The Middleby's (MIDD) CEO Selim Bassoul on Q2 2014 Results - Earnings Call Transcript - stainless steel outdoor bbq grill
At 11: 00 a.m. on August 7, 2014, Middleby Corporation (Nasdaq: MIDD) called 2014 earnings in the second quarterChairman, President, CEOTim Gerrard-Chief financial officer, vpanalystony banner-Rose Capital partnerBairdJoel Tiss-BMOJohn Duni -BB & T Capital MarketSidotiGreg.Ladies and gentlemen, welcome to the 2014 earnings conference call for the second quarter of the company.At this point, all participants are in a listening-only mode.We will ask questions later.and-Answer sessions and instructions will be followed at that time.This call is being recorded as a reminder.I would like to introduce your host for today's phone CEO and chairman Selim Bassoul and CFO Tim Fitzgerald.I would now like to transfer this call to Tim fitzgerrard's opening remarks.You can start, Sir.Tim in Fitz Nagar more KateThank you.Good morning, I'm Tim Fitzgerald, chief financial officer of Middleby.I will make some preliminary comments on this quarter and then we will be open to the issue.Net sales for the second quarter were $2014, up 0.424 billion year on year.8% from $363.The second quarter of 2013 was 8 million.Second quarter sales reflect the impact of Celfrost and Wunder acquisitionsThe bar was completed in 2013 and the market forging and processing equipment solution was completed in the first half of 2014.These acquisitions did not fully reflect the comparison results of the previous year, accounting for 5.Sales grew 8% this quarter.Excluding the impact of these acquisitions, sales increased by $39.Up 9 million or 11% from the previous quarter.This growth reflects a 10 growth in organic sales.2% of our commercial food service group has increased by 6.2% and 20 of our food processing group.The kitchen equipment part of our house increased by 6%.Sales of the commercial food service group were $263.9 million.We continue to achieve growth driven by the growth of chain restaurant sales that want to upgrade equipment and adopt new technologies to improve the efficiency of store operations.International market sales rose 16% this quarter, with double-digit growth in Europe, the Middle East and Asia.Due to the food supply problem of one of our major customers in China, sales in the previous period were interrupted, and sales in China rebounded in the quarter.Sales of the food processing group amounted to $89.9 million this quarter.The expansion of food processing business in emerging markets, the adoption of new technologies to improve operational efficiency and solve food safety problems continue to benefit sales.We expect that we will continue to achieve partial growth in the second half of 2014.However, sales growth is expected to come-growth in the third quarter is too slow as the project may turn to the fourth quarter.Overall, the demand for this business from our project pipeline is still strong, and we are implementing the benefits of the complementary brand expansion platform, which enables us to provide our customers with complete technical solutions.Sales of Viking have increased by 20.6% to $71.8 million of 1/4, including from US--Increased sales marks associated with newly added distributor operations.Sales increased compared to the first quarter, including the seasonal benefits of increased outdoor cooking sales in the second quarter, which is the strongest.During the quarter, we made significant progress in integrating the acquired reseller business.We have completed these programs to a large extent, and now our focus is on promoting our new product range, including investing in distributing these products from dealer showrooms, as well as training dealer sales reps.We expect that these efforts will continue for the rest of 2014 and early 2015, and we will be prepared to realize the benefits of these investments in 2015.Gross profit increased to $166 in the second quarter.$2 million, $136.The gross profit margin was 6 million in the previous year and 39.1% compared to 37.The previous quarter was 5%.Gross margin reflects the impact of increased gross margin in the food processing sector and Viking.Compared with 38, Viking's gross profit margin rose to 33% this quarter.7% in the second quarter of last year.Although, as expected, the profit margin for this quarter continues to be adversely affected by the inventory acquired together with the dealer acquisition.We expect that this profit impact will decrease in the coming quarters as we will drain most of the acquisition inventory associated with dealer acquisitions in the first and second quarters.Sales and distribution expenses for the quarter increased from $38 to $38.$6 million to $48.1 million.This increase includes $4.The sales costs associated with the Viking distribution business acquired in 2013 and 9 million were 2014, reflecting the results of the previous year.Another $1.Sales costs associated with the acquisition of Celfrost increased by 3 million, Wunder-Market development and processing equipment solutions.Excluding the impact of these acquisition-related activities, the increase in sales costs reflects the impact of increased sales and investment in international sales offices.General and administrative expenses increased from $37.$6 million to $42.3 million.The increase was mainly due to $3.4 million of the incremental costs associated with the acquisition.Compared with the previous year, quarterly expenses also increased due to $1.Extra non 8 millioncash share-Based on compensation.General and administrative expenses for the quarter also included $1.3 million of nonRecurring expenses related to the integration activities of residential kitchen equipment distributors.Income tax provisions amounted to $23 million and the actual tax rate was 32.2%, reflecting the adjustment of tax incentives.Effective interest rates are expected to range from 33% to 34% this year, largely depending on the mix of domestic and foreign income.The amount of cash flow generated by operating activities amounted to $72.This quarter was $5 million and $61.7 million in the first six monthsSecond-quarter cash flow reflects strong net profit and favorable impact related to the time of tax payment, as senior federal taxes paid in the first quarter were used in the second quarter.We expect that the second half of the year will continue to generate strong cash flow, which has traditionally become stronger due to the first factor due to cyclical factors.Non-The increased cash cost in calculating operating cash flow is $15.$3 million, including $6.7 million of $3 intangible amortization.8 million Depreciation and $4.8 million of noncash share-Based on compensation.In the second quarter, the company used $3.8 million capital expenditure on the fund and $15 million of the fund's total debt at the end of the relevant activities and quarter amounted to $592.$7 million, compared to $655.The first quarter of 2014 was 4 million.As of the end of the quarter, the company's net debt to EBITDA leverage ratio was about 1.8x.That's all the ready comments.Amanda, can you start asking questions now?Question-and-Our first question comes from Tony Brenner with Ross Capital Partners.Your line is open.Tony Brenner -Thank you. good morning.Tony, Tim fitzgradych.Tony Brenner -There are two issues with ROTH Capital Partnership.The first is a statement about Viking's significant investments in marketing and training relative to new products.Is the second half of the year revenue headwinds or will these expenditures be offset as it may drive incremental sales?Tim FitzgeraldThey will actually be offset by some other profit improvements-as we see that the impact of dealer inventory in the channel is less than some of the cost efficiency channels in the distribution will offset some of the investments we made in the second half of the year.Tony Brenner -Partner sokay, ROTH Capital.You have talked about 15 new products.Have these all been launched, or will they be launched gradually?Selim BassoulTony this will be a step-by-step process, when we launch our cooking platform, we will launch our new refrigeration equipment in December and launch us in OctoberSo basically you have seen Wow!The oven and the new range are available.From now until now, we have launched a lot of new products, although they are gradually launched.So the September refrigeration will come back and cook in October, and then we will open up a new line for city residents or city residents in October, a brand new line, very, very demanding for our international and high-end markets.Rebels and builders who are doing more projectsfamily unit.So this is brand new for Viking, which they have never had before.As a result, this will also introduce new lines in October.Tony Brenner -Partner sokay, ROTH Capital.Second question, Selim, you 've been talking about a number of chain restaurants for a year, testing kitchen remodeling projects on the spot.Are these chains stepping up now, are they ordering such renovations or is this just an endless field test?Let's separate the two.So we became interesting enough that we implemented this on small chains.So we have a lot of 20 to 50 stores that adopt the kitchen of the future, so they are rolling out.So in the last few quarters, it is likely that we have installed nearly 300 future kitchens.The big chain stores I call more than 1000 stores are much slower and they are still being tested.This test is very, very positive.But I think that requires a big commitment.The way Brinker does this, Brinker goes out and says I'm going to send out a check from the company, check all my stores and franchises, and basically roll out the kitchen of the future.So we had a lot of success, I call it a train, about less than 100 stores, and they are very fast, but we are still testing over 1000 of the large chains, and the testing has been going very well all the time.But this is slower than we expected, as it promises to invest a lot of money, so remind everyone that Brinker has launched more than $1200 in the capital expenditure structure of 50 million stores.So the CEO has to decide to find a $50 million business for a 1000 store.But now everyone is telling me that they are willing to do so.They do pay off when we talk to people, but that's a big commitment they have to make.To sum up your question, because everyone is asking this question, the kitchen in the future is being occupied, in smaller stores, as these stores grow from 100 to 200, they use the kitchen of the future at a faster rate than that.Tony Brenner -The cooperation between Ross capital is very good.Thank you very much.Bassolokai.The next question comes from Tim Wojs and Baird.Your line is open.Tim Wojs -Good work.Good morning, Tim.Good morning.Tim Wojs -BairdI guess, I guess, you 've talked about a target of 20% EBITDA and dropped out of Viking's 2014.I guess, I just wanted to confirm that this is still the target, even though you are talking about some investments in the second half of the year.Tim FitzgeraldYes, we are still, this is still the target for this year's 20% EBITDA, and we feel we are on track.Tim Wojs -BairdGreat, great.Then I think it's on the dealer network, you talked about reducing the number of dealers you have there last quarter, and I think it's just an update on the progress there, the news you hear from the dealer network, and then from a top level perspective, you may see a positive or negative impact that will be huge?Bassolokai.So what we do is we say that we want the dealer to make a bigger commitment to our presentation, to present it exclusively for us, rather than the one that sells Viking products.The second thing we ask about dealers who are important to us is that in order to bring us real profits, they have to basically develop their business.So from this point of view, I would say we have 1500.-The number of 1500 dealers today is less than 1000, because we have cut off some and we tell others not to do so, so we are more selective.We are working together now-most likely, the number will drop to close to 700 as we enter 2015 and run well.So the other dealers have strengthened, so we have seen the dealers who promised us.So I can talk specifically about the 250 dealers who are greatly promoted in the presentation, the results of their orders and their commitment to us.So we feel very, very good and we see that the order now is July, so let me repeat it in a different way.The first and second quarters are very disruptive to Viking, why?Since we purchased two of the largest distribution channels in January and February, we bought it on the East Coast and we have to activate it.Shortly after the second quarter, we launched a new reseller program that actually laid a new stage for how we do business with Viking, the dealer took a lot of time to absorb it our sales staff had a lot of questions and answers for me and I asked the dealer to call me and now everything is fixed.So the information is clear.We don't want to take money from dealers.What we want to say is that if you grow up with me and make a profit from it, and you basically promote my new product, I am basically willing to support you.You have to show our products;You have to be our real partner.Now that we have distribution, we are able to serve them better, we are able to train them better, but we are not going to train 1500 dealers when which one we pass, we 've made it clear which dealer we don't want and which basically tells us they don't want to work for us.So in the second quarter it was all resolved.So I can really say now that we have nearly 80% of our dealers who have made a commitment to us and to them, and we still have 20% of our dealers that are constantly changing, we will be at the best of the year.So there is a lot of stability, the project is in place, the promotion is in place, and I'm glad you did as well as we did, taking into account all the disruption and the changes we made between completing dealer distribution purchases in the first six months of this year.In fact, not only in the past year and a half, what I want to say is that we ended up buying a lot of negotiations from all the dealers, and a lot of inventory was dumped on the market, there are a lot of changes in the way we sell our services, we changed the procedures, and now we finally have new products, now our distribution is in place, and our dealers are in place.Tim Wojs -This is great.It's really helpful now.I appreciate it.And then I think, as far as Viking pirates are concerned, it might be a better question for Tim, but a year of $12 million --over-The annual growth of Viking, is there a way to distinguish what is organic growth, and perhaps what is the contribution of dealer acquisition?Tim fitzgrandi will be honest with you that there are so many moving pieces right now that it's hard to get a really accurate number, but obviously it's a combination of the two.Tim Wojs -Okay, okay.I think just on the commercial catering service, my last question, you mentioned that China rebounded this quarter, I think I was a little surprised, because there are more headlines about food supply issues there.So how do you expect to see this when we're through this year?When some larger supply chains digest supply chain issues, do you expect to have other types of hiccups?I mean, this is an early news. we really don't think that the recent problems will have a significant impact on our big customers in China, but they are related to different chain companies.Therefore, the impact on our customers is small, so we feel that the opening plan for the second half of this year is intact, so we are confident that we will continue to see growth in China in the second half of the year.Tim Wojs -BairdGreat.Selim BassoulI can answer a little more because I think many of the customers we operate there are considering China.But I have to tell you that I gave them credit because they were very active.Therefore, with their rapid development in China, China is a huge market.Our customers have come back, forcing their suppliers to start thinking about more security issues.I think the last episode we saw on one of our customers in China is now to put all the vendors in emerging markets together and start focusing on food safety.So on the other hand, this is great for our food processing business as we are pro-Cleaning equipment for food processing companies.We will see an increase in the number of people asking or other operators to seek security from their suppliers, not only in China, but also in the Middle East, which can happen in South Africa, it can happen in Malaysia, Thailand or Latin America.So I think we're starting to see some inquiries from what's going on about our food processing section, because the biggest restaurants, besides supermarket restaurants, are the biggest users of food processors, they will not tolerate a careless and distrustful supplier.I can assure you that all the large chain stores we work with have sent teams to ensure that the supplier is now audited and will no longer suffer from such health hazards or safety procedures that are not in place.Tim Wojs -BairdGreat.Well, I really appreciate all the colors.Did a good job in the results.Thank you, Tim fitzfield.Thank you very much.Thank you.The next question comes from Joel Tiss of BMO.Your line is open.Joel Tiss -I'm not used to getting on the bus, BMW will.How are you guys?Hello, Joel?Joel Tiss -BMOI guess you answered inventory and receivables, mainly receivables, why they went up so much.Is this mostly from acquisition distribution and some acquisitions?Tim fitzgerdes.That's correct.Joel Tiss -BMOOkay.I'm just wondering if you can take a step back and give us a little color and everyone seems to be looking at your new chain plan, the kitchen of the future and the Vikings, but can you give us a few sentences about other things? What's going on like some of the other big blocks in midderby, what kind of plans do you have to develop so we can get a more comprehensive picture of what you guys are still doing?Selim BassoulJoel, I'm glad you asked this because we talked about the kitchen in the future, but you have a lot of other initiatives.So we took the initiative to come up with what I call the CookTek dry well, which is now available in one of the Asian chain stores and we are starting to roll out.The waterless steamer has also been launched, and we are in the final stages of the waterless steamer displayed at the National Restaurant, a 90-second risk-free artisan pizza-the hand-made pizza type device has been greatly impacted.We got more awards, we put people in line, and I 've never seen them in any product introductions that people lined up.We have an order and the product will be launched in September.When people just showed up at the show and booked a product that was very exciting for us, we received an order.We have a lot of bakeries in terms of food processing, and new bakery innovations are coming soon.Clean side and chicken side with lots of equipment there.Then, the most exciting product we introduced is the product we got from Pitco to reduce the amount of oil, which has not only been widely tested in the United StatesS.But we just want to build a new chain store in the Middle East. they basically compare us and our competitors widely. this team is composed of former KFC and McDonald's employees, they started the chain and finally tested all the competitors, we volume and-their food chain is not a big chain, but it is a fast-growing chain, they used the reduced oil test to put all the units into extensive testing with their competitors.So we have a lot of exciting products coming out soon, whether it's our turbo chef, CookTek or Blodgett, the combo oven is at the top of the double ovendigit growth.The more energy-efficient combination oven introduced, the more water-saving function is a very good control panel, after we launched the combination oven, we have been able to gain market share in the field of the combination oven.So I'm glad you made a higher request, so we have a big plan.The combo oven plan is more than oneMillions of dollars of initiatives, we will be in multiplemillion dollar.There are many steamer without waterMillions of dollars, fried pot oven will be moreFrom this point of view, the new series of products without risks and foods without risks are also doublingdigit for us.So we will have a lot of exciting products soon.Beech oven, Beech oven is also growing double digits for us in wood burning oven, so I see we have Wow!2 on board.Wow, we are very excited!I can.-I think it's great!2 is coming, it's exciting, it's being tested by a major pizza chain and the results are fantastic, so Joel, we have a lot of really exciting moments.Joel Tiss -Thank you very much.I don't want to take up other people's time.Thank you.Thank you, thank you very much.The next question is John Duni from BB & T Capital Markets.Your line is open.John Duni -Good morning, good guy, BB & T Capital MarketsHi.Thank you, John.Good morning. thank you very much.John Duni -BB & T Capital sells more housekeeping products and I know that Q will be released later today, but I was wondering if you could go through the operating margin and EBITDA margin for each segment.Tim FitzgeraldThe EBITDA has a profit margin of about 28% on commercial food services, which is quite consistent with what we have been doing in the past.Past food processing department-Last year was about 19%, 20% north this year.So I think our EBITDA for the second quarter is about 21%, and then Viking is about 15% when you exclude restructuring costs, which still includes a reduction in gross margin impact on the company acquisition of dealer inventoryJohn Duni -The BB & T Capital Market is fantastic, thanks.Finally, I just want to know about the current situation of the M & A pipeline.Are you more interested in business expansion, or are you more interested in food processing, and you see more opportunities at home or abroad?Tim FitzgeraldThe pipeline continues to be strong, I mean, this is very consistent with the history of Middleby over the years, so we see it on all three platforms, commercial, food processing and residentialSo what I want to say is that the pace of our M & A may be consistent.This is a mix of domestic and international, we really just focus on the best opportunity to lead the brand again, leading technology is complementary and synergistic to our platform, because we position ourselves as market leaders in these three areas.John Duni -The BB & T Capital market is very good, thank you for your time.Thank you.The next question comes from Jamie Clement and Sidotti.Your line is open.Jamie Clement -Good morning, Tim sidentiselin.Good morning, Jamie.Jamie Clement -SidotiSelim, I have a question about the long-term product development and development of Viking.Let's say one person, I can't imagine who this person will be, but let's say they don't need to have a power supply of 23,000 BTUs on the burner, let's say, they don't need to melt the chocolate from the paper plate without burning the plate.When this Middleby technology starts to flow to customers who may be more interested in buying three or five series in history?Very, very good question, Jamie.What we are doing at this moment is adopting some technology, and we want to be more democratic about who can afford Viking Pirates, and I think that's what we 've been doing ---I was always interested.When I bought the brand, I was very interested in it.In many ways, there are a lot of people walking around, and many young couples say I'm eager to buy Viking and I'm eager to have Viking in my place.I think the result is actually destroying the brand without making sure that we are holding back wealthy buyers who want to pay $10,000.I think our current 3 Series has become a great platform to scale and bring technology.So I can tell you what's going on in both parts.So baby boomers are more concerned about easy cleaning, quick heating, they want to make sure the controls are easy to use, very concerned about whether its refrigeration is really easy to clean and easy to store things.The younger generation is working on smart devices and they want to be able to control their devices through the iPhone.They will be more comfortable using the iPhone.-Or their tablet or smartphone can be not only an iPhone, but also any phone.So from this point of view, we have done two R & D work, and we see a lot of investment in building quality to meet the baby boomers that we specifically require, give me a quick heating range that looks great but easy to use and easy to cleanWhat I want to eat is very interesting.Our younger generation wants an interconnected kitchen and we are working on it and we have done it.Second, put--Let's take out the house.Outside the house, both the younger generation and the baby boomers are barbecuing outside.If you are in New England, you have a short season, or in Chicago, or in California, it doesn't matter that people spend money outdoors.I know from my kids because they basically rent an apartment and they tend to spend money on a grill.They like to entertain people in their 20 s who like to spend money on a good Grill, a good refrigerator or something.What we do is we put a lot of research and development into the outdoor space, the outdoor space is shared by young people and baby boomers, they are basically willing to take the time to enjoy the outdoor therefore, they don't have to worry about the cost on the grill, and they don't have to worry about eventually cleaning up the entire house they want the right grill, and they want to be able to build quickly, with high quality.So this is the space we want.So we tried to target both goals at the same time and we spent a lot of energy on it.Thank God, we are from the commercial space where we learn how to deal with chains, big chains and small chains.Therefore, small chains do not really need all the functions and benefits of large chains, because large chains may have the resources to acquire and test, and small chains do not have these resources.So we have learned many years in the business side of Middleby, showing our strengths in a corresponding way, which is why when you see the cooking space of Middleby, it's catering to young, emerging chains.Established a chain in the pizza business or the mature business in the burger field, but we did a good job and we accepted this with Viking.Jamie Clement -SidotiGreat.Tim Selin, thank you for your time as always.Thank you, Jamie.Thanks to Jamie.Operator (operator description) our next question comes from Greg Halter from Great Lakes review.Your line is open.Greg Halter -Great Lakes review yes.Good morning, very good result.Thanks, Greg.Thank you very much.Greg Halter -The Great Lakes review clearly saw a sharp consecutive decrease in debt this quarter, with your net debt of 1.8%.Just wondering what your idea is this is just the timing of mergers and acquisitions, or are you balancing this with stock buybacks given the drop in share prices, just wondering if there is any stock buybacks this quarter.No shares were bought back this quarter.I mean, our leverage ratio starts quarterly.to-Quarterly and Annualto-It depends on the timing and size of the acquisition.It's a bit-it's still--It is within the normal range of about 1.5 to 3 times the leverage on our balance sheet.But this is a very strong quarter of cash flow.The first quarter was a little weaker because we paid some taxes in advance, which benefited the second quarter.But our performance will be good in the second half of this year, last year, we had some investment or bigger investment in distribution, we acquired distributors and set up some inventory on channels, our current inventory levels are at their best, and some of these investments must be made in the future.So we feel good about the cash flow this year.Greg Halter -ReviewOkay Great Lakes.What is the price--What is the average rate of your debt at the moment and the fixed and floating rates?The general situation with Tim FitzgeraldIt is that we 've hedge about half of it, so it's about half fixed and half floating and we're paying LIBOR plus 175.Greg Halter -ReviewOkay Great Lakes.Any comments you see in the M & A pricing environment?Tim fitzgeraldprying has risen compared to a few years ago, and it is clear that we are in a downturn.So I would say that the multiples are a bit back to no-there are some that are not exactly wax at the medium level, but they settle at the bottom.Greg Halter -ReviewOkay Great Lakes.The last one, what are your estimated capital expenditures for the whole year?Tim FitzgeraldWe is always talking about the sales range from 1% to 2%, so I would like to say that we may end-we may be in the range of 1 at the moment.Capital expenditures for the current year range from 5% to 2%.Greg Halter -Great Lakes commented.Thank you.Thank you, Tim fitzger.OperatorI does not show any further issues at this time.I would like to transfer the call to the management to close the speech.Selim BassoulSo, Amanda, I will make some concluding remarks.So from a business perspective-Restaurants are also growing.Store sales by extending menu items and extending operation time.From breakfast to late night, what's the effect on the Middleby?More equipment can accommodate, unlike new items for lunch and dinner.The second impact of commercial food services is to reduce labor costs.With more chain stores open for longer periods of time, labor costs are higher.In addition, the impact of raising the minimum wage will force operators to look for automation equipment such as future kitchens, such as conveyor belts, such as reducing equipment that allows less cleaning and less training.Third, the energy cost is still a big impact, we are the leader in energy efficiency, saving water, and our dry equipment reduces all the volume than the combination of competitors with less water.We continue to study the cost of ownership.Lifetime cost of ownership reduces lifetime cost of ownership and I think we did a good job of reviewing and researching feedback for less than two years.What's going on with future capital spending on commercial appliances, looks very good.According to a survey by the National Restaurant Association, 62% of restaurant operators plan to spend capital on equipment expansion or renovation in the next nine months.Restaurant operators of 2 out of nearly 3 said,Store sales have increased from a year earlier.Most important restaurant operators are increasingly optimistic about continued sales growth in the coming months, and this sentiment is also in their capital expenditures.In Viking's view, although the economic growth rate is lower than expected, housing sales are also difficult to keep up with last year's pace, and remodeling spending is expected to remain important, which is an important factor for Viking, because Viking is the longest brand in this high brand.We benefit more from remodeling than our competitors.On 2015 and 2016, the International will increase the total revenue of Viking.We will launch cooking equipment specially designed for urban residents and high-rise people in 2014, in international markets as well as cities in China, Brazil and India, in Dubai, Malaysia and in Europe, A product is basically needed.We have already started shipping our best 7 Series products of all time.This range has the fastest boiling time and the fastest pre-heat oven time.In addition, the first cloudHome-based, allows you to monitor the oven using a tablet, a smartphone away from the device.It's a real smart device, but it's also easy to use, easy to program, and easy to sink.We don't need to be an IT expert to figure out how to sync IT with the largest cooking surface and the ability to heat quickly.We will launch our patented Plasmacluster and the easiest to clean refrigerator in September, and in the same space it will be better than our competitors and our previous models.Most importantly, we have been investing in research and development, by acquiring products, functions and parts from our commercial use, fully improving the building quality of our appliances it takes almost 20 hours for our customers who are open to using these devices this day, we integrate many of our features and our parts into our home appliances, whether it's a combustion fan for Blodgett, or our burner, range burner, whether it's our door hinge, everything is strengthening and the fit and finish are adding better.This will affect our warranty period and consumer confidence in our equipment.Let's talk about the confidence of builders.Builder confidence has remained the same for the past three months.Looking into the future, I expect to be a strong-generated family of over $800,000 in 2015.Because it is difficult to find the house below this price, why is it difficult for the builder to find the right houseLot within price range.Competition for lots and lot sizes has increased, and for houses with prices in the $200,000 range, they have become more difficult, which bodes well for Viking, because people brought up the $800,000 house on it.Stainless steel appliances are terminal appliances in those homes.We are very excited about the situation in the dealer and distribution strategy.The early signs that more than 250 dealers have promised us are fantastic.They love what's going on and we basically start shipping new products that are very popular to receive.To this extent, we are very optimistic about our market segments and the construction of the next three years, continue to innovate, in the field of food processing and business, and now in cooperation with Viking, closer to our customers.This concludes my review.Thank you for joining us.I would like to leave you the following notice.We had an investor day in Viking on 18 and November 18 and I urge all of you to come and visit us.Thus, Darcy Breitz will issue a specific notice, but if you put November 18 and November 19 in the calendar it will be our investor day and it will be Viking in Greenwood, MississippiThank you and wish you a wonderful day.Bye-bye.Thank you all for attending today's meeting.This did end the project.You can all disconnect.Everyone has a good day.