Interface, Inc. (TILE) Q4 2011 Earnings Report, Transcript and Summary

Good day ladies and gentlemen and welcome to the Fourth Quarter 2011 Interface Inc. Earnings Conference Call. My name is Santali and I will be your facilitator for today's call [Operator Instructions]. As a reminder, this conference call is being recorded for replay purposes. I would now like to turn the presentation over to your host for today’s call, Mr. Matt Steinberg of FTI Consulting. Please proceed, sir.

Thank you, operator. Good morning and welcome to Interface's conference call regarding fourth quarter 2011 results. Joining us from the company are Dan Hendrix, Chairman and Chief Executive Officer; and Patrick Lynch, Senior Vice President and Chief Financial Officer. Dan will review highlights from the quarter as well as Interface's business outlook. Patrick will then review the company's key performance metrics and financial results. We will then open the call for Q&A. A copy of the earnings release can be viewed under the Investor Relations section of Interface’s website. An archived version of this conference call will also be available through that website. Before we begin the formal remarks, please note that during today's conference call management's comments regarding Interface's business which are not historical information are forward-looking statements. Forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from any such statements, including risks and uncertainties associated with the economic conditions in the commercial interiors industry, as well as risks and uncertainties discussed under the heading Risk Factors in Item 1-A of the company's annual report on Form 10-K for the fiscal year ended January 2, 2011 which has been filed with the Securities and Exchange Commission. We direct all listeners to that document. Any such forward-looking statements are made pursuant to the Private Securities Litigation Reform Act of 1995. The company assumes no responsibility to update or revise forward-looking statements made during this call and cautions listeners to not place undue reliance on any such forward-looking statements. Management's remarks during the call refer to non-GAAP measures. A reconciliation of these non-GAAP measures to the most comparable GAAP measures are contained in the company's results release and Form 8-K filed with the SEC yesterday. These documents can be found on the Investor Relations portion of the company's website www.interfaceglobal.com. Lastly, please note that this call is being recorded and broadcasted for Interface. It contains copyrighted material and may not be rerecorded or rebroadcast without Interface's expressed permission. Your participation on the call confirms your consent to the company's taping and broadcasting of it. With these formalities out of the way, I'd like to turn the call over to Dan Hendrix. Please go ahead, sir.

Thank you and good morning. The fourth quarter marked a continuation of the conditions we saw on the third quarter as raw material pricing and decreased absorption of fixed manufacturing cost due to lower volumes combined to pressure our gross profit margins. From a sales perspective, what we saw in most of our major markets, particularly in the corporate office space can best be described in this way, more as a pause in demand rather than a broad-based decline, as some customers have put their spending plans on hold given the uncertain macroeconomic factors. Nevertheless project activity, particularly in the US and Australia remain robust. We continue to focus on matching our strategy to market conditions and have raised our selling prices, restructured operation and reduced cost, but we could not raise our prices fast enough to make up for the cost increases and a decline in volume. Now let me give you some color on our individual businesses. In the Modular Carpet segment, our US business again posted solid net sales for the fourth quarter and for the full year, it grew 10% during the year and outperformed the overall commercial market. We also are excited by the continued strong performance of FLOR which was up 34% in the fourth quarter over the prior period. During the quarter, we opened new stores in Houston and Brooklyn, bringing our total stores to 7. The stores continued to perform well as part of our overall market approach for FLOR and the FLOR stores are profitable on a direct contribution basis. We will continue to invest in FLOR in 2012 with plans to open 12 additional stores during the year, bringing our total store count to 19 by the beginning of 2013. In Europe, the lag effect I mentioned and our price increases combined with higher raw material pricing and decline in production volume impacted profitability during the quarter as well. Overall, our European business is more than holding its own in a tough environment as it continues to gain market share, posting a 10% sales increase for the year in otherwise down market. The bright spots included Germany, which had a standout year and evidence of growth in Eastern Europe markets and Russia. We’ve also invested in the sales growth in India and Middle East which made positive contributions to this business. In Asia Pacific, a decline in government stimulus-driven demand in Australia more than offset continued growth in other markets including growth of 35% in China which resulted in lower sales from that region. The ramp up of our facility in China continues to be excellent. The plant is now operating 2 shifts a day and exited the quarter with operating and essentially breakeven. Bentley Prince Street had a slight increase in sales for the quarter, but it is not enough to offset the effects of our higher raw material costs which led to a decline in the operating income for the quarter. As I mentioned in the beginning of the call, our results were reflective of 2 primary factors, a slowdown in demand and higher cost. To mitigate these effects, we undertook a number of steps to better align our cost structure and the efficiency of our operations with current market conditions. First, we raised our selling prices in the fourth quarter. However these increases only begin to translate for the backlog in the sales too late to be much of a benefit in the quarter. We’ve also announced another price increase in the first quarter. Second, as previously announced during the fourth quarter we incurred a restructuring charge of $6.2 million. These restructuring actions which touch all aspects of our business as a result in annual cost savings of $11 million beginning in the first quarter of 2012. Third, we undertook organizational changes within the US modular business to enhance the manufacturing efficiencies of that group. And fourth, we cut SG&A expenses by $3.6 million sequentially for the third quarter. Our focus on this front will not end there and going forward, we will evaluate additional actions to remove inefficiencies from our cost structure. For example, in Europe we currently have 3 factories which have all worked hard to increase efficiencies and output over the past few years. However the combination of this in current economic climate means there is now overcapacity there which is resulting in excess cost. Consequently, we are now seeing that today we have commenced a 30-day consultation period with the employees and trade unions of our plant at Shelf in the United Kingdom concerning the proposed closure of manufacturing and warehouse activities there commencing from the end of March. In the event that a consultation concluded with closure, the exercise will result in a restructuring charge in the range of $13 million and be completed by the third quarter of this year and the resulting annual savings to the consolidation onto 2 remaining sides will be in the range of $8 million in savings beginning in the fourth quarter of this year. Clearly we had challenging in the second half of the year as some of these challenges will persist in 2012. But there are causes for optimism as well. In the US as I mentioned, we have seen some loosening of corporate budgets and while it’s still early, the pipeline of project activity is growing again. We are also excited that we recently took our first order from Southwest Airlines to begin putting carpet tile on their entire fleet of airplanes and we've already begun to fill in the order, a project that was in several years of development. In other non-office segments, we expect to see continued success, we will continue to make strategic investments into these and other promising new markets as opportunities arise. We also remain committed to rolling out additional FLOR stores and further develop these online direct sales and the emerging markets which represent more than 10% of our business continue to be a growth opportunity for us, particularly in China, India and Latin America. Due to our cost-reduction initiatives, we are entering the year with a much improved cost structure on the benefit of our price increases and further potential restructuring actions, we should see margin start to recover in the second quarter of 2012. Overall, despite the pause in demand that we and the industry have experienced, we continue to firmly believe that the primary driver of demand for our business which is the sector shift of carpet tile will continue. We are committed to driving its adoption in the marketplace over the long term. A good example here is that our sales in the US Education segment were up 8% during 2011 even though spending in this segment was down, which demonstrates that we are taking share in that segment. With orders in the first 7 weeks of 2012 down about 8%, demand remains choppy, but there is a lot of increase for the project activity in the pipeline and we expect this activity will start to translate and see more business. I believe that it was a very short 18-month recovery cycle that we've seen in this last downturn and there's still a lot of pent-up demand out there. We will continue to make the steps necessary to both ensure our competitiveness in the current market environment and position ourselves for better than market growth. With that I’ll turn it over to Patrick.

Thank you and good morning everyone. I’ll take a few minutes to talk about the financial results for the fourth quarter. Sales for the fourth quarter increased 2.1% to $270.9 million from $265.3 million in the fourth quarter of 2010. As Dan mentioned, our sales performance reflected moderate growth in the US and European modular markets, somewhat offset by lower sales in Asia Pacific resulting from tough comparisons, particularly in Australia. Gross profit declined by about 3.6 percentage points to 31.7% compared with the fourth quarter of 2010, as the increase in sales was not enough to offset the significant increase in raw material costs the industry experienced during the quarter. During 2011, we saw raw material price increases 7% to 8% representing a headwind of approximately $25 million for the full year. At this point, we’ve seen raw material prices level off in the 2012 first quarter to date and we expect the benefit of our recent pricing actions which started to flow through sales line towards the end of the fourth quarter to begin to take a firmer hold. Our margins were also impacted by lower fixed cost absorption as we lowered production levels by about 6% during the quarter. SG&A expense in the fourth quarter of 2011 increased slightly to $65.5 billion (sic) [million] from $64.3 million last year. As a percentage of sales, SG&A remained flat at 24.2% compared with the year-ago period. Compared sequentially with the third quarter, SG&A expense declined both as a percentage of sales and on an absolute dollar basis reflecting our efforts to reduce expenses to better reflect the demand environment. During the quarter, we incurred a restructuring charge of $6.2 million or $0.06 per diluted share after-tax. These restructuring actions which included headcount reductions as well as cost to exit certain leased facilities will generate annualized cost savings of about $11 million, of which about $9 million will flow through the SG&A line with the remainder coming out of cost to goods sold. Going forward, we will continue to focus on better aligning our expenses with market conditions, with further potential restructuring in European manufacturing operations as Dan mentioned earlier. Excluding the restructuring charge, operating income in the 2011 fourth quarter was $20.4 million or 7.5% of sales. Including the restructuring charge, operating income was $14.3 million or 5.3% of sales. Interest expense in the fourth quarter was $6.3 million compared with $7.8 million in the fourth quarter of 2010. This reduction reflects the refinancing of most of our senior and senior subordinate notes at a lower interest rate. We also announced yesterday that we are redeeming at par the remaining $11.5 million outstanding of our 9.5% senior subordinated notes and we expect about $1 million annual interest savings as result. Adjusted income from continuing operations in the 2011 fourth quarter was $8.8 million or $0.13 per diluted share compared with adjusted income from continuing operations for the 2010 fourth quarter of $14.3 million or $0.22 per share. Including all the items, income from continuing operations in the 2011 fourth quarter was $4.6 million or $0.07 per diluted share compared with a loss from continuing operations in the 2010 fourth quarter of $12.4 million or $0.20 per share. Net income for the 2011 fourth quarter, including the restructuring charge was $3.9 million or $0.06 per share compared with a net loss including the $43.3 million bond refinancing expense of $13.3 million or $0.21 per share in the year-ago period. Depreciation and amortization was $6.9 million in the fourth quarter of 2011, compared with $8.6 million in the fourth quarter 2010. Capital expenditures in the fourth quarter 2011 were $7.4 million compared with $13.3 million in 2010, which resulted in full year capital expenditures of $38.1 million. For 2012, we currently expect capital expenditures to be around $25 million to $30 million. Now, I’ll take a few minutes to review some of the details of our individual business segments. Our modular carpet segment had sales in the 2011 fourth quarter of $244.5 million, up 2.3% from the year-ago period. The increase was driven by sales growth in the US and parts of Europe, including Germany, which remains a good market for us. Asia-Pacific declined as a result of the softening market conditions in Australia, which offset continued growth in other areas including China, where, as Dan mentioned, the ramp-up of our facility continues to proceed well. Operating income for the modular carpet segment in 2011 fourth quarter was $18.6 million or 7.6% of sales, down from $30.2 million or 12.6% of sales last year. Operating income in this segment for the fourth quarter 2011 includes a restructuring charge of $5.8 million or 2.4% of sales for this segment. Bentley Prince Street generated sales of $26.4 million in the 2011 fourth quarter, slightly up from the $26.2 million in the fourth quarter of 2010. This segment recorded an operating loss of $1.5 million in the quarter compared with an operating loss of $700,000 in the prior period. Included in this loss segment for the fourth quarter 2011 is a restructuring charge of $400,000. Turning to the balance sheet, we exited the quarter with $50.6 million in cash, compared with $69.2 million at the end of the fourth quarter 2010 and $44.4 million at the end of the 2011 third quarter. Inventories were $166.1 million at the end of the fourth quarter compared with a $136.8 million at the end of fourth quarter 2010. As planned, inventory levels declined at a sequential basis from a $171.1 million in the quarter. Our average DSOs during the fourth quarter were 52.2 days compared with 49.6 days a year ago and inventory turns in the fourth quarter were 4.4x as compared with 5.1x last year. As Dan mentioned the demand outlook for 2012 remains uncertain, but we enter the year with an improved cost structure, a solid balance sheet and commitment to adapt our business to the changing market environment while continuing to make strategic investments that will drive our long-terms success. With that, I’ll turn the call back over to the operator for questions.

[Operator Instructions] Your first question comes from the line of Stephen Kim of Barclays Capital.

This is actually John Coyle filling in for Stephen Kim. First, I wanted to ask, generally SG&A has been higher in the first half of the year; do you expect that to be the case in since 2012 or should it be flat just because of the cost saves that you have implemented in the fourth quarter?

I think SG&A on a comparative basis should be down from 2011. Our SG&A was the lowest in the first quarter last quarter, I think. Then it ramped up from there.

But in prior years I was just saying typically in the first 2 quarters it’s higher than in the third and fourth quarter?

That’s correct, and we expect this year to be down on a year-over-year basis and even down on a sequential basis, fourth and the first in SG&A.

And then just around the Australian weakness, can you elaborate a bit on what was going on in Australia?

Well, the Australian business had 2 things going on. You had a new construction bubble that came through and then the Australian government went through a pretty extensive stimulus plan particularly in education, just about every province in Australia got a new school and we benefited significantly from the ramp up in the education and the new construction buildings come online last year and those 2 stimuluses [stimuli] are now gone, the education stimulus money, the Australian government has eliminated that and so you've got a market that is down probably 10% from last year.

Your next question comes from the line of Matt McCall of BB&T Capital Markets.

So I think you said the price, or the inflation was $25 million, I miss the number, the question is what was the price cost, the net price cost pressure in Q4 and then do you have that number for FY ‘11?

Yes, it was about $25 million raw material price increase for the full year looking back on the full year which was about 7% to 8% raw material price increase for the full year. In the quarter, we saw probably around $4 million related to the differential between pricing and raw materials. I don't have the full year impact here handy, but I can follow-up with you on the full year impact, the selling price versus the raw material costs but in the quarter it was about $4 million.

And you mentioned that you’ve taken another pricing action; have your competitors followed and is that price matching across all geographies and I guess have competitors followed in all of those markets?

We’re actually announcing that in March. We haven’t taken it. It’s going to be the first week of March. We haven’t taken it yet. So we haven’t really announced that we’re putting in play in March.

So that’s why this no improvement expected, you said, Dan, you expect improvements to your gross margins in starting Q2?

Well, I expected in Q2 we’ll see better activity from a project standpoint to pipeline I alluded to in my calls; it’s fairly robust and its improving and even if you look at the AVI Index that’s also improving. So it’s just going to be very difficult to get corporations to let go of orders. They’ve got projects in the pipeline but they’re not actually letting go of them and when I canvas our sales force, pretty much around the world, except in Europe. If you like, the business is going to get better it’s going to improve based on projects being let go.

And then the question about your competitors following from a pricing perspective is everybody kind of on the same page?

I don’t know; I just know that we’re going to control our pricing and our margins and we’re going to go up. I don’t worry too much about what my competitors do on price.

More broadly, just looking at the competitive landscape, any changes really in any markets from competitors, the share of leaders [ph] is anybody making big moves, anything you can comment about there?

I would say that the market has always been extremely competitive and it remains competitive, particularly when business is declining, moderating, yes.

And then just one clarification on the SG&A savings, Patrick I think you said that $9 million of the $11 million will hit SG&A, and so the $3.6 million that you mentioned in the I think that in your senior quote, in the release, $3.6 million is not related to the $9 million, correct?

That’s correct. Those restructuring initiatives were put in place in Q4 and won’t realize the benefit of that until Q1.

Your next question comes from the line of John Baugh of Stifel, Nicolaus.

Could you comment on the order trend, I think you were down about 3% in Q4; I heard you comment, if heard it right down about 8% for the first 7 weeks. Did the months of November and December continue to get worse and where do you see that order trend? You commented on Q2 margins being better, is that expectation that order start flattening out there or improving or still likely going to be negative?

Yes. If you look at the moderating and when it started occurring, it started occurring in October, this past year. December was down in the 6% range and the first 7 weeks were down 8%. There’s a couple of things that are impacting that in my mind. One is that we had Chinese New Year for us that hadn’t hit the, now hit after the first 7 weeks that hit. It hit this year in the first 5 weeks. We have got the China business or even Asia business negatively impacted by that. And I just think there has been a moderating in the commercial space, based on the uncertainty, really, around Europe and the uncertainty around what happened in August was our debt crisis and it just seemed to sort of take the steam out of that marketplace. But when you go to the projects and look at our pipeline, it actually is increasing now. And we’re starting to see potentially some of those projects come through. So I’m hoping that the order trend will improve in the second half of this quarter.

And Dan, how does that order number look, by region, if you could comment on the first 7 weeks of ’12 between Europe, Asia and the US?

I would say that Europe is the one I am most concerned about and then Australia continues to have really tough comparables; the record quarter for us in Australia was the first quarter last year. The US is down a little bit but it is not quite down as much as those 2 regions.

And then you commented on the European plant closure. Is that just a matter of process, in other words the likelihood that it all goes through in the savings you talked about in late this year ‘13, are likely to occur kind of handicap the process?

I hate the handicap just because we have to go through a consultation with the unions and the employees by process of law. But it is a, we’ve got an excess capacity situation there and if that consultation if we all agree that we should shut that plant down, then we’ll cover that in fact we will make that decision in March.

And my final question relates to sort of production versus inventory in Q1; obviously the year-over-year inventory is up, the orders are down. So I assume you’re going to be pretty tight on production and that will have a fairly serious impact on earnings or do you have that all?

No, you have that right. But we are going to continue to reduce inventories and production, yes.

Your next question comes from the line of Keith Hughes of SunTrust.

Can you give us the order numbers in the fourth quarter by geography?

We’re down 3% overall. I mean, historically we haven’t provide a lot of that color but, I mean in general terms, the America was up low single-digits, Europe was down a little bit higher single-digit negative and Asia Pacific was mid-single digits, kind of negative in terms of order trend in the quarter.

Dan, do you think Europe is it taking other step down or is it just kind of continuing the trend that you saw on the fourth quarter?

I think, potentially it’s going to take another step down unless something happens with this sovereign Euro issues and I don’t think it is going to get clear yet. We are I think going to do well in Germany, we are going to do well in Eastern Europe, we are do well in Russia and India is part of the European mix, and the Middle East is part of it. The countries that I am worried about are the ones that have crises going on with the debt and in the U.K. we were held on the first quarter in the UK and that is the one that concerns me but there is a lot of construction going on in particularly in London that hits in 2013. So I suspect we are going to see that some tough environment there, going through the first half of the year than improving the second half.

Okay. Second question on FLOR you talked about the growth in sales, are profitable in FLOR now and how much of a contributor is it?

We are still losing a little bit of money in the fourth quarter I think we lost about $400,000 but we are ramping up new stores and that is the drag. The stores that are mature, like the Chicago stores is very profitable. Our New York sales store was profitable and on a direct contribution basis it is profitable even though we’ve got 5 stores that are less than 5 months old. So it’s still a drag. Our plan is this year it will start contributing in the second half of the year as we ramp up these stores.

And I guess, final question on cash flow for Patrick, with $30 million-ish of CapEx you should have some free cash flows here. I know that you’ve brought in those bonds. What do you think that's going to be going in the near-term?

We will continue to focus on debt reduction as a primary focus. We still have some of the untendered 11 3/8% bonds out there, small piece of that will probably be our next focus after the 9.5%.

Your next question comes from the line of Dave MacGregor of Longbow.

It’s actually Jarrod Rapalje filling in for David. I have first question on gross margin. Two months in the 1Q here you obviously have some clarity on the COGS. How much of an improvement in gross margin should we expect in 1Q relative to 4Q?

Well, I think if anything, it would be very slight. I think we are struggling to continue to address the price, our selling price raw material delta issue here in early part of Q1. But production levels will be in line with Q4 if not up a little bit, which should help absorption of some fixed manufacturing costs, if anything. So it should be up maybe 50 to 100 basis points, kind of general idea in Q1.

Okay. With the restructuring that you guys did during the quarter can you give us some specific examples as to how these actions may have disrupted sales growth during the quarter?

I don't know that the restructuring initiatives that we undertook in Q4 really had much of a top line impact with the exception of the closure of our Japanese sales office there, but it was a relatively small business order of magnitude there, couldn’t be more than a million or 2, top line impact. Most of the restructuring initiatives were focused around the administrative and in marketing areas and so forth. So from a restructuring, top line impact was negligible.

Okay. You mentioned that Japanese business; is that expected to be breakeven or continuing to sustain losses in 2012?

No, we should give that back to break even to slightly positive around a new distribution partner that we’ve identified there to service the Japanese market as opposed to our fully owned sale force approach.

Okay. How much money did you lose in 2011?

Couple million bucks.

Your next question comes from the line of Philip Volpicelli of Deutsche Bank.

With regard to the cost savings, the $11 million that you mentioned is that going to be equally through the quarters in 2012 or is that backend loaded?

No, no those are done completed and we should see a pretty ratably through the balance of 2012.

Okay. And then with regard to the price increases, the one in the fourth quarter number and the one that you are proposing from March. If you get both of those in full will that offset the headwinds you based on raw materials or is there still more to go?

No, that, those are designed to address raw material input cost that we’ve incurred.

Okay. And then last question you’re obviously addressing 9.25% notes. Do you have any plans to address your 11 3/8 that remain outstanding?

Yes, we do. We will continue to watch those as well as the 7 5/8 that we have as well. We will continue to monitor that and make decisions on both of those.

Is that open market transaction you are looking or you’ll actually do it in adherence…?

We probably are just looking at open market transactions for now.

Your next question comes from the line of Glenn Wortman of Sidoti & Company.

What is the exact timing and size of your price increase in the fourth quarter and were your comps out there with increases as well, based on that price increase?

That was 4% in the fourth quarter.

Do you know if your comp, compares as well as the price increases as well?

That’s they did. The compares went up in the fourth.

Okay. Was that implemented earlier in the fourth quarter or was it generally the lag effect there?

The lag effect is generally our backlog which is about 7 to 8 weeks.

Okay. And so was that implemented early in the quarter or late in the quarter?

Sort of 3 to 4 weeks into the quarter.

Okay. And then just looking at the raw materials, looks like they kept rising sequentially throughout 2011 but the price of oil had stabilized over the back half of the year. Can you just help us understand the disconnect there?

There is a phenomena that is going on with engineered plastics where particularly China is sucking all engineering plastics out for the automotive industry. So there is a lot of demand. So you got a demand and a balance with nylon 6 and 66, due to that. If you look at the charge that actually has resided a little bit and those input costs are now starting to turn down.

Okay. And you think that sustainable [ph] given the rise in price of oil over the past few weeks or would you expect that your raw material costs to start rising again?

There is not a direct link. There is 2; the rise in oil price has been seen in polypropylene and natural gas, were the things that impacted. And so typically when oil goes up, those will tend to go up but there is more of a demand issue than there is a more cost issue.

[Operator Instructions] Your next question comes from the line of Mike Wood of Macquarie.

This is Adam Baumgarten in for Mike. Couple of quick ones. Can you talk about kind of the tractions you are getting in hospitality and what kind of growth do you see heading in to 2012?

Well, hospitality, we have made a big investment last year in hospitality. And we are literally seeing a lot more activity with some of the big name brand hotels, The Hiltons would be one. And I expect that hospitality will finally get off, out of the slow growth scenario we’ve been in and see some pick up in hospitality, particularly in United States. The investments we’ve been making, I think we’re going to get some traction this year.

Okay, great. And just on the pipeline, it was robust and improving. Can you talk about which, kind of, end markets are seeing the best kind of...

Yes, I would say it’s the corporate office market. In United States, there is still a lot of pent-up demand; I alluded on my script of the conference call. We had a, sort of, upturn that we’ve had in any cycle that I’ve ever been involved. 18 months and it turned down. I am referring to the basement [ph] numbers, particularly. And I just think there is a lot of pent-up demand in the office market that’s going to come through as the economic environment in the United States continues to improve and the job market continues to improve. And Australia also. Australia has got a very robust economy as well, prior to the mining industry and I think we’re going to see some good activity with renovation work in Australia as well.

Your next question is a follow up from Dave MacGregor of Longbow.

It’s Jarrod again. Just, I don’t know if you differentiated. What was the between corporate office versus institutional end markets in 4Q? How does the sales growths split between those? Was institutional markets down again in 4Q?

They were up, but only up slightly and then corporate office market was up mid-single digits.

Okay. So, they’re both positives. Was there any spot or highlighted strength within the institutional end markets?

None in particular. Education has been surprisingly pretty resilient throughout the whole year.

And retail spaces. Retail spaces has been pretty good as well.

At this time, there are no further questions in the queue. I would like to turn the call back over to management for closing remarks.

Well, thank you for listening to our call and hopefully we’re going to report a lot better numbers in 2012. Thank you.

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