Good morning, and welcome to the Q2 2013 Interface, Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. At the conclusion of today's Conference Call, instructions will be given for the question-and-answer session. (Operator instructions). As a reminder, this conference call is being recorded today, Thursday, July 25, 2013. I would now like to turn the call over to David Foshee, Vice President and Senior Counsel for Interface. Please go ahead, sir.

Thank you, Operator. Good morning and welcome to Interface's Conference Call regarding Second Quarter 2013 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 downloaded off 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 An archived version of this Conference Call will also be available through that website.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 the risks and uncertainties discussed under the heading Risk Factors in Item 1A of the Company's annual report on Form 10-K for the fiscal year ended December 30, 2012, 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 not to place undue reliance on any such forward-looking statements. Management's remarks during this call refer to certain non-GAAP measures. A reconciliation of these non-GAAP measures to the most comparable GAAP measures are contained in the Company's results release in 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 express permission. Your participation on the call confirms your consent to the Company's taping and broadcasting of it. Now, I'd like to turn the call over to Dan Hendrix. Please go ahead, sir.

Good morning, and thank you for joining us today. The second quarter was a nice improvement over the first with earnings per share of $0.17. The Americas business was the strength of the quarter with a healthy year-over-year sales increase and an all-time quarterly record sales within the US commercial business. The overall US commercial market is barely above flat, so with a double-digit growth rate in the US, we are clearly taking market share. Growth was coming across virtually all markets with the corporate office leading the way and strong growth in the non-office segments of hospitality, government, healthcare, education and residential. We substantially improved gross margins during the quarter, up more than 100 basis points both year-over-year and sequentially. This was the result of increased production volume during the quarter, as well as improved manufacturing efficiencies from our lean initiatives. We expect further gross margin improvement in the last two quarters of the year. Our SG&A expenses rose, as a result of planned new product introductions, FLOR store roll-outs, marketing initiatives and additional sales people. With an improving top line, we will start to grow into this SG&A number and bring it down as a percentage of sales. Europe maintained a respectable profit margin during the quarter, and we're outperforming our competitors in the region. But, the recession continues to take its toll. This is especially true in the UK, which is our largest market there. On a positive note, we've seen an improving order trend in Europe and even in the UK over the last eight weeks, and markets such as Eastern Europe, Russia, Scandinavia and India are growing robustly. Our Asia Pacific business is seeing strong growth in Southeast Asia and China, while Australia is showing impressive resilience as we recover from last year's fire. As…

Thank you, and good morning everyone. I'll now take a few minutes to walk through the financial highlights for the second quarter. As a reminder, given the sale of Bentley Prince Street in 2012, results for Bentley Prince Street for the 2012 second quarter and all prior periods have been classified as discontinued operations. Sales for the second quarter of 2013 were up 6.1% to $243.5 million, compared with $229.5 million in the second quarter of 2012. On a consolidated basis, there was not a significant currency impact for the quarter. As we predicted on our last call, we've seen a significant gross margin expansion during the quarter to 35.4%, up 110 basis points from the second quarter of 2012, and up 150 basis points sequentially versus the first quarter of 2013. As Dan mentioned, we expect gross margin expansion to continue during the second half of 2013. We saw strong sales growth in our US modular business, primarily driven by our corporate office, hospitality, government and even healthcare markets. Overall, we experienced increases in virtually all market segments in the Americas for the second quarter. In Europe, we experienced a 5% sales decline in local currency, and down 3% as reported in US dollars. This decline was led, primarily by the education segment with all other segments reporting smaller declines. The sales decline in Europe was tempered somewhat by an improving manufacturing efficiency, which resulted in higher gross margins. There's no quick fix in this region due to the macroeconomic environment, but as Dan mentioned, there are areas of promise in Europe, particularly with regard to the recent trends in the UK and the emerging markets. As Asia Pacific – our Asia Pacific division saw a sales increase of 4% during the quarter. A sales decline of approximately 3%…

(Operator Instructions). We have our first audio question from the line of Stephen Kim of Barclays. Over to you, Stephen. John Coyle – Barclays Capital Markets: Hi, guys. It's actually John, filling in for Steve. Really good work on the gross margin this quarter wanted – so I wanted to touch on that. Could you maybe give a little more color around what you've been doing as far as the lean initiatives and how much this has increased your productivity, and then looking out to next year, how that might impact your CapEx outlook because maybe you're adding some capacity without having to add actual manufacturing sites, so any help on that would be great.

Yes. So, one think that's happened to our business is we've gone to a really make-to-order custom smaller business in the US to actually give the customer a lot more design capabilities. And the small order runs was one thing that has given us a lot of problems last year. And so, we've gone through this lean initiative to create fast lanes for the small order business and learn how to do changeover times with the counting machines. And we have increased capacity by doing that and we expect to have a lot more capacity increase without adding capital expenditures, particularly in the US business. And also, what's driving it is we've actually had a really nice sales volume increase with production volume increase in that facility as well. John Coyle – Barclays Capital Markets: Thanks. Then, as we look into… (CROSSTALKING) John Coyle – Barclays Capital Markets: Pardon?

But I think we're just actually getting started on a real good lean initiative within the US business. So, I expect that we'll see some improvements going into next year as well. John Coyle – Barclays Capital Markets: Great, that's helpful. Looking to the SG&A line, we're at $64 million this quarter. Are you pretty comfortable saying that that should be pretty fixed in the back half of the year?

We will go to Patrick.

I think we're going to be around $65 million, $66 million for the balance of the year in absolute dollars but we'll come down into the 25 and change, as a percentage of sales in the back half of the year. John Coyle – Barclays Capital Markets: Thanks.

And next question comes from the line of Kathryn Thompson, Thompson Research Group. Over to you, Kathryn. Kathryn Thompson – Thompson Research Group: Thank you for taking my questions today. Want to just follow up on your bid activity. Just based on checks that we've been doing in the channel for non-res in particular, it just seems that there was a pickup in that bid activity in the late spring. It was building momentum last year, but you saw greater activity as the years progressed, which is a change in trend that we've seen in the previous four to five years. What are you seeing in terms of different changes in bid activity, particularly as it relates to certain end markets that have been softer like government and education?

You know I would say that you know we have a project tracking system for anything that's on our architects board, gets into our system, and we track that. But the robustness of that is improving. And you're right that happened sort of last year. I think a lot of businesses are now renovating their offices. They're also trying to create density in their offices, and they're having to change the offices. As I – you know we're not seeing very much new construction at all yet but we're seeing a lot more renovation, particularly in the financial services area and the technology areas. It’s I – we think we're just getting hopefully started with this commercial rebound in the United States. Kathryn Thompson – Thompson Research Group: And historically when you look at certain end markets, are there certain end markets that generally lead recovery, so for instance are financial services and tech – had they led recovery in the past? Or is it just vary by cycle?

I would say that they typically lead, particularly the technology companies. And in the financial services, I mean with the '08 downturn in that market, obviously they haven't done a whole lot within their facilities and now you're seeing insurance companies and banks and so forth upgrading their facilities today. Kathryn Thompson – Thompson Research Group: And lastly, just digging a little bit further on order rates by trend, if I recall correctly in the prior conference call when you talked about how were trends in the first three to four weeks. Australia at that time was down in the low 20 – or at least down 20%-plus. And so, for sales to be down only single digits – only single digits that implies some pretty strong growth. Where we off in that? And maybe you could talk about the progression of that and give an update for Americas, Asia and Europe early in the quarter?

Yes, that's true Kathryn. In terms of Australia sequentially throughout the quarter, they saw a pretty – a kind of an accelerating environment. We were down in the mid-20s in April and then got to the mid-teens down in May and then we're at 6% positive territory in June. So, there was a decent recovery across Australia through the three months in the second quarter. The momentum across Asia Pacific here, you know, in Q2, as well as the first three weeks in July, has been very robust, in particular, China and Southeast Asia for the first three weeks of July. Our Asia Pacific business, which would also include Australia, is up 21%. So, that geography is trending nicely. Kathryn Thompson – Thompson Research Group: And how are Americas and Europe trending?

Actually, our European business is in positive territory, 7% up in US dollars in orders. And the US business is up 3% for the first three weeks of July. Kathryn Thompson – Thompson Research Group: Okay. When was the last time when you had all three geographies reporting – I was struggling to find that?

I would say it was probably when we had at least (seven).

Then, I would say that the head face that we got in '10, the second half of '10 – so, yes, was the first time that we saw all three in positive territory. Kathryn Thompson – Thompson Research Group: Okay. Finally, China profitability update?

Yes, it was broke even in Q2. So, they’re – yes – right at breakeven in Q2, ahead of where they were 2012.

And we – yes.

Yes.

We actually expect to make money in China in the second half of the year.

Yes, and we lost $500,000 second quarter last year, and breakeven in second quarter this year. Kathryn Thompson – Thompson Research Group: Great, thanks so much.

Thank you.

Thank you for the question. And next question is from the line of David MacGregor of Longbow Research. Over to you, David Josh Borstein – Longbow Research: Hi. This is Josh Borstein, filling for David MacGregor. Thanks for taking my questions. Just on the Asia-Pacific region. Can you discuss how much costs are you booking today that might go away once the Australian operations return to normal?

There isn't any cost or any recoveries that we're reporting through the income statement that would be – and we're reflecting the true operations. We have not booked any receivables or anything associated with the insurance claims, related to lost profits or otherwise. So, the true activity of the business utilizing a 100% import model is what's been reflected in the income statement effectively since the fire. So, it's a true and accurate picture. Now, as proceeds and other recoveries come in from the insurance carriers, those will be reflected through the income statement down the road as those settlement payments come in. Josh Borstein – Longbow Research: Okay, thanks. And then, just a follow-up on that. Now, what's the revenue recovery opportunity associated with winning back the short turnaround business that you've temporarily lost to competitors, is that the 1.2% you noted in the press release? Or are we talking about a bigger number?

Yes, that business was around $100 million pre-fire. And now, we're running at around $80 million. So. I think there's an opportunity to take the share back that we lost. I will say that the import model really started taking really – effect this quarter in April. We finally got an inventory position in Australia that we can service the customers on short lead times and we moved the lead times from 14 weeks down to eight weeks out of the Thailand plant. So, we're now – we have a pretty competitive model. And I think we can actually compete today with the import model, and that would just be a whole lot better when we have a three-week lead time when we build the Australian plants. So, yes, I think we can call back for the share that we lost. Josh Borstein – Longbow Research: Okay, thanks. And then, just a last one from me. Can you remind us on your cash flow; your thoughts for 2013 and what are the cash flow uses associated with the, you know, the new ramping up of the plants in Australia there. Is there working capital liquidation there in the region that might fund the ramp up there?

Yes, seasonally this is – we're entering into our cash flow positive territory. We generate most of our cash in the back half of the year as we kind of ramp up inventory levels through the first half of the year. So, yes, I expect working capital to be a strong source of cash through the second half of the year to put us in a positive free cash flow territory. Again, the use of cash will be primarily targeted towards our debt reduction and opportunity to repay some of our senior notes. Josh Borstein – Longbow Research: Thanks for taking my questions and good luck

Thank you.

Thank you. And next question is from the line of Mike Wood of Maguire. Off with you, Mike. Mike Wood – Macquarie: Hi, yes, Macquarie. Thank you. Could you give us some more color in terms of the operating margin trajectory of the FLOR stores, as they reach the one-year mark? I know you've disclosed it in the past, but also just if you can talk about what you think a more normalized operating margin would be on the stores as they get to maturity.

Sure. On the same-store sales that we referenced where sales were up 50-plus percent, the operating margin in those stores was 9.2% as a percentage of sales and operating income – the group in total was profitable as well. But those that have been open a year or longer were just under 10% direct operating margin. So, again, we're seeing the maturity trajectory to be around 18 months to two years, and we certainly believe that 15% operating margin is still achievable for the FLOR stores, once they hit the maturity levels. Mike Wood – Macquarie: And is there any way to measure what the impact of the promotional activity timing had on those same-store sales, what they might have been if the promotional timing was matched up?

That’s – the overlap, you know, kind of a June, July kind of timeframe, not really.

Yes. I would say that we had a very successful June sale. And if you compare the same period, the first in July, the business would have been up still pretty significant based on how well we did with the June sale versus the July sale a year ago. Mike Wood – Macquarie: Okay, thank you, very helpful.

Thank you. And next question is from the line of Keith Hughes of SunTrust. Over to you, Keith. Keith Hughes – SunTrust: Thank you. On the – back to the share gain in the United States, Dan, if you look at it by end-user market, were there any specific end-user markets that were the major contributor to that share gain?

Yes. It's interesting because most – all of our end markets were up. Hospitality is one that we're having a lot of success on a smaller base. But if you look at the hospitality business in the US, it was up about 80%. All those non-office markets were doing pretty well. I think retail is the only one that wasn't up, and that's another thing that's really hadn't happened a lot lately with what's going on with the downturn is that education – government was actually up for us as well. So, all those markets were contributing to those share gains. Keith Hughes – SunTrust: Do you think in the industry you have a situation where you have office up and the others down? And that's why we end up with kind of no growth in the industry?

I just don't think the commercial market has really rebounded yet. You know carpet tiles is a secular shift and is taking share of the commercial market. And I just don't think the market is that good. If you looked at the furniture guys they are seeing the same kind of flatness in that market. I mean I think that the modular play in the commercial market is taking share, and we're obviously driving that as well. Keith Hughes – SunTrust: All right, thanks.

Thank you. And next question is from the line of Matt McCall of BB&T Capital. Over to you, Matt. Matt McCall – BB&T Capital: Thank you. Good morning, guys.

Good morning. Matt McCall – BB&T Capital: Actually, I want to follow-up on that last question. Dan, when you look at trying to get an indication of the pace of share gains for tile overall – when you look at the cycle thus far, the activity thus far, and you talk about the penetration rate of tile versus traditional floor covering, what does it tell you about the pace of those share gains for the industry maybe compare it to – can you compare it to the penetration last cycle?

Yes. Matt, it's really hard to know what's happening because our competitors obviously don't report their tile business the way we do. So, I have a sense that the office market is moving to a much higher rate of penetration. It was at 50% when the downturn happened in '08. And my sense is that's probably moving closer to 60% or more. The other markets, education would be the next market that you're seeing some penetration but I think carpet tile penetration in education is still fairly low. My guess it's still 25% and probably moving the right way. In hospitality, carpet tile represents a very, very insignificant share gain there. Same thing in retail space. So I just – in the office, I think, it's accelerating. Government, obviously is going to carpet tile as well with education being the next market. But I think there's a lot of headroom on the penetration, but it's really hard for me to tell how much carpet tiles taken in the commercial market without our competitors reporting their numbers. Matt McCall – BB&T Capital: And on the hospitality front, you seemed to be pretty excited about that. I guess two questions. Is the growth, I think you said 80, and I think there was another number in the release. It was big as well. Is there – is that being aided by any couple of large projects? Or is it more broad based? And then can you talk about the size of that business today, and given your levels of size and where do you think it can be one, three, five years from now?

You know I think it can be a significant market for us. You know education business, for us, was pretty much non-existent in '03 when we started going after it. The hospitality market, we think the United States is around $500 million market and globally it's probably $1.5 billion market. And we're rolling out Interface hospitality globally. We're about three years behind in the other markets behind the US but it's finding its way into rooms now, it's finding its way into corridors and ballrooms. And I mean the reason the carpet tile obviously is the right product for hospitality is they are brutal – that market is brutal on carpet and then you've got selective replacement and now you've got a design option and you have a sustainability option. So, I think it can become a very nice business for us over the next three years. Matt McCall – BB&T Capital: And then, on the large project front anything that really skewed the numbers this quarter?

Now, that's just one hotel, one hotel. The Marriott – we're starting to get into the Marriott, which is to me a great news for us. So, I think that when the Marriott brand, who said they would never put carpet tile in their space and now they're putting it in their marquee hotels, I think that's a good sign that the carpet tile is going to take share. Matt McCall – BB&T Capital: Okay, and then, Patrick, I think there was a question about profitability at the FLOR stores earlier. Did you talk about the profitability this quarter and what you expect for this year? And then, is there an opportunity incrementally next year maybe to – forgive me I don't remember the profitability track last quarter. But is there an opportunity to eliminate some losses and see some better results next year incrementally?

Yes, what I referenced earlier was just the operating margin on the stores themselves and the stores in particular that have been open a year or longer. The FLOR division lost a little bit of money around $500,000 or $600,000 in this quarter. We're anticipating the back half of the year to be more profitable; closer to breakeven-ish levels through the balance of the year. And, yes, as the FLOR stores get – more stores get closer to their 18-month to 24-month maturity levels, we expect the profitability profile of the group in total to improve. Matt McCall – BB&T Capital: And so, what's the total loss expected to be this year?

Just under $1 million. Matt McCall – BB&T Capital: Okay, thank you.

Thank you. And next question comes from the line of – is it John Baugh of Stifel Nicolaus? Over to you, John. John Baugh – Stifel Nicolaus: Thank you. Good morning. Couple of things quickly. What is the annual free cash flow goal, Patrick?

We'll probably be pushing $20 million to $30 million in free cash, is the goal. John Baugh – Stifel Nicolaus: Good. And is there a preliminary thought on CapEx for next year?

Not yet, John. We haven't formalized that. But I think we'll probably, excluding the Australia facility, we'll go back to probably our normal $25 million to $35 million in CapEx. John Baugh – Stifel Nicolaus: Okay. And FLOR – what were the revenues, roughly quarter year-over-year, and then maybe six months year-over-year?

I have the second quarter handy. The second quarter, as a group, was up 62% in total. John Baugh – Stifel Nicolaus: Okay. Do you have a dollar number or…

Yes. $12 million versus $7 million. John Baugh – Stifel Nicolaus: Great. And then another thought – a huge number, but I assume their gross margins are higher and their SG&A is higher, and I'm just wondering how that influences the consolidated gross margin and SG&A?

It does. I mean yes there – and the group is the highest gross margin we have in the whole portfolio, but you know probably new to the 50 basis points at the most as a group (CROSSTALKING)

Now, that’s much better.

$12 million.

Yes. John Baugh – Stifel Nicolaus: Okay. And then if you could discuss a little bit – the orders from continuing operations year-over-year show a 1.7% increase. I know you talked a little bit about three weeks of July, and this of course is the June quarter number. But could you kind of walk around the globe in terms of orders and help us understand maybe what happened a year ago when orders are – that rate of increase seems a little lower relative to the general bullishness I sense in all the markets. Thank you.

Sure. I mean if you were to break down the roughly 2% orders on a consolidated basis, the Americas division was up 6%, Europe down 3%, and the Asia Pacific, as a group, down 5% for the full second quarter. John Baugh – Stifel Nicolaus: And so, Patrick, the commentary – and I don't remember it all in the call – a lot of these – in July the first three weeks are up materially from those numbers with the exception, I guess, of the Americas, which I think you said was up 3%, is that right?

That's right. Yes, Europe has rebounded from negative territory into positive territory as well as Asia Pacific, down 5 up to 21% for the first three weeks in July. John Baugh – Stifel Nicolaus: Okay. (CROSSTALKING) John Baugh – Stifel Nicolaus: Go ahead.

Now, we had a – John. So, we had a pretty good orders last year in July from a comp standpoint. And three weeks really doesn't really – gives you a trend, but it's still early in this quarter. And my optimism is around the activity with the architect community and projects that we're tracking. John Baugh – Stifel Nicolaus: Okay. And then, Dan, I don't want you to give away competitive secrets. But is there a price per square yard on tile. So, what's that doing roughly in light of some of the rapid growth in areas that I think are well, you know education I don't know about hospitality, but a lower price per square yard than say the office markets?

You know I would – I was – well, I know that our average selling price, particularly in the US, is up from a year ago. One thing that we're doing is we're introducing some pretty high-end products; the Urban Retreat and the Net Effect, the last two product introductions are really at the high-end of that market. So, we're increasing the top end, and we're actually – obviously increasing the bottom end. But average selling price is moving up pretty much in every market for us. John Baugh – Stifel Nicolaus: Great. Thank you for answering my questions.

Thank you. Next question is from the line of – is it Sam Darkatsh of Raymond James? Over to you, Sir. Sam Darkatsh – Raymond James: Good morning, Dan. Good morning, Patrick. How are you?

Same Sam Darkatsh – Raymond James: And most of my questions have been asked and answered. Just interestingly, looking at the gross margins sequentially in the back half of the year, you're saying that they're going to be improved versus Q2, which is terrific because Q2 itself was real good. Just to try and get a sense of the primary drivers of that. You are going to have hopefully more sales volumes but I think you're also drawing your inventories down at the same time, so – and material costs are basically flat. And I think your pricing is flattish. So, what's the primary driver of the sequential gross margin improvement in the back half?

Well, I think the big driver will be the continued benefits that we've been seeing in our Americas division, in particular, the progression that we've seen Q1 to Q2, really as a result of the lean manufacturing initiatives. Our expectations are that will continue on through the balance of the year. And frankly it's just better execution, lower changeover times, higher production throughput on the counting machines, more – higher efficiency levels effectively. The additional volume certainly will help on the fixed cost absorption. But it's the absence of overtime and downtime and all of the things that had caused so much disruption in the facility around the short order runs. I think were finally – we've bedded those down and have improved our manufacturing processes, particularly in the Americas that will continue to drive the margin expansion through the back half of the year. Sam Darkatsh – Raymond James: I was specifically referring to sequentially from the second quarter here though because I know year-on-year we don’t much improved because of the issues you had last year in the back half but sequentially from the second quarter – ?

Yes. That's right. Yes. Even sequentially to the back half of the year versus Q2. Yes. We expect continued improvement from Q2 forward. Sam Darkatsh – Raymond James: Okay, terrific. And last question – and if you mentioned this I apologize. Did you call out specifically education orders in the quarter – what they were on a year-on-year basis?

Education, shipments was in the Americas division was up 16%. Sam Darkatsh – Raymond James: Yes. And you have the orders though? (CROSSTALKING)

I’m sorry. Excuse me. I – government was up 16%. Education was up 4%. Sam Darkatsh – Raymond James: Do you have the orders Patrick? Sam Darkatsh – Raymond James: I don't. We don't track. We just track shipments. Sam Darkatsh – Raymond James: Okay, got you. All right. Thank you much. I appreciate it.

Thank you. Next question is from the line of Glenn Wortman of Sidoti & Co. Over to you, Glen. Glenn Wortman – Sidoti & Co.: Yes. Good morning, guys.

Morning.

Good morning. (CROSSTALKING) Glenn Wortman – Sidoti & Co.: Yes. Setting aside any potential increase in sales volumes next year, do you think there is another leg up in the gross margin since you'll have that Australia facility back online?

Yes. I mean I think we'll have a seasonal sequential kind of the lower volumes in Q1, 2014 where we do typically and then ramp through the back half of the year. But you know with continued – expecting a flattish raw material environment, higher production levels, I think we have better execution in manufacturing and operations. And in the initial stages, I would expect the Australia facility to be a drag early on, as we ramp that production up on the back half of late Q4, early Q1. But midway through 2014, and the back half of the year, yes, we could continue to see some gross margin improvement. Glenn Wortman – Sidoti & Co.: Okay. And then Asia Pacific orders up 21% through the first three weeks. I believe the fire last year was on July 20th, so the comp should get a little bit easier I think as we move through the rest of the quarter. Would you expect the order rate to actually accelerate in the Asia Pacific region? Or are there other factors that I'm missing here?

Yes. I would say that the comp really isn't that easy because when you had the fire we’d pulled a lot of – they pulled a lot of orders and our customers they are trying to get them in there because of the fire. So, the comps in Australia in the third quarter are going to be a little tougher than they were after the third quarter last year. But, you know, I think we're having a lot of success in Asia Pacific in Southeast Asia, China and India as well. So, I would expect those emerging markets would continue to contribute to the growth. Glenn Wortman – Sidoti & Co.: Okay. Thanks for taking my questions.

Thank you, Sir.

Thank you. And the next question is from the line of Philip Volpicelli of Deutsche Bank. Over to you, Philip. Sean Wondrack – Deutsche Bank: Good morning, Dan. and Patrick. This is Sean Wondrack on for Phil. I don't believe you disclosed this yet this quarter. But if you could, could you tell us what capacity utilization wise, by geography, please? (CROSSTALKING) Sean Wondrack – Deutsche Bank: US, Europe and Asia?

Yes. If you look at the US business that we're probably running at 85% of capacity in the US business, six days a week, 24/7. If you look at our Thailand plant that's running seven days a week, 24/7. Our China plant is probably running at about 60% to 65% of capacity. The one good thing about the Australian plant coming online is we're going to create a lot more capacity in that region to grow that business. We're pretty capacity constrained in Asia Pacific today. The European business is probably running around 60% capacity today. Sean Wondrack – Deutsche Bank: Okay. Great. Thank you. And do you have an idea of what the, you know, commissioning costs or the initial drag might be in the fourth quarter when you begin commissioning that plant?

You know it will be under $1 million in Q4, not material. Sean Wondrack – Deutsche Bank: So, nothing too crazy. And then, as you look at your material costs going forward, what gives you confidence, you know, that they should remain pretty flattish? Or what are you seeing there exactly? I know that they haven't been very volatile this year relative to other years.

I would say that one of the things that is happening is that China is really taking a lot of the capital items for engineered plastics, for the automobile industry, and we were creating more demand than supply. You know I feel like the China situation has stabilized and they're actually starting to create their own capacity around capital items. So, that's helping us. But we have – yes, we only know what our suppliers are telling us and we track the inputs and they are stable today. But as soon as I say, they are going to be stable for the rest of year, we'll have a price increase. So, I think right now we expect this quarter to be pretty quiet on the raw material front and then we'll see what happens at the time. Sean Wondrack – Deutsche Bank: Okay, thank you very much.

Thank you. (Operator Instructions) We have no any further questions in the queue. So, I'd now like to turn the call back to the Management for closing remarks. Thank you.

Well, thank you for listening to the call and hopefully we'll have a better third quarter than our second quarter. Thank you.

Thank you very much, ladies and gentlemen. That now concludes your conference call for today. You may now disconnect. Thank you very much.