Louis Gries - Chief Executive Officer, Executive General Manager of U.S.A, Executive Director and Member of Financial Statements Disclosure Committee Russell Chenu - Former Chief Financial Officer and Member of Financial Statements Disclosure Committee.

Jason Harley Steed - JP Morgan Chase & Co, Research Division Emily Behncke - Deutsche Bank AG, Research Division Matthew McNee - Goldman Sachs & Partners Australia Pty Ltd, Research Division Andrew Johnston - CLSA Limited, Research Division.

Thank you for standing by, and welcome to the Q1 2014 James Hardie Results Conference Call. [Operator Instructions] I must advise you that this conference is being recorded today, Monday, the 12th of August, 2013. I would now like to hand the conference over to your first speaker today, Mr. Louis Gries. Please go ahead..

Thank you. Good morning from Dublin, and I appreciate everyone joining the call. We'll walk through this how we usually do. I'll take care of the business overview. Russell will come back, will take care of the financial presentation, and then we'll come back for Q&A, investors and analysts first and then any media questions at the end.

So if you flip through the slides to Slide #6, we'll start there. Obviously, the row we track is the net operating profit with the exclusions. This quarter, we did have a $4.6 million exclusion for Asia Pac Fibre Cement along with other normals.

So the improvement on that line, 19%, good improvement, and we'll talk about how that was driven through both operating divisions. We go to Slide #7, which starts the U.S. results, pretty much had things moving in the right direction across the board in the U.S.

We had higher sales volume, tracking about with the market opportunity there on a quarterly basis. PDG was pretty significant, basically flat. When you look back 4 quarters, it's where we want it to be, and I -- when we look forward through the rest of the year, it's where we want it to be.

But this particular quarter, if you calculate just for that, it's pretty flat. Price was basically flat on last year, but a positive trend we're seeing in the business currently, and we expect it to continue. We did have higher input cost.

It wasn't super significant, about $2.5 million or so, and that would be kind of across the board, full cement, energy, so pretty much everything a little bit. The product mix, per that positive trend in pricing, is due to a positive trend also on the product mix, so that's part of it.

We did have increased costs due to idle facilities, and that's mainly Fontana refurbishment costs, which are not capitalized, and then Somerville trials that we've done some preliminary works at Somerville anticipating that facility's startup. It's not really production trials. We're -- it's production trials, but not for commissioning.

It's more to see what our product mix can be out of that facility. It has been a siding plant, and we're looking at producing HardieBacker at that plant. So the upfront work there has been around our evaluation of that change. We did have lower fixed costs basically due to utilization.

And we had higher employment and marketing, higher than last year this time, but that's pretty flat at this point quarter-to-quarter, but it was higher than last year. Slide #8 shows you results. Generally, the U.S. numbers are slightly better than the numbers you see here.

Although Europe is small, Europe had a kind of an off quarter, both from a volume and EBIT standpoint, so it did impact it enough to where you could see it a little bit in the numbers. But these are the numbers for both U.S. and Europe, up 10% on sales, obviously, flat on price. So you get 10% on the volume as well.

18% on EBIT line, which is a good result, pulls us kind of at the lower third of our range, but we got a pretty positive trend month-to-month there.

So our EBIT margin that we've been struggling to deliver is starting to come in range for us, and we, obviously, indicated we do think it'll be in the range for the full year, not just first couple of quarters. Next slide, #9, kind of shows that graphically. Last year, same quarter, we just touched the range, never really got back into it.

This year, like I said, we're kind of at the bottom third of the range, but we expect the trends in the business to continue and finishing the -- in the range for the full year. Slide #10 really shows what I already described -- well, everyone knows the market's getting better, so we covered that some.

Our price is pretty flat, so all 3 lines are actually lining up pretty close to the same slope because our PDG result, even on a rolling average, is in the mid-single digits. So we don't have the volume, kind of running significantly better than the market at this point.

It is running better than the market, but not significantly better than the market. Slide #8 (sic) [Slide #11] , just gives you the price. I mean, it's interesting to look at that graph. So we had a really good slope.

If you went back further years, you had a really pretty good slopes running up at 2011, and then we had the production pricing that we experienced over the last couple of years. And we're starting on a new slope off of that. F '13 low is how I would anticipate the pricing going, a new positive slope, obviously.

Slide #12, Asia Pac had a very good quarter. So when you look at the division overall, housing starts are up. I guess, Australia is flat to slightly up, and New Zealand and the Philippines are up reasonably good. We did have higher sales volume as a result of that and just some positive comps against the market index.

We had lower fixed manufacturing costs for a variety of reasons, some production spending and also higher utilization. And obviously, everyone's aware of the depreciation of the Australian dollar, so that impacted our earnings when we translate it to U.S. dollars. From a U.S. dollar perspective, sales were up in the division 7%.

Price was up a little bit, and volume was actually up 8%, so in Australian dollars, the revenue was up more, but again, that didn't translate as well as last year. EBIT and EBIT margin, up strongly, so we had a very good result down there. We did a acquire the land, I think, in May or possibly earlier than that.

We had indicated part of our plan to expand the Carole Park facility was to purchase the land, which we've done that. We'll start it in the first half of calendar year '15. And as you're aware, I believe, the expansion of Carole Park doesn't affect the other plants as far as they'll still be operating plants.

We'll use the new capacity, obviously, we won't need it all day 1, so we use the new capacity kind of rebalancing that work and get whatever freight savings are available. Slide 15. The U.S.

market is good and continues to improve, repair and remodel, especially for our type of repair and remodel, which is mainly driven by major projects, re-side, that's definitely more positive than it has been over the last several years.

We're continuing to work on the capacity, until Fontana starting in January, and we have several capacity expansions kind of right behind that, all in existing facilities, no greenfield plant at this time. We getting our expectations for the EBIT margin, so we have to repeat of that. Asia Pac, again, we had a very good quarter.

We actually expect a very good year in Asia Pac. New Zealand is good, market wise. In the Philippines, it's good, market wise, as well. Both the Australian and New Zealand businesses are running very well. Philippines business, we've had a few bumps down there, but still, we expect a good year out of the Philippines.

At this point, I'll hand it over to Russell..

Thank you, Louis, and good morning, everybody. So turning to Slide 17. I think it's pretty been apparent from our releases and also from what Louis said that we've had increased sales volumes and revenues dropping all the way through to EBIT and EBIT margin line, with increases -- increasing as you go down the P&L.

So that's the first time we've had that for a while and we're showing the leverage starting to come through as we built sales. We did have an unfavorable movement in the accounting provision for the product liability issues in New Zealand.

That was an expense of $4.6 million of -- for the quarter, but we have excluded that from the adjusted profit that we have reported. We also had favorable asbestos adjustment due to the depreciation of the Australian dollar in the quarter. That amounted to $94.5 million, with an 11% depreciation of the currency between March and June.

One of the very pleasing aspects of the result was the improvement in net operating cash flow, 58% improvement, due to improved earnings and also improved working capital as sales volumes increased. So we're carrying less inventory, and we're turning the inventory into accounts receivable and then to cash quite efficiently during the quarter.

We've declared a dividend at the end of May. And in July, we paid a dividend of $163.6 million in total. And at the end of July, we also bought back a very small parcel of shares, which is the first activation of the share buyback that we announced in May. Turning to Slide 18.

You can see here the line leading down to the reported profit of $142.2 million. Sales were up 10%. Gross profit was up 15%. SG&A was a bit of a mixed story, and in fact, these numbers, if anything, portrays at the wrong picture, it shows a 24% increase to $54.9 million. But I would just note a couple of things.

Firstly, in FY '13 Q1, we had a foreign exchange gain of $5.5 million, and this year, we've got a $4.6 million product liability expense reported through the $54.9 million.

So if you adjust for those impacts, the numbers are actually quite close together, and to the extent that they're not the same is due to increased marketing and employment costs in the U.S. business. You can see the asbestos adjustment there of $94.5 million and reported EBIT, up 90% to $156.9 million.

But obviously, the big item there is the noncash foreign exchange impact of the asbestos provision. Turning to Slide 19, perhaps, a more informative slide in terms of the adjusted profit. We reported $52 million for the quarter, which was up 19% on the $43.8 million of 1 year ago.

On Slide 20, looking at the divisional result there, you can see that very similar increases in both U.S. and Europe, being 18%, and also Asia Pac, up 19%, so a very satisfactory performance there. The Asia Pac result was not impacted much at all by foreign exchange movement.

The falloff in the Aussie dollar occurred at the end of June, but through the quarter, the translation impact of foreign exchange was immaterial. And the Asia Pac business reported an EBIT margin of 22.4%.

As you can see, also, research and development was flat, and corporate costs were higher this period than the prior corresponding period, largely because of the foreign exchange gain that we reported a year ago in this quarter, but also because we've had a lower charge against the stock comp expense than in prior quarters because of the fall in the Australian dollar and also the fall in James Hardie share price in the past 3 months.

So we did bear an expense, but it wasn't the normal sort of level as a consequence of that movement. Now on Slide 21, you can see there the movement in the foreign exchange rate, Aussie dollar/U.S. dollar over the 2 relevant quarters, and you can see the way in which the currency fell against the U.S.

dollar in the -- at the end of the first quarter, in the month of June in particular, and that's what impacted the asbestos provision adjustment and the fact that it was, on average, very similar during the quarter, relative to the prior corresponding period, meant that there was very little impact on sales revenue or earnings from the Asia Pac business.

On Slide 22, looking at tax expense, you can see the tax expense was up from $13.4 million to $14.6 million. The effective tax rate was down on adjusted earnings from 23.5% to 21.9%, and that was the result of recurring items in the tax line being the lower proportion of the total earning and resulted in a lower effective tax rate.

On Slide 23, the cash flow statement. You can see here that net operating cash flow was $78.2 million, approximately a $30 million increase from last year. And of that $30 million increase, about 1/3 of it was due to earnings, i.e. through EBITDA, and about 2/3 of it through improvement in working capital that I referred to earlier.

Capital expenditure came in at $26 million for the quarter, compared with $15 million to the corresponding quarter of last year, and we're anticipating that capital expenditure will be at higher levels during the balance of this year, if any, probably in each quarter. Turning to Slide 24 on capital expenditure.

You can see that most of it in this period, somewhat unusually, was actually in the Asia Pac division, and that's the consequence of the acquisition of the Carole Park land and building prior to the expansion of capacity at that plant. And that actually outweighed the spend in the U.S. business. And mostly what was spent in the U.S.

was on the Fontana refurbishment. Turning to Slide 25, on distributions to the shareholders. As I indicated earlier, we paid a $0.13 ordinary dividend and a $0.24 special dividend based on FY '13 earnings. And that total dividend was $163.6 million distributed towards the end of July.

We've also activated the share buyback program in July, and we purchased stock at AUD 9.02, USD 8.20. Now turning to Slide 26, on debt. You can see that our facilities position is very adequate. We also had net cash at the end of June of $198 million.

Obviously, that's been reduced by the $163 million dividend that we paid, but the business is generating strong cash flow, as is apparent in the first quarter's results. On Slide 27, product liability.

As Louis highlighted, and I referred to earlier, we took another $4.6 million charge in this quarter, which reflects adverse movements in provisions for existing claims during the quarter.

There was no material change in claims inflow, but because of the way in which other liable parties are falling over in the New Zealand environment, particularly professional firms, those of us who remain as liquid entities, which is largely the account holders [ph] and in the case of the cases against us, also Hardie, we're getting left to bear a larger proportion of the settlement on each claim.

So that's what that additional charge is about. At the end of June, we were left with a provision of $18 million as a consequence of taking that charge. In relation to the Ministry of Education claim, which we received in mid-April of this year, there's been no change relative to the full year position.

And at this stage, we see no reason to be taking account of any liability. On Slide 28, we look at the asbestos fund, and these numbers are in millions of Australian dollars. During the quarter, the fund had fairly significant disbursement for claims paid. There were a couple of large claims that were settled, which impacted that.

And the balance in the fund was reduced massive, from $128 million at the end of March to $96 million at the end of June. I'd also note something that is apparent in our financial statements that were also released this morning, that the -- there's been an increase in asbestos claims activity during the quarter.

We've had 160 claims in the first quarter of this financial year, compared with 130 last year. And the actuarial assessment allowed 135. We are monitoring claims activity closely, but at this stage, it's not clear whether the increase that we saw in the first quarter is a result of a change in trend or just a result of random variability.

But I would note that we've previously seen upticks in a month or a quarter or even in a year, only for the claim numbers to then settle back to a lower level. So I think we'll hopefully get some clarity around that in the next few months, but it may take a little time. Turning to Slide 29. Summary is, I guess, a very, very encouraging result.

We wouldn't say it's really strong, but it's an encouraging result driven by higher volumes and some price improvement, especially in the Asia Pac business and also higher operating earnings in both of the major segments in which we operate and good margin.

CapEx is up, and we expect we'll continue to ramp through the year as we get more active in terms of the capacity expansions in both the U.S. and the project at Carole Park. Turning to Slide 30, in terms of guidance. The guidance we noted from analysts was in the range of $165 million to $194 million.

And we, at this stage, noting that it's still very early in the year, but our expectation is that our full year result will fall within that range of analysts' forecasts. Clearly, there'll be susceptibility to movements in foreign exchange rate.

And for us to deliver a result in that range, it may require exchange rates of the Aussie dollar, New Zealand dollar and Philippine peso to be at or near their prevailing rates through the balance of this year. So at this point, I think I shall close and hand over to Louis to chair the questions..

Okay. thanks, Russell. We'll go to questions. If we could start those, please. Thanks..

[Operator Instructions] The first question today comes from the line of Mr. Jason Steed from JPMorgan..

A couple of questions, please, to start. Just in terms of the product mix shift, which has obviously been a positive, could you just elaborate on that to a greater extent, in terms of -- I think it's about half of your U.S. and European sales come from about 5 customers.

Is it really a shift among the big nationals that you're seeing, away from Cemplank, perhaps, into HardiePlank and ColorPlus, that is driving that? Or is it more in the R&R segment that you're seeing that products mix shift?.

Yes, I'd say the shift isn't large enough to really drill down on it like that. Basically, what the business had experienced over the last couple of years is increasing percentage of Cemplank and what we call our Prevail product and slower growth in our Trim and ColorPlus product relevant to those.

So this quarter, and I think, probably remainder of the year, we expect that kind of just to adjust slightly and the kind of higher-end products maybe outperform the base products to a small degree, but not any real big shift in what's going on. But it did turn positive on us after being negative for several quarters in a row..

Right. Got you.

So did you institute a price increase across products? Because it sounds, though, the products mix shift not quite enough to arrest that decline in average price that we saw for most of last year?.

Yes. Now the pricing at a better level than the previous quarter was somewhat due to mix, but we have been addressing price inefficiencies we had in the business. We've talked about those in the past.

And that's not necessarily through price increases, but the way large projects and builders were getting their discounts was changing the business, and it's just a more efficient way to do them. Again, we used to do it in our -- with a rebate structure.

A lot of that got onto invoice at some point during the downturn, and now we've got it back to the rebate structure, which is more efficient from our position as far as how the business model runs. In addition to that, we've had some specific increases on a handful of products or in a handful of markets.

So each of these, probably the product line that we had the most significant increase, that's our Trim product in the South. And then there were just a little bit of a few fix-ups here and there. We have gone for a HardieBacker increase, and it's now in the market.

Now that wouldn't show up very much in the first quarter results, but it will start to show up in the second quarter results..

And just one more, if I may. You talked of the full year results, about a sort of 12% volume lift from FY '13 to '14, and I think that was obviously mostly considered to be a U.S. Fibre Cement growth figure. You're obviously a bit behind that now, but your second quarter comments sound sort of pretty positive.

So should we expect to see sort of consistent sort of period-on-period improvements through the remaining quarters of the year? Or is that your expectation, I guess?.

Yes, I'm not quite remembering the 12%, but where we're at is we'll grow better than market. We're targeting about 6% better than the market, so our PDG, and this is exterior price I'm talking about. I don't think -- I think we're kind of expecting that, it's still a good target for the full year. We didn't have it in the first quarter.

I think the second quarter, if you remember, last year's second quarter, it was a drop-off quarter for us. Right now, we're looking at the second quarter, whatever it is, 5 weeks in or so, looks pretty strong to us. So I think our kind of expectation on PDG in being slightly above the market is the same as it would have been going into the year..

The next question comes from the line of Emily Behncke from Deutsche Bank..

Just a couple of questions. Just following on from Jason's question, a question around primary demand. I guess, when you look at the volume growth of 10% for the quarter and U.S.

housing starts, which is roughly, I think, 40% of your volume sort of growing around 30%, it's just hard to see how you're -- to reconcile primary demand even flat -- was even flat in Q1.

Are you able to give us a little bit more clarity on that?.

Yes. Now the -- I do agree with you. It's really hard to understand. Now our addressable housing starts, we have about 19.6. So again, we knock out certain starts, mainly high-rise construction. Then we add Canada in. And Canada, this year, that's been pulling up the number for several years, but pulling back the number a bit.

But we see about 20% on our addressable housing starts. On our repair and remodel, I think this is probably where we're most out of line with some of the numbers that's being published, is we see our type of repair and remodel about just below 2% positive comp from a market perspective. So we see our segment up about 2%.

So it blends out -- it blends -- if you blend the whole business, it blends around 10%. Like you say, we're up 10%, but we're up more exterior than interior. So we do have a positive -- slightly positive exterior PDG. The other thing we do, and I think you may as well, we look at the other materials at the same time, so you have BSI numbers.

We see our competitors' numbers or we have estimates for our competitors' numbers that seem to be pretty reliable. And outside of natural wood, obviously, you get chipboard, hardboard numbers through results. And we don't see anyone growing against us. So again, that's kind of where we're at. We're working off starts.

We're working off the same assumptions of starts, 2,500 for new construction. I think it's around 1,000 for multifamily. Obviously, there's been a shift in multifamily, so your average per start is down. But that's kind of where we're at. We're not losing -- we can't see where we're losing against the market.

But like I said, this quarter, in particular, it's just kind of flat against the market, the way we calculate it. Now I know if we use the other inputs you see published at times -- that's a problem outside of housing starts, you don't have official numbers -- we'd come up with a different calculation. But we're pretty satisfied.

Category share is good. And like I said, we can see vinyl's numbers, and we understand what their struggles are. And we see chipboard, hardboard numbers through L-P. So we're pretty confident we know where we're at against the market..

Okay. And looking at Q2, you mentioned you're pretty happy. It looks pretty strong for primary demand growth, and obviously, the monthly EBIT margin improved throughout the Q1.

Does that mean that Q2 EBIT margins should actually be above Q1, which is a little bit strange when -- versus history? Or how should we look at the Q2 margin, maybe flat versus Q1?.

Yes, I mean, it's a little bit early to call that, but we're only 5 weeks in. But the order funnel's good. Like I said, there's a positive trend on pricing. Across trend lines are good. So it wouldn't surprise me.

It is a little different than normal, but normally, we didn't deal with the kind of lag we have experienced with our pricing and the inefficiencies we're trying to address in the business on the pricing side. So it wouldn't surprise me that it was -- would be above the first quarter.

But not significantly, it's not going to pop out of our range or anything like that..

Okay.

And what do you think you need to see to sort of be above the 20% margin for the full year?.

Well, yes, I think we're seeing it -- when we gave you the guidance on the 20-plus margin for the full year, we were only 7 weeks into the year. And now we're 4 months and a week, and basically, if the market and the business trends the way it is, we'll be above the 20%..

The next question comes from the line of Mr. Matthew McNee from Goldman Sachs..

Louis, just on the primary demand growth question.

Can you give us a sense for how much siding grew versus Backer? I mean, your 10% overall was -- did Backer grow? Or did Backer go backwards?.

Backer grew about 1/3 of the rate of siding..

H Okay. So we can -- so that implies probably 12%, 13%, 14% growth, something like that, over siding. Anyway, we can figure out the numbers. My other question, just on pricing, going back to the pricing issue. I know you've sort of backed away a little bit from your bundling, sort of House Pack in the South, with ColorPlus and the other products.

Is that part of the reason why we've seen price go up as well, because your -- because implicitly you're not discounting some of those products as much?.

No, that -- those programs, which we'd called Hardie House Pack, would have been positive from a pricing standpoint, not necessarily positive from a contribution standpoint, but positive from an average price standpoint.

Now the pricing inefficiencies are just the kind of things we've talked about before, and it was how we we're executing tactical pricing. And it was just way less efficient than it should have been.

So there are certain projects and volume business you want to get a different price to, and it was just -- there was too much leakage around that previously..

The next question comes from the line of Mr. Andrew Johnston from CLSA..

Just going back to the question on margins again. If you have a look at the margin trend Q1 through Q4 and where they'd normally sit and also the discussion around the -- at the full year result, the view was it needed to be sort of 23% -- 22%, 23% in Q1 to be able to hit the 20%.

And also, the sort of -- there's some thought that you actually need to get some price increases coming through.

So by the sound of things, you'd -- would I be right to interpret you're reasonably optimistic that by year end your prices will be a bit higher than where they are at the moment compared to last year, in other words, better than flat?.

Yes..

Okay.

And just, I suppose trying to understand what the change in the last few months around where you thought you needed to be Q1, because you know what Q1 come in at 21%, and because your guidance says that you expect margins to be 20% to 25%, so what's changed? And then also, what does it have to be for you to get closer to the 25% margin for the year?.

We're not aiming for 25%, and our forecasts don't show 25%. So as we indicated, over the last couple of years, we've been trying to balance our investment and growth with the returns in the business, and we got the cost ahead of the volume.

And at the same time, our pricing didn't come in where we thought it would in fiscal year '13, and that's why we fell pretty far short, I think a couple of points short on EBIT margin, on where we thought we were going to be going into that year. This year, we had highlighted our problem in pricing last year, and we were addressing it.

But there was a pretty serious lag, so to get those pricing restructured requires a lot of work with your customers. So it just took a long time to get there, but we have gotten there, so we've kind of addressed that price inefficiency piece, which is good.

Now I just indicated we had a HardieBacker price increase that will hit the numbers starting in second quarter. It was a good increase. It was 7% on HardieBacker, and you guys know how much percent of HardieBacker -- So it's going to help price, just whatever that is, 20% of 7%. So it's going to help price about 1.5% the rest of the year.

And then just generally, like I said, we had HLD go up, and we had a few moves on the bottom of the Cemplank market and a few specific markets. So pricing will be trending better through the rest of the year.

But we're not aiming at 25%, because as we've had a lot of conversation, going back to the PDG, it's kind of the wrong thing to talk about quarter-to-quarter, and this year will be a good example, because like I said, we're pretty close to flat first quarter.

Second quarter, we'll be up a bit, but through our 4 quarters, in other words, second quarter will show higher than it should because of the comp it's going against last year. But through our 4 quarters, we're pretty comfortable with the 6%.

So I think what we've started indicating to you earlier in the year, confirmed in May and confirming again now, we think we have it balanced right for where we are in the market recovery between PDG growth and financial return on the U.S. business. So we're pretty comfortable.

Obviously, we're still only 4 months into it, but the trend lines are good on the market side, and they're good in the business as well..

Louis, just on HardieBacker, on the numbers for FY '13, HardieBacker didn't look like it grew at all, like there was 0 volume growth..

That's pretty close to accurate. Last year, it was a very flat volume. This year, we are up a bit, as Matt guessed, we're up -- our growth rate on -- growth rate on siding, 3x than on Backer, but Backer does have a 4% -- 4.2% growth rate going..

Okay.

But did -- I assume everyone else wants to put up their prices as well, if you're confident in getting a 7% price increase through, and I assume you don't plan to lose volume in Backer?.

No, we don't plan to lose volume. I don't believe -- I don't -- I'm not aware of the other backer boards going up. There has been -- I think, last year, our falloff in volume, you can't explain that through market share. So obviously, it should have been up because new construction was up.

Now we would be more biased than the other backer boards toward renovation and new construction because we don't participate, in a large degree, in the gypsum channel with our products.

A gypsum company can have backer boards at a relatively higher share in the gypsum channel than we would, and a lot of new construction goes through the gypsum channel. So even though backer board -- you're right on your assumption that backer board was flat to slightly off last year, which it was.

But now it's up a bit, first quarter, and I think it'll stay that way. But having actually seen some of the work done by the Australian analysts, where you guys have seen a premium for HardieBacker in the retail stores, as well as the depot, becoming greater and greater against fiberglass mesh boards.

So that reflects our price and I think it reflects the margin that our customers get on our board. But ultimately, what it reflects is the value to contractors who puts on a fiber cement backer board versus a fiberglass mesh backer board. So I'm not sure if the other backer boards went up or down.

We do track share on Backer pretty much weekly, because we're in all the retail stores. So we would not anticipate losing share because we took a price increase, but it's not necessarily because the other backer boards would have gone up as well..

That's really a nice position to be in.

And finally, Louis, on Trim, how are you seeing Trim volumes? Are you seeing much growth in volumes versus your exterior cladding?.

We've had good Trim growth in the South. The North has been below our expectations. And in the West, we don't participate with Trim to the same degree as we do with the rest of the country. So I would say we have more work to do on the North against both cellular PVC and hardboard or chipboard trim.

And in the South, we're on a good run with our HLD product. We expanded -- we've made a product improvement on the product design. And like I said, we took a price increase around that change, and growth has been very good since we've made those 2 moves. So that's kind of the summary on Trim..

There are no further questions at this time. Mr. Gries, please continue..

Now if that's it on the questions, no media questions, so we're set to go. I appreciate everyone joining the call. Thank you very much..

That does conclude our conference for today. Thank you for your participation. You may all now disconnect..