UFP Industries, Inc.

UFP Industries, Inc.

$135.26
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NASDAQ Global Select
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Paper, Lumber & Forest Products

UFP Industries, Inc. (UFPI) Q4 2017 Earnings Call Transcript

Published at 2018-02-23 14:48:03
Executives
Matthew Missad - Chief Executive Officer Michael Cole - Chief Financial Officer
Analysts
Ketan Mamtora - BMO Capital Markets Daniel Andres Jacome - Sidoti & Co. LLC. Steve Chercover - D. A. Davidson & Co., Inc.
Operator
Welcome to the Universal Forest Products Incorporated Fourth Quarter 2017 Conference Call. Hosting the call today are CEO, Matt Missad; and CFO, Mike Cole. Matt and Mike will offer prepared remarks, and then we'll open the call up for questions. This conference call is available simultaneously and in its entirety to all interested investors and news media through a webcast at www.ufpi.com. A replay will also be available at that website through March 25, 2018. Before I turn the call over to Matt Missad, let me remind you that yesterday's press release and today's presentation include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company's expectations and projections. These risks and uncertainties include but are not limited to those factors identified in the press release and in filings with the Securities and Exchange Commission. At this time, I would like to turn the call over to Matt Missad.
Matthew Missad
Thank you, Liz, and good morning, everyone. We appreciate you taking the time to listen to our year-end 2017 conference call. 2017 was the year of Leo, which is learn it, earn it, and own it. And our team definitely owned it by breaking records for both sales and profits. As we discussed on last quarter's call, we also needed to position our company well for continued growth and success in 2018. And they did that too. Just some quick highlights. Sales were a record $966 million for the quarter and a record $3.94 billion for the year. Earnings were also a record $0.51 per share for the quarter and $1.95 for the year, all adjusted for our stock-split during Q4. Again, I would like to thank all the members of the UFP family of companies for making these new records. Of course, we had a little help from the new federal income tax law, which Mike will describe in more detail. And we did have some margin headwinds related to hurricanes, which we talked about at the end of Q3. Gross margins were down 80 basis points from 2017, due in large part to the higher lumber market, increased freight cost and to significantly lower margins on sales of hurricane-related materials. We honored our commitment to hold the line on pricing in the wake of the hurricanes to help the hurricane victims. We incurred additional freight, handling and sourcing cost to make sure that our customers received as much product as possible in the face of these disasters. Our ability to source worldwide and support the impacted geographies from our many facilities outside the hurricane regions enabled us to ship products at up to 4 times the prior year's unit volumes on some SKUs. While this impact is painful in the short-term, we believe it is the right thing to do and it will serve us well in the long term. To wrap up our 2017 scorecard, we finished with new product sales of $418.4 million. We are sunsetting $26 million in new products, which we no longer consider new, but will continue to sell. So for 2018, we have set a goal of $450 million in new product sales. Since 2017 is now history, I'd like to focus on a macro level regarding our plans for 2018. The biggest question today is what is going on in the lumber market. Are these record high sustainable? Can the market keep climbing? And what happens when prices get so high that they affect the potential buyers' ability to afford to buy a house? These are great questions and I can only offer my perspective. The market is high for sure, but demand still appears strong. Housing starts are nowhere near the mid-2000's peak and repair and remodel is still very robust. Lack of skilled labor has served as a limiter to overbuilding. On the supply side, the mills in the U.S. are benefiting from the Canadian duty issue, which has resulted in 20% to 30% of the price increase over the last several months. There is a difference between dimension lumber and panel products too. Dimension lumber will see modest increased production in late Q2 or in Q3, while OSB will have more increased production in new mills in both Q2 and Q3, based on current mill forecasts. In addition, both Georgia-Pacific and Canfor recently announced new lumber mills in the Southeast United States, which indicates that more supply will come online over the next few years. With solid demand in current supply levels, the market appears justified in its existing pricing. Of course, external forces such as if the fed decides to be more aggressive in raising interest rates and doesn't protect the long-term bond market would slow demand somewhat which would impact the lumber market as well. However, in speaking with our customers, they are seeing solid demand ahead in 2018 and are optimistic about the year. The retail market shows strong signs thus far with the repair and remodel activity predicted to be strong. And in addition to market growth, we have also added market share gains in retail by adding business with big-box retailers as well as independent retailers. Manufactured housing looks to continue its steady growth, while site-built construction, which showed a slight decline is Q4, which could have been caused by higher lumber prices and also may have been the result of some more difficult conditions in the market versus the prior year or to uncertainty regarding the pending tax legislation at that time. The industrial market sales have lagged our cost increases and we continue to make adjustments to pricing as agreements allow. And as much as we recognize the impact of the lumber market, we try not to waste time looking for excuses in things we can't control. So we are concentrating on sales growth, new products and services and better sales mix to enhance our profitability. We talked about 2018 new product sales target, but where are we focused? We are expanding our Deckorators product offering, and are having good success with designers and contractors, in specifying and installing our extremely contractor-friendly Vault product. Our Deckorators certified installers have a definite advantage in the marketplace, since Vault is lighter and stronger than similarly sized wood plastic composite products, contractors find it much easier to work with and to install. We've also expanded Inside the Home by introducing colors of our UFP-Edge Charred Wood, such as the designer-specified ash color. These products create more opportunities for unique design and accents and are easily obtained via special order. In addition, we are excited about our new Deckorators branded anodized aluminum railing products, which we expect to help us gain more market share. These products all enable us to utilize our multiple manufacturing and distribution facilities, which gives us an advantage in the marketplace. The ability to provide mass customization on a more local basis gives consumers better and more timely options for customized and semi-customized products. On the international front, our operations continue to grow. We have added small tuck-in acquisitions in Mexico and Australia, which complement our existing operations in those countries. Our cross-selling with multinational customers, we need our international footprint continues to grow as well. We are making steady progress on our goal to become the global packaging solutions provider for our products. We also expect some questions regarding idX. Many investors have wondered about the progress of idX. While, we felt considerably short of the original targets for 2017, we still posted $260 million in sales. We are targeting $290 million in sales for 2018 and have aggressively pursued the synergies, we identified pre-acquisition. With projects already implemented, we have eliminated and estimated $5 million in annual costs, which will be fully realized once the facility consolidation plan is completed this year. We also believe there are more savings to realize later in 2018. In addition to the cost savings, idX continues to expand the customer base and diversify its end markets. Through operating efficiencies and lower levels of working capital, we remain confident that the idX team will make substantial profit improvement in 2018 and to generate a return on investment in excess of our cost of capital in 2019. And we continue to seek other acquisition opportunities. Multiples have gotten a little frothy, in our opinion, so we will remain selective and conservative in our approach. It will be interesting to see the impact of rising interest rates as well as the tax law changes on the valuations. We are looking at targets, which grow our current markets and which adds scalable new product opportunities. We look to become the partner of choice for late-stage product developers, who need access to our end markets. We plan to sell these new products to our customers through both their brick and mortar outlets or through their e-commerce channels. Therefore, we're adding resources to make our e-commerce efforts more robust to meet our customers' needs. We also will seek targets, which help us broaden our ability to offer more complete packaging solutions with alternative materials. As we look at challenges, personnel recruitment and retention is critical. We have a state-of-the-art training program, which we continue to expand in the digital environment and we are investing in automation to make the production environment a more attractive place to work. On the compensation and benefits side, we expect to use one-third of our federal tax savings to invest in our employees through benefits and compensation options, which will be tailored more to the individual employee. Instead of one-time bonuses, we believe that are comprehensive program for compensation and benefits will help us to improve retention by 10%, which in turn will enhance the efficiency of our operations and reduce excessive over time. We expect to use the remaining two-thirds of the tax savings for investments, which will also enhance shareholder value. Another challenge is the transportation cost continue to rise, with new DOT regulations and driver shortages, we are trying to make the best use of our internal truck fleet and outside carriers. Rail carriers are also struggling currently due to the cold weather, primarily in Canada, which reduces the amount of freight for locomotive. Finally, we continue work at limiting our SG&A costs. Excluding investments in new products, e-commerce and innovations in manufacturing design and testing, which are all included in the SG&A line. We plan to keep the SG&A growth rate below our unit sales growth rate. Now I'd like to turn the call over to Mike Cole to provide other details on our financial performance.
Michael Cole
Thanks. Before reviewing the financials, I should briefly touch on the impact of lumber prices this quarter. Specifically, overall lumber prices were up 23% year-over-year in the fourth quarter, as a result of significantly higher spruce prices in the fourth quarter - as a result of significantly higher spruce prices. Spruce was up 41% year-over-year and increased approximately 9% sequentially in Q3. Southern yellow pine prices were up 6% year-over-year and up 8% sequentially. As you might recall, rising lumber prices present a challenge for certain products we sell with a fixed price until we reach a point when we can reprice those products with our customers to pass along the cost increase. Higher lumber prices also expose us to future gross product risk and products sold on a variable price formula like treated lumber, in the event lumber prices fall during our primary selling season. You might recall this was the situation we experience last year from April through June. Finally, higher lumber prices caused our ratios of gross profits, SG&A costs, and operating profit as a percentage of sales to temporarily look distorted as we generally attempt to pass along higher commodity cost to our customers and earn a targeted profit per unit. In periods like this, it's best to compare changes in profits and cost with a change in unit sales. Also as we stated in the press release, our results for the quarter and full-year included one less operating week, which we tried to quantify for you. Moving on to the highlights from our income statement. Our overall sales for the quarter increased 13%, resulting from 5% increase in unit sales and an 8% increase in selling prices due to the lumber market. Our 5% unit sales increased was driven by recently completed acquisitions. The lack of organic unit sales growth this quarter was due to the extra week of reporting in the fourth quarter of 2016. We estimate the loss of this extra week caused a 7% decline in our Q4 unit sales and similarly impacted each of our end markets. Breaking down our sales by market. Sales to the retail market increased 20%, resulting from a unit increase to 13% and an increase in selling prices of 7%. The Robbins acquisition completed earlier this year contributed 10% to year-over-year growth. Adjusting for the longer reporting period in 2016, we estimate our organic growth was about 10%, which is higher than previous quarters this year due to recent hurricanes. But as Matt pointed out, the products sold primarily consisted of low margin commodity product, that contributed little to our profitability. Our sales to the industrial market increased 9%, driven by a 2% increase in unit sales and an increase in selling prices of 7%. Organic unit growth adjusting for the longer reporting period in Q4 2016 was about 5%, and was driven by adding almost 200 new customers and adding 44 locations of existing customers as our efforts to improve market share continue to gain traction. Our overall sales for the construction market increased 10% due to the increase in selling prices. Again adjusting for the extra reporting week last year, organic unit growth was about 6%, with similar contributions for manufactured housing, residential and commercial construction. Moving down the income statement, our fourth quarter gross profit increased by almost $7 million or over 5%, which is in line with our increases in unit sales as challenges associated with rising lumber prices, freight costs and labor rates were offset by a variety of factors including strong sales growth and leveraging fixed cost. Continuing to move down the income statement, SG&A expenses included almost $11 million of accrued bonus expense, which was flat compared with Q4 last year. The remaining core SG&A expenses totaled almost $77 million compared to $76 million last year, and was impacted by acquired businesses which caused an increase in our SG&A, while the extra week of reporting in 2016 cause to decrease. Overall, we're pleased to report a less than 1% increase in our SG&A compared to our 5% increase in unit sales, as we continue to carefully manage our expenses. Looking forward, we are currently planning for quarterly core SG&A expense of about $83 million and a bonus rate comparable to 2017. Operating profit increased by over $6 million or 17.5% for the quarter to almost $41.5 million. Likewise EBITDA for the fourth quarter increased by almost $8 million or nearly 16% as acquired businesses contributed $2.5 million to EBITDA growth. Overall, we're very pleased to see our profits grow well in excess of our unit sales this quarter. Our effective tax rate was 17.7% this quarter compared to 34.9% last year, primarily due to the impact of the tax law change on our net deferred tax liability. Excluding the $6.4 million impact, our effective tax rate would have been 33.6%. Looking forward to 2018, we are currently planning for an overall effective tax rate of approximately 25%. Finally, our net earnings from controlling interest were $31.1 million, a 50% increase compared to earnings of $20.8 million last year. Excluding the $6.4 million tax benefit, net earnings would have been $24.7 million, a 19% increase over last year, demonstrating operating leverage on our sales dropping to the bottom line. Moving on to our cash flow statements for the year, our cash flow from operating activities was $137 million for the year and it's comprised of net earnings of $124 million, along with non-cash expenses of nearly $48 million, offset by a $35 million increase in cash invested in net working capital since the end of last year due to the growth of our business and substantially higher lumber prices. As I mentioned on previous calls, we measure our cash cycle to assess our working capital management. Our cash cycle for the fourth quarter was 53 days compared to 51 days last year. Investing activities consisted of $61 million spent to acquire Quality Hardwoods, Robbins Manufacturing and [Goboard Pallet] [ph], as well as two small transactions in Mexico and Australia as we continue to pursue acquisitions that expand our geographic reach, enhance our product offering, represent attractive bolt-on opportunities. Capital expenditures were $71 million for the year, including expansionary CapEx of our $24 million. Next year we are planning for capital expenditures of $85 million as we continue to add capacity in regions that have good long-term growth opportunities, enhance our capabilities to offer new and value-added products, and invest in automation when opportunities exist for a high return and a quick payback. Financing activities included total dividends of almost $20 million, including a 13% increase in our most recent semi-annual dividend rate and repurchases of our stock totaling almost $13 million. As a reminder, our practice has been to buy back stock opportunistically when the price makes sense to offset stock-based compensation issuances. In total, we returned nearly $33 million to shareholders during the year. With respect to our balance sheet, our net debt balance was about $144 million, compared to $97 million last year, primarily due to the $61 million borrowed to fund acquisitions this year. Overall, our balance sheet remain strong and we believe we could add up to $250 million to $300 million in debt to continue to grow our business, and still feel comfortable with our leverage and capital structure. Finally, our return on invested capital was 13.2% this year, exceeding our weighted average cost to capital, but down somewhat from last year as we expect certain long-term investments and capital expenditures and acquisitions to reach our return targets over time. We also expect the sale of our Medley, Florida pant announced earlier this year, will enhance our return on investment in the future as we use existing capacity and add appropriate replacement capacity in a manner that will allow us to be more efficient. This transaction provided us with $36 million of pretax proceeds and we recorded a $7 million gain from the sale in January. That's all I have in the financials, Matt. Thank you, Mike. Now, I'd like to open it up for any questions you may have.
Operator
[Operator Instructions] Our first question comes from the line of Ketan Mamtora with BMO Capital Markets. Your line is now open.
Ketan Mamtora
Good morning, Matt, Mike.
Matthew Missad
Good morning, Ketan. How are you?
Ketan Mamtora
I'm fine. So first question, has this recent tax reform change changed your view at all on kind of build versus buy?
Matthew Missad
Yeah, I think that's a good question, Ketan. I think from a build versus buy for us is really about what the situation is in the marketplace in terms of valuations. And that's a bigger driver really than the tax issue. If the valuations are too high, which they appear to be today, we're more inclined to build. If the valuations normalize more that generally is a better option for us.
Ketan Mamtora
Got it. That's helpful. And then, can you just give us some sense at a high level what is it that is kind of most interesting to you at this point, whether it is in the build category or in the buy category, whether it is filling up leased and hold? Or just give us some sense of where do you think there was the most opportunity for you?
Matthew Missad
Yeah, I would say that we are still focused very heavily, Ketan, on the industrial market. There are a lot of opportunities, whether it's with the different product lines or different geographies. So I would say that's probably our biggest focus area and then the new products would be our next one in any of the markets that we serve, trying to find new product opportunities that are scalable that we can grow.
Ketan Mamtora
That's helpful. And then, turning to lumber markets, out to Q1, is it fair to say that you would expect a bigger margin squeeze in Q1? Or anything that you can do to mitigate whether it is reset of contracts on January 1 or anything of that kind?
Matthew Missad
Yeah, Ketan, so we don't have a specific date that's common for all of our agreements, so they tend to run at different timeframes. So a specific date that's common for all of our agreements, so they tend to run at different timeframe. So you're right, as the market runs you're going to continue to have compression until we're able to pass along those cost. So I think it's something similar, I would say, to Q4 in terms of the run in Q4. It's hard to predict at this point, although we're up approximately 7% on the southern yellow pine market thus far this year. So it's a little bit of playing catch-up.
Ketan Mamtora
And typically, what the lag is between kind of the cost and when you can reset the contracts? Appreciate that it would vary across different categories and products, but on average?
Matthew Missad
I would say, on average, it's probably between 60 and 90 days, some longer, obviously, considerably and some much shorter.
Ketan Mamtora
Got it. And just one last question on idX. You gave the sales figures that was very helpful. Would you be able to give us the EBITDA contribution as well in 2017?
Matthew Missad
No, I think we're going to try to stick towards the sales and you can kind of use their historical percentages and that would give you a pretty good idea of what the numbers look like.
Ketan Mamtora
Got it. And that's very helpful. Good luck in 2018. I'll turn it over.
Matthew Missad
All right. Thank you, Ketan.
Operator
Our next question comes from the line of Dan Jacome with Sidoti & Company. Your line is now open.
Daniel Andres Jacome
Hello, good morning.
Matthew Missad
Good morning, Dan.
Michael Cole
Hey, Dan.
Daniel Andres Jacome
Hey. So let's say on idX, if we can - I think you said you're targeting $290 million in revenue this year versus a base of $260 million in 2017. Did I get that right?
Matthew Missad
Yes.
Daniel Andres Jacome
Okay. Can you just give us a little flavor of exactly how you're going to get there or what's the game-plan, because I think it's kind of 11% delta, which seems pretty reasonable? But I would just love to hear a little bit more on that.
Matthew Missad
Sure, yeah, I think what we said about a year ago is that a lot of their business got pushed back and what we're seeing now is our backlogs are growing. And then, overall what we're seeing is some of the end markets, they're picking up. The newer diversified end markets are picking up with new business. So I think the typical retail apparel category, they're going to spend more money this year than they did last year and all the new end markets that they're focused on are starting to pick up too. So based on - based on their backlog and their visibility with the customer base, that's how they're arriving at the $290 million number.
Daniel Andres Jacome
Okay. So you are saying there was - because of the timing there was a little bit - the results were a little bit depressed and now they should recover from that?
Matthew Missad
Yeah, as you may recall from a year ago, people were talking about store closures and trying to rationalize their own capacity, so…
Daniel Andres Jacome
Right, no, I remember, yeah, I remember, okay, and that's encouraging. Then wanted to - maybe a one-off or do you - you look at your footprint back in Florida, that looks - mistaken, you still own a lot of manufacturing facilities. Do you see room for further opportunities like this down the road, because for a return on invested capital standpoint it would probably be a positive? Just curious anything there.
Matthew Missad
Yeah, I think this one was a very easy compelling view of the ROI model that we use to manage the business and to the extent that there are others like that, which I don't believe we have a lot of that to begin with. But we'll be able to downsize the facility, still serve that local market very, very well. And as Mike said, we'll be able to build or create a much more efficient facility, so our operating cost will be even lower there.
Daniel Andres Jacome
Right, yeah, I remember seeing that in the press release. How close are the other facilities to the Medley one? Like do you have a rough idea?
Matthew Missad
In terms of…
Daniel Andres Jacome
The nearby facilities, yeah, where you're going to roll over some of that production to the facilities nearby, how close are they?
Matthew Missad
Yeah, we have facilities in Central Florida, and we also will have facilities within that Miami market, so…
Daniel Andres Jacome
Okay. Good. And then, on the hurricane, if I'm not mistaken, you said there was some sourcing cost, and maybe headwind - temporary headwind. So hurricanes are not going to go away. Did you pick up any learnings from this short-term, I don't know, let's call it, blip that maybe going forward, can mitigate something like this happening again? Or is this just kind of like the cost of doing business down there?
Matthew Missad
Yeah. I think you're absolutely right. Hurricanes are going to happen. And every hurricane, we learn a little something about it. And in this case, one of the things we do is we try to make sure that we service our customer, and the need to service the customer trumps the short-term profitability issue. I think, what we will do and learn from this, is we will need to better manage the expectations with the customer base in terms of how much material we can get and how quickly we can get it there.
Daniel Andres Jacome
Okay. And then on the lease deck, I forgot to ask earlier, but the proceeds, is there just kind of - it's being roll forward in - it's in your CapEx guidance for the year, some of that, that you're going to reinvest, I guess?
Matthew Missad
Yeah, I would think, that we would look to use it for replacement projects and properties around the country.
Daniel Andres Jacome
Okay, terrific. And then last one, what sort of housing start growth do you have baked in internally at corporate, when you're thinking about 2018, if you care to comment on that? Just trying to see what you guys think versus some peers? That's it.
Matthew Missad
Yeah. I would say that we're probably on the lower end of the spectrum. Dan, we typically are with probably at 3% maybe growth rate.
Daniel Andres Jacome
Oh, yeah. Okay, that is low. All right, but fair. Thank you very much.
Matthew Missad
All right. Thank you.
Operator
[Operator Instructions] Our next question comes from the line of Steve Chercover with D. A. Davidson. Your line is now open.
Steve Chercover
Thanks. Good morning, Matt and Mike.
Matthew Missad
Good morning, Steve.
Michael Cole
Good morning, Steve.
Steve Chercover
So just to kick it off, I'm assuming that you guys could be beneficiaries of increased infrastructure spending. And in my mind, I see concrete forming as maybe the most obvious opportunity. But can you tell us how you might participate and how you're targeting it?
Matthew Missad
I think, you just said it, Steve, probably better than I can. That's - like [ph] the big area that we would see being able to participate in that, and that's an area we're focused on. So any of the infrastructure spend, our concrete forming business, we think, would benefit and perhaps some of our other construction markets will benefit as well.
Steve Chercover
All right. Very good. And I'm not trying to dig much deeper, but on idX, you gave us the sales achievement and target for 2018. I just want to - can you help us recall, was it around $25 million what you've thought they would be generating in a steady state?
Matthew Missad
Yeah, I think it was - that was the number from a couple of years. That's correct.
Steve Chercover
All right. So anyhow, they'll be kind of accretive to your - or achieving better than ROI in 2019.
Matthew Missad
Correct.
Steve Chercover
Okay. And finally on lumber prices, when you cited them that the higher lumber prices, specifically, is a governor on residential construction. So, A, do you expect that the new mills from GP and Canfor might ultimately help drive prices down? And do you think that these duties on Canadian lumber are actually detrimental to the U.S. economy?
Matthew Missad
Well, that's a loaded question. I know you're setting me up here, Steve, so I'll try to tackle the first part of that. First, I guess, in terms of the impact on the lumber market, clearly, if there it is more supply, we would expect and not commensurate increasing demand. We would expect there to be some moderation in the pricing. So that's the first and the easy one. I guess, with respect to what's the impact of the Canadian duties on the lumber market it would be hard for me to say that it hasn't had an impact in driving up the costs. And the ultimate question is how high is too high relative to what does that do to the market in terms of consumer demand. And I guess, you can draw your own conclusions there, but I definitely think it's had an impact.
Steve Chercover
Yeah. Well, I mean, I'm a double agent, everyone knows that. But to the extent housing is a policy objective - housing affordability, and if it's actually impacting activity levels, it doesn't seem - it seems like there's clearly negative. All right. Well, thanks guys. Best wishes for 2018.
Matthew Missad
Thank you, Steve, appreciate it.
Operator
We have a follow-up question from the line of Ketan Mamtora. Your line is now open.
Ketan Mamtora
Thank you. Mike, just a couple of quick ones, and sorry if I missed this, but what would your cash taxes be in 2018? Would it be similar to your effective tax rate or would there be any differences?
Michael Cole
It would be very similar.
Ketan Mamtora
Got it. And then, any change in your view on leverage as we move through the housing cycle?
Michael Cole
No, I think at this point of the cycle, we still think 1.5 to 2 times debt to EBITDA is a good comfortable leverage ratio. At another point in this cycle, when we expect demand to be off, then we might change our view on that. But at this point, we're very comfortable with that.
Ketan Mamtora
Okay. That's very helpful. Good luck in 2018.
Michael Cole
Thank you.
Matthew Missad
Thank you, Ketan.
Operator
And I'm not showing any further questions at this time. I'd like to turn the call back to Mr. Missad, for any closing remarks.
Matthew Missad
Thank you, Liz. I'd like to thank all of you again for joining us on our call this morning. We truly appreciate your interest in our company, and believe that we have an outstanding team committed to driving performance and increasing the value of our investment. I'd also like to say a special thank you to you for helping us get our Halloween wish of a tax reduction. Sometimes wishes do come true. And our 2018 goal is to say, one year from now that 2018 was greater than ever before. Thank you and have a great day.
Operator
Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. And you may now disconnect. Everyone, have a great day.