Leggett & Platt (LEG) Earnings Report: Q1 2016 Conference Transcript The following Leggett & Platt conference call took place on April 29, 2016, 08:30 AM ET. This is a transcript of that earnings call: Company Participants David DeSonier; Leggett & Platt, Inc.; SVP of Strategy & IR Karl Glassman; Leggett & Platt, Inc.; President & CEO Matt Flanigan; Leggett & Platt, Inc.; CFO Susan McCoy; Leggett & Platt, Inc.; VP IR Mitch Dolloff; Leggett & Platt, Inc.; SVP & President of Specialized Products Other Participants Bobby Griffin; Raymond James; Analyst Mark Rupe; Longbow Research; Analyst Keith Hughes; SunTrust Robinson Humphrey; Analyst Daniel Moore; CJS Securities; Analyst Herbert Hardt; Monness, Crespi, Hardt & Company; Analyst MANAGEMENT DISCUSSIO N SECTIO N Welcome to the Leggett & Platt first-quarter 2016 earnings conference call. (O perator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, David DeSonier, Senior Vice President of Strategy and Investor Relations. Please go ahead, sir. David DeSonier (SVP of Strategy & IR): Good morning. Thank you for taking part in Leggett & Platt's first-quarter conference call. With me this morning are the following -- Karl Glassman, who is President and CEO; Matt Flanigan, our Executive VP and CFO; and Susan McCoy, our Vice President of Investor Relations. Mitch Dolloff, who is Senior VP of the Company and President of the Specialized Products segment, is also joining us this morning to participate in Q&A. The agenda for our call this morning is as follows -- Karl Glassman will start with a summary of the major statements we made in yesterday's press release and provide segment highlights, Matt Flanigan will discuss financial details and address our outlook for 2016, and finally the group will answer any questions that you have. This conference is being recorded for Leggett & Platt and is copyrighted material. This call may not be transcribed, recorded or broadcast without our express permission. A replay is available from the IR 2014 TheStr eet, Inc. Al l R i ghts R eser ved Page 1 of 11
portion of Leggett's website. We've posted to the IR portion of the website a set of PowerPoint slides that contain summary financial information, along with segment details. Those slides supplement the information we discuss on this call, including non-gaap reconciliations. I need to remind you that remarks today concerning future expectations, events, objectives, strategies, trends or results constitute forward-looking statements. Actual results or events may differ materially due to a number of risks and uncertainties, and the Company undertakes no obligation to update or revise these statements. For a summary of these risk factors and additional information, please refer to yesterday's press release and the section of our 10-K entitled Forward-Looking Statements. I'll now turn the call over to Karl Glassman. Good morning. Thank you for participating in our first-quarter call. Before I start with my prepared comments, I want to stop for a second and congratulate and thank Susan McCoy. Yesterday marked the 30-year anniversary of her employment with the company. Susan not only does an outstanding job as our Vice President of Investor Relations, she is also a trusted advisor to many of us, and is truly an outstanding person. Congratulations and thank you, Susan, from the shareholders, the investment community, our fellow employees, and from me personally. We are very pleased with our start to 2016. EBIT and EBIT margins were ahead of our initial forecast despite short-term demand softness in a few of our residential in markets. For the full year we expect record earnings per share from continuing operations, very strong EBIT margins and significant improvement in operating cash flow. As we reported yesterday, first-quarter earnings per share from continuing operations were $0.63, up 26% from the $0.50 we posted in the prior year. This increase reflects several factors, including higher unit volume, a lower effective tax rate, and the non-recurrence of a prior-year steel tubing impairment charge. Sales decreased 3% in the quarter to $938 million from the divestitures of the steel tubing business and a small portion of commercial vehicle products in late 2015. Higher unit volume added 4% to sales growth in the quarter and acquisitions added 1%. These improvements were offset by raw material related price decreases and currency impacts, which combined to reduce sales by 5%. Strong sales growth continued in automotive, Comfort Core in both the US and Europe, and Adjustable Bed. EBIT grew 14%, and EBIT margin increased 190 basis points to 13.5% in the quarter, also benefiting from higher unit volume, improved operational efficiency and continued portfolio management. Now on to the segment details. In residential furnishings, first-quarter sales were down 5%. Unit volume grew 2% but was more than offset by raw material related price decreases and currency impacts. Sales trends for the major businesses and product categories excluding deflation in currency were as follows -- US spring component dollar sales were down 2%, innerspring units decreased 7%, and boxspring unit volumes were down 6%. The favorable mix shift in innersprings continued, with Comfort Core units up 15% during from the quarter. International spring sales grew 6%. Furniture component sales were up 3%, with sales in the seating and sofa-sleeper business up 8%, and motion hardware unit volume down 6%. Volume also increased in Geo Components. Segment EBIT and 2014 TheStr eet, Inc. Al l R i ghts R eser ved Page 2 of 11
EBIT margin decreased in the quarter with the benefit from overall higher unit volume more than offset by FIFO inventory impacts and lower unit volume in typically stronger margin businesses. The FIFO impact occurred, as expected, from reducing selling prices as we were consuming higher cost inventory on hand at the end of 2015. In the commercial products segment, first-quarter same-location sales increased 7%, primarily from growth in Adjustable Bed, with units up 18% during the quarter, and continued strength in our Fashion Bed business. The Work Furniture acquisition completed in early 2015 also contributed 8% to the segment sales growth in the quarter. Segment EBIT grew and EBIT margin improved 280 basis points to 8.5%, primarily from higher sales, operational improvements, and a gain from the sale of the building. In the industrial materials segment, first-quarter same-location sales were down 19% from steel-related price decreases and lower unit volume in drawn wire. Total sales also decreased versus first quarter last year from the divestiture of the steel tubing business in late 2015. The segment's EBIT and EBIT margin increased significantly during the quarter from the non-recurrence of last year's steel tubing impairment, along with cost and efficiency improvements, partially offset by lower unit volume. In the specialized product segment, first-quarter same-location sales increased 10%, with a 12% volume improvement partially offset by currency impact. Excluding currency changes, automotive sales grew 11%, aerospace same-location sales increased 7%, machinery sales grew 19%, and commercial vehicle product same-location sales were up 7%. The segment's EBIT increased and EBIT margin improved 140 basis points, primarily from higher volume. During the first quarter we acquired a small US manufacturer of aerospace tube assemblies with annual sales of approximately $20 million. This business further expands our tube forming and fabrication capabilities and also adds precision machining to our aerospace platform. I'll now turn the call over to Matt Flanigan. Matt Flanigan (CFO): Thanks, Karl. Good morning, everyone. A lower effective tax rate added $0.04 to first-quarter earnings per share. This benefit resulted from the adoption of a new accounting standard related to stock-based compensation that was just issued by the Financial Accounting Standards Board. The tax effect that arises when stock units or options are converted into shares will now be recognized as an adjustment to income tax expense instead of shareholders' equity. While we have some of this activity in most quarters, the first quarter of each year is impacted to a greater degree due to the timing of issuances under our major stock compensation programs. As a result, we anticipate an approximate 28% tax rate for each of the remaining three quarters this year, which should average to a full-year rate of 27%. Cash from operations was a very strong $111 million in the first quarter. O perating cash flow increased $79 million versus first quarter last year due to higher earnings and a smaller increase in working capital. We entered the quarter with adjusted working capital as a percentage of annualized sales at a seasonably normal 11.1%. In February, we declared a quarterly dividend of $0.32 per share and extended our record of consecutive annual dividend increases to 45 years. At yesterday's closing price of $47.69 the current yield is 2.7%, which is one of the higher yields among the 50 companies that comprise the S&P 500 dividend 2014 TheStr eet, Inc. Al l R i ghts R eser ved Page 3 of 11
aristocrats. We also repurchased 2.5 million shares of our stock in the first quarter at an average price of $43.75, and issued 1.1 million shares through employee benefit plans and option exercises. O ur financial base remains very strong and this gives us considerable flexibility when making capital and investment decisions. We ended the first quarter with net debt to net capital of 37%, well within our longstanding targeted range of 30% to 40%. We also monitor debt to EBITDA. At the end of March our debt was 1.6 times are trailing 12 months adjusted EBITDA. We assess our overall performance by comparing our total shareholder return to that of peer companies on a rolling three-year basis. Our target is to achieve TSR in the top one-third of the S&P 500 over the long term, which we believe will require an average TSR of about 12% to 15% per year. For the three-year period that will end on December 31, 2016 we have so far generated compound annual TSR of 25% per year. That performance places us within the top 10% of the S&P 500. As we look forward in 2016, we believe the key macro drivers for our markets remain favorable. Positive trends continue in several of our businesses and product categories. With this backdrop, along with strong earnings in the first quarter, we raised our 2016 EPS guidance and now expect record full-year earnings from continuing operations of $2.40 to $2.60 per share. Bridging from 2015, this earnings guidance assumes that unit volume will generate typical 25% to 30% incremental margins, but that benefit is expected to be partially offset by the non-recurrence from the 2015 pricing lag. Sales guidance is unchanged at $3.9 billion to $4.1 billion, or flat to 5% higher than 2015. This guidance assumes unit volume growth in the mid to high single digits. As partial offsets to the volume growth, sales guidelines includes a 2% decrease from late 2015 divestitures, net of small acquisitions, and an approximate 2% reduction from commodity deflation. Steel scrap costs have begun to re-inflate since the beginning of the year and we are implementing price increases in some of our businesses. As a result, full-year sales guidance now reflects slightly less deflation than previously anticipated. We expect another year of very strong margin performance. Based upon our guidance range, we currently expect a full-year EBIT margin of between 12.9% and 13.3%, which is flat to up slightly compared to 2015. In April, we settled as plaintiff a long-standing antitrust claim and expect to receive $25 million of aftertax cash proceeds in the second quarter. This claim was primarily related to the Prime Foam products business that we divested in 2007. The majority of the benefit, or $0.15 per share, will be recognized in discontinued operations. The remaining $0.03 per share benefit will be recognized in continuing operations during the second quarter. We expect to generate full-year cash from operations of approximately $500 million, which includes the cash proceeds from the litigation settlement. Dividends should require about $175 million of cash, and capital expenditures should approximate $130 million for the year. Our target range for dividend payout is 50% to 60% of net earnings. Actual payout had been higher until 2015, and, as a result, dividend growth has been modest at about 3% per year. However, recent growth in annual earnings, we are now comfortably within our targeted payout range. This gives us greater flexibility to consider future dividend growth that will more closely align with our EPS growth. 2014 TheStr eet, Inc. Al l R i ghts R eser ved Page 4 of 11
As has been our practices, after funding capital expenditures and dividends, remaining cash flow will be prioritized for competitively advantaged acquisitions. Potential acquisitions must meet stringent strategic and financial criteria. Should no acquisitions come to fruition, and if excess cash flow is available, we have a standing authorization from the Board to repurchase up to 10 million shares each year. No specific repurchase commitment or timetable has been established. However, we currently expect to repurchase 4 million to 5 million shares in 2016, and issue approximately 2 million shares, primarily for employee benefit plans. With those comments, I'll now turn the call back over to Dave DeSonier. David DeSonier (SVP of Strategy & IR): That concludes our prepared remarks. We thank you for your attention and we will be glad to answer your questions. In order to allow everyone an opportunity to participate, we request that you ask only one question and then yield to the next participant. If you have additional questions, you are welcome to reenter the queue and we will answer those questions, as well. Operator, we are ready to begin the Q&A. Q UESTIO NS & ANSWERS (O perator Instructions) Budd Bugatch, Raymond James. Good morning, everyone. This is Bobby, filling in for Budd. I appreciate you guys taking my questions. And congrats on another strong operational quarter. Karl, in your prepared remarks there you talked quickly about some short-term demand softness in residential. I was wondering if you could maybe provide some color, if you saw some stuff in April that gave you confidence that it picked back up, and that it was only short term in nature. Bobby, first off, you'll remember that, from a residential perspective, we were -- and continue to be -- up against some really difficult comps. Innerspring volume in the first quarter of last year was up 15% from the previous year. We have those same headwinds in the second quarter, with second quarter last year being up 17%. But, a direct answer to your question, the first quarter was a little bit choppy. February was the softest. We think that it was correlated to a lesser tax refund season than is typical. March improved somewhat, certainly compared to February. And through the first three weeks of April, US spring sales are flat. With unit flat and the real favorable mix benefit that we have going forward, we're pretty bullish, from a selling price perspective, as our customers start to launch their new product lines that are very heavily weighted to our technology. I appreciate that. Is Comfort Core now across 30% of innerspring units? 2014 TheStr eet, Inc. Al l R i ghts R eser ved Page 5 of 11
33% in the first quarter. Thank you. I appreciate the color, and best of luck moving forward. Mark Rupe, Longbow Research. Mark Rupe (Analyst - Longbow Research): Good morning, and congrats, as well. O n the upholstered furniture, the motion furniture, down 6%, I know it was down a little bit in the fourth quarter. Similar kind of choppiness or is there anything else at play there? No, Mark, actually furniture, as we speak, is softer than bedding. April, as you know, isn't the strongest month for home furniture typically anyway. And it is a little softer. We have a dynamic that's taking place in that -- you remember a year ago the industry, or all industry, was significantly impacted by the West Coast port strikes. We think that there was significant demand or shipment built in Asia, product that did not hit the US shores. So, we saw abnormal growth in the US mechanism business in the first, really, half of last year that normalized in the back half. So those comps are difficult, but admittedly furniture is a little softer, as we speak, than bedding. Mark Rupe (Analyst - Longbow Research): O kay. And just real quick, on the Comfort Core, just following up on Bobby's question, is the profile consistent in Europe, as it is in the US, or is it a smaller piece of your business there? In Europe, actually, it's 59% of our sales, total units in the first quarter. Now I will say, in Europe we tend to mix higher to the medium price points and premium price points. And for margin reasons really don't participate in the real low-entry price points in the bedding industry. Where, in the US -- Mark Rupe (Analyst - Longbow Research): All right, perfect. Thanks, good luck. Keith Hughes, SunTrust Robinson Humphrey. Ke it h Hughe s (Analyst - SunTrust Robinson Humphrey): Shifting over to raw materials, with steel now accelerating, historically that's been a better environment for you. Can you just give an update on where the spread lies right now, how you think it will play out over the short term? Yes, Keith, market scrap was up $20 in the first quarter. Selling prices didn't follow that. So the spread was 2014 TheStr eet, Inc. Al l R i ghts R eser ved Page 6 of 11
tighter in the first quarter than it was during any of the quarters in 2015. With a $50 market increase in scrap in April and an expectation of another $50 increase in May, we have announced wire-based increases -- so, at the rod and the wire level -- and have started to implement selling price increases in the bedding industry. So, we were narrower on spread in the first quarter. The second quarter, we will probably have that typical lag where you start to see inflation. There's a 90-day lag before we can recover it. We should start to see normal spreads in the back half of the year. And again, I'll remind the listeners, our people do a great job of passing through inflation, but there is a little bit of a lag on the upside. Inflation is very good for our shareholders, and badly needed at this point. Ke it h Hughe s (Analyst - SunTrust Robinson Humphrey): Okay. Switching to the year, your same-store sales were down 1% -- I guess you were down 3% in total for the quarter. You are looking to be up flat to 5% for the year. It feels like you'd probably be towards the lower end of that range given the slow start to the year. But is there something that offsets that moving forward? Susan McCoy (VP IR): Keith, let me help you a little bit with that. We should, as we get into second quarter, start to see some sales growth and, in the back half of the year, would expect more sales growth. O bviously, we're gradually anniversarying the 2015 deflation as we move through the year. In first quarter of 2015, we really didn't have too much price deflation. It started to ramp up in second quarter, and then we had a quite a lot in the back half of the year. And then, to Karl's point, we also -- based on current commodity environment -- should start to see some inflation growing as we move through, certainly late second quarter, but in the third quarter, fourth quarter. That, along with the comp dynamics -- if you'll remember, first quarter of last year was actually our most challenging total Company comp quarter, with units up 8%. When you roll all that together, it, I think, helps to make some sense out of our expectation that our sales growth should start to improve as we get into second quarter and certainly back half. Ke it h Hughe s (Analyst - SunTrust Robinson Humphrey): Thank you. Daniel Moore, CJS Securities. Daniel Moore (Analyst - CJS Securities): I just wanted to echo your initial comments on Susan: you are the best in the business; thank you for all of your hard work. Q uickly, just in terms of -- in the industrial side, can you quantify the decline, year over year, in drawn-wire volumes and perhaps what your expectations are for the remainder of the year? Dan, it would be correlated to the relative softness in US spring. So, the expectation is, as the comps get easier, that we'll start to consume more tons of wire internally. We're heavy weighted to internal consumption. So, that's the softness. We don't want to buy it in terms of tons. 2014 TheStr eet, Inc. Al l R i ghts R eser ved Page 7 of 11
Daniel Moore (Analyst - CJS Securities): Got it. But, similar expectations for improved volumes as you move out through the year. Yes. Daniel Moore (Analyst - CJS Securities): Excellent. And then, just a housekeeping, but the tax rate, 27%. Lower, given the changes -- are those likely sustainable as you look out to FY17 and beyond? Susan McCoy (VP IR): Dan, actually, 27% was -- I looked back last night -- was our full-year tax rate for 2015 also. The dynamics that we are seeing this year are ongoing. First quarter, in most years -- assuming that our share price continues to, over time, move up -- will typically kick out a tax benefit that will lower our effective tax rates in the first quarters. And then the second quarters just don't have as much of that new phenomenon that hits them because of when our stock-based comp programs ultimately pay out. So, yes, is a long way of answering that -- 27% is reasonable this year. It was consistent with last year and what we set our expectations at the start of each year. But there would be no reason to think of ongoing years of being meaningfully different than that, based on what we would know right now. Daniel Moore (Analyst - CJS Securities): That's helpful. Lastly, then I'll jump back, the 13%-ish EBIT margin guide for the full year, obviously you started out the year higher than that. Based on the lag that you described, is Q2 likely to be the low point for margin and then start to rebuild as the year goes on? Or are there other factors that might cause that to be different? Susan McCoy (VP IR): That's a good question relative to progression. We would expect, year over year, in both the first and second quarters -- obviously, we did in the first quarter a 150- to 200-basis-point improvement. Back half, year over year, is going to be down because of prior-year comps being fairly challenging. And, collectively, that gets us to the flat to up slightly guidance that we have issued. Matt Flanigan (CFO): Dan, this is Matt. I would just weigh in and echo what Susan basically said. First quarter came in very strong, as you see. The second quarter you should expect a pretty strong EBIT performance. And then, naturally, with some of the seasonality of the business as well as the lag going the other way, with inflation possibly ticking up in the back half of the year, you should see those likely to be a bit lower than the -- if 13% is what it's going to be all year long, we think the third and fourth quarter might be a tad on the underside of that, whereas the first two quarters would be on the tad on the upper side. But we'll see. We are certainly not surrendering at all to the margin opportunities through the rest of the year. But you should expect the second quarter to also be strong, and third and fourth quarter will probably be closer to our full-year guidance, if not just a tad below that. Daniel Moore (Analyst - CJS Securities): Very helpful, thank you. 2014 TheStr eet, Inc. Al l R i ghts R eser ved Page 8 of 11
(O perator Instructions) Herbert Hardt, Monness Crespi Hardt. He rbe rt Hardt (Analyst - Monness, Crespi, Hardt & Company): Good morning. I would also say, good quarter. I have two questions. O ne is regarding aerospace. There are several suppliers to Boeing and Airbus who have said there have been delays. So, I would ask if you've experienced the same thing. Secondly, on a broader basis, given the fact you've held revenue guidance roughly the same, margins going up, where do you really see the changes in terms of margins? Mitch, why don't you hit the aerospace side of things? Mit ch Do llo f f (SVP & President of Specialized Products): O kay. I think for our aerospace business, it's been relatively steady. In the broader market, there is really solid build rates through 2019, mainly driven by more fuel-efficient aircraft. But I think that does create some disruption --just through end of life of programs and new programs starting, it creates some disruptions at individual suppliers on those programs. But, for us, I'd say it's been relatively steady. As it relates to global demand, Mitch actually should probably answer part of that, too, because we continue to see really strong global auto demand. Europe is recovering significantly in the markets that we serve, not only from an automotive perspective but from a bedding components perspective. There's a lot written about Asian automotive. It continues to perform extremely well. So, if there is a little bit of softness, oddly it's in US residential. The rest of the globe and the rest of our businesses are performing extremely well. Susan McCoy (VP IR): And, Herb, on your margin question, our full-year earnings guidance has come up by about $0.10, as we noted, but that's partly the tax benefit in the first quarter. We're allowing for the $0.03 benefit from the litigation settlement that Matt made mention of. O ur overall margin framework has improved a little bit. We were previously thinking that we would be flattish, maybe down a bit from last year's 12.9% and now we're thinking 12.9% to maybe a few basis points higher than that, even with current guidance. That essentially reflects the strong performance that we had in the first quarter, and the fact that, even though we had the FIFO carryover, as we would have expected in residential, much of that impact was offset with really strong operating improvements happening in our industrial segment and in commercial, some other parts of the Company, too. So, I think, collectively, those things are helping to bias modestly our overall margin will be a little higher for the full year. We recognize, to Karl's earlier point, the lag potential on commodity inflation as we start to inflate, but would expect to come out by the end of the year in pretty good shape. He rbe rt Hardt (Analyst - Monness, Crespi, Hardt & Company): O kay. Thank you. 2014 TheStr eet, Inc. Al l R i ghts R eser ved Page 9 of 11
Budd Bugatch, Raymond James. This is Bobby again. I appreciate you letting me ask one more question. I just wanted to touch real quickly on Susan's comments about the operational improvements inside Commercial Products and Industrial Materials, those two segments we saw very nice margin improvements in. I was hoping just to get a little color on, on what's taken place in those segments to drive that. From a Commercial standpoint, it was volume. O ur people in Fashion Bed are doing a great job of picking up share. The recovery in adjustables is notable and a very good thing for us. So that the expansion is really just contribution margin on additional volume. Those businesses are all extremely well managed. As regards Industrial, the primary driver of the margin improvement is significantly improved performance at our steel mill. It is running at record levels of productivity in, obviously, a tough market from a spread perspective but the tons output per hour, per kilowatt, both are fantastic. And we were implementing some new manufacturing processes a year ago first quarter. So, we are comping at that steel mill to a little bit of year-on-year softness. But they're just doing a great job of executing. I appreciate that. And then, one quick follow-up. How's the capacity for the adjustable-base business in terms of -- you guys were adding CapEx there all last year? Bobby, I would encourage you and any of your friends to buy adjustables. We can ship them. I promise you. (Laughter). I would not have said that a year ago, but with four manufacturing sites, our people are very well aware of the market demand expectation for growth in that category. And we are dressed up and ready to go. We can service any bit of business that we're graced with. Are we starting to see that adjustable-bed attachment move down to the, call it, sub $1,500 or sub $1,000 mattress units now? Yes, I think that's actually been the real growth in the category. But that's a story from 2015, as well, that the ultra-premium side, the attach rates probably continue to expand slightly. But, as you know, there's not a lot of units there. But to be able to sell more adjustables in that pricing band between $1,000 and $2,000, all of the manufacturers and the retailers are attacking that band. And that's where we are seeing the largest unit growth, for sure. I appreciate the additional color, and best of luck. We've reached the end of our question-and-answer session. I'd like to turn the floor back over to Management for any further or closing comments. 2014 TheStreet, Inc. All Rights Reserved Page 10 of 11
Just one quick one before we sign off. This was really a great quarter from an operating perspective. But our tax -- our accounting and legal people really did some Herculean work with adopting new accounting rules, and the tax folks working well together, and the legal folks getting some of this foam litigation behind us. So, to each and every one of them, I want to thank them, as well. Dave? Anything --? David DeSonier (SVP of Strategy & IR): With that, we will just say we do appreciate your participation on the call and we will talk to you again next quarter. Thank you. Thank you. All rights reserved (c) 2014 TheStreet, Inc. Please feel free to quote up to 200 words per transcript. Any quote should be accompanied by "Provided by TheStreet" and a link to the complete transcript and www.thestreet.com. Any other use or method of distribution is strictly prohibited. THE INFORMATION CONTAINED IN EACH WRITTEN OR AUDIO TRANSCRIPT (the "TRANSCRIPT") IS A REPRO DUCTIO N O F A PARTICULAR CO MPANY'S CO NFERENCE CALL, CO NFERENCE PRESENTATIO N O R O THER AUDIO PRESENTATIO N. THE TRANSCRIPTS ARE PRO VIDED "AS IS" AND "AS AVAILABLE" AND THESTREET IS NOT RESPONSIBLE IN ANY WAY NOR DOES IT MAKE ANY REPRESENTATION OR WARRANTY REGARDING THE ACCURACY O R CO MPLETENESS O F THE TRANSCRIPTS AS PRO DUCED, NO R THE SUBSTANCE O F A PARTICULAR CO MPANY'S INFO RMATIO N. THE TRANSCRIPTS ARE PROVIDED FOR INFORMATIONAL PURPOSES ONLY. THESTREET IS NOT PROVIDING ANY INVESTMENT ADVICE O R ENDO RSING ANY PARTICULAR CO MPANY. 2014 TheStreet, Inc. All Rights Reserved Page 11 of 11