I would think that the pressures would be similar in the various areas that we've already experienced. Joshua K. Chan - Robert W. Baird & Co. Incorporated, Research Division: Okay, that makes sense. And then recently some of the homebuilders have been talking about actually slowing traffic rates, then order rates because of increasing interest rates. Have you seen volatility surrounding your business because of this interest rate increase yet? Or has that not impacted you so far?

We don't really think it's made a big impact so far. We've -- over this really difficult time, we've seen lots of changes in the market from the sales of existing homes, from the sales of new homes. It's difficult to get a loan still, regardless of the various programs that exist out there. And of course, there's caps on various federal programs to support construction of new homes. So overall, we haven't seen a real impact on sales. I think what we might say is that they're not as robust as some have forecast. And that's probably an impact to some extent, of rising rates. But it doesn't seem to have made much of a difference so far.

And we'll take our next question from Alex Rygiel with FBR. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: Tom, in the quarter and year-to-date, clearly, home centers sales have been lagging a little bit and at least relative to sort of new construction sales. Are you surprised that this dynamic this year? Do you have any broader thoughts on why that might be and how or when that could reverse?

I think, Karen, she's been discussing this up to this point. I think she might have a little bit more current data than I would have. Karen, would you like to respond to that?

Yes. So one of the things I would point out is that we also did not have the Lowe's Home Center business for the first half of the year, so you've seen a portion of that number in the total home centers sales as you look again at the first half of the year. I think we are seeing, as we see increase in housing starts, we do tend to see, at some point, maybe a balancing of what happens with the Home Center business. So I think it's kind of a trade-off as you're seeing housing starts increase maybe a slight lowering of what the business is in the home centers. That, in combination again, with -- from inventory levels, how they want to control that. Alexander J. Rygiel - FBR Capital Markets & Co., Research Division: And one last question. Sort of on pricing, understanding pricing is under a little bit of pressure here. But when in the cycle would you be hopeful to possibly see price be neutral to turn positive?

Well, that's a really, really hard question to answer. Most of it, from our standpoint, would probably relate to something that Karen touched on before, which is service and availability of products. So to the extent that, that becomes a bigger and bigger issue, I think that helps us because of the great manufacturing capabilities that we have. We have been told frequently, recently, that some of the limitations of homebuilding really relate to the availability of qualified people to help with the construction process. So I don't know exactly when that would change, but to the extent that the housing starts rise and our opportunities progress with that, we would think there'd be less pressure in a general sense on pricing. I'm not sure about the word neutral. We've always had a lot of issues with pricing. There's always been a very substantial differential between us and others. And the primary weapon that our competitors have used in the past has really been the price differential. So that is not really new, news to us. It's something that we've lived with for many years.

And we'll take our next question from Robert Kelly with Sidoti. Robert J. Kelly - Sidoti & Company, LLC: What was the benefit on European EBIT from the closure of Liebig?

It was -- just a moment. About $2 million. Robert J. Kelly - Sidoti & Company, LLC: $2 million, okay. So when do you begin to lap the cost savings from exiting that business? Would it benefit you throughout 2014, or?

I'm not sure I understand the question? Robert J. Kelly - Sidoti & Company, LLC: You exited the business in -- or you announced the closure in 4Q '12, right? So you generated savings over the past 3 quarters?

Right, right, right. Robert J. Kelly - Sidoti & Company, LLC: Will there be savings to be gained from exiting that business in 2014 or is it neutral to European margins?

Right. No, it should be neutral as we've not had that operation in 2013. Robert J. Kelly - Sidoti & Company, LLC: And what's the full year contribution to Europe from being out of Liebig year-to-date?

About $3.8 million. Robert J. Kelly - Sidoti & Company, LLC: $3.8 million. Okay. On the pricing front, the release talks about difficulties globally with respect to competition. Is that an ongoing pressure or are we just referencing the fact that you dropped prices a year ago and selling prices remain below that level?

This is a Karen. I would say when we mentioned pricing pressures globally, we certainly, no matter what product area geographically or what product, there are always some competition that might be selling only on price. In some sense, brand has always been much more than price. Again, the quality of the product and the engineering supporting that, as well as the inside sales, the outside sales and all of our service levels and product availability. So we have never ever been low-cost product and we never want to be the low-cost product. So we are always under pricing considerations globally and on various product lines. Robert J. Kelly - Sidoti & Company, LLC: So are selling prices lower sequentially compared to 2Q?

I would say not significantly.

No, no.

No. Robert J. Kelly - Sidoti & Company, LLC: Okay. Is part of the price competition, the fact that the steel prices are weaker, i.e., would you see less competition in a stable to rising steel environment?

No. I think, again, as Tom mentioned, it's not just only a function of steel pricing, it's a function of the competition using price as their leverage to get customer base. So again, we will always see this sort of variation and these pricing pressures. Just competition pressures using price. Robert J. Kelly - Sidoti & Company, LLC: I guess I'm just trying to understand, did the competitors take advantage of lower raw material costs to intensify their price declines?

We wouldn't really know.

Yes.

What we know are their pricing is independent really from what their costs might be, and it's more based on what they're trying to do market share-wise. Robert J. Kelly - Sidoti & Company, LLC: It's a job to job bit sort of thing?

It could be. Robert J. Kelly - Sidoti & Company, LLC: Fair enough. One final one, the order book, at least for the public builders that have reported thus far in 3Q, have talked about a slowing demand trend. Some have seen outright declines in their new orders. If that is the case, when would you start to feel a slowdown in demand from their backlog decelerating?

I would say it would be very similar. As we've always mentioned, we typically lag probably about 3 months. We will also see, again, a decline as we always have when we get into winter months. Right now, I think weather-wise, things are going nicely in the Northeastern market. Our October is looking better than last year's October. But as soon as snow hits, that would drop off very rapidly. So along with the time of year and if they are getting, again, that decrease in their books, we would see that lag time 2 to 3 months.

And we'll take our next question from Barry Vogel with Barry Vogel & Associates.

Tom, first, I want to congratulate you and your team, including Brian, on the best and most informative press release you've had in a long time.

We appreciate that.

Okay. I know you worked very hard to figure out how to be as efficient as possible and you've done it. I have a few questions, a lot of my questions have been answered. First of all, Karen, could you tell us what your current strategy is on your share repurchase program? I know you bought about 342,000 shares at around $29 a share in the second quarter, and I hadn't seen any purchases besides that. And if you had a $50 million authorization based on your last public comments, that would be $40 million of authorization. So what is the company's attitude, given your great balance sheet and excess cash generation that seems to be accelerating towards your share repurchase program?

Barry, maybe I could answer that. I think you could use one word to describe our share repurchase program, that's opportunistic. We don't have a specific program. We do look at the price of the stock all the time. And that would really drive the decision that we make about the repurchase of the stock. We do have a 40 million -- about 40 million unused from the authorization that the board gave us.

Does that imply business conditions improving and earnings improving? And I think people, investors, we're not sure when was that going to happen, frankly. That if the stock would back down to $28.70 a share, given your balance sheet, your cash generation, you'd be in there opportunistically?

Well, I think we'll be seriously considering it. But again, there's a short and long run issues associated with that. There could be an acquisition that would make a difference at that point in time. We consider all of that.

Okay. And as far as the home centers, I know several people on this call have asked about the home centers because you've mentioned many times declines in sales in various and sundry fashion. So my question, is, and I've one question on that, according to your press release, home centers sales declined 4% in the first 9 months of the year, excluding Lowe's, you did have a comment excluding Lowe's. That is -- I would think that's a little bit unusual. And again, it's for the 9 months, that comment, given an improved economic conditions, improved housing attitude for the consumer. That's a little disappointing for the 9 months. So can you give me a full-color on that? Additional color?

It's Brian. A little comment on that. If we recall, Q1 was a tougher quarter for us, primarily due to extensive -- extended winter this year compared to last year. So we're seeing a bit of that effect, I think, carry through the year. But as Karen mentioned, home centers, primarily due to some of their inventory decisions.

Right. But in theory, people will go to home centers, should be still going to home centers and sales should not continue to decline, I would think, unless something was wrong. And again, it's excluding Lowe's.

So, Barry, this is Karen. I would just say that we have an excellent relationship with Home Depot and our other Home Center business. We are continually focusing with our sales force on working to add product lines into those arenas. And I don't think that we're seeing too much concern. I think what we're really seeing is different avenues used for getting some of the products when we look at where some of the builders -- of some of the larger builders might be getting their product.

Where would that be relative to sector service -- to home centers?

It would be at our two-step distributors, such as Lumber Yards.

Okay. So you would benefit by getting sales into the lumber yard instead of being in the home centers?

I mean, we have many means of distribution from a one step distribution, two-step and then the home centers, as well as co-op. So we have several locations in which customers can get our products.

Okay. That's a good answer. And Brian, my last question. Can you give us, for the first 9 months of the year and the third quarter, do you -- United States utilization rates -- plant utilization of capacity rates for connectors.

This is Karen. I would mention, just as we did in second quarter, we have a lot of efficiencies that we've put in place in our plants. Certainly, with the uptake in housing starts, we're seeing more use of those plants, but we would be at probably about 65% utilization at this time.

And we'll go next to Paul Karos with Whitebox Advisors.

Most of my questions are all answered, but just any commentary on near term business, how October is looking? And how the growth rates kind of continued or any kind of changes that you could talk about just on near-term activity that you've seen?

This is Karen. The October numbers are looking a little bit better than they were October 2012. Again, as we've mentioned, we sort of have not had winter, luckily, hit the Eastern states yet, and that's why we think we're seeing that. It's -- as soon as the first snows hit, no matter what part of the country they will be in, that typically slows our construction and certainly slows our sales down. But so far, October is looking slightly better than last year.

Okay. And slightly better, so not as aggressive as the growth as you were seeing in the third quarter?

That is correct.

[Operator Instructions] And we'll go to a follow-up with Arnie Ursaner with CJS Securities.

A number of questions about price. So I want to maybe ask a couple in different ways. If you had North American revenue growth of 15% -- almost 15% in Q3 and prices declined, is it fair to say your volume growth is probably closer to 20%? And if so, isn't that dramatically better than the industry?

Yes. I would say, our volume growth would be just a little bit under that 20%. But you're correct, that growth that we've had, along with that price decrease. So maybe a little under 20%. And again, that is a large function of what we're seeing from that pickup in the housing starts.

And then I know, Karen, when I was on the road with you, we talked about you had your salesforce going back to virtually every customer, trying to highlight the value proposition to them of being able to get product quickly with orders placed by 5:00, it would reach them the next day. How much -- how much more valuable might that be than a minor price reduction if you can't get the product you need? What feedback did you get from your salesforce as they went out and had these meetings? Is it impacting the way you're approaching the business going forward?

So we've certainly had a lot of success again. We have hundreds of salespeople who work every day very hard to meet the customer needs and customer requirements and really listening to what it is our customers are requesting. We help them by changing product lines that are in their stores so they can get better turns. We do this with all customers, by the way. And it has been a very successful program. As we've mentioned previously, there's a lot more behind Simpson strong ties than just price, and we really pride ourselves on our product quality, that product availability and those service levels and engineering support that we provide. That has always been our point of differentiation with any competition and we're using those same points of differentiation as we look into the concrete avenue that we're now working with those repair and restoration products. So our customers are quite appreciative of our work with them, and our salespeople do an excellent job on a daily basis of continuing that work.

Okay. A couple of real quick ones, if I can. It seems obvious that level-headed people might have discussions. Have you had any with Lowe's about restarting any relationship?

Well, we are always interested in talking to our customers. So we're always keeping the door open for those sorts of things.

Can you be a little more specific on the impact S&P Clever had on your margin in Europe? I know you mentioned in previous calls that there's some seasonality. And again, I'm still trying to understand the 49% gross margin in Europe in construction-related products.

Arnie, it's Brian, again. With the exit in Europe of the heavy-duty mechanical anchor business, so we do still sell some lighter-duty concrete products there. And -- but S&P, because the heavy-duty mechanical anchor sales were not there, as Tom had indicated in the opening comments, S&P Clever ends up becoming a bigger part of the total. So yes, they are having pretty good impact on that 49% that you referenced.

And again, remind us that you expect a fair amount of seasonality in Q4 in that business?

Well, we believe so because they're involved in road building or road improvement activities and such. So as winter sets in on us here in Europe, that could impact their business to a certain extent.

Okay. My final question goes to your trust business. Obviously, you had to roll out the software at the trade show in San Antonio, which you did. And distributors are likely to make decisions about changing anything after the most of the season's behind us. Kind of putting those 2 together, how well received was your software upgrades or -- that you highlighted at the show? And did it actually lead to orders?

Well, as I mentioned, the enhancements and the improvements that we've put into the software was quite well received. As any software change, and I think you've hit this, there's a certain period of time in which you could change software and you're certainly not going to do that during your busiest season. So we do have a window of opportunity to try to convert some additional business coming up here in the next few months.

And we'll also take a follow-up from Garik Shmois with Longbow Research.

I just have a follow-up question on the implied fourth quarter margin guidance. I can appreciate some of the commentary around the seasonality, but just wondering if there is any negative mix issues that you're seeing play out in the fourth quarter, higher percentage of sales going into concrete products as opposed to wood? Is there any geographic mix or maybe some of the lower margin markets in the U.S. picking up at the expense of higher margin markets. I'm just trying to get a little bit more granularity around the 4Q on the implied margin guidance?

Garik, it's Brian. I don't think there's really any significant mix changes in the guidance that gets us to that annual number. It's Q4. If we look at the last couple of Q4s, last year we came in at 38%. Q4 in '11 was 42%. I wouldn't expect it to be as low as last year, but maybe around that number that we saw a couple of years ago. But I don't think that there's any significant mix changes there in building that number.

And we have no further questions at this time. I'll now turn the program back over to our presenters for any closing remarks.

Thank you very much. Great questions, and thanks for your congratulations on the quarter. We are pleased with our results. And we're looking forward to working hard for the fourth quarter and see how it turns out. Lots of interesting opportunities for us going down the road. Thanks very much.

This concludes today's program. Thank you for your participation. You may now disconnect at any time.