The Hain Celestial Group, Inc. (HAIN) Q4 2008 Earnings Report, Transcript and Summary

At this time I would like to welcome everyone to the Hain Celestial fourth quarter fiscal 2008 conference call. (Operator Instructions) I will now turn the call over to Mary Anthes, Vice President of Investor Relations.

Good afternoon. I’m pleased to be with you today to introduce our fourth quarter and full fiscal year 2008 earnings conference call discussion of our financial results which were issued earlier today. We have several members of our management team here today to discuss our results; Irwin Simon, President and Chief Executive Officer, Ira Lamel, Executive Vice President and Chief Financial Officer and John Carroll, Executive Vice President and Chief Executive Officer of Hain Celestial United States. Our discussion today will include forward-looking statements which are current as of today's date. We do not undertake any obligation to update forward-looking statements either as a result of new information, future events or otherwise. Our actual results may differ materially from those projected and some of the factors which may cause results to defer are listed in our publicly filed documents, including our 2007 Form 10-K filed with the SEC. This conference call is being webcast and an archive of the webcast will be available on our website at www.hain-celestial.com, under Investor Relations. Our call today will be limited to approximately one hour, so please limit yourself to one question and one follow up question. If time allows, we will take additional questions and management will be available after the call for further discussion. Now let me turn the call over to Irwin Simon our President and Chief Executive Officer.

Thank you Mary and good afternoon everybody. I hope everybody had an opportunity to look at our fourth quarter for fiscal 2008 and our full year and our guidance for fiscal 2009. Our sales for the fourth quarter $278.3 million versus $223.3 million, up 25.2% and for the full year $1.06 billion versus $900 million and we reached that milestone of $1 billion in sales, up 17.3% and what I must point out, the $278 million has been our biggest quarterly sales ever in the history of the company. Our gross margin for the quarter 27.9% versus 28.7% and half of that, of the 0.8 bps is coming from input costs and just fuel alone April, May and June was up 22% and we’ll show you later how we absorbed those costs and how our freight rates and fuel was flat to last year. For the year 28.6% versus 29.1% and up 50 bps and the majority of that is coming from input costs. Our operating income for the quarter $20 million versus $18.5 million, up 8%. For the year $103 million versus $86 million, up 19.7%. Earnings per share for the quarter adjusted $0.34 versus $.025 up 36% and $1.40 versus $1.16, up 21%. Let me talk about the quarter and let me share some of the great things. What a quarter it’s been and what it’s been and what’s happened with inflation, what’s happened with ingredient costs, what’s happened with fuel costs, what’s happened to the consumer and we’ll talk a lot about that today. Good top line growth, good bottom line growth in the fourth quarter. We absorbed about $11 million of costs in the quarter and as you can see we were able to offset it with price increasing productivity, increase in sales. Fuel alone as…

Thanks Irwin, good afternoon. Today I’ll give you an overview of our Q4 and full year results for Hain grocery and snacks, Hain personal care and further outline our plans for Celestial Seasonings. Starting with Hain grocery and snacks, Q4 was a very strong quarter with top growth up 85 which reflects organic year on year growth as the acquired brands MaraNatha, SunSpire and Tender Care were not included in this calculation. Q4 top line growth including the acquired brands was 18%. As Irwin talked about we saw growth across our brand portfolio and our growth was driven by a combination of velocity increases, alternate channel gains, and new product sales. Moving to the middle of the grocery and snacks P&L, pressure for commodity costs and fuel related expenses reached its highest point in Q4. We saw year on year increases on almost all commodities including organic corn, soy beans, wheat, canola oil, fruit and dairy as well as packaging and diesel fuel. In fact our Q4 ingredient inflation is $10 million versus year ago which was double the rate we experienced in Q3. Despite these challenges our Q4 organic gross margin was actually flat versus year ago as pricing taken in Q2 and Q3 and continued productivity savings offset rising commodity and fuel costs. Moving on down the P&L our Q4 SG&A expenses as a percent of sales were flat versus a year ago. We continue to exercise strong discipline on our operating costs which is essential in this inflationary environment. Our Q4 inventories were higher then a year ago primarily due to an additional $6.5 million in Earth's Best inventory. This is consistent with what we discussed in previous calls where we said we would maximize our fresh pack production in September through December to ensure supply for…

Thanks John, good afternoon everyone. I’m going to review for you the details of our adjustments to earnings as well as the 2009 guidance. Our earnings on a GAAP basis was $0.16 per share in the quarter and $0.99 per share for the full year. On an adjusted basis earnings were $0.34 for the quarter and $1.40 for the year. The adjustments we’ve made are those we identified for you in our third quarter call. In the fourth quarter we’ve added back $2.3 million pre-tax which is $1.6 million after-tax, or $0.04 a share for the personal care SKU rationalization, severance and other reorganization costs. Of this amount $900,000 went to cost of goods and $1.4 million to SG&A. For the full year we added back $10.8 million pre-tax which is $7.9 million after-tax or $0.16 per share for this program. The charges included inventory we will not go forward with, the write-off of certain assets related to the inventory, such as packaging design costs and the costs related to the reduction in force. We continue to believe as we said when we announced this in our third quarter release that this program is going to benefit gross margins in the future, probably a bit more then 200 basis points in the personal care unit and approximately 100 basis points in the consolidated margin line. We also anticipate that we will get additional benefit to the operating income line from the personnel reduction which should save approximately $2 million annually. This of course, is absent any other cost pressures that we may encounter in the inflationary environment in personal care. As we’ve discussed in recent quarters we continue to incur integration and start-up costs through the fourth quarter in connection with consolidating our manufacturing facilities and processes into one facility…

(Operator Instructions) Your first question comes from the line of Edward Aaron - RBC Capital Markets

On the tax rate, it looks like it accounted for about $0.08 relative to where you expected the tax rate to be, is that accurate and if so is the variance between that and what you reported on an adjusted basis, would that entirely be the impact of unexpected additional increase in costs in the quarter?

No I think $0.08 is not quite the right conclusion. If you were to take out all of the adjustment items because of the varying tax rates of those items, there’s a component of the stock compensation that’s non deductible, there are different rates for the start-up costs because its in the UK and if you just normalized what the rate would have been for the full year there was a $0.02 impact on earnings for the quarter on both a GAAP and adjusted basis. So it’s not $0.08 its $0.02.

The difference between the reported adjusted gross margin and the number that you used in the same brand calculation, when you talked about the 28.6 number in the press release, there’s about a 300 basis points difference there. Is that entirely the impact of Hain pure protein? Because it doesn’t seem like that could account for that much.

The reason I labeled it as same brands computation is we look at the brands we operated last year and the brands we operated this year so it takes out both Hain pure protein because of its lower margin results and it takes out the businesses that did not operate on the Hain Celestial group for the full year this year and the full year last year. So what it shows is what we’ve been able to do on a continuum with the brands that we’ve operated in the full fiscal years.

It’s an apples to apples basis. So the brands this year that we own versus the brands last year in comparing the margin last year if we owned those same brands what they were for the full year.

Your next question comes from the line of Christine McCracken - Cleveland Research Company

Regarding your comment that you’ve hedged it sounds like about two-thirds of your hedgable commodities, it’s just that portion of your exposure that you’re able to hedge is that accurate?

When we use the word hedge we’re not really hedging in the traditional sense of buying against each other with forwards and so on. What we’re able to do is actually buy the commitments from the producers of the ingredients that we utilize so it’s not a pure hedging play. It’s locking in our price for a period of time and locking in the source of supply for that same period of time. We actually execute contracts with farmers and other types of suppliers at fixed prices. So when we say hedge we really mean we’ve locked it in as opposed to the pure play on these derivative contracts in the hedging world.

That’s not including diesel or oil based packaging, that kind of thing? Is that included?

No we’re not really buying diesel ourselves. We look at diesel and fuel inflation as it comes to us from the, let’s call it the trucking industry. We know what the cost of diesel is by tracking it on the market number one and number two by tracking it in the delivery bills that we get from those third party truckers who deliver products for us. We also see the same inputs on the freight bills on our inputs as well where ingredients are being delivered to us or products that are co-packed are being delivered to us. When you look at packaging we’re not measuring with specificity the packaging component that includes petroleum.

I think you talked about if you saw increased commodity pressure into next year you’re more then willing to take another round of price increases and you’ve done a great job with that, at what do you think you’re not close to where you’ll see that demand destruction as prices hit a level, or maybe just comment on how you measure that and how that goes into your pricing equation?

First I believe the percentage is 85% of our products are sold at $3.99 or less so that’s first thing. We don’t think that we’re really breaking any real price barriers yet. Secondly we look and we compare ourselves to two things, we compare ourselves to our competition in the natural organic space as well as our conventional counterparts and we manage deltas against each of them and as long as we don’t push a delta above where we’ve been successful in the past we’re comfortable pushing through the pricing. The third thing is most of our competitors have the same commodity pressures that we do and they’re not in a better position then we are so we’re pretty comfortable that if we take and lead pricing in natural organic they’ll follow. We’ve seen that as the experience in the past.

Your next question comes from the line of Simeon Gutman – Goldman Sachs Simeon Gutman – Goldman Sachs: On the guidance the mid point for the top line guidance is 18%, the mid point on the earnings guidance is more low teens, what does that reflect? Is it more of the ingredient inflation that just won’t be fully priced through?

Yes, there’s certainly going to be a carryover of the ingredient inflation certainly in the first half of the year before some of our pricing increases take hold, and then we still will have a period of time where the acquisitions that we made essentially in Q4 will not be accretive to earnings in the front half of the year. Simeon Gutman – Goldman Sachs: The Fakenham start-up costs, is that going to continue to dwindle as the quarters progress here?

Well we think its going to be largely completed in the first quarter and that we won’t have any of these start-up costs from the second quarter on. Simeon Gutman – Goldman Sachs: As far as the velocity versus channel gains, can you comment on that a little further and what are you seeing with respect to channels, are you consumer shopping patterns move out of one channel into others?

We’re seeing a pretty good split between the two in terms of driving our growth. Only on a handful of brands are we starting to see volume move away from certain channels. Other then that we’re just seeing new consumers coming into the natural organic area. Simeon Gutman – Goldman Sachs: How well are you positioned to where that volume is moving towards?

I would argue that we’re probably as well positioned as anybody in the natural organic area because in some places, many channels, we’re the first natural organic item they put in particularly in the area of baby food.

I think what’s happening is all retailers they are looking for additional business and looking for different unique brands so with that where our brands were not before, they’re looking to bring our brands into their stores.

Your next question comes from the line of Scott Mushkin – Jeffries & Company Scott Mushkin – Jeffries & Company: I’m still a little unclear on this stock compensation the $0.08, is that included in the guidance or is that excluded?

The guidance of $1.54 to $1.61 is before you deduct stock compensation. Scott Mushkin – Jeffries & Company : I understand that you’re not seeing demand falling off and you’re doing a good job of staying in front of the trends, but what kind of things do you think about in 2009 that either (a) could happen or (b) and what would you do in the event that you just started to see demand fade away as we have seen with some of these other [inaudible] products, not natural organic but referring to restaurants and these kind of things because it seems like the consumer is taking a step back. It is possible that it could visit natural organic.

Demand falling off is something that always could happen out there. But I think as we step back today we’re not thinking about how demand falls off, we’re thinking about how to grow our demand and you can see by our guidance and our organic growth and our guidance for next year. Our plan for next year is strong growth, innovation, new products, and if you go back and look we’re a diversified group of products, diversified group of brands and if you look at Hain, our business today a little more then half of our business today only goes through mass market and supermarkets so we think we have tremendous distribution gains of opportunities out there. And at the other end we think there are tremendous opportunities in Canada and Europe. I keep hearing about sales falling off, again you heard John say it, over 85% of our products are less then $5. If you come back and really think about it, if our baby food is $0.10 more and the average mother buys four to six jars of baby food, $0.60 a week, $4.20. So yes we watch it and yes we’re watching the consumer out there but I think our focus continues on how we grow our distribution, how we expand our brands.

Your next question comes from the line of Analyst – Blackrock Analyst – Blackrock: On the $33 million you identified as absorbed costs in FY08, the $11 million in FQ4, how much were you able to recover given the four to five variables mentioned, top line growth, mix, price increases, etc?

In that $33 million probably $12 million to $15 million came from pricing and the remaining came from productivity and mix and top line growth. Analyst – Blackrock: That was for the year? And how about in Q4, a similar kind of breakdown?

In Q4 probably a little more because we’re able to start to catch up on pricing. There’s a lag time, unfortunately we get the price increases right away. We don’t get to pass then on right away so there was some catching up in Q4 and Q4 probably at the $11 million, $7 million to $8 million probably came from pricing and probably $4 million came from productivity. But I think the important thing is it shows that we’re able to get pricing through pricing sticks, its showing that with our pricing we’re still getting good top line sales and which I’m really proud of the group here is the productivity that we’ve been able to do and I think one thing is important to point out, we just didn’t start looking for this productivity on July 1, 2007, this is something that’s been in place a long time. We’re looking for a lot of productivity again this year and we’re also looking for pricing and our hope is commodities come down.

Your next question comes from the line of Gregory Bandishkanian - Citigroup

In acquisition sales, I’m calculating about $23 million, am I missing anything?

That’s real close.

So that gets me to about a mid teen organic sales? Am I in the ballpark or am I pretty far off?

You’re a little high but again you know I don’t want to comment on organic growth but I guess you can come back and see we had a good top line quarter for the quarter so I think you can pretty well figure it out with the $20 million, I think you’ve got to put some pricing in there. And I think that will get you to, and again also in the quarter there are some SKU rat adjustments and on the positive side of the quarter you’ve seen it where one of our biggest customers took down their inventories and reduction in inventory so from a growth standpoint it was a good quarter on growth.

July and August were strong, any color on channels or products that in particular were doing a little better and then even if its not mid teens it was still very strong, the Whole Foods actually saw deteriorating trends in the second calendar quarter in July, I’m showing accelerating trends for you, any thoughts on why this might be the case?

I think we’re continuously seeing strong sales in July and August again back to similar brands, rice milk, Earth's Best, Spectrum, Garden of Eden, Arrowhead Mills, I have my group here, DeBoles, were definitely seeing that. We’re seeing some good strong growth continuously on Avalon and Alba, JASON on adjusted after SKU rats seeing mid single-digit growth, seeing some good growth on our chicken business, so all around I think what I continuously say, people are staying home and cooking. In regards to the natural channel, we’re seeing some good growth on our products and actually interesting what we think is people are buying groceries and cooking instead of buying prepared foods and fresh foods and produce and that’s what we’re seeing. So in the natural channel in regards to independents and the banners of Whole Foods etc. we’re seeing some good growth coming from that also.

I know not the easiest question to answer about one of your biggest customers but any reason for their disconnect why you’re seeing very nice accelerating sales growth, they’ve been seeing deteriorating growth?

I don’t think I’m going to answer that question.

Your next question comes from the line of Scott Van Winkle - Canaccord Adams

You mentioned that the plans to improve profitable consumption in the base Celestial business, what is included in that base Celestial business and what percentage of the sets you currently have do you have your top 20 selling SKUs?

The base it’s the core tea business so it does not include [Safara] it does not include coffee, its bag tea.

And one of the things we see on that what’s happened is [Safara] and some of these things we look for innovation on some of those things and if we just stuck to tea and the money we spent on some of those innovations our profits would be up even more. So I think if we sold more green tea, sold more herb tea and focus on that, that’s where we’re going to see a lot of profitability and a lot of growth come from.

In terms of what percentage of sale sets have the core 20, it’s a very low number and its like any other item, we just need to have some real discipline about these are the 20 items we have to have in no matter what.

Is it because your average set is less then 20 or is it because the retailers just ask for what they ask for?

Actually our average set is more then 20, it just comes down to not great category management in some instances where they don’t know what the best sellers are in a category.

What’s the timing on the personal care co-pack contracts ending this year?

They stagger throughout the year so we’ll be seeing them; most of them start to come up in the second half.

Your next question comes from the line of Jacqueline Rider – Lazard Capital Markets Jacqueline Rider – Lazard Capital Markets: On your guidance for 2009 on the sales side, you’re looking at about 14.3% sales growth and there are obviously a bunch of items such as acquisitions and SKU rat in there, I’m looking at about $40 million in SKU rationalization, $100 million maybe a little more in acquisitions, if that’s in the ballpark you’re looking at about 7% to 17% organic growth next year. How do you get from one end of that to the other? Is the 7.5% kind of just price increases and then you get up to 17% and that’s strong volumes and price increases? If you could break that down a little more.

I think you’re a little high on the top end. I think you’re right on on the bottom from 7%. I think we’ve said 7% to 10% organic growth and-- Jacqueline Rider – Lazard Capital Markets: Just if you take the acquisition revenue out and you take the SKU rat out of the high end of your guidance, just whatever is left I kind of look at organic growth and is the $40 million in SKU rat and $100 million in acquisitions in the ballpark?

Right, you’re high on that and I think getting to that of how we get to the organic growth and I think we’ve seen it this year in regards to organic growth and we think with our new products, with product growth in the acquisition MaraNatha, 70% of MaraNatha today is only natural food stores, we also a big thing is our business, our volume was down substantially in the UK, we’re looking to recover some of that. We’re looking to recover some of the JASON business. We were off in our fourth quarter on [tariff] shifts in some of the promotions in club stores versus a year ago to pick up some of that. There are some one-offs that we had that we didn’t have this year that we’re looking to pick up this year and we see tremendous opportunities. Also we’re looking for some good growth on our baby formula; we’re also looking for some real good growth on our diapers. That really is from an Earth's Best standpoint really some substantial stuff there. We’ve introduced a whole line of gluten free products on frozen which we’re looking for some good things. We continuously see where Spectrum is, so I feel good going into the year with some of the things that we have. We’re a little late in getting some of the new Health Valley products out, where our sales lagged last year. So we’re looking for some major execution from a sales side and from a product side on Health Valley. So we’re feeling good on the growth for next year. Jacqueline Rider – Lazard Capital Markets: On your EBIT margins for 2009 we’re looking for some contraction maybe in the 100 basis points overall range and it really should be, we should see leverage on SG&A but we are going to have a pretty tough time on the gross margin line going into 2009?

We think the gross margin as we said are going to continue to be pressured in the first half of the year as we lap if you will the very heavy inflationary effects we saw in the back half of the 2008 fiscal year. So we’re being cautious on that.

I don’t think what you’re seeing, you’ve got to look on an apples to apples basis, and then whereas poultry brought down the overall margins but on the other hand whereas poultry offset some of the SG&A margin I think that’s what you’ve got to look at is the overall EBITDA or overall EBIT margins from a standpoint. Jacqueline Rider – Lazard Capital Markets: So by the fourth quarter of next year we should start to see as we’ve lapped all of these items in New Oxford acquisition we should really start to see at least a stabilization or even an improvement especially with the SKU rat going on in the personal products business.

You should see that beginning in the January quarter where basically you’ve got SKU rat and then you see price increase and that, starting to take affect after that.

Your next question comes from the line of Andrew Wolf - BB&T Capital Markets Andrew Wolf - BB&T Capital Markets: On the Celestial business, getting it going next year, to my hearing it sounds like at least strategically or hypothetically not too hard a fix if it’s all about going into the retailers, buyers and showing them how they can move more product through better category management. Has this kind of a fix if you will to getting some of the other brands to be a lot more profitable and have better velocities and productivity, how analogous is that to some of the other brands? You have other brands that you can point to and say yes this is pretty much we had to do here and it worked. And secondly is tea different because it’s much more competitive then some of these other, and if that’s the case and it’s just a category management fix and its worked before what is the competitiveness of the category mean for that?

First this a really, really profitable business even today it is a very profitable business for Hain so it is an opportunity for us to really start driving some consumption growth and in terms of what’s analogous to, its analogous to some of the categories that we ran into in grocery and snacks, it analogous to some of the issues we worked our way through on JASON. It’s just a matter of refocusing our efforts on the consumer in a really meaningful way. I think there’s been a lot of great progress on the Celestial business, the question is are we getting the most out of our marketing and sales investment to drive consumption? Or are we spending in too many areas or are we spending it in distributors as opposed to retailers, there’s the issues that we tackled on both grocery and snacks and personal care and I think the same issues and the same opportunities and same leverage point exist on tea.

If we were here talking about tea today alone as a public company I think we’d be talking about some good numbers. It’s a tougher category and when you’re number one or number two, its what do you do and I think [inaudible] what Celestial tried to do was go into categories and had to innovate how to innovate and at the end of the day we kept innovating and we didn’t make any money on these. And we make a lot of money on selling green tea, herbal tea, and black tea but how do we make more money going into other areas and as we focused on zingers to go, or maybe [Safara] and places like that did we take our eye off green tea, herbal tea and was it worth it and I think that’s what John is saying and that’s kind of what the blueprint that John was able to do on personal care with JASON SKU rat and get the line skinnied down and improve margins and take it to a whole other level and I think he’s got the playbook for that and he’s done it within a lot of brands within Hain. Andrew Wolf - BB&T Capital Markets: What I wanted to get to beyond that was some of your competitors are so big they can buy some shelf space and can they kind of knock that back just through size or have they been doing that? Or do you think if you could persuade the retailers to getting velocity up on these high margin items if it’s better to go with the velocity?

We hope the brand means something. At the end of the day we hope Celestial part of Hain that we have relationships out there with Kroger and our other retailers that help the brand grow and I think what’s important today again, half of our volume of Celestial goes through other markets whether its mass market, other retail channels so its just not supermarkets. Andrew Wolf - BB&T Capital Markets: On the guidance you mentioned the stock comp is out the options are excluded, can you give any sense of what the range on the expectation from Fakenham in Q1 is, start-up costs there?

Hopefully it’s minimal and that is behind us and as Ira said within the first quarter, $0.50 million to $1 million that’s a lot but that needs to be behind us and as a company it needs to be behind us and I think we’ve got the people in place to really get that behind us. We know what we need to do in regards to volume and new products and that in there. So that’s basically behind us. Andrew Wolf - BB&T Capital Markets: And then $1 million to $2 million of unabsorbed overhead? Is that something we also will also be excluded from the adjusted number?

No, we [absorb] that out because the co-pack agreement is expired, we have been pointing out that co-pack agreement in the past and we just know that we need to replace the volume as we go forward.

I think it’s important to say, in regards to this year one-time items and its important going into next year other then some of the legal costs with regards to the inquiry and one or two months into the first quarter in regards to Fakenham, our one-timers hopefully are all behind us.

Your next question comes from the line of Terry Bivens – JP Morgan

I don’t know if you comment at all, Campbell has Wolfgang Puck now, I understand there may be some capacity issues there, do you see anything in their acquisition that you’re going to have to do anything strategically with Health Valley on?

I think what it shows and we’ve seen Wolfgang Puck organic where they made the present and I think I’d be more concerned with Campbell’s organic then Wolfgang Puck organic. And we’re seeing good soup numbers which is interesting during the summer where people are staying at home and ultimately are cooking with soup and some of our research shows that Chef’s branded products are perceived as unhealthy so that’s one of the things that we see out there when we do some of our testing.

So you haven’t really had to do anything significantly different as a result of that, it sounds like you’re not planning to for this fall?

No and I think from a capacity standpoint its something we’re going to continuously do because our [inaudible] soup business is something that continues to grow for us and we’re going to look for more capacity. The other thing that we’re doing this year and we’ve announced it and its out there, we’ve introduced a whole line of Imagine soups for the first time in cans which are all organic because of the strength and the [inaudible] line so with that we’ve now come out with Imagine and we have Health Valley, we have Walnut Acres which will basically be SKUed to natural food stores but we have basically a very strong brand in Imagine canned soup.

Did you give a number on personal product sales, how that top line did?

Yes we said it was up 11% ex SKU rat.

What’s the ACV on that now?

It’s still below 40% in grocery.

And what we did say since we acquired Avalon and Alba, our sales have somewhat almost doubled on that business. Our profitability has doubled on that business. And that’s since owning it since January 2007.

Your final question is a follow-up from the line of Edward Aaron - RBC Capital Markets

You mentioned I think that the price increases from July are not expected to help until the second quarter, why would that be if we are, July was obviously the first month of the quarter so why not see any impact this quarter and then on the commodity environment in general, there has been a pull back over the last month or so in some of the key commodities, I didn’t really hear a sense from you that you really feel like your cost picture has loosened up at all, can you provide a little clarity on that?

The reason why we won’t realize anything in Q2 is that for the most part, most of the, we announced it in July, it takes affect the end of July early August and the net of it is most of the promotions we can’t touch at all. So at this point we’re going to realize very little benefit in Q1. Secondly in regard to commodity prices softening, that’s on conventional commodities. Organic commodities are under really, really high demand right now so we’re not seeing any softening on organic commodity prices at all.

Thank you everybody for listening to our call today for our year end fiscal 2008 and our Q4 and like I said at the beginning what a year it has been and there’s numerous times I sat there and said going into our planning and our planning starts back in December and planning of fuel and planning of commodities prices and healthcare costs etc. and where we’ve been able to come out at, I think this group has done a fabulous job. It shows the power of our brands, the strategy we have in place, and yes, the UK operation did not deliver and we are not happy about that but we’ve taken a lot of steps. We’ve made people changes and where we need to make personnel changes we’re not afraid to do that. I think going into 2008 the question asked about organic growth I feel good about the growth. I feel good about the opportunity of expansion to many classes of trade and many channels, whether Canada, the US, Europe, Asia which we didn’t really talk about. We’re being cautious here and we should be because we’ve seen corn go from $8.50 down to $5 and we see it back over $6 today. We’ve seen crude oil come down from $1.50 to $1.50 but we still see, $115 and we still see fuel at the pumps $4.09 so not knowing where anything is going we’re somewhat being cautious and optimistic out there. On the other hand, we feel the consumer is staying at home eating healthy. The consumer, personal care products continuously buying personal care products because they’re educated and aware of the ingredients and we feel the consumer is trading down from red meat or reducing their red meat intake and eating chicken and turkey so we’re really in good places. And we also feel the retailer is looking for additional brands and looking to bring in a good line of natural organic products so going into 2009 we’re focused on growing top line sales, we’re really focused on cost containment, on productivity, we showed everybody what we could do on productivity in 2008 and we’re looking to repeat that and then some in 2009. We’re continuously looking at innovation, as I said, as a company we introduced over $30 million of new products and looking to duplicate that. And last but not least we appreciate our shareholders and those that follow us for your support through 2008 and look forward to delivering in 2009. Enjoy the rest of the summer and look forward to speaking to each of your soon. Thank you very much.