ManpowerGroup Inc. (MAN) Q4 2011 Earnings Report, Transcript and Summary

Welcome and thank you for standing by. At this time, all participants are in a listen-only mode. After the presentation, we will conduct a question-and-answer session. (Operator Instructions) I would now like to turn the meeting over to your host for today’s call, Mr. Jeff Joerres. Sir, you may begin.

Good morning, and welcome to the Fourth Quarter 2011 Conference Call. With me is our Chief Financial Officer, Mike Van Handel, I’ll go through the high level results for the fourth quarter and full year. Mike will then spend some time going through the detail of the segments as well as the forward-looking items for the first quarter and any implications at all for the balance sheet and cash flow as well as the reorganization that we have done in the fourth quarter. Before we move into the call, Mike, could you read the Safe Harbor language?

Good morning, everyone. This conference call includes forward-looking statements, which are subject to risks and uncertainties. Actual results might differ materially from those projected in the forward-looking statements. Additional information concerning factors that could cause actual results to materially differ from those in the forward-looking statements can be found in the company's Annual Report (inaudible) and in the other Securities and Exchange Commission filings of the company, which information is incorporated herein by reference.

Thanks, Mike. The fourth quarter by many measures was a strong quarter when you look at some of the wins in our [phase] that we had to deal with. We continued at the same time to follow through with our execution and it resulted in a very strong quarter. We’re able to meet our expectations of profitability, while experiencing slightly worsening revenue trends throughout the quarter. Our revenue was up 6% in constant currency and 5% in U.S. dollars to $5.5 billion in revenue. We experienced the strongest revenue growth from our Asia-Pacific region as well as profitability increases. Our Asia-Pac region increased revenues in constant currency by 14% and more than doubled their OUP. Our gross profit in the fourth quarter increased to $935 million and our operating profit came in at $150 million, while our net income increased 47% to $80 million before the reorganization charges. Earnings per share were $0.78 including a $0.20 charge for reorganization. On a full year basis, we achieved record revenues of $22 billion and sales of $23 billion. Our operating earnings ended at $545 million before reorganization. It was a hard fought increase of 52% and our earnings per share also before reorganization was $3.24, a 76% increase in constant currency. we continue to drive for efficiency with our SG&A as a percent of gross profit improving by more than 400 basis points. We executed quite well in the fourth quarter. We were able to maximize the strategies that we put in place and continue the execution from our operational perspective. Now for additional information regarding the segments and a bit more detail, I’ll turn it over to Mike.

Okay. Thanks, Jeff. I’ll follow my usual format with some comments on the quarter followed by a discussion of each of our segments and then a review of our balance sheet and cash flow. Lastly, I will comment on our outlook for the first quarter of 2012. As Jeff noted, our earnings per share for the quarter came in at $0.78 per share, which includes a charge of $0.20 related to reorganization charges. Therefore, on a pro forma basis, earnings per share was $0.98, exceeding our guidance range of $0.85 to $0.95 per share. $0.08 of performance relative to the mid point of our guidance related to operational earnings exceeding expectations by $0.05, our tax rate adding $0.05 and our lower share count adding $0.01. Currency impact was neutral whereas our forecast expected a positive impact of $0.03 per share. Revenue in the quarter came in at $5.5 billion representing a 5% increase over the prior year. Revenue growth in constant currency was up 6% right in the middle of our guidance range of 5% to 7%. Our fourth quarter revenue growth was aided by acquisitions completed in the second and third quarters and this added about 1.5% to our growth rate in the fourth quarter. Operating profit in the quarter was $130 million or $150 million before reorganization charges. Operating profit before reorganization costs was up a strong 29% in the quarter with a margin of 2.7%, 50 basis points above the prior year. Our operating profit margin came in at the high end of our guidance range as a result of our gross profit margin also being on the high end of the range, while SG&A expenses are well controlled and came in about as expected. Our gross profit margin came in at 17.1%, which was up 60…

Thanks, Mike. The fourth quarter was a very solid quarter, we were able to achieve solid revenue growth and even better operating leverage. In 2011, we clearly leveraged our capacity and footprint by adding an additional $3.1 billion in revenue, finishing the year just over $22 billion in revenue, and $23 billion in sales. As Mike talked about, our expense management as well as the efficiency and productivity that we worked on throughout 2010 and 2011 resulted in an increasing operating profit percent by 70 basis points. Clearly, our geographical diversity and portfolio of offerings assisted our successful fourth quarter. Few highlights geographically. Mike mentioned the U.S operation, the U.S. operation did an outstanding job with gross margin increasing by 100 basis points, even given the set back of state unemployment tax. Additionally, we were able to improve our operating profit in the U.S. and the Americas region to 3.5%. For the second quarter in a row and on an annual basis over 3%, even given the fact that we did not have strong revenue increases. Also our Japanese organization deserves a strong call out, given the difficulties in the Japanese market. We actually did extraordinarily well with revenue increases in the fourth quarter of 3%, in constant currency. And profitability increase of over 40%, and for the year our profitability was up over 20%. Much of this is attributed to our switch to solutions and our mix of business. Also our U.K operation assisted in the quarter, with U.K business up 12% and profit up 28% in the fourth quarter. For the year our U.K business increased profitability more than 40%. Our Solutions business worldwide is gaining momentum. We were able to continue to expand our managed service offering, both the MSP and vendor management, nearly $6 billion now…

Thank you. We will now begin the formal question-and-answer session. (Operator instructions) Andrew Steinerman of JPMorgan, you may ask your question. Andrew Steinerman – JPMorgan: Good morning, gentlemen. I want to talk about your thoughtful strategy for purging business. It sounded like it was primarily in the U.S., but I heard a touch of it perhaps maybe coming in France. I want to know if you felt like the purging process, which obviously has worked, is behind us or behind us soon, and I also wanted to get a sense if you have a [view] on how the U.S. market started at the beginning of this year, is it anyway [fought] by purging?

Okay thanks. Andrew yeah a couple of things on that, purging is always something we take very seriously, because we don’t want to do is to stop away from business and we’re not. We have a long discussion with our client talking about kind of values, what we’re trying to do, why we’re trying to do it. And in the end, it may end up maybe because in the case of [Zeus], which really prompted a lot of those on discussions early on in 2011, which was – that we’re just not going to absorb or let us pass along Zeus. So we had decided to give them a period of warning that we would be to move on. It has worked well, it is increasing our margin, but more importantly, it’s giving us time to work on other accounts. so it is a strategy, it’s a strategy that we felt based on the market gains that we had made in the last two years in the US market that we were able to take that risk. So we evaluate even now. my sense is it would be less aggressive in the U.S., but that still doesn’t mean we’re not going to do it, because we have to kind of hold up the value of what our offering is and there are certain clients who just are looking for something very different. So probably a little less in the U.S., but we would continue. On the French side, what we’ve really been doing is spending the last 18 months working to the point where we would have the opportunity to be in a position to take some of those accounts that just are not the right accounts, the clients who are just not doing certain valuing. and what we’ve seen now is through a lot of hard work on our French operation, the deeper penetration into the small, medium sized business part, a bit more of a share of wallet from some other large clients that we picked up, because it might have been some quality problems on the competitor side. it’s putting us in a position where we’re probably two, maybe three points ahead of the market in France and now we’re considering okay, what do we do, how do we do that, but it will be very careful. On the start of the U.S. market, clearly there are two things if you look at, as we look into the current first quarter, first months and Mike talked a little bit about what we’re thinking with the U.S. Yeah, we have an anniversary of those – all of those accounts that we might have given to another competitor. Additionally, we had a book of business and Experis that was heavy on the finance and banking side and there are few projects that ran off where they decided to bring in house. Andrew Steinerman – JPMorgan: It sounds good Jeff, thanks.

Yes.

Sara Gubins of Merrill Lynch. You may ask your question. Sara Gubins – Bank of America/Merrill Lynch: Hi, thank you good morning. In the sense, it looks like you held up better than the market overall in the fourth quarter. And I’m wondering if you could give us some more details about what you’re seeing there and how that’s trending in the early part of this year?

I think we did and some of it had to do with what I had spoken to Andrew about is that when you try to make a different kind of sales structure, discipline, our operations down at the branch level in France have improved greatly over the last year in achieving their key performance indicators. we focused on verticals and client segmentation. So we’ve done all of those things. Sara Gubins – Bank of America/Merrill Lynch: Okay. And so far this year?

And now what we’ve seen is that as we roll into this year, you’ve got to be really very much standing on guard, I mean there are some challenges in Europe, which might be an understatement or just so obvious, but the fact is that France is in the middle of that. there is an election in May. There are some things that have come out. so what we’re seeing is actually not much worsening, but clearly, we wouldn’t see the first quarter having any kind of inflection point on the way up. there could be some very devastating news that comes out three weeks or a month from now that none of us would be aware of, but I would say that right now, we’re feeling fairly stable in France it would be mighty, Mike, anything to add to that?

Yeah. Just maybe a little bit more specific color, I think stable is the word as we look at the last four weeks in terms of where our monthly volume numbers have been running. From a revenue perspective through January, I would estimate we’re running down on prior year, low-to-mid single digits. so clearly although weaker than what we saw in December, but clearly it’s not falling off from also quite either at all. and so right now as the last couple of weeks have looked pretty similar. Sara Gubins – Bank of America/Merrill Lynch: Okay, great. And then also focused on Europe, could you talk about what you’re seeing in small business trends versus large?

But what we have to focus on small business, which Italy is there’s a lot by nature of the marketplace and we have improved our small business presence and there, it doesn’t seem to be as much of effect on the small business community in France. Switching over to Italy that small, medium sized business is seeing some effect, there’s no doubt about it. Italy is going to lots of changes right now in the banking system and austerity programs and lines of credit as well as just consumer demand. So we have seen the difference between the third quarter and the fourth quarter, it was probably the sharpest that we saw across Europe in the downturn, which happened in Italy. we still see a little bit more coming down in Italy, because of that small, medium sized businesses affected. The real question is, is that can this get stabilize both from a confidence perspective and also from a technical perspective? I think you’d start to see that come back, but it will be far too early to say when that would happen. Sara Gubins – Bank of America/Merrill Lynch: Okay, great. and then just last question any more detail on margin expectations in the first quarter by segment. Thank you.

Yeah. We tend not to go into detail by individual segments. And overall, we’re looking for about 20 basis points down at the operating margin level. and as you look across the board, I would expect probably each of the operating segments to be just a little bit less than the prior year. Asia-Pac might be pretty much in line with prior year, would be my sense for things. And what you’re seeing there is effectively little top line growth. Gross margin should be pretty stable across most countries or most segments and then from an expense standpoint, we’ll have just a slight expense growth probably overall less than 1% in constant currency and that’s really just reflecting some of the statutory salary increases and that type of things. So, expenses are tightly controlled and so just a very slight delevering in the first quarter given where we’re expecting top line right now. Sara Gubins – Bank of America/Merrill Lynch: Thank you.

You bet.

Paul Ginocchio, Deutsche Bank. You may ask your question. Paul Ginocchio – Deutsche Bank Securities: Thanks. Just a question on the operating leverage, it’s pretty significant where revenue is down. Could we just talk a little bit where you’re getting that and then just maybe where the office closures were located? Thank you.

Thanks, Paul. I think from an overall operating leverage standpoint, I mean, clearly that’s something that we’ve been focused on all year long and incremental margins in the fourth quarter were quite strong as we really focused on driving as much top line as we possibly could, while just holding back the costs. I guess, when you actually look at it from a market standpoint, we’re getting really good leverage and really got good operating leverage, I would say across virtually all segments, and Asia-Pac really kicked in as well this last quarter. I think when you look at it, it’s a lot of focus on the fundamental just driving productivity in those offices looking at all of our processes end-to-end, and how do we accelerate the in-take process with our candidates, how do we get them assessed in all the assignment much more quickly. So it’s really driving every process along the way. So, there is not one thing I would point out. I would say it’s just a continuation of our overall productivity and the efficiency, strategic driver that we have been driving on and that’s starting to show up in the results and really has through out the year. The first quarter is a little bit more sensitive of course, just given the lower volume quarter. so, if revenues are a little bit stronger, we’ll feel a little bit leverage coming through and of course, it works on the opposite side as well.

On the office closure perspective, we really aren’t moving out of any markets at all primarily in Europe, what we have found and we’ve been testing this now for about two years and the test results are coming back quite positive, is in some of the major cities we are doing consolidation. So we’ve done it in Amsterdam, we are looking at doing it in Berlin, we’ve done it in London. We’re instead of kind of having the Starbucks strategy, if you will; we’re moving more to a consolidated strategy given that people are clearly more mobile, meaning they will go outside their smaller area within a major city. it gives us the chance to have more scale in that office. it cuts down on our real estate and actually it creates a much better dynamic in the office. At the same time, we have opened offices. We’ve opened offices in China, some of them in fact, the majority of them organic and we’ve continued to look at opening offices and have opened offices in Brazil and a few other locations within South America. So net-net, it’s about even if you will, but there is no market that we’re exiting from any of the geographies that we operate in.

As you look at the reorganization charge, Paul, the 20 million, it’s pretty much broken up. About half of that is severance costs, about half of that is office costs, which the office cost would relate to least commitments as well as fixed asset write-offs leasehold improvements in those offices.

Well, and that, to bring to that reorganization, it falls as Mike said, in the two areas, Right Management and Experis, let me describe both of those. In the case of right management, we’re able to in it by keeping the integrity of that brand, which is really important to us, and the independence of that brand, we have been able to co-domicile in some places where it really worked well and markets a lot of that’s taking place in Asia. But also in the case of Experis where we wanted to bring it into one brand, an operating model that would really different ourselves in the market, there are some side benefits to that. We don’t have an Elan office, a Manpower professional office and (inaudible) office, we now have an Experis office and we've been able to put that together. In the U.S., we are able to take our Jacksonville’s office and turn that into the Experis finance. So there’s cost savings probably what about half of those in the reorganizations sit in that area on the Experis side, we didn’t do Experis for that intent, but we have the side benefit of being able to get some good consolidation of real estate people on management. Paul Ginocchio – Deutsche Bank Securities: If I could just speak, was there a headcount number related to that severance in second doesn’t sound like you’ve taken any capacity out to that or your ability to grow. it sounds like it’s just at the edges?

There was some headcount in there, particularly at the leadership level, where we have done some management restructuring particularly along those lines, I just spoke about in Experis as well as in right management, but it probably as a lot of it is on the back-office and system side as well.

Yeah. It would be in the neighborhood of 1% of our overall global headcount. Paul Ginocchio – Deutsche Bank Securities: Thank you.

Jeff Silber, BMO Capital Markets, you may ask your question. Jeffrey M. Silber – BMO Capital Markets: Thanks so much. I was wondering, if you could talk a little bit about the pricing environments in some of your major markets across the world?

So pricing for the most part is all things relative, is pretty stable. that doesn’t mean that we don’t price everyday, and as you’ve heard in some cases walk away from some business. But what we are seeing is any further ratcheting down. There are a few markets that might be a little bit more competitive than others, but none of them real major markets. So I would say pricing has become a bit more sophisticated and as a result, we’re seeing less ridiculous, now we would see in France, and that case in Italy where there is a local competitor who – in a couple of those cases with the DSO of 75 days, I don’t know how you’re going to return an adjusted profit based on that. So that still happens, but that was happening before. Our major account set, they’re really looking for us to make the switch from what we’re doing now, while not a bad in total. But what we’re doing now two more solutions and that’s why you saw our solutions business going up, they’re saying we’ve already got you as far as we can on the so-called gross margin. What we’d like you to do now is perform at a different level and that’s why our solutions business is growing so quickly. Jeffrey M. Silber – BMO Capital Markets: Great. It is a follow up; I wanted to focus a little bit on the UK, at the beginning of last quarter that the components of the Agency Worker Directive came on full force. Did you see any impact from those new [ags] on your business?

So you’re right. The Agency Worker Directive in the UK started in October and was to be implemented throughout the year. We’ve had lots of discussions in scenario plannings. we have not seen a much effect at all, coming into the end of this year. we still have the first part maybe the first half of the first quarter where we could see some effects. no doubt there are some clients that have made different decisions, because of that parity pay, but it is a very small amount. So at this point, we do not see it affecting our UK numbers, as we move into 2012.

I think what we are finding there, Jeff, clients are really evaluating flexibility and the flexibility is the priority now. and so it really hasn’t had a big impact. As Jeff said, press a little bit along the edge of few clients, but not a dramatic impact. Jeffrey M. Silber – BMO Capital Markets: All right. That’s great to hear. Thanks so much.

James Samford of Citigroup, you may ask your question. James Samford – Citigroup Inc.: Great thank you. Just wanted to touch on the U.S. again and just the purging issue again. how should we think about maybe an organic growth rate relative to sort of clients who have exited and that’s potentially when should we lapse some of the larger efforts that you’ve made in terms of streamlining your client base?

Well, it depends on how the clients that we purge some of them at seasonality. so it’s not just a straight anniversaring of, when we left them in June or they left us, but come the next June that is, it perfectly lines up across those quarters. I would say that when you look at it, if you would have looked at 2% some number like that it might be at, but it’s – and our view would be as we look into the future, now we’re going to continue to do it probably not at the scale we did in 2011. but I just think it’s a good business practice once we find out that there are just some clients as we have a discussion with them that they’re looking for something different that what we’d be offering. So I would expect it to continue, but just not at the same level. So as we look at 2012, our focus – wasn’t 2011, but even more intense our focus will be to really bring some of the solutions we have out, some of the ways that we have implemented salesforce.com, our sales process. So we’re optimistic, we’re going to get back on the trail, after we’ve readjusted our business that get back on the trail of getting up on top of the market. James Samford – Citigroup Inc.: And if I just quick follow-up, I think you mentioned that is there a pushing into more middle market in the U.S. as well and I think you lost a large client this quarter. How should that pan out this year and should that help diversify your way from some large losses.

I think so well we may have lost a large client, we win many more large clients in that. So I would say 2012 will be an equal struggle to make that balance work, because if we can pick up a $100 million, $200 million, $300 million we’ve got a couple of bids on the table right now, that are in the final stages and are for a couple of hundred million dollars. So we are still going to have a very solid and growing book of what we’ll call key or large account business. But we are going to work our tail off to balance it in through our metro market strategy and our SMB strategy. James Samford – Citigroup Inc.: Perfect, thanks.

Kelly Flynn of Credit Suisse, you may ask your question. Kelly Flynn – Credit Suisse: Thanks, guys. My questions are builds on Sarah’s earlier question about what you are seeing in Q1 so far. Are you seeing market to be worse trends in January versus Q4 or does your guidance just kind of imply that the Q4 trends continue in Q1. I think you answered it for France, but I just want to you to specifically address the U.S. and Italy.

Sure, yeah. Kelly Flynn – Credit Suisse: Thanks.

Good question Kelly, I think overall it does depend little bit by market I think when you look to the U.S. Market and a few other markets in Asia, what you see is some stability going into the first quarter. And yeah there is enough noise in the first couple of weeks starting of the year that you don’t know how much weight to put on. But I’ll say overall the U.S. in January looks as good as December is not a little bit improved on December overall from the couple of weeks we’ve seen so far. When you look to Italy, our fourth quarter was up 4% in revenue terms, it now is – we’re seeing contraction in that market. So that market clearly has become a little bit weaker and contraction would be in the mid single digit level or something like that right now. So again, not falling apart by any means, but certainly just some easing in overall demand, and that’s what we’re seeing there. Northern Europe would be a little bit mixed by market place, but I would say in general, things have started the year okay and in some markets maybe about like December other markets maybe just a touch softer, but overall, I would say okay. In terms of the overall guidance for the first quarter anticipates that we probably will see a little bit further softening in February and March, but not dramatic for their softening in February and March. So, that’s how we’re looking at it right now. Kelly Flynn – Credit Suisse: Okay, great, and then, if I could just ask related high level question of Jeff. I know you’re not an economist, but the investors obviously seem a little more optimistic about macro in general and Europe specifically. But it seems like somewhat you said in press release about your guidance, they are rest of the downside. Just building on those two comments, I mean, what if any are the meaningful positive signs on the cyclical front in Europe are you just not seeing any?

No. So, I’m glad you brought it up, because as Mike knows as I rewrote that was about 25 times in the press release. But I having come back from Davos, I came back with a just slightly different mindset and that is that there is a real commitment that this difficult problem whether it would be some forms of physical union or austerity or the balance between austerity and growth, are actually being achieved and that the banks, which were also represented there have the time over the last year. I mean, if you think about it over the last year at this time when Greece really announced that they were in a lot of trouble. So, while this has been long and drawn out and we would all like answers and fast action, it’s not going to happen and it shouldn’t happen, because it’s a very complicated process. So, while there could have been this race for an answer, which is what was being driven in the October and November timeframe that was scaring a lot of people, because it would have been pretty tough or draconian or not agreed to. Where we are right now is that yes, this is going to be difficult, yes there is a slowdown in Europe, but my sense right now is that there is a lot less panic, optimism would be too strong of a word, but more of a satisfaction of we will make it through this without a major drop. Now, having said that, I couldn’t say that in the press release, so what I said in the press release is, things look pretty good, all things considered, but there is this wildcard. and if this wildcard ends up coming apart for reasons that I have no idea, but I could imagine then of course, the game changes and that was really what I was trying to get across in the press release is that, that’s the wildcard and I think it’s logical to consider the wildcard, but given the backdrop, it’s actually less likely than it might have been 30 or 45 days ago. Kelly Flynn – Credit Suisse: Okay. That’s a great answer. Thanks a lot.

All right.

Thomas Allen of Morgan Stanley. you may ask your question. Thomas Allen – Morgan Stanley: Hi guys. Can you talk about your capital allocation strategy a little bit? I mean you bought back more stock this quarter than anytime since 2008. Should we view this as any change in your use of cash? And then related, how you think about the emerging market opportunity? You made a number of acquisitions that were big enough to call out early last year and they appear to be doing very well. But are you happy with your footprint now or could that grow? Thanks.

Sure, Thomas. So I think clearly, we are always tuned into our overall capital structure and probably one of the primary things that we’re looking to do is maintain an overall investment grade rating, just because that gives us more access to debt markets overall. And so – whatever we do, it’s in the context of that and as we look at the world we’re on the acquisition front, we’re always looking at opportunities to either accelerate our professional and solution strategy or expand within some of the emerging markets. I mean there is the two things that we’re always looking at and so there’s always possibilities and those are always on the Board. Dividends of course is part of one way to get cash back to shareholders, but then share buyback is the other way. And as we looked at things in the fourth quarter and where things stood from an overall cash standpoint, we did have a cash we felt that it would be thoughtful to get it back to shareholders overall. But clearly, we do it in the context of the overall share price, but we don’t think we’re too smart that we’re going to be able to pick the share price, pick the bottom et cetera. But certainly in the level that they are at today, we certainly felt that this was a good time to return some cash back to shareholders. So, I don’t think it’s been a dramatic change if you go back prior to 2008, you would have seen over a four-year period. We returned about $1 billion of cash to shareholders. So this has always been part of the strategy. I don’t think there’s anything new here, clearly in 2008, 2009 the depths of the recession. We were certainly more focused on liquidity than just given the fact that capital markets weren’t very reliable. So we backed off in any type of share repurchase strategy than, but certainly we see the world in a different way today.

And I would just add, yes we are happy with the acquisitions we’ve made. And we’re a year behind whether it would be WDC in India, what we’ve done in the three in China, they’ve integrated nicely. They’ve offered great management. They’re working with our branding strategy. So we are happy. Having said that, and we know that because you have a few good acquisitions, doesn’t mean you should start getting more aggressive because that’s when they start piling up bad one. So we are as disciplined as we’ve been in the past. We don’t need any acquisitions. So that gives us the advantage to really do some picking and choosing. We are growing very fast organically in those emerging markets primarily China and India is where you would see that or if you look at Hong Kong and few of those are really emerging if they’ve been quite mature. Both of those growing nicely, both of those have opportunities for us to take what we’ve done, which has always been our strategy. If you go all the way back to Elan where there were $300 million revenue company and there were $1.2 billion last year. So our strategy is still intact on that. And as Mike said, if there are some good ones out there, we’ll look at it. But we don’t get overly eager on any of these, because we know that when you do them, then you do a lot of them your stomach gets upset pretty quickly. Thomas Allen – Morgan Stanley: Okay, that’s great. Thank you.

All right last question.

Kevin McVeigh of Macquarie. You may ask your questions. Kevin McVeigh – Macquarie Research Equities: Great, thanks. Hey, Mike or Jeff, do you have a sense of what percentage of your business in Europe on the manufacturing side is tied to exports?

Well, here would be an answer and Mike probably can calculate it, I’m just kidding. But here is where I would go. If you look at our business in Europe, it is running with the exception of Sweden and probably in Netherlands. It’s running somewhere in the neighborhood of 60% light industrial manufacturing. So you could almost do a proxy for what is happening in Europe. If you took a European industrial output and said what percent of those are actually on export, we would be in line with that, because we’re big enough almost to represent the market. That’s the best answer I would have struggled a bit with that one ever, but that’s about the best answer. Kevin McVeigh – Macquarie Research Equities: Great, thanks. And then just not to press, do you have any sense Jeff, the GDP your assumptions you are using as you build your kind of business model for 2012?

We do look at that and I’ve said this a few times before, each country has a little bit different correlation between GDP. But I would also say that given the way the world is shaping up for a knock in some cases. GDP may be less relevant from a correlation perspective than it was in the past, because if you get stimulus coming from government that has improved increasing GDP, but we don’t participate in that kind of business is GDP that has no flow-through to us. So yes, there are some correlations. In France, if we can get to that 1%, 1.2%, 1.3%, we tend to be in growth mode in the low single-digits. You get below that, we tend to go down. I’d like to think that’s still true, but its election here, you don’t know what’s going to really happen from a [quasi] stimulus perspective. Kevin McVeigh – Macquarie Research Equities: Super, thank you.

And then, one more question. We’ll take one more question.

Mark Marcon of Robert W. Baird. You may ask your questions. Mark Marcon – Robert W. Baird & Co., Inc.: Good morning and congratulations on the good SG&A leverage. I was wondering if you could talk a little bit about two things. First, Northern Europe, specifically Germany, what are you seeing there? I mean, we’re actually getting reports, the EPO has been moving up over the last three months. It sounds like some competitors are still seeing strong results. How are you managing that over there and what are you seeing with the bench and managing that dynamic? And then secondly, in Asia-Pac, a real nice surprise over the course of this year in terms of the improvement in the margins, are those sustainable, is there anything unusual that’s occurring? How should we think about the margin outlook longer-terms over there?

Okay, good. Thanks Mark. On the Germany one, Germany’s economy is growing and we are participating in that, but we are being even more selective. So when we look at Germany, our strategy has been for the last 18 months and if you had to go back into our conference call, you’d be able to look at it. We really wanted to make sure that we had our house in order. We were selecting the right kind of accounts. We were doing the right kind of profitability and not reducing our gross margin or our profitability. In 2011, our profitability in Germany doubled. So we really worked on, if you will, ourselves, not excluding ourselves in the market, but very much on ourselves. When we look at 2012, you’re going to see us much more aggressive in the marketplace that doesn’t mean pushing price down, but really much more aggressive in the marketplace. So we know, we get tracking of it. Also I would say that there is two less days in December, so your average daily sales would come up with something different than minus six. So that kind of lessens that impact, if you will. We look very closely at it, and we’re meeting with them next week. This is an important topic for us, but we really wanted to get very, very solid profitability, high single-digit sort of stuff and we felt that once we get on that kind of plane we can move in a much better way. On the Asia-Pacific side, what you are seeing is the investments now paying off. What you are seeing is where we had losses or very little ability to use scale to offset fixed cost, those are now turning around. So in some cases, we would have lower gross…

It was 3.1…

So 3.1, I believe.

Yeah, right.

So 3.1, we’re – the team there is saying, hey, we may be Asia, but there is no reason why we shouldn’t be at the same levels of others and that’s the trajectory that we’re on. Mark Marcon – Robert W. Baird & Co., Inc.: That’s fantastic. So I could throw one more in, the $30 million in savings that are expected from the restructuring, how quickly do you think you will actually be able to realize those?

Yeah, that’s going to start to come in pretty quickly, Mark. I would expect probably see $6 million to $7 million of that in the first quarter. So that’s a lot of those actions have been taken and we’re moving on and then have been working on that over the last quarter. Mark Marcon – Robert W. Baird & Co., Inc.: Fantastic. Thank you.

All right. Thank you.

This concludes today’s conference call. Thank you for your participation.