Ladies and gentlemen, welcome to the Titan International, Inc. Fourth Quarter 2017 Earnings Conference Call. During this session, all lines will be muted until the question-and-answer portion of the call. [Operator Instructions]. As a reminder, certain statements made in the course of this conference call are considered forward-looking statements for the purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995, and reflect the company's or management's intentions, hopes, beliefs, expectations, or predictions for the future. The company's actual results may differ materially from the intentions, hopes, beliefs, expectations, and predictions contemplated in these forward-looking statements and as a result of various factors, including those discussed in the company's latest Form 10-K and Form 10-Q filed with the Securities and Exchange Commission. In addition, today's remarks may refer to non-GAAP financial measures, which are intended to supplement, but not to be a substitute for the most directly compared GAAP measures. The earnings release, which accompanies today's call, contains financial and other quantitative information to be discussed today, as well as the reconciliation of the non-GAAP measures to the most comparable GAAP measures, and is available within the Investor Relations section of our Web site. Participating from Titan International on today's call will be Mr. Paul Reitz, Titan's President and CEO; and Mr. Jim Froisland, Titan's Chief Financial Officer and Chief Information Officer. Please note, today's call is being recorded. At this time, I would like to turn the call over to Mr. Paul Reitz. Please go ahead.

Thanks. Good morning, everybody. I appreciate you joining us today. I'll start by going through some highlights on Titan’s business and then I’ll turn it over to our CFO, Jim Froisland, to run through the financial side of the house. And then we’ll conclude by taking your questions. To start with, I think we had a really good finish to 2017. Our fourth quarter sales were up 22% which propelled us to a gain of 16% for the year and saw our total sales landing just under 1.5 billion. I had a business colleague from over 20 years ago that liked to say, “Elephant honey typically ends bad for the hunter.” So for Titan, it’s really good to see that our revenue growth this year came from solid gains across all of our business units and segments. This means we’ve built a good foundation with our growth and we didn’t just simply find ourselves one big elephant. Another point I’d like to make that illustrates the strength of our 2017 growth is that this was the first time since Titan became a public company in 1993 that we experienced sequential growth in all four quarters throughout the year. I’d like to spend time referencing sports frequently when I talk and I do that because I believe there’s a high correlation between winning in sports and what takes place in the business world, the basic premise for success in sports and towards the same goals. I want to take just [Technical Difficulty] as our company was facing a super commodity cycle that is coming to an end and creating a challenging business environment of which we hadn’t seen for many years, if not decades. Clearly, we’ve been through a lot of cyclical turns but one was going to be different. You…

Thanks, Paul. I will begin with a reminder that the results we are about to review were presented in a news release issued this morning and will be discussed in more detail in our Form 10-Q which was filed this morning. Let us start with the income statement. Net sales for the fourth quarter of 2017 were $376 million. This was up more than 22% or almost $69 million from a year ago. This is the fourth consecutive quarter with year-over-year double digit increases we have seen. Sequentially, net sales grew $5 million, up approximately 1% from third quarter 2017. This is not our normal seasonal trend, as we often see net sales declining from third to fourth quarter as you experience plant shutdowns and holidays. Here’s what it meant in terms of our segments. Net sales were higher in all segments when compared to the same quarter last year. Overall, net sales volume was up 16% with higher volume across all segments and geographies. Our earthmoving/construction segment saw the biggest improvement in net sales of more than $43 million or 35%. Our agricultural segment was up 14%, while the consumer segment increased 12% compared to last year. Before we discuss gross profit and margin, I’d like to further explain the asset impairment that was reported during the quarter. As we previously announced on September 21, 2017, a fire broke out at the TTRC facility in Fort McMurray, Canada. The facility contains six thermal vacuum recovery units which are large, contained capsules used to recycle large mining tires. Since then, an investigation has been in progress and since February of 2018 as part of the investigation, information became available that the TVR units involved in that fire were a total loss. Therefore as required by accounting rules, as a result…

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Steve Volkmann with Jefferies. Please go ahead.

Great. Thanks. Good morning, guys.

Good morning, Steve.

Paul, you mentioned I think at the outset that your order books were looking a little bit better. I’m curious maybe if you could just kind of bring us up to speed in what you’re seeing in the end markets sort of construction versus ag, replacement versus OE, large versus small, just whatever kind of color you can give us on how your order book is looking and how you’re kind of looking at '18?

Yes. Generally speaking we’re seeing good improvements across the board. Now ag’s weaker in certain areas such as Europe, doing better in North America, holding its own in Brazil. For us I think that’s a – it’s divided pretty well between OEM and aftermarket, so I think both areas are functioning very well. It’s clearly not a commodity-driven process or improvement. It’s not a farmer income-driven improvement. It’s really just the industry fundamentals and Titan business fundamentals improving. And so I think the spread across the board and definitely improving size of the [ph] business. We’re seeing that move in good direction in just about every location. And I think that’s more driven by industry improvements and obviously coupled with some of the changes we had last couple of years. But you’re seeing more of an industry cyclical improvement there than you are necessarily in ag. I think ag is just fundamentals of the business and dealers getting their inventory right-sized. People managing input cost better. So for us, we’ve seen that kind of spread into our order books where generally across the board kind of like how we saw 2017, things are just fundamentally improving. And it’s not, Steve, happening in one big area where we could say this is the shining light and we’re going to follow that. I think we’re spread pretty evenly seeing things move, continue what they did in 2017 and continue to move in a positive direction for 2018 with order books. We got to continue to watch it closely. We got to continue to stay on top of it. And I think if we continue to do that, then 2018 will be a very good positive year for us.

Okay, great. And then just a quick totally unrelated follow up. But I think that somewhere around mid '18 is when they potential put option on that Russian deal kind of comes to fruition and I’m just curious if you have any updated thoughts about how that’s going to play out? And if you did have to put out cash for that, how would that kind of get funded and so forth?

We are having discussions with our partners on that and that will continue as we get closer to the date you mentioned. From our perspective we’re assembling a multitude of plans on how we can address it and it will depend on how we end up with our partners and how we move forward with them into the future. I think as Jim stated, we’re comfortable with whatever solution is drawn up and it will – in all likelihood it may be a blend of different approaches versus just one direction. But it’s still early on that but it’s definitely not something that we’re waiting to really plan for. It’s something that we will continue to work on, Steve, but we don’t have anything concrete that we can talk about here today.

Okay, good enough. Thanks. I’ll pass it on.

All right. Thanks.

Our next question comes from John Mondillo with Sidoti & Company. Please go ahead.

Good morning, guys.

Good morning.

So I wanted to talk about the SG&A. Just first off, wanted to – in terms of the fourth quarter, so your SG&A fell about 2% I think, revenue up 22%. Could you explain to me how that’s really possible with such strong revenue growth? Essentially I’m just trying to make sure that we’re not eliminating certain costs that will sort of hinder future growth.

Yes, this is Jim. Again, as I mentioned in my notes, we set out a number of initiatives at the beginning of last year, one of them was what I called profit leaks just taking a close look at doing the basics, looking at our SG&A expenses. And there was quite a few findings at the corporate level. For example, naturally when we solved the remediated material weakness, our audit fees came down and cost associated with that. That’s just an example. We’ve taken a close look at our legal spend. So basically it’s taking a hard look at, as I said, every fixed and variable cost. Now to address your question, are we hurting the business? No, I don’t believe that. We’re increasing our productivity, as Paul said. We’re taking a hard look at making sure that how we invest our money in SG&A. And also as I mentioned earlier, we’ve invested some monies not only just in people but also in the technology side of things. So in my opinion all roads in SG&A lead to people and technology.

Okay. So in terms of the 2018 outlook then, what are your expectations? Do we continue to sort of see a flattish or declines in SG&A? You put out a target of 10% to 10.5% of sales, SG&A and R&D the last quarter around. Do you see downside – could that be lower given the revenue trends? And then just in terms of the ERP investment, how does that sort of play into it? Do we see a higher ERP spend in the first half of this year? Just sort of give us an outlook on sort of SG&A and how that trends.

Yes. Well, we stick our guidance of those numbers that you mentioned in terms of SG&A as a percent of revenue. In terms of the ERP system, as I said before, we’ll have additional costs but at the same time we’re taking cost out. We’re basically going – as I said before, we’re going to the cloud, so we will not – we will gradually get off our AS400 legacy type platforms. But for – I would say mostly in the third and fourth quarter you’ll see an uptick in IT costs but you also will see corresponding – as it relates to the cloud, but also some reductions in other IT costs as well as other SG&A costs.

Okay. And then in terms of I guess gross margins on the ag side of things, could you just maybe walk through some of the puts and takes; mix, price cost, how you’re thinking about it heading into the year?

I’ll jump in first, Jim, and then you can add on. With gross margin, Joe, we are seeing a mix that’s improving in the back half of the year. The first half of the year was really driven by the small and midsize market. We’re seeing the large products start to move better which is a plus for us as we continue to grow volumes which we did in '17 and then into '18 as well. We’ll see the plants get more efficient. We’ve been hiring. The only headwind we face right now is just the training cost of getting people up and running and working effectively in the plant. So at all our locations we are hiring. We have been hiring and will continue to do that and we’re getting them adopted into the plant as quickly as we possibly can, so we’re pretty efficient at doing that. But there is obviously a learning curve of two to three months before you really get somebody operating at a high level. So for the business overall on margins, I think economically just fundamental it’s going to continue to improve. Where we got to watch things closely is just the balance between pricing and cost with raw materials and then where you can pick up some additional pricing power as the markets go in a favorable direction compared to where we were over the last few years. Many times you have a prolonged downturn – multiyear prolonged downturn, it gives your customers a chance to really focus on their costs and in turn they’re going to find ways to put suppliers against each other. And so that’s the market [Technical Difficulty] see that change. It’s not going at a game-buster level where you also then have pricing power flipping all the over. But we are going to continue to look very closely at how we price our products, where the demand is increasingly compared to the supply in the market. We’ve been focused on pricing for a while and we’re going to continue to do that. We even got a two-day meeting set up for next week that’s just about pricing. So I think on the fringes, you continue to get better on your pricing versus your cost, again assuming that raw materials don’t have any hiccups like we did in 2017. You put all that together and you keep driving some margin improvement in that direction. Again, I think the big headwind for us though is just bringing in headcount. Whenever you’re doing that you got some costs you have to absorb. But other than that, that’s a positive. Once you get a trained workforce in place, now you’re really running, you’re getting some improved volumes going out the door.

Okay. And just a follow up on sort of mix. Where are we in the cycle of small/large mix? Are we still very close to the bottom and do we still have a big runway in sort of the shift in mix, or where are we within that cycle?

Yes, the mix is still skewed compared to historical levels towards the small/mid. The large, while it’s improving, if you look at historical metrics going back over the last couple decades, it would tell you that there is definitely runway ahead for the large market to keep going. So I think that’s a positive that we’re not sitting here already having taken on the improvements in the large market. We got a lot of runway ahead of us. And for us, our plants operate very well. It’s what we’re designed to do. We’re designed to serve the large ag market. That’s the core of our company wherever you look around the world. And so as the large markets improve, we definitely have the capacity and the capabilities that’s second to none in our industries to serve customers in ways that not everybody can. And so we’re prepared for that. We’re going to continue to be prepared for that. Again, the only thing we got to do is keep hiring people and training them. But there is – again, compared to historical levels, there is runway ahead on the large market.

Okay. And just one more for me and I’ll hop back in queue. In terms of taxes, could you help me understand how – first off, how you’re paying cash taxes despite seeing pre-tax losses in the prior periods? And then how you see tax reform affecting the bottom line?

Yes, this is Jim. In terms of tax reform, it really has no impact. The reason for that is the same reason you stated about the tax question. It’s our NOL position in the valuation allowance as it relates to the countries that we’re in and the mix thereof results in the taxes that you see on the – and reflected in the financials.

And just in terms of the cash taxes that you’ve been paying despite pre-tax losses, why is that? Why are you paying cash taxes – why are you paying taxes on losses?

Again, that’s just the foreign jurisdictions. In some countries we’re making profits and we have to pay the governments their due.

Okay. And that’s offsetting losses elsewhere, I guess?

Well, we’re not getting – basically we’re not getting any benefit on that.

I see. Okay. Thanks.

Joe, one point on that is Jim and our Treasurer and IR VP, Todd are – they’re looking at how we can position ourselves from a tax standpoint, some moves we can make with how you set the company structure, pretty standard stuff that both – all of us have been doing for 20 plus years. So I think there’s ways where we can reduce that cash tax expense. Also along with that project taking a look at how we got our intercompany balances structured with our different entities and try to remove some of that FX volatility. So that project is underfoot and hopefully something that will get locked in here in 2018. But there will be improvement in both taxes and FX volatility.

Just a follow up real quick. The cash taxes seem to be running at about $5 million the last two years. Best guess if your foreign businesses continue to improve in 2018, should that be similar to maybe a little higher in 2018? Is that a good way of thinking about it?

It again really depends on mix, but yes. I think that it’s going to be around that level.

Okay. All right. Thanks.

Our next question comes from Larry De Maria with William Blair. Please go ahead.

Hi. Thanks. Good morning. It looks like sales and adjusted EBITDA obviously ended higher than expected than you maintain in the guide for next year. Just want to clarify, just looking 7 to 12 and 50 to 100 gains from where we ended the year imply from that 1.47 and the 72 million of EBITDA, that’s correct, right? So the new range on EBITDA is 108 million to 144 million. Is that right?

Yes.

Yes, we’ll take the outlook issued in Q3 and apply it to the 2017 numbers that you referenced.

Right, so essentially it’s probably a bit higher. Okay. Thanks. Can we narrow that 108 to 144 down a bit or can you maybe help us provide some kind of a bridge to get to the mid or upper end of their, considering obviously we’re starting at a much lower base?

At this point, it’s early in the year. What we’re looking at it from our team’s perspective is that we’re comfortable with the outlook we put out there. We see the path on how to get there is really kind of how we talked about 2017 results is spread across all the business units and segments within our company. So the bridge is not simply just take A plus B and you get C. You’re getting revenue gains, you’re getting some margin improvements, you’re getting cost cuts, you’re reducing SG&A. And so – again, it’s really a broad based improvement. So what we’re looking at is again the overall forecast and the overall picture for 2018 supports the outlook that we put out there. As far as narrowing it down that’s something that as the year progresses, we could look at doing that. But for today and for announcing the 2017 results, we just keep the 2018 outlook as is.

Okay, that’s fine. Thank you. And then I guess, Paul, as we think about seasonality, it sounds like you have better results expected in the second half based on the mix and some things. Is that right or did I hear that wrong and I just want to understand first half or second half to make sure we model it correctly?

The seasonality, it’s a nature of the business. You got plant shutdowns that take place for the most part around the world. Midsummer I guess is a slower period in the European markets and then around the December holidays. And so you do have some natural seasonality that is built into just the business model. So I wouldn’t take that off the table for 2018. I think what we saw in 2017 was just the improving conditions taking effect in the second half of the year that propelled the back half to be strong in a way that we have not typically seen, as Jim had mentioned. But I would not take what happened in 2017 and apply it forward because you just have fewer working days available in the back half of the year compared to the first half.

Okay. Thanks. And then I just two more quick questions. You mentioned, Paul, I think that ag order books in Europe were weaker. Is there something fundamentally driving that or is that maybe driven by some [indiscernible] and some other rules in Europe, if you could clarify that specifically? And secondly, price cost, can you just help us understand what kind of inflation for steel and rubber you expect this year and what kind of price increases we should be looking for? Thank you.

As far as my comments on European ag, it’s weaker compared to the rest of the markets that are growing. It’s not in a declining situation that causes panic, it’s just – it’s generally speaking just not as strong as everywhere else and so it’s again not an area of highlighted concern where we’re looking back – that we’re looking to have to pull back costs and reduce production levels. But it’s just not an area of growth – it’s not the same level of growth as the rest of the business. As far as the questions on raw materials, I think our forecast for raw materials on the rubber side of the business, it looks like the supply is in pretty good condition. So the issues that existed in 2017 don’t appear to be percolating at this moment. And steel, obviously there’s just a lot of talk going on in the world these days about steel and specifically from the U.S. perspective. From our North American business, the way we have it structured we do believe at this time we have sufficient supply for steel and we have sufficient capability to pass through any increased costs to our customers in what I would call a timely efficient manner. So our North American wheel business is much different than our tire business. And so as we sit here today, we clearly are watching it closely both supply, costs, price in the market, but we don’t have forecasted headwinds for steel. And that’s generally true across the world on steel but steel is volatile. The announcements of potential tariffs and what may be going on with price competition clearly it’s something we just got to stay very close to. But at this moment, the way things are, the rising cost in steel is not a concern and it’s not even the same situation as what we faced last year with rubber. So at this point again, raw materials appear to be in a fairly stable, neutral environment and we don’t have any forecast for that. And by neutral, I just mean price to cost not obviously price of steel is going up. But for us, the price to cost ratio seems to be very stable.

Okay. That’s actually helpful. Thank you, Paul. And then just to follow up on the European comment. So essentially it’s just not as strong on a relative basis than other regions but you would expect some kind of moderate growth in Europe, is that basically what you’re saying?

Yes. We do see some parts of the business that are growing. It’s not at same levels where we’re seeing elsewhere.

Okay, great. Thanks. And good luck guys.

Thanks.

Our next question comes from Justine Fisher with Goldman Sachs. Please go ahead.

Good morning.

Good morning.

I just have one question on your aftermarket. I know this was a business that you guys have talked about when you were on the Bond Road Show [ph] in the fall. How is the growth in that business trending and what are your expectations for 2018?

On the active market we see good trends going forward into the future based on just the amount of the equipment that came into the world in the early part of the decade; '10, '11, '12. Really put a lot of new equipment out there. They’re running the equipment longer and harder. So for us we do believe aftermarket will continue to be an area of growth and opportunity. We’ve done a number of different measures that we’ve talked about with pricing. We did that about a year and a half ago to make sure that we’re priced properly within the market and got our products positioned where we want them to be. We have LSW which continues to be a good growth asset for us in the aftermarket. And really from a sales environment, we continue to just look at our sales force in our organization to make sure we got everybody out there hustling as hard as they possibly can to hit every potential customer. And I still see opportunities for us to continue to grow just from a sales organizational perspective in our dealer network and it’s something we got some ideas on how we can continue to do that and we’ve already launched some of those early this year. So broad-based speaking, I think the aftermarket will continue to be a positive growth engine for us. Clearly farmer incomes, the reports that we’ve all seen coming out of the USDA are not headline wise, they’re not great obviously but I don’t think there’s any reason for concern at this point that if farmer incomes are flat to down as they projected [Technical Difficulty] we’re going to have to do some replacement and maintenance on that which is good for our aftermarket business.

What percent of your revenue is aftermarket now? It’s a very small percent now, right?

It’s a small percent only on the real business. And what we do on the real business is primarily more OTR related where you have components and you have refurbishment and repair work going on. And that’s true for the most part on a global basis. And so the OTR wheel business has some replacement. Ag wheel, there are very minimal replacements. But on the tire side of the business, we’ve really positioned ourselves to be about 50-50 split between OEM sales and aftermarket sales.

Okay, great. Thanks. And then just my last question is on working capital for this year. I know it’s a decent use in 2017 as your inventories and your inventories were up. What’s the expectation for working capital in 2018? Do you expect it to be more of a source of cash?

Working capital – Jim made some comments and Jim you can jump in on this as well. Jim made some comments about the investments we had to make to support the growth in sales. My expectations for the team this year is that we should hold the line and Jim mentioned that our cash conversion cycle days have remained stable. But from a dollar standpoint we need to be very aggressively holding the line on what we invest in the working capital. So it’s an important area of focus for us. It can be a challenge obviously when the business is growing on how much you invest in working capital and obviously what [indiscernible] in a very timely effective manner [indiscernible] watching it very closely and not just building inventory for the sake of building inventory. They better have a plan, a reason that supports why they’re making that investment into working capital. And I think we’re on that path but it’s going to be – we got to focus on throughout the year. And I don’t know Jim if you want to add some further color on that.

Yes, Paul. It’s clearly on our scorecard. We look at it but there was – I’d mentioned that there was a focus on aftermarket. You have to have the inventory in that area to sell it at the right time. And then heading into the new year, the aftermarket picks up. So we had to build the inventory to make sure that the tire was there as we mentioned to be sold. So we have this build up at the end of the year going into 2018. And then as Paul said, we’ve got initiatives. We both take a close look at it and the businesses do and we look at our cash conversion days. So they’ve been improving except for this last quarter where they evened out and again that was due to primarily stocking and making sure that we can make that sale and continue the double digit growth.

Great. Thank you guys for the time.

Thank you.

Our last question for today comes from Justine Ho with Mesirow. Please go ahead.

Hi. Can you elaborate more on what you experienced with rubber last year? You said that cost went up and you were not able to pass it through in terms of price increases. Maybe if you could just elaborate a little bit more on that and what was the impact?

Right. We announced in the first quarter of last year is roughly a $10 million hit primarily to our North American tire business due to a sharp increase in natural rubber prices. It was driven primarily by some speculation in the market not driven by a supply constraint issue. For us, we run a higher blend across our total tire portfolio of natural rubber because of the off-road requirements of natural rubber being put into our recipes for our products. So we came out with that in the first quarter last year, probably one of the first public companies to announce an impact of natural rubber on their results. What happened in subsequent quarters after that is that just about every tire manufacturer around the world expressed concerns and took really a hit to their operating margin due to the rising cost of rubber. And so for us that impacted us again in the second quarter roughly $9 million. So the total for 2017 was right around $19 million, $20 million and that was all in the first half of the year. So for us, the back half of the year the impact of imbalance between natural rubber cost and the price that we can pass through our customers, really the impact was mitigated. So it was really just a first half of the year phenomenon. But it continues to be a drain on some tire manufacturers and they continue to talk about just issues with the imbalance between raw material costs and pricing. But for us, Jim and I in Titan have not had that same level of concern over the back half of the year and we have not talked about it in the back half of the year. So as we sit here today going into 2018, we do not have really any further updates other than we’re kind of a rational world right now as far as pricing cost and hopefully it remains that way. And then on the steel side of the business, as I talked about earlier, that’s a different business model for us where we do have better capabilities to pass through the impact of any rising steel cost. So as steel prices have increased at this point, we are not giving any disruption through our cost model.

And so did rubber cost go back down in second half and that’s why there was no impact in the second half, or was it – because I don’t think you increased prices, right?

Well, we did along with the competition. We only had one competitor out in the CIS region that did not increase prices. So what happened in the back half of the year was the combination of pricing coming down on natural rubber and then also just the ability to pass through some of those cost increases. And I would say to my knowledge really that’s the only competitor that didn’t act rationally with cost increases in passing those through to the pricing to customers. So for the most part, it balanced itself out in the back half of the year because of those factors.

Okay. I guess I must have misheard you. I thought you were not able to pass the rubber cost increases through without price increases.

Just the first half of the year. If you look at the chart for natural rubber going back to the tail end of '16 into early '17, it spiked rapidly. So if it had done a gradual increase, it would have been less of an issue, but it didn’t. It did one of those runs up the mountain that’s scary to look at. And it was just driven by primarily speculation going on in some Asian markets. So that’s why it wasn’t a supply-demand imbalance, so that’s why it was able to correct itself in the back half of the year. But again, if you just pull up our natural rubber chart, it does the hockey stick and it’s ugly to look at. And the way our business model is and the way tire manufacturers is they’ve also expressed since that moment – we just don’t have the ability to absorb those – well, we have to absorb the cost but we don’t have the ability to pass them on that quickly. And so basically everybody had to face absorbing those costs more so than what we could pass on. But it hasn’t happened that – that hasn’t happened that often out of blue. It’s happened before in commodity cycles where rubber cost increased that quickly, but this one came out of the blue with natural rubber and again it wasn’t driven by supply-demand and the world went back to normal fairly quickly.

Okay. And I guess as a last follow up with that one. If you – when it spikes that quickly in the first half and you’re able to then increase prices in the second half, do you have to give that back when rubber cost go down and then you end up having a permanent loss of that 19 million, or do you kind of --?

The way we look at it and the way – I think Jim’s talked about it in prior calls is we do end up with the permanent loss. Generally speaking you end up – the commodity prices and really the components that go into our products are known by our customers. So generally speaking you end up pricing in an equilibrium manner between your price and your cost. And it’s just when you get those rapid changes that you get some things to get out of whack. But I would say generally speaking you end up having permanent losses and then you get back to a rational price cost point which is where we’ve been since the back half of the year. Would you agree with that, Jim?

Yes, I would point out that that price uptick there at the end of 2016 heading into first quarter we saw 30% or 40% I’d call it a rocket price increase. It shot up like a rocket. Everybody as you said in the industry was surprised. And then it continued in the second quarter. It took a while for the rocket to come down. But it totaled about $19 million that we could not pass on or the industry as far as that goes. As a result, we did strengthen our purchase policy, such things as dollar day averaging going out, et cetera, trying to do what we could within our own four walls to control it. So that helped out in the third and fourth quarter naturally. So that’s what I did. But as Paul said, it’s bad to “more normal.”

Okay, great. Thank you.

Thank you.

This concludes our question-and-answer session. I would like to turn the conference back over to Mr. Reitz for any closing remarks.

I just want to say thank you to everybody for your time today and look forward to talking to you again here soon. Thanks.