Hub Group, Inc. (HUBG) Q4 2009 Earnings Report, Transcript and Summary

Good afternoon and welcome to the Hub Group fourth quarter conference call. We will begin with the discussion of the financial results led by Terri Pizzuto, Executive Vice President, Chief Financial Officer, and Treasurer, followed by an overall business discussion to be conducted by Dave Yeager, our Chairman and CEO. The company will make its prepared presentation followed by a question-and-answer session. Mark Yeager, Vice Chairman, President and Chief Operating Officer, will join us for the question-and-answer session. At this time, all participants are in listen-only mode. Comments made by Hub Group employees during this conference call may contain forward-looking statements. Actual results could differ materially from those projected in these forward-looking statements. Our SEC filings contain additional information about factors that could cause actual results to differ materially from those projected in these forward-looking statements, copies of these SEC filings maybe obtained by contacting the company or the SEC. Now, I would like to introduce Terri Pizzuto, the Chief Financial Officer of Hub Group.

Thanks [Shemica] and thank you all for joining us. I want to begin by covering three things. First, we had volume growth of 6% in intermodal and a 11% truck brokerage for the quarter. Second, as we expected, the pricing environment took a toll on our margins and third, we had great cost control. Here are the key numbers for the fourth quarter Hub’s diluted earnings per share was $0.26. Hub’s fourth quarter operating margin was 3.8%. That’s compared to 5.4% in 2008. At the end of December, we had $127 million in cash and no debt. Now I’ll discuss details for the quarter starting with revenue. Intermodal revenue decreased 7%. This change includes a 6% decline for fuel, a 5% price decrease and a 2% decrease for mix offset partially by a 6% volume increase. The exciting news is that our customer direct 53 foot business, which is the biggest piece of our intermodal business, was up 11%. Contributing to that growth was a 44% increase in loads with our retail customers. Wholesale and ISO, now only represent 8% of our total intermodal volume, wholesale, which is the business we do with other intermodal marketing companies is down 45%. ISO business, which is business that is mostly in 40 foot international containers, is 26% lower than last year. Truck brokerage revenue decreased 4% due to a 10% decrease for price of mix and a 5% decrease for fuel partially offset by an 11% volume increase. Mix change because our length of haul went down by 6% or 45 miles. Truck brokerage gross margin as a percentage of sales was consistent with last year, but was down 230 basis points compared to last quarter. We have now experienced the full impact of the bids in our margin. The big growing…

Great, thank you Terri. With intermodal volume up 6%, our fourth quarter results were far better than the expectations of the 4% to 8% decline we had anticipated on our last call. Our volume increase is due to substantial growth from both new and existing customers in our retail, paper and durable goods segments. From a geographic perspective, we had strong growth in the local east market as we continued to convert customers from truck to intermodal and take market share. In addition, our business moving between the Southeast and the West Coast grew 21% in the quarter. The VPNS service in quarter corridor uses the most direct rail route, thereby creating a service advantage of Hub over the bi-modal competitors. Customers are recognizing the advantage the VPNS routing has and are taking advantage of that enhanced service. Our gross margin remained under pressure due to the weak economy and a highly competitive market. As we discussed on prior calls, the pricing environment during the bid season was extremely aggressive, and as expected, we saw the full impact of this pricing during the fourth quarter. Despite these challenges, we struck a pretty good balance between pricing to maintain our market share, while still focusing or maintaining a reasonable gross margin. We’ve also maintained tight cost controls. The difficult cuts we made earlier in the year enabled us to reduce our total cost and expenses by $9 million. Intermodal service was very good during the quarter with no issues with any of our major service providers. The fourth quarter saw continued improvement in both speed and reliability across our network. We are now in the third year of a very real, rail service improvement story and we anticipate this will continue through 2010. Our fleet utilization was also very solid, improving…

(Operator Instructions) Your first question comes from Ed Wolf - Wolf Research. .

Can you talk a little about your expenses, particularly on a labor side? They are so in check. Is this something that can go forward if volume is still growing?

We all maintain tight controls on our headcount, but the cost guidance that we gave of $34.5 million to $34.5 million a quarter for 2010. The reason that’s going up is because of bonuses and wage increases for the people that we have.

I didn’t hear that $34 million, $35 million earlier. So explain to me, that’s $3 million or $4 million relative to this quarter and it is all for bonuses? How is that accrued for and paid throughout the year?

It would be accrued ratably throughout the year and it is paid after year end general in February and it would only be paid if we met our bonus targets which the board will set in February.

That basically this year there was no EPS bonus payouts. There was for personal goals, but we didn’t hit the EPS mark and so nothing was paid?

Exactly

What was paid for personal goals?

About $4 million.

So why are you so confident, and I remember you guys set expense goals last year too that you beat, but why are you so confident you are going to pay them this year?

Based on our budget, we would hope would meet those EPS targets since so that the board will set, and that’s why we have them built into our model.

Is it fair to say that that incentive would be above the dollar $1 to $1.15 you blessed?

That’s the number that will set by the board. That’s not something we have yet.

Can you talk a little about the, you mention that you are still looking for acquisitions with the cash, but it’s been a longtime since you have been looking for that acquisition. At some point now that the world feels a bit better, do you go down the share Repurchase Avenue again was the thought process then?

This is Dave. The thought process is we are candidly disappointed that in 2009 we didn’t come through with an acquisition. I know we talked about it all year. We still do believe that is the best usage of our cash is to find a good, solid acquisition or several acquisitions. If in fact we do not as the year goes on in 2010, we’ll certainly talk to the board about potential share repurchase that it something that would defiantly go back on the table if it doesn’t look like we are going to able to can a acquisition done.

Can you take us through, Terri, if you have them that the volume growth for intermodal and truck throughout the quarter by the month?

We don’t like to give out the monthly guidance, but we went up each month.

For both of them?

Yes.

Has I continued into the first quarter?

Yes, it has did the volume continues to be good. It’s obviously very early, but through the 21 of this month it certainly does look stronger.

Okay, and then on the gross yield squeeze, you said I thought I heard you said most was intermodal. How does that start to improve, and what is the timing? What steps do you need to take? What needs to happen, and when would you expect that to happen?

Ed, this is Mark. I think that our view is that it remains a challenging pricing environment out there. We won’t see a significant amount of bid activity for the foreseeable future, and probably it isn’t until the second half of the year we will see just how aggressive the bid activity is likely to be. I don’t think we are anticipating in our guidance or in our models that we are going to see a significant up tick in the price environment from where we are act right now.

What we were…

See I think it is a firming up of the truck supply environment that could translate into a further price environment on the highway side and that very well may translate into the opportunity to increase pricing on the intermodal side, but until that happens it is not likely we will see a highly favorable rate increase.

Could higher fuel do that for you possibly?

That certainly we think it more attractive and potentially widen the gap to a point where there might be some room.

On the other side, market equation is there a way to reduce your rail costs? Or is that something at this point that is unlikely?

Well, we have been working on our cost of transportation pretty diligently, and we are continuing to work on those costs. I think David eluded to improved equipment utilization. We are doing better with matching our dray loads and showed a lot of real progress there, particularly in the second half of the year. We’re doing better with pool compliance; a number of certain operation efficiencies are being realized. So I don’t think that the rail community is very excited about price reduction. So we need to find ways to control our cost to purchase transportation and that more about taking that in efficiencies. I think we are making a lot of progress there.

Your next question comes from Alex Brand - Stephens.

I guess I want to focus first on volume, which I think your guidance for Q4 was minus 4% to minus 8%, and you come in at plus 6%, and not just intermodal, but truckload volumes were pretty strong as well. I’m wondering if you can just give us some color as to how much of that you think was the economic affect of a recovery on existing customers versus internal initiatives that you guys have had that are starting to pay some dividends?

I don’t have the exact figures as far as how much of this might be new clients. We have been developing some new, significant relationships, which certainly contribute to this, as well as I think the way we are going about the bid process in 2009, our understanding of the dray costs and understanding where our network creates efficiencies has certainly expanded. So I think some of this has been business that has been with existing customers that has increased. So it’s probably a pretty good mix of both at this point. Do you have anything to add to that, Mark?

I think would agree with that. What we saw was growth with customers who were historically maybe outside of our top 20, but grew pretty dramatically and became, in some instances, top 10. I think it wasn’t, that the customers were growing that dramatically, but we were taking share within those customers and I think we did a pretty effective job, and that manifested itself particularly in the fourth quarter.

Part of the response you just gave to Ed on volume and are really on price that you don’t have much expectation. Is there anything I should read into this kind of volume growth that you guys have been a little more aggressive in the market and maybe you’re more willing to sort of protect share than maybe you have been in the past?

Price is still going to be a much greater lever than volume for us. As Dave eluded to, I think we’re trying to strike a balance between share preservation and margin. We’re still committed to protecting our margins, and we’re certainly not eager to go out and try to gobble up share. I think we were able to, if you look at some of the other folks in the industry that have seen substantially more price erosion than we did, I think it indicates we did a reasonably good job of finding that balance.

You now have your fleet fully utilized, what you already had. Are there any plans to do anything with the fleet this year, either grow it or shrink it or I guess there’s too much capacity in the market, so are you doing anything to address that internationally?

Again, our utilization is the best it’s ever been. We have ample demand for the fleet. We’re still looking at our fleet plan. We have not made a decision yet on whether or not to expand the fleet for 2010, but that certainly is on the table. I don’t think we’ll have a great deal of difficulty in all candor and getting manufacturing capacity if we make decision over the short term.

One more question and then I’ll turn it over. Last quarter you guys were pretty disappointed with what had happened in local east. How did that look in the quarter and any thoughts you have now that JB Hunt and as public that they have a deal that it may or may not impact local east going forward?

Again, our local east numbers were up 12% for the quarter. So that’s very positive. As we said on the call last quarter just after the Hunt announcement, we’ve been told by the Norfolk Southern that in fact we have a comparable deal that we do not at a competitive disadvantage from either or pricing or service perspective. We take them at their word, and we believe that there is plenty of business that is local leased that is available be taken off the highway and Hub don’t have to constantly be butting heads for both of us to share.

Your next question comes from Jon Langenfeld - Robert W. Baird.

Loc leased side up 12%, what would trans con have been?

To and from the West Coast in the fourth quarter was down 1%.

Did I miss a number? I thought there were a number you in prepared remarks to 21%?

21%, yes, and that’s between Southern California and the Southeast.

Specific to the Trans con line.

Right, where, the Union Pacific, Norfolk Southern has a service advantage.

Have you seen your volume on that business come from existing customers, or new customers? I’m assuming a lot of that has to do with your new or your expanded relationship with UP.

It’s a combination of both so existing and new clients, but certainly again we think that with the service where it is, we’ve got a full day advantage that it really does offer clients a very good option for those that are trying to compress their inventory at this point.

Conceptually, can you just walk me through the logic, the pricing this quarter was down about 5%, and I think last quarter you said it was down maybe 4%?

Right.

Your gross margin sequentially what that was down almost 100 basis points?

Correct.

So yet that was just intermodal. It sounded like brokerage, I guess brokerage had some sequential, what I’m trying to understand is pricing was worse in the fourth quarter than the third is what you’re telling us. Is that true on an absolute basis, or more just the way the percentage is in your comparisons?

No, that’s true, but also when you go sequentially from Q3 to Q4 truck brokerage was down 230 basis points. So that also played into the yield, when you compare sequentially and Comtrac yield was a little worse, because we had a few more accidents.

Does the ability to drive, I know it’s not a big part of it, but do you have the ability to drive some peak season pricing because of box scarcity that occurred out there?

I wish. No, we were not able to. There was box scarcity out there, John, in all candors, but there was no peak surcharge for 2009.

If you kind of looked at pricing on an apples-to-apples basis, in the fourth quarter relative to the third quarter on absolute basis, it was down?

Slightly. Number one, I think that’s all of the bids, all the results of the bids were finally in the fourth quarter. So you’re seeing there what was accumulation of six months worth of bidding, if you will.

Would you expect, if I’m a shipper that has rebid in the last 12 months and I’m coming to the industry this month, this quarter to rebid again, what would be the expectation? Would the rates be up from where they bid a year ago?

We’re very early in the bid season at this point. I would think, if you bid in 2009, it could be somewhat tenuous going back out to bid in 2010. Now, I’m not sure how the market is going to react as it yet again it’s too early, but certainly the pricing appeared to strike the bottom during the bid season in 2009. So that has yet to be told, that story, but it certainly it could backfire on those who put it out to bid again.

Last question just a tax rate, what would you expect that to be next year, or throughout 2010?

38.6%, approximately.

Your next question comes from John Barnes - RBC Capital Markets.

Going back to the question on the rail cost and understanding that they’re not necessarily willing or looking to lower their rates, how helpful have they been in terms of making sure their costs are lined with, what the bid situation is so, if you guys lose share, UP loses share. So how does that relationship work, while they’re trying to protect their pricing I get it, but how do they manage it with you in order to protect share?

I think that the roads have been appropriately commercially oriented. They certainly aren’t, they haven’t been as aggressive say as the over the road community, no doubt about that, but it’s hard to argue with that rational. They’re obviously reluctant to make any significant concessions. They look at business on account-by-account basis and try to make sure there’s an adequate return associated with it. I would say they’ve remained reasonably disciplined, but at the same time I think we have a good working relationship with the rails, and we’ve been able to work with them to preserve our shares. So it has been challenging. There’s no question about it and we have had to show that we are executing on our end and trying to drive out as many inefficiencies as possible. End of the day, I think they worked with us well, but there is no doubt that as we go forward they’re going to be looking to recapture some of the price erosion that they experienced in 2009.

I’m sorry if I missed this, did you give the percentage of your dredge that’s being handled internationally?

We did. It’s up to 40%.

As you look at 2010, where do you anticipate that number going?

That should increase, there’s no question about that. I think that we’d be very happy if we were to be able to pickup 10 points. That’s probably on the aggressive side. A lot of it depends on what happens with dray pricing. Should we see it furling up in the dray pricing environments, then I have no doubt we could get up to 50%. If it remains soft as it has, it is more likely we would make incremental gains, something along the 45% range.

Your next question comes from Todd Fowler - KeyBanc Capital Markets.

Dave, going back to, I think it was an earlier question made by Alex, talking about where your guidance was on the volume side of down 4% to down 8% and coming to a plus 6%, if you can go through what was the biggest doubt or what really the volumes coming in that much stronger, was it the affect of the bids still outstanding at that point and you were more successful in taking in new freight? Was it strength of the existing customers? What drove the positive volumes for price?

It is a number of things. First of all we did see a stronger peak shipping period whereby particularly electronics out of Mexico, imported goods into Los Angeles, that coupled with some of the bids that we were successful on that in fact were not implemented until later on in the year all contributed to the 6% increase in volume because if you look at it year-over-year, the prior year ‘08 versus ‘07, we were only down 2% during that period. So it is not as though the comparable was weak. So we had some very strong weeks and some pretty decent quarter from a volume perspective. We’re quite pleased with it.

Then conceptually, when the volume does coming stronger like that, is it the incremental freight just comes in and there’s not a lot you can do on the cost size and that’s why you get the margin squeeze? I guess, I would just think that what was capacity that much tighter where the additional volume didn’t translate into a little bit better on the gross margin line just from a utilization factor from the network, anything along those lines?

Most of the customers we have longer term pricing stability. So going back and attempting to raise prices in the middle of October and giving them a week’s notice probably does not create a great deal of customer goodwill. So as a result of that, we make commitments and we stick by them. We don’t try to take advantage of what maybe an artificial spike in demand. Certainly, we could have done that and candidly could have raised our prices dramatically, but that’s not our strategy. That’s not the way we deal with our clients.

Trying to get you to predict volumes going forward, but based on what you saw in the fourth quarter and what’s realistic or what is the expectation was any can you say this is a peak season push you saw here, and then it is not going to continue into the first half? Is there anything that gives you more conviction that there is more tales what you so on the volume side? Or you say that back and okay that was a really good fourth quarter and we will be more cautious as we get into 2010?

Possibly said the first 21 days of this month have continued to be strong. I think the real key is going to be Chinese New Year which occurs in mid February, and if shipping continues or builds thereafter I think that will be a real key indicator for what we’re going to see from a demand perspective.

You don’t want to add specific volume guidance?

Probably not, I think one of the things that does give us some comfort is the growth is not coming from a single account or it is not highly concentrated were we saw a number of relationships that became sizable and that’s encouraging. So we are not depending on one development or one bid or anything along those lines. It is a fairly balanced growth picture.

With the ISO and the wholesale business coming down here, is that by design, and is that a level where we should expect that to be at on a go forward basis and from a profitability standpoint, how does that business compare with the larger 53 foot box business?

Our wholesale business was predominantly due to the fact that we have a relatively large fleet on Burlington Northern and at that time there were certain clients within the IMC community that desired to be on the BN to some extent, but didn’t have any equipment so they went through us. As our relationship has shrink dramatically with the Burlington, so has our ability or need to have wholesale business shrunk. It is kind of where it is right now, and I don’t look for that to grow. I do think the margins overall they were competitive, but there has been an awful lot of compression during 2009 which makes that business just that much less attractive.

The ISO I thought was a business you were looking to get into at some point, and maybe now you are scaling back a little bit there?

Yes, I definitely wouldn’t say the shrink in ISO is by design at all. It has become a very, very price competitive market place, and the supply has been challenging at different periods throughout the year. I would say that’s an area we would like to reignite growth in, and there is not a reason we can’t do that, but at this point in time we did lose two price several ISO engagements and that’s driven our numbers down throughout the course of 2009. We would like to turn that around, think we can, but for right now we are fighting an up hill battle there.

Then just the last one here, maybe this is for Mark. Mark on the truck brokerage margins, my impression always been that your truck brokerage business is a little different from a true brokerage model, can you remind me a little about how the margins in that business would work, and why you would see that margin squeezed here in the quarter, and I guess when we can expect that to reset and normalized on a go forward basis?

Sure. Our truck brokerage model is different it is not nearly as transactional or day-to-day. We are not out in the market constantly mining for the cheapest capacity. We have improved how we go out to the market place to try to secure competitive pricing, but it doesn’t tend to be nearly as dynamic. It is also associated with more repetitive business and which we have pricing periods over a longer period of time. It naturally has the ability, potentially, to somewhat get squeezed in certain types of market conditions. So I think what we saw in the fourth quarter was a situation where we did see some firming up of the capacity environment that we weren’t necessarily able because of prior commitments to patch those costs on to our customers. More importantly though what we saw with margin compression was really the result of mix of business we were handling. We were bringing on a fair amount of business through bids. It was highly competitive business, so we priced it accordingly. So, I think that was really the greatest impact as opposed to our model necessarily on the margin compression that we saw on highway.

Does that freight rebid again here this year I mean kind of consistent with normal truck load bidding season?

Generally speaking, yes, absolutely this would be conventional bid freight.

Your next question comes from Kevin Sterling - BB&T Capital Market. Kevin Sterling - BB&T Capital Market: Terri, could you run through the components of your truck brokerage revenue again? I got the volume gross, but I missed the price fuel and mix, if you don’t mind?

Price and mix for truck brokerage are down 10% and fuel was down 5% and then the volume increased was 11%. Kevin Sterling - BB&T Capital Market: Dave, I believe you mentioned, you talked about the rail serviced levels are really good and you improved your utilization with UP. So how fast are you turning your boxes now?

For the fourth quarter it was 13.8 days, so that’s pretty fast. Kevin Sterling - BB&T Capital Market: You think you can get better?

Yes, I think we’ve gotten awfully good at it, but I think that there’s still a lot of room for improvement here, particularly when you’re look at some of the service we’re getting now. With that type of consistent service and the enhanced transit times, it gives you the ability that you don’t have to build in excess days when you’re making appointments at the time of pick up. So, all those components allow us to continue to reduce or increase actually the overall fleet speed. Kevin Sterling - BB&T Capital Market: As you think like the shorter length of haul for intermodal maybe in the 650 to 1,000 mile range, are you gaining any traction there? You take it shared from truck, or is there still too much truck capacity at the marketplace causing the truck pricing to be competitive?

Well, there’s certainly too much truck capacity out there. There’s no question about it, but I think a lot of shippers are convinced that that’s not sustainable. So they are looking for ways to use intermodal in shorter haul. Our local east clearly is the growth that we’ve seen there is clearly indicative I think the ability to capitalize on that trend. We’re growing. The one area that we’re shrinking is 2,000 miles or more, between zero to 1,000 and 1,000 to 2,000, we’re continuing to grow, and we’re ever growing greater than the industry growth rates as well. We are very confident that there remains a lot of conversion opportunities, and that’s a long term trend as you look at particularly in the east I think there’s some in the west as well, but particularly in the east with some of the investments that Norfolk Southern is making for example in the Crescent Corridor, they are targeting large scale conversion, million load plus converse rates off at the highway. And we think that’s realistic. Kevin Sterling - BB&T Capital Market: Dave one last question, as you talk to your customers, how do they feel till about 2010?

I just think that everybody is a little leery. We certainly all felt a little bit better I think that, people in general felt better with the stock market going up and with just a better feel for the economic environment, but I think that everybody is a little bit leery to be predicting victory that we’re going to be moving forward without a few dips here and there. Again, I think our customers feel better. They do feel as though volumes will have the potential to increase somewhat, but again, so much is just dependent upon the consumer and whether in fact, we’re intending to spend more and get out of the poor economic environment we’ve been in. Kevin Sterling - BB&T Capital Market: One last follow-up, I think you said you feel really good about where your capacity is and the number of boxes you have. If things were to really pick up and you needed additional capacity, would you get most of that from the UP?

Well, if we were going to go out and acquire our own boxes that would move on the Union Pacific railroad, yes.

Your next question comes from Matt Brooklier - Piper Jaffray.

Not to beat a dead horse here, but just looking at your gross yields and kind of the sequential tick down from 12.4% to 11.4%, as I understand it, a lot of that had to do with increased purchase transportation costs with in intermodal, i.e., the rails taking up rates with you guys and also due to the fact or due to your truck brokerage model in terms of you guys locking more into price with capacity. I guess my question is, are we at a bottom here in terms of kind of gross yield compression? Do you think rates are going to see increased rates on the intermodal side or on the truck side first quarter? I mean, how should I look at that 11.4% gross yield going forward?

To answer your question, as far as with pricing, we really don’t look for pricing to increase in the first half. We think it’s up for debate whether or not it will increase in the second half. There may be some opportunity for that, but certainly as we live out the contracts that we currently have from last year’s bid season, we don’t see rates increasing in the first half of this year.

So you’re comfortable that you guys won’t see incremental purchase transportation costs going forward?

From what we’re paying to the rails at this time we don’t see any increase in rates in the first half. Again, if the market would suddenly demand, suddenly begins out strips supply, we may see that, but at that time we would be able to pass on the increases to our clients.

When do you think the timing would be for that in terms of passing on? I mean you took a good amount of incremental purchase transportation costs in the fourth quarter. I realize it is a pretty competitive environment currently. I mean, at some point in time I’m guessing you are looking to pass some of that rate on to your customer. What’s the potential timing of passing some of the rate on to your customers?

Just to be clear, our purchase transportation cost both highway and intermodal have actually gone down. They just have not gone down fast enough to completely offset the price erosion. So we have not seen a systematic rail increases in the fourth quarter and we didn’t see increases from a highway perspective in the systematic way of fourth quarter. We did see some tighter on the highway side, tighter demand conditions that did on a transactional basis, raised some rates, but in the aggregate we’re purchasing transportation cheaper than we were.

With your current contract with UNP, if you guys bring let’s say the demand picks up materially and you guys start to bring more volume to the Union Pacific, are there price concessions? Do you get lower price on a go forward basis if you do in fact bring more boxes to Union Pacific?

Obviously, we don’t talk about our contracts. So we certainly wish that was the case, but unfortunately it is not, but we can’t really talk about our contractual agreements with the Union Pacific.

You guys indicated that you’re getting more efficient with the rail service at Union Pacific. I think the box turns was 13.8 days. Do you have those numbers for third quarter and second quarter just to get kind of a feel for the direction of improvement?

We can get back to you.

Your final question comes from Mike Buttonfield - Stifel Nicolaus.

I had a question little bit related to that rational about efficiency. Further rational for making the transition from DN, so you see in the West is that you would utilize your containers and equipment more efficiently. Wonder if that has progressed as you expected it to and kind of if you could describe that a little bit?

I certainly think that number one are the way our fleet is turning is indicative that having one western railroad to deal with has made our network more efficient. I think that you also, as we look at our dredge costs we have been able to compress those and create fewer empty miles for our drivers. Again, this is a part of that efficiency that we’re gaining by having one network, one ramp. We have one ramp in Dallas, Texas right now versus having one in alliance, Texas and one in Dallas. There is a lot of efficiencies to be garnered, and I think we are realizing them, and I think there is more opportunity.

Okay, so using the east as a benchmark, it does sound like there is some more efficiency that can be improved in the west from utilizing the one network, is that fair?

Yes. Okay. Well it appear there’s is no other questions so if obviously if anything else does come up, please feel free to contact Terri, Mark or I and again thank you for listening to our fourth quarter call.

Thank you for your participation in today’s conference. This concludes the presentation. You may now disconnect. Good day.