Good morning. My name is Davetta, I will be your conference operator today. At this time, I would like to welcome everyone to the Tennant Company's Fourth Quarter and Full Year Earnings Conference Call. This call is being recorded. (Operator Instructions) There will be time for Q&A at the end of the call. All parties please stay on the line after Q&A for closing remarks from management. Thank you for participating in Tennant Company's fourth quarter and full year earnings conference call. Beginning today's meeting is Mr. Tom Paulson, Senior Vice President and Chief Financial Officer for Tennant Company. Mr. Paulson, you may begin.

Thanks, Davetta. Good morning, everyone, and welcome to Tennant Company's fourth quarter 2013 earnings conference call. I am Tom Paulson, Senior Vice President and Chief Financial Officer of Tennant Company. With me on the call today are Chris Killingstad, Tennant's President and CEO; Pat O'Neill our Treasurer; and Karen Durant our Vice President and Controller. Our agenda today is to review Tennant's performance during the 2013 fourth quarter and full year and our outlook for 2014. First, Chris will brief you on our operations, and then I'll cover the financials. After that we'll open up the call for your questions. Before we begin, please be advised that our remarks this morning and our answers to questions may contain forward-looking statements regarding the company's expectations of future performance. Such statements are subject to risks and uncertainties and our actual results may differ materially from those contained in the statements. These risks and uncertainties are described in today's news release and the documents we file with the Securities and Exchange Commission. We encourage you to review those documents, particularly our Safe Harbor statement for a description of the risks and uncertainties that may affect our results. Additionally on this conference call, we will discuss non-GAAP measures that include or exclude special or non-recurring items. For each non-GAAP measure, we'll also provide the most directly comparable GAAP measure. There were special non-GAAP items in the third and fourth quarter of the 2012 and the first and fourth quarters of 2013. Our 2013 fourth quarter earnings release includes a reconciliation of these non-GAAP measures to our GAAP results for the fourth quarter and full year. Our earnings release was issued this morning via Business Wire and is also posted on the Investor Section of our website at tennantco.com At this point, I'll turn the call over to Chris.

Thank you, Tom, and thanks to all of you for joining us this morning. Today I’d like to briefly review our performance and then tell you about our strategic plans going forward. Tom will give you greater detail on our financial results for the quarter and full year. First, let’s take a look at Tennant’s fourth quarter. The company had solid top line revenue growth. Our 2013 fourth quarter consolidated net sales of $195.1 million rose 5% organically compared to the prior year quarter on higher volume across all of Tennant’s product categories. Contributing to sales was demand for new products, especially the T12 rider scrubber, which is the first new product in our redesigned modular large equipment portfolio. It has been a great success for us. We also saw strong sales of industrial equipment as well as sales to strategic accounts. Additionally sales of scrubbers equipped with ec-H2O technology rose in the fourth quarter to post their strongest quarterly gains for the year. We had record sales for our fourth quarter, although they were slightly below our expectations. This impacted our bottom line as we intentionally ramped up key strategic investments during the quarter in order to accelerate long-term growth. We were simply not able to pull back spending in time to pace with the lower sales level in the quarter. Going forward we expect our growth initiatives to produce clear benefits in 2014 and beyond. I’ll say more about our strategic plans in a moment. Turning to a few fourth quarter highlights across our geographic regions. Contributing to Tennant’s revenue in the America were sales of industrial products, sales through distribution and continued strong growth in Latin America. As I mentioned last quarter, we are building on our momentum with strategic accounts by duplicating in Brazil, the approach…

Thanks, Chris. In my comments today, all references to earnings per share are on a fully diluted basis. For the fourth quarter ended December 31, 2013, Tennant reported net sales of $195.1 million compared to $187.5 million in the prior year quarter. Organic sales grew approximately 5.1%, excluding an unfavorable foreign currency exchange impact of about 1%. As you may recall, Tennant's organic sales grew approximately 6.8% in the 2013 third quarter, excluding an unfavorable foreign currency exchange impact of about 1%. We are encouraged by the solid level of organic sales growth in the last two quarters. For the 2013 full year, Tennant reported net sales of $752 million compared to $739 million in the prior year. Organic sales grew approximately 2.8% excluding an unfavorable foreign currency exchange impact of about 1%. Fourth quarter 2000 net earnings as adjusted were $12.2 million or $0.65 per share. These numbers exclude the restructuring charge of $1.6 million pretax or $0.10 per share. In the year ago quarter, Tennant reported adjusted net earnings of $11.8 million or $0.62 per share. For the 2013 full year net earning as adjusted were $42.6 million up 7.3% compared to net earnings as adjusted of $39.7 million in the prior year. 2013 earnings per share as adjusted were $2.26 up 8.7% compared to earnings per share as adjusted of $2.08 in 2012. Turning now to a more detailed review of the 2013 fourth quarter. Our sales are categorized into three geographic regions which are the Americas, which encompasses all of North America and Latin America; EMEA which covers Europe, the Middle-East and Africa; and lastly Asia-Pacific which includes China and other Asian markets, Japan and Australia. In the Americas, 2013 fourth quarter organic sales increased approximately 5.6% excluding about 1% of unfavorable foreign currency exchange impact.…

(Operator Instructions) Your first question comes from the line of Jason Ursaner with CJS Securities. Jason M. Ursaner – CJS Securities, Inc.: Good morning. Congrats on a very strong finish to the year.

Thanks. Jason M. Ursaner – CJS Securities, Inc.: The gross margin was down, 1.5% year-to-year despite higher sales with the lowest total of any quarter. I just didn’t catch what this will primarily attribute to obviously not a longer term issue given the guidance on grow margin?

Yes, the two biggest pieces of it were channel mix and product mix. The biggest of those two is the channel mix as we had a particularly strong growth in our strategic accounts and through the distribution channel and both of those channels tend to have modestly lower gross margins and we do make it up through the efficiency and the selling expense side. So it’s additive to our operating margins, but it is with the mix we had it was dilutive to our gross margin. But it’s fair to say we think we will be back within our targeted range for next years as we just kept on guiding. Jason M. Ursaner – CJS Securities, Inc.: Okay. And when you think about the strategic account, obviously it’s becoming a bigger factor, the overall growth strategy, when you think about that on the operating margin leverage, I guess just overall how do you view it and what was the commentary on SG&A inflation relative to sales.

What you’ll see is on an absolute basis, we’ll expect our operating expenses to grow inline with our sales revenue. So it will be depended upon where our revenue ends up and that we’ll monitor our spending at that level. A predominant amount of the investment will be around sales coverage, service coverage and also investments in marketing. And then to your first question around strategic accounts and distributions through also, we do make lower gross margins, but through the efficiencies incrementally where it’s additive to our operating margin structure. We try to negotiate the best prices we can at the gross margin line but we’re even more focused on the fact that we’ve got to incrementally drive our operating margins above 12% or will be in dilutive to our operating model once – where we want to take it too. Jason M. Ursaner – CJS Securities, Inc.: Okay. And the SG&A increase with sales, that’s I guess due the actual sales growth in the year or that’s reflective of the future growth with investment coming ahead of revenue on the longer term in 2017 $1 billion target?

Yes, a reflective of investments ahead of the curve a bit Jason. I mean one of the comments I will make there is, we did say that we made some of those investments in the back half of the year. I mean we haven’t published our K yet, but you’ll see that our headcount from the end of the year 2012 to the end of the year 2013 will be up somewhere in north of 100 heads and a vast majority of that is going to be increases that were sales people, service people and end to end marketing folks. And that’s an investment that’s in our cost base and we think that it is a critical part of driving accelerated revenue growth in the next year. But when you come into Q1 at the higher level of investment against our lowest revenue typically in the year and that puts pressure on the profit margins. But we are very comfortable in improving operating margins for the full year. Jason M. Ursaner – CJS Securities, Inc.: Okay. And just last question from me, and then I’ll jump back in the queue. Outside of the cost base from a capitalized investment point of view, the gross strategy is not particularly capital intensive. So just overall I mean you’re generating very strong cash, what’s kind of the view on capital structure sitting here today?

Well, we’ll continue to – we’ll explore dividend increase as we have said that, that’s under way and we’ve typically taken our dividend up. It sits under exploration at this point, so we will continue to return money to shareholders through dividends also. We expect to remain aggressive in our buyback of shares. We’ve been that way for the last three years. We’ll continue to be aggressive. Assuming the right economic circumstances we’ll be going to the market and buy shares on the open market. We’ll fund our working capital. We are taking our capital spending up a bit in the upcoming year and we will continue to look at M&A activity but it is unlikely to be a major investment. Our predominant focus is on organic growth. Jason M. Ursaner – CJS Securities, Inc.: Okay, I appreciate it. Thanks guys.

You bet, thanks Jason.

Your next question comes from the line of Joe Maxa with Dougherty & Company. Joe Maxa – Dougherty & Company, LLC: Hi, good morning thank you.

Good morning Joe.

Good morning Joe. Joe Maxa – Dougherty & Company, LLC: So a couple of questions. So back on the gross margin, the channel mix being a bit of an issue in Q3 for the margin. I understand the sales benefit or lower expenses. How does that look going forward? Are you still focusing on strategic accounts? Are we going to see this gross margin be at the lower end of that range because of it or what is your expectations for 2014? Can you get back to that higher end?

I sure hope so. That’s certainly what we’re going to strive for Joe, but we don’t want to be that precise. We are comfortable, it will be about 43% or certainly I’m not willing to say we can go about 44% that’s the current point. But we are going to continue to focus on gross margin improvement. I mean we’re working on our discounting. We are going to take price increases. We are managing the heck out of our supply chain. But if we can continue to accelerate growth in strategic accounts, and we can earn operating margins above 12%, we are okay with that. And it has been an important part of our growth and will continue to be an important part. I can’t say some of the investments we are making are outside of the world of strategic accounts and then in our direct sales organization and with our distribution partners also. Joe Maxa – Dougherty & Company, LLC: Right. On the guidance, second half appears to be a little more back-end loaded than a typical year based on what I’m hearing? Is that driven by…

A couple of comments on that Joe. One is if you’ve looked at our revenue over the last few years we’ve been returning to a more normalized skew, if you went back to 2012, we had more revenue in the front half than the back half. That’s abnormal. It used to about 48% of revenues in the front half. We got closer to that norm in 2013. I think it will be closer to history in the upcoming years, so higher percent of total revenue in the back half. And then we have made investments and we feel really good about them. The other commentary, I’d make on Q1 specifically as we kind of have the opposite effect in our tax rate last year in Q1. We had an abnormally low tax rate in Q1 of last year and an abnormally high in Q4 and that makes for some tough comps. We don’t expect for that very low, I think it was around at 28% tax rate in Q1. We don’t expect that to repeat itself. So put some pressure on profitability in the first quarter and we are focused on again – we care about the quarters a lot more focusing on the full year and really accelerating our growth profile for the future. Joe Maxa – Dougherty & Company, LLC: Regarding the tax rate, if you’re not taking the R&D credit, what would be that base rate without it?

It’s about 50 basis points overall in the R&D tax credit. So we’re not saying… Joe Maxa – Dougherty & Company, LLC: [indiscernible] is going to come in.

Yes, we are not saying we can’t be within range without it, but it’s going to negatively affect our tax rate in the quarter by 50 basis points until it gets inactive. Joe Maxa – Dougherty & Company, LLC: And then, last from me is, regarding the Orbio launch coming up this spring. Can you give us little color on how initial beta tests are going and what the initial outlook maybe?

Yes, we’re really excited about this product. It’s call the OS3 system. Remember it’s a machine that’s half the size and half the cost of our 5000-Sc which is out there right now. It provides both an anti-microbial solution, as well as a multi-purpose cleaning solution. The other thing that’s real benefit is that it produces a concentrate that is a diluted kind of on site and that concentrate we can then store in containers and move about the facilities to other dilution stations, something we could not do with the 5000-Sc, which gives it a lot more flexibility and allows our customers to that way cost effectively clean the entire facility. The other issue we have with the 5000-Sc was a lot of our customer said it’s great, but it only solves part of our cleaning problem. We still have the sanitizing and disinfecting part and if we’re going to change our cleaning protocol, we want to do it across the board. They can now do that because we can help them disinfect, sanitize and clean. What I would say is that, we’ve had prototypes in test for a while now with extremely strong positive reaction from everyone. The goal is to get this product out in the market commercially in the second quarter of this year. It’s the product. We always talked from the beginning that this is the product that had the potential of truly making Orbio a force within the cleaning industry.

And we’re taking orders as we speak? Joe Maxa – Dougherty & Company, LLC: Sounds good, thanks a lot.

We won’t call that [indiscernible]. Joe Maxa – Dougherty & Company, LLC: Great guys, thank you.

Thank you.

Your next question comes from Dan Rizzo with Sidoti and Company. Daniel D. Rizzo – Sidoti and Company, LLC: Hi guys.

Hi, Dan. Daniel D. Rizzo – Sidoti and Company, LLC: In addition to the new product you just described, I think you said you have 63 new products that you plan on launching over the next couple of years. Is that can be like somewhat evenly distributed or something when you look more of those new products coming in the back half of the year into 2015 or I mean just a little color on the timing on that?

I think it would be fair to say they will be relatively evenly distributed across the three years, 2014, 2015 and 2016. And we’re not ready to get a specific as front half or back half, but if you looked at for each of the three full years that will relatively evenly distributed across the three years.

And we said 20 products, no sorry 16 products in 2014, so that gives you an indication that’s the cadence then it is pretty evenly distributed. Daniel D. Rizzo – Sidoti and Company, LLC: Then with the product you just describing this, its sounds kind of revolutionary the way you’re describing it. So could it be as big as where it was a couple of years ago where it’s just really changes everything?

Well, it’s very different from ec-H2O, remember when we reported ec-H2O results, it was the ec-H2O module on our scrubbers, right. So we were reporting the scrubber sales with ec-H2O not just the sales of the technology module that produces the ec-H2O. So I don’t think you’re going to see in the short-term that we can get to those levels, which are in the vicinity of $140 million annual sales right now. But we do think it’s revolutionary, I mean, what this does it allows our customers to produce on site and on demand sanitizing, disinfecting and cleaning solutions that can replace just about everything if not everything they currently use. It is cost effective. It simplifies the cleaning process for their operators dramatically and it’s environmentally friendly and that the on site on demand generation eliminates the very long and significant environmental supply chain of producing or striking the raw materials, producing the chemicals, packaging the chemicals, transporting them to the facility. So, we think and the feedback we are getting from the beta test is that this could be transformative. Daniel D. Rizzo – Sidoti and Company, LLC: Would that mean that, that you could – I mean, I think you said emphasis half the cost, give the way, how it could be – that would mean that you can charge more for it and still enjoy higher margins. Am I looking at it the right way?

I think the only comment we could really make there Dan is, we certainly expect it to be additive to our margin structure at both the gross margin line and the operating margin line. So we can pass on value to the end-user and they can improve the economics of there cleaning process and we can make nice margins at the same time. So it’s exactly a kind of innovative products we want to bring out. Daniel D. Rizzo – Sidoti and Company, LLC: All right, thank you guys.

You are welcome.

Your next question comes from line of Scott Graham with Jefferies. R. Scott Graham – Jefferies LLC: Hi good morning.

Good morning Scott.

Good morning Scott. R. Scott Graham – Jefferies LLC: Couple of questions for you guys. Tom, the first one is, it sounds to me as you went through the 12% operating margin that there is a bit less confidence in getting there in the fourth quarter of this year. In fact I don’t even think you’ve said that you will. And I’m just wondering if that is traceable to this mixed issue and if so, why this 43% to 44% gross margin guidance.

The guidance in the 43% to 44% as we really believe will be there, I mean we wouldn’t give a guidance range if we didn’t believe in that and it could be at the lower end, it could be at the higher-end. We are comfortable that it will be within the range. The biggest reason for us not definitively committing to that 12% by the fourth quarter, we’re not saying, we’re not going to get there. But we’ve given a pretty broad range in our revenue and it’s a $20 million range. And the dependences on what revenue level you get and what quarter it falls in, could dictate that you are not able to get to that 12% by the fourth quarter and we are – we’ll knowledge we are a bit more focused on the long-term here and accelerating and making the investments to take our growth profile to a different level. And we are not going to manage to a quarter to get the 12%. We’re looking at to get to a sustainable 12% as quickly as we possibly can while achieving better than the historical revenue growth rates that we’ve had over the last period of time.

And the beauty with the new growth strategy it actually enhances our ability to get the 12% and go beyond, right, because if you look back over the last two years, our struggle has been organic growth. I mean we’ve kept our R&D spending within the range that we have promised, we actually took our gross margin range up a 100 basis points. So it exceeded expectations there and we made great progress in terms of reducing our operating expenses. So growth has been the culprit in terms of postponing our ability to get the 12%. Now that we are focused on the organic growth while maintaining the discipline against the three other metrics, it should allow us to get to the 12% and beyond to a much greater extend than before. So we view it as a net positive for both our ability to grow market share, get to a $1 billion and to enhance our operating profit margins. R. Scott Graham – Jefferies LLC: Okay that’s actually down the path of my third question, which if you don’t mind.

Sure. R. Scott Graham – Jefferies LLC: I like to come back to you with crispy, the second question is kind of more again for Tom. So let me just ask you this. I know you don’t give quarterly guidance. I’m asking for that, but if you’re saying that the year is going to be kind of more back-half loaded it just seems as if that the range – the high-end of the ranges would be pretty remarkable second half of the year. What’s behind that thinking on the high end?

We obviously think we’re going to grow solidly organically in every quarter. We expect to exit the year in our highest level of year-on-year organic growth. And $800 million of revenue would be a good quarter, but we wouldn’t give guidance that that was the highest. We didn’t believe it was achievable. So it would be accelerating organic performance. We are going to monitor closely, and if we’re not achieving the higher growth rates we’ll back off on our spending a bit, but we did give a range and we did that on purpose, but we are not saying that the higher end is not achievable. R. Scott Graham – Jefferies LLC: But the higher end is about 6% growth.

Yes, $800 million, 6.4% recorded growth and that would be 7.4% roughly, if we’re at the… R. Scott Graham – Jefferies LLC: I was actually talking about earnings per share.

Oh, I got you. R. Scott Graham – Jefferies LLC: So do you kind of refashion your response, now that I was talking about earnings per share? Again it just seems as if the first half is let’s say flat or up slightly?

Yes, and the way to think about that is gross margins should get better during the year. And that tends to be a given Q1 is always our low point from a gross margin stand point. We are going to, we have done some free investment, our expectation is that we will make significantly higher incremental margins in the back half of the year as we get to a higher sustained revenue base and we got some of the investments that we’ve frontend loaded, part of that was this year, part will be front year. And you’ve seen the power of our business model as we begin to take advantage of the investments and down further invest and get the kind of incremental margins that we can make as we begin to accelerate our revenue growth. So we are assuming a higher incremental structure in the back part of the year. R. Scott Graham – Jefferies LLC: Okay, very good.

But again the growth is the key component.

The key critical component.

Because you know we plan to maintain the discipline we’ve established around gross margins and our operating expenses. Yes, we’re taking operating expenses up especially in the first half to fund some of these strategic investments, which are going to pay dividends in the second half and help us get to the $800 million. And with the appropriate margin structure and getting to the EPS goal, hopefully on the high side of the range that we’ve put out there.

And we do think Scott, we’ll get a good read as we’ve had and we’ve got an read on the ability to get revenue going. We think we’ll get a read in the front part of the year and that will dictate how we meet our spending out. If we don’t get comfortable or we are going to be at the mid point or higher on our revenue range, we’ll meter back some of the spending. So we’re still very cognizant of the need to keep moving margins on the right direction. We are taking on a little bit more risk in this profile than we have in the past, but we are not getting that far ahead of ourselves.

But the reward of getting it right is significant lead.

Absolutely. R. Scott Graham – Jefferies LLC: I understand. Chris last question is more directed to the product, the new product pipeline. When you look at this range that you’ve given which I think you guys mentioned that this was a wide range, I actually consider that a fairly narrow range which seems to be somewhat indicative of confidence in the placements in the new product pipeline. Well, if I am right in my supposition there Chris, would you be able to tell us those placements, is that higher mixed channel or is that still kind of same channel mix?

I don’t think we are going to see a big shift in channel mix in terms of where the new products are going. Although the new industrial product we’re launching in the second year is an industrial product we are launching in the second year is an industrial product. It’s going into our industrial vertical markets which inherently has higher margins and should be a net positive for us. So that is the one shift versus last year where the majority of the products were all commercially oriented with a little bit lower gross margins. So I would say that’s positive. The other thing about new products you got to remember, all the new products we launched last year we often say that it takes three years to get the peak annual sales on products launch in a specific year. So we are going to get a lot of benefit from the new products, incremental benefits from the new products launched last year, this year plus the benefits of the 2014 new products. And if you look at the T12 which we launched last year and the success we’ve had with that and we anticipate we’re going to have similar success with this next product, that’s another very nice gain for us in 2014, which gives us the confidence that we can both get to our revenue goals and our margin gross. R. Scott Graham – Jefferies LLC: Thanks very much.

You’re welcome.

With pleasure, thanks Scott.

(Operator Instructions) your next question comes from the line of Kevin Sonnett with RK Capital. Kevin S. Sonnett – RK Capital Management LLC: Thanks. Hi guys.

Hi, Kevin. Kevin S. Sonnett – RK Capital Management LLC: So along the lines to some degree of which Scott was getting at, understanding we’re much more focused on the year and even more than the year we’re focused on several years and rightfully. The last couple of years we’ve seen a pretty similar decline from Q4 to Q1 about 10% little over 10%. Then I think that would come forward with Tom what you were saying about growth increasing as we move to the year. So you start off with something similar to the growth we just saw 4% growth give or take and then that ramps to what something like 678 as we end the year to get as per as the middle of that range.

If you did the math like quarter, that’s not far off. Kevin S. Sonnett – RK Capital Management LLC: Okay, and then with the spending you gave a good forecast for SG&A first half. It should grow about with revenue so that helps a lot especially in terms of the initiatives you have with new product launches et cetera, on the R&D line I apologize if I missed that. If the R&D step down a lot in dollars and as a percent of sales this quarter, it had been running closer to $7.5 million to $8 million or just new products, new product work and some shift in timing for that.

Yes, we were more frontend loader with our R&D and we had guided that we would be right around that 4% level for the full year which really just kind of half spending the down in Q4 not only versus the run rate but versus the prior year, but we were still at adjusted over 4% for the full year last year and we are going to be somewhere up to 4% in R&D next year. But it was a planned way of the way our spending we that we are spending was loaded in R&D. Kevin S. Sonnett – RK Capital Management LLC: Okay and then as we think about 2014, understanding it should be around $4 million maybe a little bit less, up to $4 million for the year. Is that more front-half or back-half loaded, does it look like last year or just given the timing of the new product works.

It will likely be a bit more front-end loaded, as a percent of revenue. Kevin S. Sonnett – RK Capital Management LLC: Okay, so may be a little over four in the front-half, a little under flow in the back-half?

It could very well be. Kevin S. Sonnett – RK Capital Management LLC: Okay and maybe this is a good time to and I guess get everyone one the same page since we are in a public call. So if we understanding you don’t want to get so specific that you are giving quarterly guidance because I know you are not managing the business that way and you don’t want to get locked into making decisions for a quarter. Can we still get to the, let say the mid point of your range give or take maybe its not the high end but we can still get solidly in that range. If the first half was flattish like in terms of the planning you have as far as spending on an EPS basis?

Yes, the answer would be yes. We could very easily have a first quarter that’s going to be quite similar at the EPS line that we had in our first quarter of last year and then Q2 becomes a much become revenue quarter. Typically I mean Q2 at times has been bigger than Q4. So that’s the easier quarter to manage within and then our expectation as we begin to create further leverage in the back part of the year, solid. But we can be flattish at the EPS line through the first part of the year to slightly better and we expect some acceleration in the back part of the year. Kevin S. Sonnett – RK Capital Management LLC: Okay, thanks. That’s really helpful thanks guys.

Welcome.

And at this time there are no further questions, I will turn it back over to speakers for closing remark.

All right, well, we are pleased with our progress today and confident that we have laid a strong foundation for our future. By placing a renewed focus on growing Tennant’s revenues while continuing to leverage our cost structure we expect to generate stronger bottom line performance. We are committed to reaching $1 billion in revenue by 2017, while achieving a 12% or greater operating profit margins. Thank you for your time today and for your questions and we look forward at updating you on our 2014 first quarter results in April. Take care everyone.

I understand there is one more question before we close, is that possible?

Yes. Your question comes from the line of John Rosenberg.

Hi, John.

Hi, guys. Thank you for taking my question. How are you doing Tom?

Thanks.

Sorry to reiterate a lot of the things that you’ve already said. My focus is more on operating profit. Of course as you’ve said and as discussed in the prior questions, not really looking for anything quarter-to-quarter. You don’t want to manage business and I certainly agree with that on a quarterly basis, but can you give us a sense of how much of the improvement in operating markets and gross margin might come from not just the new products but also from your moving to a modular manufacturing process? If you like to hit the high end of your range, are we likely to still see some, I mean 8% to 12% is pretty significant improvement. Are we still going to see some significant improvement even if the year does not turn out as good as hoped?

I mean obviously revenues, I think it helps gross margin improvements a lot. So the higher revenue, so you do generally create significant amount of leverage. And so it’s a hard question to answer. Modularity will have begun to and will continue to drive some upside in our gross margins, but you got to remember we’re at the front end of that security modularity, we’re only introducing the second industrial product that’s modular in nature in 2014. We’ve begun to modularize our commercial line. The real benefits of that both from a margin point of view and an inventory and a cost point of view is out in front of us and I think that that’s more of a long-term two, three, four or five year kind of a benefit than it is going to benefit us significantly in the short-term, but it is very beneficial in multiple fronts over the long-term.

So, ultimately you will start to see that in more churns, lower DSOs, cash flow as well as margins?

We think it’s one of the efforts that is – it’s beneficial to margin growth, it’s beneficial to cash generation et cetera. So it’s positive on lots of fronts.

Okay and thank you. And lastly just one quick kind of housekeeping question, I might have missed this. The new Orbio product what is its particular end uses, are you selling it to the same channels or is it – are you entering an entirely new market?

No, the Orbio product it’s obviously very different from our core product portfolio. As we mentioned, it’s a product that has both an anti-microbial and a multi-surface cleaning capability that you can generate on site on demand. It is relevant in our existing customer base across the board and into some new customer segments maybe where we haven’t competed in the past. We have decided with this product that we are not necessarily going to be focusing on our existing sales organization, our distributor structure to launch it. We are putting in place an organization with account specialist who are well versed in the product and the size behind the product and understand the regulatory environment that we will be competing in. And we will be focusing much more on what we think are the early adopter customers who have the ability to take many, many units up front versus trying to sell one sites and two sites across many, many different customers. Because one of things we’ve learned is that, it’s one thing they get the product into the customer you need to hold their hand a little bit up front until they get comfortable using it. And you can only do that if you limit the customer base you go after, but those customers for example a university campus that could take upwards of 100 of these units potentially, then you focus a resource on that university campus hold the hand of the people involved until it’s up and running to their satisfaction and then you can move on.

Great. All right, well thank you very much for that color and of course best of luck. Thanks a lot.

Thanks a lot John, I appreciate it.

Thank you. That concludes the call today. You may now disconnect.