Welcome to the Neogen Third Quarter Fiscal Year 2018 Earnings Results Conference Call. My name is Hilda and I will be your operator for today’s call. At this time, all participants are in a listen-only-mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded. I’ll now turn the call over to Mr. Jim Herbert. Mr. Herbert, you may begin.

Good morning. And as Hilda announced, welcome to our regular quarterly conference call for investors and analysts. And today, we will be reporting to you the results of our third quarter of, of course 2018 fiscal year that ended on February the 28th. As normal, I’ll remind you that some of the statements that are made here today could be termed as forward-looking statements. And these forward-looking statements, of course, are subject to certain risks and uncertainties. Actual results may differ from those that we discussed today but also your attention that the risks that are associated with our business that are covered in part in the Company’s Form 10-K as filed with the Securities and Exchange Commission. In addition to those of you who are joining us today by this live telephone conference, I’d also welcome those who joined by way of the simulcast on the worldwide web. Following comments this morning, we will entertain questions from participants who joined this live conference. And I am joined today by Steve Quinlan, Neogen’s Chief Financial Officer; and John Adent, Neogen’s Chief Executive Officer. For those of you that have been on the last couple of calls or so, you’ll remember that John joined us about nine months ago and is doing a great job of drinking from a fire hose. John is now responsible for the major operating divisions. So, he has generated up about $350 million of our revenues, and I’m continuing to help with some responsibility on acquisitions, R&D and a few couple of other areas. But earlier today, Neogen issued a press release announcing the results of our third quarter of 2018 year which ended on February the 28th, as I mentioned earlier. Announcements of the quarter once again introduced these several new factors. To hopefully clarify…

Thanks, Jim. Jim mentioned that our effective tax rate was 4% for the quarter. I think, it’d helpful to flush out just why that rate was so low. As you all know that tax reform was passed in the U.S. in December. The reform has a number of provisions which affect us with the most impactful in the long-term, lowering a statutory federal income tax rate from 35% to 21%. For our full 2018 fiscal year, we’re estimating a blended statutory rate of 29%. And this is simply the weighted average of the 35% rate in effect through December and the 21% rate thereafter. Using the blended rate of 29% means that during this quarter, we adjusted tax expense downward for the year-to-date by approximately $2 million compared to what we would have recorded under the old rate, based on our pretax income. We also revalued the net deferred tax balances on the balance sheet down to 21%, and this adjustment resulted in gain of $5.6 million. Going the other way, the transition tax or repatriation tax on our foreign earnings and profits, resulted in the tax charge of approximately $2.7 million during the quarter, and the net result of all these adjustments is approximately $5 million in lower tax for the quarter and a 4% effective tax rate. Now, there will continue to be noise in our tax reporting through the end of the fiscal year as a number of our estimates are refined, but we’ll be using the statutory rate of 29% as the starting point for our full year provision calculation. Effective with the first quarter of fiscal 2019, federal income taxes will be calculated off of the 21% statutory rate. Now, let me now give you some financial color and then discuss some highlights in our…

Thanks, Steve. And welcome everybody listening. As Jim has already report and on our overall sales and profit performance, I’d like to spend this time and provide a little more detail on the performance of our Food and Animal Safety segments and highlight some of our top performing businesses. Our Food Safety segment revenues were approximately $48 million for the third quarter, an increase of 11% compared to the same period in the prior year. For the nine months period, Food Safety revenues increased 17% to nearly $144 million. Highlights for the quarter, include sales of our AccuPoint sanitation monitoring product line, which increased 18% with strong sales in both our reader equipment and consumable supply. Sales of our test kits to detect pathogens increased 22% in the quarter, led by strength in Listeria products, including our Listeria Right Now test kit that launched earlier in the fiscal year. In the quarter, we also had a strong increase in sales of equipment used for our ANSR line of test kits, to detect various foodborne pathogens including Listeria. Sales of our food allergen test kits continued their steady climb, increasing 14% in the quarter as product recalls due to contamination with one allergen or another, continue to expand the global market. In the past three months, our worldwide Lab M branded dehydrated culture media sales increased 21%. Jim will spend a little bit more time talking about this when he reports on our international business. In the quarter, we continued to see strong growth in our sales of dairy drug residue kits. Their sales increased 29% as new products continue to gain market share, particularly in international markets. This increase does not include sales of our new BetaStar Advanced product line which we officially launched in February. Our BetaStar Advanced products…

Thanks, John. It’s been called to my attention that I twisted my tongue up in the very beginning on some comments here. I’d like to make sure that I get it right on revenues. Revenues for the quarter were about $96 million and that’s up $7.5 million compared to the prior year, which is I don’t know, 8.3%, 8.4% increase compared to the year earlier. So, I must have turned one or two of those around. Nevertheless, I still -- I like them either way. As John said, let me now take a minute and cover what’s happening in our international markets. In this third quarter, revenues from international sources increased to 39% of total revenues as compared to 36% of total revenues in the same quarter last year. Growth of our international sales were up 17% for the quarter compared to the same quarter a year ago and that’s in absolute U.S. dollars. So, our international business has grown at a faster clip than the overall corporate, which is what we expected. It’s a part of what our projections are. Neogen Europe operations based in Ayr, Scotland, once again had a nice quarter with revenues up about 16% compared to a year ago. Not included in those Neogen Europe numbers though are revenues from our Lab M operations, which though they are part of the Neogen Europe group, they report separately for now. Their revenues were up almost 20% compared to the same quarter last year. So, both of these operating groups show a nice strength through the first nine months and just for the quarter. And I think they are well-poised and that operation and that management team is well-poised to expand on our existing operations and take on some potential other business over there that perhaps might…

Thank you. [Operator instructions] We have a question from Kevin Ellich from Craig-Hallum Capital Group.

Good morning. Just a couple of questions, guys. I guess, first off, Steve, could give us what -- did you mention what the organic growth was for the quarter?

I did not mention the overall organic growth. So, our total sales growth was 8.5% and overall organic was about 7%.

Wow! That’s pretty good. And then, I guess, just thinking about the tax rate and all the color that you provided was great for this quarter. When we think about those moving pieces that affected this quarter, how do you think that will play out in Q4?

Well, we kind of -- in this quarter, we got caught up with the new blended rate. So, we’ll start at the 29% in the fourth quarter. But as I said, there are going to be a number of adjustments. We didn’t estimate of our deferreds in this quarter but we’ll square up with those kind of the sharpen the pencil as we go through year-end. It’s going to be -- I can’t give you a great estimate there for the fourth quarter, except if we start at 29, we’re going to be somewhere I would say in the low to mid-20s. But, I have no real clarity there.

And then, lastly, looking at your sales and marketing expense, I think, you made a comment about some personnel and increased advertising ahead of new launches. Can you give us little bit more color? I mean, should we be modeling increased sales and marketing, and which products specifically should we be thinking about with that?

Let me start and then turn it back to John. John’s got 13 years of running the biggest sales organizations in this industry, among other things, but the expense department is down there. As we’ve got new products coming out to shoot, you guys -- John talked about our data business as an example. You have to lead that product into the marketplace, you don’t want to push that into the lab benches and expect sales are going to be [indiscernible] to go write orders that day. So, we’ve got bigger and got more sophisticated, I think we do look at leading the market. And that was the part of it. And we’ve been pretty steady; [ph] we used our ways, try to increase headcounts just a little bit ahead where we need them because the first data sale person or marketing person is on board, they are not productive. So that’s a part of that in anticipation. John?

Yes. I think, Kevin, it’s good to talk to you. That bump up was because we had three big launches that came right here recently with Listeria Right Now, our BetaStar Advanced and Raptor. And what’s exciting about all three of these is these are game-changing technologies. So, we didn’t want to under fund what we think is going to be a growth -- a great growth strategy for us going forward. So, great markets, really big market potential. So, we’re going to put the funds to make sure they are successful.

The next question comes from Jason Rodgers from Great Lakes Review.

Just a follow-up on the organic growth. Do you have the total organic growth in genomics for the quarter and if you could break that out between food and safety and Animal Safety as well?

I’m going to jump in the middle of that and tell you that on genomics, that’s moving so fast. What is -- first of all, you got to find what is organic growth. And I think maybe you’ve heard me tell the story. We’ve got operation in Brazil and let’s say that it was running at just, pick a number, it was running at rate of 1 million. So, then, we’ve put all of our sales force behind it. We started bringing in product from everywhere else. We grew that business. I would say, a big growth in that business was from growth of our current business, not something that was added by acquisition. So, I really -- I guess, it doesn’t matter to me where we get the money. If it’s good solid profits and good solid revenues, I told you, we didn’t buy anything new this quarter. So, we’re not growing the business based on the acquisitions but it’s pretty hard to start separating what is actually organic growth and what is growth based on adding extra resources, extra salespeople. We’ve got a worldwide reach. Our Australian -- as an example, our Australian operations are new. So, you’d say, well, is that -- that must be acquisition growth. No, a big part of that is the merino fine and wool sheep product is now we’re running in Australia. At this time last year, we had the same business and it was in Lincoln, Nebraska, we brought a sample into there. So, it’s -- anything I tell you about the genomics, I think it’d be misleading other than say to you we do have a worldwide strategy. Every piece of the stuff that we’re buying really adds to organic. We’re not out buying far worse or something that’s totally unrelated to the business. So, I don’t mean to be facetious there. But, I just don’t know. I think I want to make sure people don’t assess too much as to whether they’re buying the business or growing the business, because we’re doing both. Does that help?

Sure. But, I did want to ask about the mycotoxin test kit sales. What was the number there for the quarter versus a year ago.

Right. Good question.

So, the deal and outbreak that we had last year that didn’t recur this year that resulted in about a $1.4 million reduction in sales in the third quarter.

And then, you talked about lower sales there and lower sales in the cleaners and disinfectants. Were there any other areas beyond those two that performed less than expected or were weaker in the quarter?

No, I don’t think so. I mean, when we look at it, we had two big headwinds. One was the DON and the other was the Lanxess contract and that was about a $1.5 million.

Yes. So, those have been watching, the Lanxess, which went back to the old DuPont product line, we said this thing is -- we’re a distributor for them and it’s in this way, [ph] and they are developing new products like we hope so. We just compared our own book, we bought Preserve. And Preserve ended things [ph] -- Preserve is a lot bigger than what the whole Lanxess business is, it’s ours’ and we’re growing it.

I mean, other than what Jim talked about with India, we’re pushing hard, we know it’s a great market, we’re pushing hard but that one’s not really where we wanted to be. We fest up to that one early.

I’m feeling even better about China now. [indiscernible] they tell me in Mandarin Chinese. He talks to some of our Chinese people and they all been like they know what each other saying, so assume they do. And that’s -- I think that’s added to our knowledge, not just the business but knowledge of the culture there. So, as we see that -- if you look at the two fast growing populations, one is India and one is China, and China is China. And it’s centrally controlled what’s happening to that economy, whereas India is trying to operate under democracy that was invented by the English. So, it’s going to be a lot slower.

And if I could just squeeze one more in. Last quarter you talked about some changes in the competitive landscape and taking some actions there. Wonder if you can give us an update on that.

I’m not sure, what I told you. [Multiple speakers]

You said competitors were gaining share. So, you are looking to change maybe some strategy…

Yes. I don’t know that I’m willing to give up them gaining share. They’ve been more competitive. We had a couple of big -- couple of players who decided to get out of the business. DuPont was there, diagnostic test for the detection of pathogenic organisms decided to sell that business and it was -- it was a strong competitor, good product. It was inside the gates at DuPont. So, you had to get it outside and go manufacture at someplace else and equity capital got attracted to it. They got the price and ran with it. We said we probably don’t need it anyway, we liked it, [ph] we have been on table. But, we got out there. So that one is yet to be determined. There was another company, a little company, a decent sized company in California that is a competitor in just one smaller market on the food side. But, they’ve got some nice share there, it was also a part of equity capital. So, they’ll be kind of fun to watch these new guys, they got the pockets. But it will be kind of fun to watch them come to the table I think over the next year. We’ve got a place or two where we need to bolster up on allergens, as John talked about allergens. We’ve got one or two spots there, where we need additional products. Certainly at least for halo effect, we don’t have a diagnostic test now, probably what it needs to be to detect the take the presence of fish. [Ph] So, we’ve got the competitors that have that out there; it’d be nice to have that one. John talked about -- I think we’re making a big gain on the milk side. John talked a little bit about that. We do have the best, easiest to use test to detect the presence of antibodies in milk anywhere in the world today, and have spent [ph] on that one. And we are already a big player, we’re a big player in most of the world, not in the U.S. but this is going to give us a chance to be a bigger player in the U.S.

The next question comes from Paul Knight from Janney.

Hi, Jim and John. Could you address where you think you want the international mix should be? It’s 60%, 61% U.S. now. Do you want it to be in a five-year horizon, a third Asia, third Europe? Where do you want to be? And do you get there via distributors, or you’re doing this via direct sales build out?

Let me talk a little bit and then I’ll let John add to that if he likes. But, I don’t know where that number came from. We’ve been saying it for so long, I think it’s become gospel. But, way back early somebody asked a question like that. And I said I think about two thirds of our total market potential lies outside the U.S. and there must have been some basis for saying that. But, we can’t find the source now. But, any rate, if we’re at 30% now and two thirds could come from outside the U.S. And you’d [ph] probably never get the share of market in one part of the world if you got here at home. But, that would I think I mentioned in my comments, we probably could add another 20% to that. And if we’re 30% [ph] now and you could add another 20%, that would be pushing towards that two thirds. It’s kind of -- it’s picking where we go. I think, we’ll make some big gains in Australia and New Zealand because we hadn’t been there. So, it’s picking up part of that market; I think that will be big. We’ve been in the 38 countries in the EU for a while. We’re going to continue to grow there. But, we’ve already picked the low-hanging fruit. So, it’d be a little bit more difficult to grow it on a percentage basis there. I don’t know, John, you’ve been around the world and looked at these markets. What are your thoughts there?

Paul, I think the way we look at that is what is the market potential in different parts of the region. Right? So, if you look at market potential by EU, U.S. and Asia, then we go out and say where can we compete, how do our products fit, where can we sell solutions for customers and then we set our expectations based on that. And as you know, while the markets are big, sometimes the technology is ahead of the market, like in Asia. While the population is big and there is a great opportunity there, they are not as sophisticated in the way that they look at kind of food safety as some of the more developed countries. So, we try to track that along. The other thing you mentioned was how do we do go with market. And I really think Neogen has done a great job of this under Jim for long time is, first, we start export. So, we work with distributors and local, international countries. As we start to develop and we get bigger share and we start developing significant revenues, then the team should go on and look at either acquiring or working with the distributor or setting up our own shop. Once we have a sales office that continue to grow, then we look at, okay, is it big enough to support some type of manufacturing, like we did in Brazil, some of the other countries. So, I really like that strategy of grow it, fund it, move into a sales office, fund it, move into manufacturing as it makes sense. So, I like that strategy and it’s something I want to continue with.

Okay. And then, genomics specifically, could you talk to the growth rate of Scotland? What was the overall -- genomics growth rate overall I think was 25%. How quickly did the European genomics business grow, specifically Scotland? And then, how quickly do you want to move into our add technology and people into Brazil and Australia?

Well, we’ve already got -- we’ve got the genomics in Australia. What’s been so great about this is we’ve got the same model. We’ve bought an existing business in Australia and they were using pretty much the same techniques that we were. I mentioned earlier that in fact some of the samples that were coming from Australia were actually going to Lincoln, Nebraska to tell them how to make selection for a fine haired merino sheep. And now they are doing -- we’re doing it in our own lab in Australia, instead of shipping them around the world. But, it’s a model and we send a team and they -- if it’s an already existing operation, they kind of need an asset [ph] and we are all working out to the same things. In the case of the Scotland, Steve just pushed a note to me, the genomics business in Scotland for this quarter was up 38% compared to last year. And when, I say that I also say some percent of that was probably product that we ran in Lincoln, Nebraska the same time last year and now we were running in Scotland. I really don’t care. I mean, we’re going to do it where it’s most efficient. Turnaround time is exceedingly important. And we are dealing in days. We’ve got some contracts that we get a 120% of published rate, if we could provide them the results that quicker than what they specify. So, turnaround time is awfully important. So, as an example, the gestation period of a cow is still nine months. But, if you don’t get answers back [ph] that may not be that important. But if you look at chickens, it takes 21 days to hatch an egg. So, the turnaround time is pretty important to know what to say. So, this opportunity of shortening our turnaround time, using the same models around the world, we in fact run inter-lab analyses to make sure that all our labs are operating like we swap samples once a month, take a sample and send to every lab and we record results and make sure that they come back with the same answers. So, that’s a long politicians answer to what was probably a short question. But we’re growing -- even Lincoln is growing but Lincoln’s growth is as Dr. Bauck would say, he’s been in -- he’s given that to the [indiscernible]. So, he’s not keeping all of it for himself right now.

The next question comes from Brian Weinstein from William Blair.

Hi, guys, good afternoon. This is actually Andrew Brackmann on for Brian. I wanted to start actually on the genomics as well. You talked about some growth drivers through partnerships and through introducing new products. But, could you talk about any other things that driving the business there, is it greater awareness, adding more content or increasing sales force? Thanks.

Thank you. Did we rehears this question? I’m glad you asked it. As I think one of the key things, we probably don’t spend that [ph] much time on [indiscernible] to is what’s happening to genomics on the Food Safety side. And way back early when we first acquired that business, I said to a super group of scientists in an R&D meeting when they asked that we do such a good job of running the genomics up on the on a [indiscernible], Jersey cow, what could you do -- could you do the same thing with salmonella and I said sure, we could. So, we started saying yes, we’re going to start doing that. And we got some significant pieces of business now that’s going into genomics has to do with looking for spoilage organisms in food. I don’t whether I’ve used the story on that, but it’s good enough, I could tell it twice. We had a customer, a good genomics customer that is one of the world largest worldwide breeders of hogs [ph] and one of the large producers came to us one day and says, we’ve got a problem with spoilage in our fresh pork and we can’t find the organisms causing it, can you help? We said, yes, we would sure try, we probably could. So, in a few days they got a package of rotten meat in Lincoln, Nebraska and started trying to sort through it. And it was only a few days, they came back and said we need to talk to this guy and got him on phone, [ph] and said we’ve identified the organism that’s causing your spoilage in these fresh pork chops, but we don’t quite understand it because the organism that we’ve identified is normally found in marine conditions, and there was a brief silence. And the guy said, I guess, I forgot to tell you that we use sea salt as a part of our curing process. So, there’s an example how genomics can -- and that’s just a little one, I can give you several more like that. So, as we expand the use of genomics beyond just package or carcass freights [ph] or whatever we might be looking on breeding for animals is going to be a lot -- I think a lot more of food-based genomics.

That’s interesting. Thanks. And then, is there any update on hiring a new Head of Food Safety? Thanks.

Yes. We continue to go through that process and we’ve got some great candidates. We’ve had a number of interviews and hopefully shortly you’ll be able to hear something.

In the meantime, John is drinking out of two cups. So, he does a pretty good job at it.

The next question comes from Kurt Kemper from Hilliard Lyons.

Thanks for taking the questions. I have a couple on the home the Raptor platform. First of all, with the milk opportunity, how are you all thinking about that in terms of price increases versus cannibalization and possible taking market share as well?

So, thanks Kurt. I think, there’s a couple of things. One, in the U.S., this is about growth for us, because we’re not involved in that market. So, this is the opportunity for us to take share. And externally, in the international markets, it’s allowing us to really solve customer needs and speed up the amount of time that it takes them to analyze these samples, because we can run up to nine samples on this reader. It allows them to skip the incubation process, because we do it with our reader. And so, what we think is we’re going to grow share there, but also it’s going to simplify the -- really our customers’ challenge around this on an international side. And from a margin perspective, our current products, we will launch something that we thought it was going to be dilutive to our current margin structure.

And I think, John, priced pretty much in the same slot as our other [ph] tests are today.

Okay. And a follow-up for the Retro platform. It seems like a very, very convenient option for your customer base. I think you all have said in the past that you’re thinking about moving that technology to some other platforms, whether it’s allergens or pathogens. Can you kind of talk about what that process looks like and maybe the R&D timeframe that’s necessary for that?

We’re not going to tell you too much because I know we’ve got a couple of competitors that may be listening, even recording this call. So, [indiscernible], I’ll let John talk something about it. But, I think, John you are already nearly there with several of the mycotoxin tests.

We are. And Kurt that’s right, I mean, the thought is to help the customer, so he doesn’t have to have multiple readers to run different types of tests across different spectrum. So, we’re extremely close on mycotoxins. And yes, the thought is to have the flexibility to run multiple types of tests on a common reader, and that’s what we’re working towards.

Okay. And then, my last one. I guess, this is a little bit longer timeframe because it doesn’t appear to affect you all immediately. But I thought it was interesting to see Church & Dwight, their ARM & HAMMER division via passport food safety solutions. To my knowledge, one of the very few that are now positioned both inside the farm gate and the food on the plate, like you all. So, I was just interested to hear your thoughts on that news.

Yes. And that’s a group that came out of a Elenco [ph] with some technology and we knew that. We actually looked at a little bit of that business. It’s kind of a different space because it’s more of a treatment on a carcass wash. So, while it’s ancillary to us, it’s really not around detection. I believe it’s more around treatment. Jim do you want to...

Yes. We tried to figure out what to do with the technology; it was all confusing. There should be a way to -- if you spray a dirty old 1,500 pounds [indiscernible] that’s coming into the holding lines before he is going upstairs to the slaughter floor and two to three hours you spray him, but something has got to kill the bacteria, hopefully the E coli and the [indiscernible] patches or whatever that’s on animal and it reduces the load going in. As John pointed out, it’s an intervention. I don’t want to make lies of it but it’s an intervention process, not a diagnostic to do.

[Operator Instructions] The next question comes from Gerry Sweeney from ROTH Capital Partners.

Just a quick -- two questions really. I wanted to talk about, in the commentary you talked about consolidation and efficiency improvements. And I think we talked a little bit about this on the last call. I think you are looking at some SKU pruning. But it sounds so there is some opportunities just across the board to make improvement. How do we look at this longer term. Is this an opportunity to drive margins or is this more just standard blocking, tackling, offsetting some increasing costs et cetera.

I think it’s maybe probably first and foremost we’ve talked about the harmonization and what’s happening around the world. And what we are doing with -- we are manufacturing culture media at an operation here in Lansing that we bought some years ago from [indiscernible]. It was stuck out in New Jersey; we brought in here. And three years later we found and brought a company that was making media. We tried to buy it on a couple of occasions. And we got the opportunity to buy what we call Lab M. Between them -- and they are both making product and shipping it around the world and it is for used for part of diagnostic tests, also big piece of that market culture media that goes into production of vaccines and things like that. And we started -- we knew in the beginning that we wanted to try to harmonize that so that -- a big vaccine company as an example, they want to produce product in the U.S. and they want to produce the same product in Europe, but they like them to be able to have the same media to go with it. I think, when our team started, they had something like 450 products, different SKUs when you combine the number of products offered between both of the companies. We now have got that pruned down. And I think the number is like 205. And even more importantly, those all won’t be made in Manchester, England and Lansing, Michigan. Some of them will be made both places if buyer is big enough. But, in other places, we may make them here in the U.S. and transship and they may make others over there and ship. And today, we’ve got containers, we’ve got it with a container or two coming. Some of them are coming from the different parts of the world. But, you can move stuff around on a container pretty easily. And open then whole harmonization. So, I think first of all, it’s harmonization. Yes, it does get rid of lot of redundant products. It was -- it’s crazy. You start looking at that list and you say, gosh, we did all of this and we only sold $3,500 last year. Yes, but that one customer really does want it. And so, you can start those things out. But, it’s working and -- but it was part of our original plan. We said all along that we wanted to be recognized as a worldwide leader in a number of places. And any place you went, if you were looking for a product and it had the Neogen flask beside it, you could feel [ph] good.

That’s helpful. And then, on the tax side, obviously -- I mean these are real changes, positive impact to the cash flow. And as you look at operations, there’s always a balance. But with this increase in cash flow, does it change your view on going and reinvesting in R&D, driving organic growth or does this money just sort of continue to build on the balance sheet? And then as a follow-up to that, are you seeing any increases in some of your customer spends because of the tax increase, sorry, tax decrease.

I don’t know that -- John, I’ll let you niggle that last question. I’m not close enough to -- I mean they’re buying the product now not because they can afford it, because they have to have it, I think primarily. But, maybe I’m missing something. As it relates to where we’re going, we’re continuing to look for aggressive opportunities to use that money. Some of it is as we talk about automation, we had meeting, not long ago, there were couple of different projects that were roaming around now in excess of $1 million just for a piece of equipment, each of them. We’re looking at what we might do in consolidation of where we’ve got an operation in one part of the Midwest and another one somewhere else and we’re not real proud of the facility. We’re putting that into some expansion into bricks and mortar which we have done long ago. So, I think we’re going to continue to find use of the capital.

Hey, Gerry, what I see from a customer base is that our products are not priced that is prohibited that they can’t afford it, it’s where we can get it. They’re doing same thing, we are and saying okay this gives us an opportunity to invest in capital and more people and grow the business, then their usage of our product is going to go up. So, that’s what we’re seeing.

Okay, that’s what I assume but wanted to ask. Thank you very much. I appreciate your time.

Thank you.

We have no further questions at this time. I would like to turn the call over to Mr. Herbert for concluding remarks.

Well, thank you so much for your continued support and a great set of questions this morning. I always love these because I know what our investors are thinking based on what questions you’re asking. And it’s awfully helpful as we make sure that we’re doing the right thing. So, we’re off and running for the fourth quarter. And it’ll take us a little longer to announced the end of the fourth quarter. But we’re always available. And of course you know that anybody discuss specific questions on the analyst side, Steve’s available and Terry still -- his phone still rings. So, don’t forget message around. And we’ll look forward to talking to -- see you next time. We’re off and have a good spring.

Thank you. Ladies and gentlemen, this concludes today’s conference. We thank you for participating. You may now disconnect.